Steve Blank Mapping the Unknown – The Ten Steps to Map Any Industry

A journey of a thousand miles begins with a single step

Lǎozi Lao Tzu

I just had lunch with Shenwei, one of my ex-students who had just taken a job in a mid-sized consulting firm.  After a bit of catching up I offered he was looking a bit lost. “I just got handed a project to help our firm enter a new industry – semiconductors. They want me to map out the space so we can figure out where we can add value.

When I asked what they already knew about it, they tossed me a tall stack of industry and stock analyst reports, company names, web sites, blogs. I started reading through a bunch of it and I’m drowning in data but don’t know where to start. I feel like I don’t know a thing.”

I told Shenwei I was happy for him because he had just been handed an awesome learning opportunity – how to rapidly understand and then map any new market. He gave me a “easy for you to say” look, but before he could object I handed him a pen and a napkin and asked him to write down the names of companies and concepts he read about that have anything to do with the semiconductor business – in 30 seconds. He quickly came up with a list with 9 names/terms. (See Mapping – First Pass)

“Great, now we have a start. Now give me a few words that describe what they do, or mean, or what you don’t know about them.”

After a few minutes he came up with a napkin sketch that looked like the picture in Mapping – Second Pass.
Now we had some progress.

I pointed out he now had a starter list that not only contained companies but the beginning of a map of the relationships between those companies. And while he had a few facts, others were hypotheses and concepts. And he had a ton of unanswered questions.

We spent the next 20 minutes deconstructing that sketch and mapping out the Second Pass list as a diagram (see Mapping – Third Pass.)

Note that even with just the sparse set of information Shenwei had, in the bottom right-hand corner of his third mapping pass, a relationship diagram of the semiconductor industry was beginning to emerge.

As the information fog was beginning to lift, I could see Shenwei’s confidence returning. I pointed out that he had a real advantage that his assignment was in a known industry with lots of available information. He quickly realized that he could keep adding information to the columns in the third mapping pass as he read through the reports and web sites.

My suggestion was to use the diagram in the third mapping pass as the beginning of a wall chart – either physically (or virtually if he could keep it in all in his head). And every time he learned more about the industry to update the relationship diagram of the industry and its segments. (When he pointed out that there were existing diagrams of the semiconductor industry he could copy, I suggested that he ignore them. The goal was for him to understand the industry well enough that he could draw his own map ab initio – from the beginning. And if he did so, he might create a much better one.)

When lunch was over Shenwei asked if it was OK if he checked in with me as he learned new things and I agreed. What he didn’t know was that this was only the first step in a ten-step industry mapping process.

Epilogue

Over the next few weeks Shenwei shared what he had learned and sent me his increasingly refined and updated industry relationship map. (The 4th  mapping pass showed up 48 hours later.)In exchange I shared with him the news that he was on step one of a ten step industry mapping program. Other the next few weeks he quickly built on the industry map to answer questions 2 through 10 below.

Two weeks later he handed his leadership an industry report that covered the ten steps below and contained a sophisticated industry diagram he created from scratch. A far cry from his original napkin sketch!

Six months later his work on this project convinced his company that there was a large opportunity in the semiconductor space, and they started a new practice with him in it. His work won him the “best new employee” award.

The Ten Steps to Map any Industry

Basic Industry Understanding

1. Diagram the industry and its segments
   1. Start with anything
   2. Build your learning by successive iteration
   3. Who are the key suppliers to each segment?
   4. How does this industry feed into the larger economy?
2. Create a glossary of industry unique terms
   1. Can you explain them to others? Are there analogies to other markets?
3. Who are the industry experts in each segment? For the entire industry?
   1. Economic experts? E.g. industry analysts, universities, think tanks
   2. Technology experts? E.g. universities, think tanks
   3. Geographic experts?
4. Key Conferences, blogs, web sites, etc.
   1. What are the best opensource data feeds?
   2. What are the best paid resources?

Detailed Industry Understanding

5. Who are the market leaders? New entrants? In revenue, market share and growth rate
   1. In the U.S.
   2. Western countries
   3. China
6. Understand the technology flows
   1. Who builds on top of who
   2. Who is critical versus who can be substituted
7. Understand the economic flows
   1. Who buys from who in this industry
   2. Who buys the output from this industry.
   3. How cyclical is demand?
   4. What are the demand drivers?
   5. How do companies inside each segment get funded? Any differences in capital requirements? Ease of starting, etc.
8. If applicable, understand the personnel flow for each segment
   1. Do people move just between their segments or up and down through the entire industry?
   2. Where do they get trained?

Forecasting

9. What’s changed in the last 10 years? 5 years?
   1. Diagram the past incarnations of the industry
10. What’s going to change in the next 5 years?
    1. Any big insight on disruption?
    2. New entrants?
    3. New technology?
    4. New foreign suppliers?
    5. Diagram your model of the industry in 5 years

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