The digital era has opened the door for organizations and individuals around the world to turn innovative ideas into thriving businesses, with some becoming so successful that they’ve gone on to create entirely new market categories. Social media is among the most striking examples of this kind of rapid and ubiquitous success, where just a few years before, the industry simply hadn’t existed at all.
Approximately four billion people are now using social media worldwide, but less than 30 years ago, the segment had yet to burst onto the scene, employed nobody and generated zero revenue. Today, the market leaders are valued in their billions and the industry employs hundreds of thousands of people worldwide both directly and across a multitude of businesses servicing the sector.
In the process, many pioneers of the social media category have fallen by the wayside, unable to capitalize on their moment in the limelight, while others have thrived - think MySpace vs Facebook, for example, among many others. In any circumstances, building a new market category is hugely ambitious, and success is far from certain. But, the arrival of new segments is also an inevitable result of human ingenuity and the appetite of societies for products and services that simply do things better than they’ve been done before.
- The ROI of data-driven development (opens in new tab)
Another example of the emergence of a new market category is the development of Customer Relationship Management (CRM). A market valued at over $40 billion worldwide, it counts global giants such as Salesforce, Microsoft, Oracle and many others among its leading brands, each of whom offers exceptionally powerful and increasingly intelligent tools to help organizations manage their interactions with current and potential customers. Today, the industry is light years away from its roots in simple contact management software, underlining the direct correlation between innovation and bottom line success. It’s part of a well worn path in the technology industry where today’s niche innovation can become tomorrow’s leading trend.
The software development industry has seen its own version of category creation, with Agile methodologies and DevOps playing a key role in revolutionizing the way organizations build the systems and technologies that power almost every other industry. DevOps, for example, began as a way to bring together development and IT operations to meet the need for continuous software delivery and now is a mainstream technology segment in its own right.
And among the hottest new technology markets today is Value Stream Management (VSM), which can be viewed as something of a ‘live’ case category creation study, having emerged only in the last couple of years.
In essence, value streams are everything in the software delivery lifecycle (SDLC) - from idea to production - needed to deliver software products or services to customers. VSM works by removing the cumbersome and inefficient operational silos familiar to many involved in the software development process, and instead builds connections between key processes, teams and tools to deliver better software. It draws on real-time metrics to enable cross-team collaboration, embeds governance in the software delivery process and coordinates automated workflows.
Together, these capabilities enable organizations to deliver high-quality software at greater speeds while reducing risk - a massive priority for businesses across the economy. As a result, its rise has been rapid with the likes of Digital.ai, Plutora, HCL Technologies, ServiceNow and Tasktop combining forces to create the Value Stream Management Consortium to drive exponential growth in the software development industry. With this growth has come recognition that VSM has become something much more significant to the technology landscape than a nascent trend, but instead should be viewed as a market category in its own right.
- Why you need to ditch your scripts in 2021 (opens in new tab)
Finding the value in value stream
In common with other market categories of the digital economy, the VSM concept itself isn’t new and can even trace its roots to the middle of the last century. So, what’s changed between then and now to enable VSM to - finally - take off? The founder of Ford Motor Company, Henry Ford is quoted as saying, “If I had asked people what they wanted, they would have said faster horses”, and this sentiment holds true to the creation of new market categories in general and VSM in particular.
The point is, innovators don’t necessarily set out to create a new market category per se - instead, they build business models that can help solve specific problems or create new ways of doing things, and in the process, ‘disrupt’ established practices and even entire markets. As the benefits are shared and awareness of new ideas grows, competitors race to meet emerging opportunities, driving further innovation and momentum. For a market niche like VSM, this is a virtuous circle where customer success has attracted the attention of investors who see the emergence of new market categories as an opportunity for significant returns.
Working at the heart of an emerging market category like VSM is a fascinating experience. It gives individuals and businesses the rare opportunity to define solutions where customers can see the benefits from the start, and even participate in the process. An important stage in the development of the VSM category was recognition from outside the industry players, perhaps most notably from independent analysts who coalesced round the idea that VSM was significant enough to require their focused attention. This not only helps to formally define a niche, but adds gravitas to every business working to carve out their share of the market.
The Forrester Wave for Value Stream Management Solutions is an example of category validation in action, and is part of sustained market momentum that has also seen M&A activity increase levels of awareness and interest. As a result, billions of dollars have been invested in the VSM category and both market leaders and startups continue to bring new capabilities to market.
Compared to many niche technology markets, VSM is still relatively early in its current phase of rapid growth, investment and adoption. As the market and technology matures, new startups, further investment, market consolidation and continued innovation will all play important roles in determining how big the VSM category becomes.
- Digital transformation - A necessary disruption you cannot ignore (opens in new tab)
Bob Davis, CMO, Plutora (opens in new tab)