Niche environments create space for new life forms. Like an undersea volcano surrounded by bizarre creatures, commercial niches enable new types of business models and enterprises to flourish. The niches also provide a foothold from which these businesses can step into larger and more competitive markets.
The challenge about niches is that they are abundant, and some will be as eternally isolated as those undersea volcanoes. Picking your niche is a critical discipline. Four rules illustrate how to do this in a rigorous way.
Target Customers Overserved yet Undershot by Existing Offerings — One Medical Group is a new concept in primary care medicine. For a few of a few hundred dollars a year, it enrolls patients in exclusive practices that provide extensive personal attention, same-day visits, lengthy consultations, and excellent customer service. But it is not for everybody. If you have a bevy of chronic conditions requiring tight coordination of a team of specialists, go somewhere else. One Medical is a great proposition for relatively healthy people who do not want to wait three hours for a 12 minute appointment. It may not scale to serve millions of patients, but its niche is plenty big to be attractive. Not only does the model offer an answer to over-stretched primary care physicians facing a wave of newly insured patients, workflow changes, and an older, sicker population, but it may also offer a route for small health insurers to escape an increasingly commoditized industry in which they have fundamental disadvantages.
Picking a niche is an endeavor where patterns of success are invaluable. In addition to the principles laid out above, consider who has succeeded and failed in creating niches in your industry. What rules can be discerned?
There is seldom one right answer to picking a niche, but there are definitely wrong answers. Thoughtful attention to these dynamics up-front can create large payoffs down the road.
Story by Steve Wunker.