Overcoming Commoditization by Anchoring Corporate Innovation within a B2B Market Positioning Architecture
When email gained popularity in 1993, it heralded the arrival of faster, more effective business communication. But as email became ubiquitous, it quickly gave way to torrents of messages and overflowing inboxes. By 2017, over 269 billion emails were sent and received each day. The average person receives 122 of those emails daily, of which only 38 percent contain important, worthwhile information.
Chris Rivers, Garret Heaton, and Pete Curley experienced these problems, and knew there had to be a better way to communicate than email—so they founded HipChat in 2009. The platform had soaring expectations following its public launch in 2009, and Atlassian, the parent company of HipChat, had over 5 million monthly users at its peak. Today? Most of those users have migrated to Slack, a business communication platform that looks similar to HipChat, but is used by 77 percent of the Fortune 100.
Slack wasn’t even close to first-to-market, its feature set isn’t significantly different from HipChat, and (at least in its early days) it wasn’t nearly as well capitalized as Atlassian. Yet, it still became the dominant force in workplace communication.
Moving Past Superficial Technical Utility to Capture Broad Market Adoption
When similar products attack the same market, it’s not capital, product features, or speed that determines the ultimate market leader. Differentiation and domination, in these instances, are dependent on the ability of an organization to articulate its purpose in a way that is more compelling and relevant to customers than others—and is able to grow the market itself beyond early adopters and beyond a point of mass adoption.
Slack didn’t begin with the aim of dominating business communication. The platform evolved out of a gaming company called Tiny Speck, where CEO Stewart Butterfield and his team saw it as a way for gamers to communicate more easily across time zones. The enthusiasm with which users embraced the chat platform indicated to Butterfield that it was chat, not the game, that represented a real opportunity. There were other tools on the market that allowed users to communicate with their peers, log off, log in again, and pick up right where they left off. But each of these offerings was oriented towards businesses and felt like business tools: transactional. What Butterfield saw in Tiny Speck’s chat was communication people wanted to engage in, and collaboration that was natural.
By early 2013, Tiny Speck’s team had pivoted fully toward the development of a chat platform, which became Slack. Butterfield pushed this nascent version into the field, intent on seeing how collaboration developed in real-time, and if users responded to it in a way distinct from existing options: “We begged and cajoled our friends at other companies to try it out and give us feedback. We had maybe six to ten companies to start with that we found this way. The pattern was to share Slack with progressively larger groups. We amplified the feedback we got at each stage by adding more teams.”
Transitioning Pilot User Feedback into a Emotionally Driven Culture of Work
The feedback received through Slack’s pilot confirmed to the team that the platform would never see mass adoption if it just relied on the quality of its features. Users loved how Slack made them feel about work, communication, and collaboration, not how it worked. Slack needed a story—one that could articulate its purpose to a market that didn’t know it needed chat yet. The messaging Slack began to deploy— “Be Less Busy” and “Where Work Happens” deliberately spoke not to the platform’s features and benefits but to the emotional core of its relationship with users. Businesses would choose Slack not because it was an improvement over HipChat, but because they believed in a new culture of work where connections were stronger and work looked more like normal life.
In June 2020, Slack implemented a significant product innovation, Slack Connect. Where Slack had always been focused on more closely uniting an organization, this new feature enabled users to connect with up to 20 other organizations within the same channel. With nearly 650,000 organizations on Slack, the company saw a natural opportunity to extend its brand: an external communication would ordinarily require employees to use email or LinkedIn.
This feature doesn’t just market Slack as an innovative business tool—it directly challenges email in a way predecessors such as HipChat could only have dreamt of. It’s also a logical extension well aligned with Slack’s story: collaboration in business isn’t limited to those in one’s own organization, and the emotional benefits Slack has offered employees can only be amplified by extending them to customers.
Evaluating Brand Archetypes of Market Challengers and Incumbent Enterprises
Slack managed to eliminate HipChat’s early lead in team communication, and it has recognized that maintaining that dominance will require extending its offering in ways that are authentic to the story it’s telling. But every strong market has space for both a dominant player and a challenger brand, a role competitors like Microsoft Teams and Rocket.Chat are vying to play.
Microsoft has been a direct competitor to Slack since it launched Teams in 2017, which still only has a market share of 15 percent. But Microsoft is actively working to leverage its biggest advantages; Microsoft has never been where people turn to for work to be fun, but thanks to its legacy products the company has an unparalleled history of empowering organizations to achieve more at work.
Most organizations already use at least one Microsoft product. Those flocking to teams aren’t comparing shopping features and benefits to Slack (although OneDrive and Office 365 integration probably helps), but appreciate the different attitude of the brand. Microsoft Senior Director Bryan Goode observed: “We’re not talking about Teams replacing email or Slack replacing email for that matter, as much as competitors would like people to believe that happens. I actually think what’s happened is we’ve got this proliferation of tools in our toolkit, and now we can do collaboration in the tools that make sense. I think email has a very viable future.”
Teams’ users are seeking the consistency that Microsoft has always provided to support work through efficiency. Its products have never been the most innovative on the market, but its software powers so much of business, more conservative firms know they can trust it, and employees not seeking to change their relationship with work can see it as an extension of Outlook.
Microsoft Teams’ ability to challenge Slack isn’t a bet on product features, it’s a bet that ultimately most of the market wants access to a new tool, but not a different relationship with their job.
Harnessing Open-Source Architectural Models to Form Coherent Brand insulation
Rocket.Chat (a Woden client), is clear about its intentions as well—although it’s making a very different bet about what businesses want in a Slack competitor.
Rocket.Chat has positioned itself around being a fully open and scalable platform. Where Slack—especially thanks to connect—is trying to raise the walls of its garden as high as possible, Rocket.Chat embraces the ideas that communication and collaboration should be free, and fit the form and needs of those working together. Rocket.Chat tells users it is seeking to “replace email and improve your digital workflow.” By being open source, it allows security-conscious firms (such as the US Government) to run their own private instances, or, at the extreme other end of the spectrum, global communities to build chat servers that are more massive than any Slack workspace.
A clear, consistent story for Rocket.Chat ensures users understand what it values and how that is completely distinct from Slack or Microsoft and provides the right framework to attract those who share those beliefs.
While Rocket.Chat may alienate some users who love email, the platform has fully aligned its innovative ambitions behind its brand story. Slack is curious about becoming an all-in-one platform for business communication, but Rocket.Chat is confident they are the all-in-one platform for business communication.
Proving that Codebases Yield to Strategic Stories in Industry Transitions
Slack became dominant because it told a story that wasn’t about its product, but rather the promise for customers that motivated them to grow the market. It’s a story that beat the market’s first-mover (HipChat), has endured against an even better-capitalized competitor (Microsoft), and may ultimately be felled by another upstart in Rocket.Chat. No matter who wins the chat wars, it’ll be their story, not their code base, that paves the path to victory.
Frequently Asked Questions
SaaS sales teams face a version of the alignment problem that compounds with every new hire and every product update. New features get added to the pitch. Different sellers emphasize different capabilities. The consistent story that converts best-fit buyers gets harder to find with every iteration.
The StoryKernel gives every seller in a SaaS organization one precise narrative that does not change with the product roadmap. The market shift at the core of the story remains stable even as the product evolves, giving the team a foundation that compounds over time rather than resetting with every release. StoryEngine then ensures that narrative stays consistent across every seller’s daily output regardless of how many people are on the team.
Learn how the StoryKernel aligns a SaaS sales team behind one consistent story.
Building a strategic narrative for a B2B SaaS company starts with uncovering the market shift that makes the buyer’s current approach untenable and positioning the software as the guide that takes them to a better future. The most common mistake SaaS companies make is building their narrative around features and product capabilities rather than the transformation the product makes possible.
The StoryKernel forces the story outside-in by opening with the Existential Threat the buyer is already living with and building toward the Potential Achieved state the software enables. Redis Labs used this approach to move from a technical database description to a story about the companies that run fastest, which took the company from one paying customer to a nearly five billion dollar valuation.
See how Redis Labs used a strategic narrative to reach a five billion dollar valuation.
Feature parity is the default state of every mature SaaS category. When competitors can replicate capabilities within months, competing on features alone is a race to the bottom. The brands that command premium pricing and win the best customers in their market are the ones that own a story about why the status quo is no longer tenable for their buyer and why their approach is the only credible path to a better future.
Streamline Health used this approach to define an entirely new category called revenue foresight in a crowded healthcare SaaS market, creating urgency that feature comparisons could not produce and ultimately achieving a 37.4 million dollar exit.
See how Streamline Health used a strategic narrative to define a new SaaS category.
