Are your services dominant or submissive?

A lot of business relationships exist where one side is much more powerful than the other.  Walmart's relationship with their suppliers is a text book example - Walmart is definitely the dominant one: "Here's how you're going to work with us and, if you don't like it, find someone else to sell to."  And, their suppliers definitely do what Walmart wants, no matter how painful: "Thank you sir, may I have another."

What's interesting is that this exact same pattern appears with services. People that build services seem to naturally either take a role of assuming dominance (assuming they are the gorilla) or one of submission (assuming they need to cater to the whims of each of the consumers of their services).  Of course, there's nothing holding back the exact same service provider from going down either one of these paths - in the end it's all a state of mind really.

The important question, though, is whether one is better than the other?

The advantage of catering to the whims of consumers is often that it becomes easier to get a hesitant consumer on board.  That's a good thing... but at what cost?  If you customize and tailor for each and every consumer, you'll never be able to scale up to broad usage because you'll spend too much time juggling all the customizations and variations every time you want to improve the service.  But, if your target is no more than 3 consumers for your service, then this role is probably optimal.  If you're going to go down this path, it's almost better to think of your role as one of professional services though - because that's what you're really doing.

On the other hand, playing the role of a gorilla means that some consumers will turn away.  But, that's a good thing.  You didn't want them anyways.  Why?  If they view that your service is valuable enough to put up with the rules you place around it, then you've got a relationship that really works - they really need your service, and you get consistency that gives you economies of scale you couldn't get otherwise - allowing you to add more value more quick to benefit your consumers.

Of course, the gloom-and-doom crowd will ask "What if you end up turning away everyone?  What if no one signs up for your service?"  This likely means it was of marginal value to begin with.  Sorry, but that's the truth. You probably need to rethink the service to provide more value.  But that's also a good thing - it makes it harder to get caught in a holding pattern of mediocrity.

There are a lot of historical parallels to learn from.  For example, take application hosting - it first developed using a model that was catering to the whim of the customers.  For example, with Siebel hosting, any Siebel customization a customer wanted you could get. What people ended up finding was that the value proposition didn't hold up as a result.  There's no such thing as a free lunch.  Contrast today's SaaS world, with vendors such as salesforce.com:  Salesforce.com sets strict rules and limits on how you can integrate, what you can customize, and what quality of service they offer - and if you don't like it, you can go buy Siebel.  This is a value proposition that works for the long term because it creates an economy of scale that benefits salesforce and their consumers.

Why is it so hard to act dominant?  The natural reflex is to never want to miss an opportunity, and to please everyone.  But, by pleasing everyone, in the end you please no one.  So, take a cue from successful service providers: Be confident. Be dominant.  Be a gorilla.  Say no.