The Power of Precise Positioning

At the beginning of every engagement, we ask our clients to describe their positioning.

We do this because a business’s positioning informs and directs every single other business strategy, regardless of whether that strategy relates to brand, design, marketing, customer acquisition, or even hiring.

But one thing I’ve noticed over the years is that when a business is successful, and especially when it’s successful over a long period of time, it often struggles to pinpoint its exact positioning.

These businesses sometimes have a general idea of what it is—“We provide services to companies to help them win.”—but they often lack the specificity needed to qualify as real positioning. On paper, it’s difficult to differentiate one company from another.

I believe this inability to position partly has to do with the fact that there’s no obvious incentive to engaging in the hard work of positioning for already-successful companies, because doing so forces them to reckon with who they’ll work for and why, while questioning all the assumptions they’ve made about their success to date—and the customer base that’s fueled that success.

Essentially, positioning work puts a microscope on a business and forces it to take a hard look at what it sees in the petri dish. It’s bacteria, sure, but is it a probiotic or E. coli? And does it really even matter if you’re feeling just fine?

To put it more plainly: why work on your positioning when your positioning seems to be working?

The answer is simple: validation.

Positioning work will either validate your current path, or validate the change you probably already know you need to make.

But before you balk and dismiss positioning as just another thought exercise disconnected from the real realities of running a company, consider this: there’s a direct line between positioning and profitability.

People are willing to pay—and pay a lot—for specialization.

Vertical or horizontal?

If you think about business strategy as a concentric circle, then the middle of that circle is a business’s purpose and the first ring is a business’s positioning.

The purpose is the reason why the business exists. It’s often internal-facing and aspirational in nature. (For example, “Turner exists to make a difference in the lives of our people, customers, and community.”)

Positioning, however, is much more concrete and defines what your business does and for whom it does it. In effect, it’s your “discipline for market.”

In a perfect world,  positioning work would always come in the infant stages of a business, because it allows for ideas and decisions to be rooted in the rich and fertile ground of strategy.

But the way that it works for many businesses is that positioning comes much later in the organization’s life cycle, because so much of a business’s early success is defined by saying “yes” as much and as often as possible, to almost any and all work, that positioning can feel like a limitation, or even a luxury.

Paradoxically, it’s almost as if the price of admission to solid positioning is a number of years of, well, no positioning at all. (Which is also a type of positioning, of course.)

A lot of the thinking about positioning that I’ve done recently has been fueled by the work of David C. Baker, who wrote a compelling and nuanced book called The Business of Expertise. In it, he defines both vertical and horizontal positioning, and argues the benefits of both.

Many businesses, he posits, begin with vertical positioning, because it’s the easiest to understand. Perhaps you only work for clients in a particular vertical, like manufacturing, paper and pulp, or oil and gas. Or perhaps you’re even more narrow than that, and within the oil and gas vertical, you only work for upstream or midstream clients.

This is vertical positioning at a fundamental level, and it allows you to group and organize your clients in a way that makes them easy to find—and easier to market to.

Philip Morgan, author of the Positioning Manual for Indie Consultants, goes a step further and talks about pure market verticals, which can be either very broad or very narrow.

Compare the 1,034 companies in the U.S. that work in the narrow market vertical of “crushed and broken limestone mining and quarrying” to a broad market vertical like “retail” or “finance.”

On the other hand, horizontal positioning defines your target market across a number of verticals.

Perhaps you work in lots of industries, but only one geographic location, or only with companies that meet a certain revenue threshold. Those are both demographic segmentation factors that can help you figure out to whom you’re providing what, and why.

Baker’s podcast co-host and co-expert on positioning, Blair Enns, sums it up like this: “Vertical is the market, horizontal is the demographic or discipline.”

In short, your position.

The difference maker

What I find most interesting about positioning is that it shares one central characteristic of your brand’s narrative, which is this: whether you acknowledge it or not, it exists.

Just as your brand tells a story to the market about who you are, even if you put little or no effort into shaping that story, your company is positioned in a certain way in the minds of your customers regardless of whether you’ve spent time influencing their perspective or not.

Maybe you’re the least expensive, or the most expensive, or the most technical, or the most responsive, or the only crane company that has the experience (and insurance limits) to lift a space shuttle for the Smithsonian—but if you don’t own your positioning, and, better yet, shape and evolve it, you’re missing out on an enormous opportunity for success.

To that end, positioning is your North Star, and the arbiter of your product/market fit.

It tells you who you should be working for, where you should allocate your marketing dollars, and even gives you insight into the people you need to hire.

Without it, you can still do what you need to do, of course, but it’s considerably—and unnecessarily—harder.

“A strategy that doesn’t leave anything out cannot be called a strategy,” writes Tim Williams, of Ignition Consulting Group, a U.S.-based consultancy with a global footprint. Strategist Jon Kolko argues for the concept of strategy as “thoughtful restraint.”

Yes, taking a position publicly can be scary and comes with some risk, as most things do, but there’s more risk over the long term by not taking a position at all.

Doing the hard work of positioning puts you in the best position to win.