Part 4 - Combining Horizontal & Vertical for big plays

Welcome to Part 4 of our Network playbook. Today, we're diving into the big leagues - combining horizontal and vertical scaling. This is where things get really interesting, and potentially, really profitable.

I’ve held this back because it’s the sort of thing entrepreneurs get (overly!) excited about. But we need to only deploy when ready.

Let’s get started

Two Approaches to Combined Scaling

When we talk about combining horizontal and vertical scaling, there are two main approaches.

The first is Horizontal then Vertical.

This is the more straightforward approach. Here's how it works

• First, you push into a new market and build a new audience (horizontal scaling).

• Then, you scale vertically down your sales funnel, introducing initial free products, low-cost offerings, core products, and premium services one by one.

This approach works well when your new audience has the same problems and values the same solutions as your original audience. For example, if you started with an audience on TikTok and then expanded to Instagram, there's a good chance that your Instagram followers will be interested in the same offers as your TikTok followers, especially if your content strategy is consistent across platforms.

The second approach is what we’ll mainly talk about today as it’s more complex (and exciting).

Horizontal and Vertical Simultaneously

This is the more complex, and often riskier, approach. It involves moving into a new market with a new set of products or services tailored specifically for that market.

For example a personal example. I currently license my AI workshop kit to individuals - a B2C market. I’m considering jumping horizontally to a new market by selling directly to large corporations' training departments so they can train internally using the materials. This move would require a whole new set of products/services - a new vertical scaling.

This type of move is high risk, high reward. I’d be dealing with a new market AND a new offer, essentially rebuilding my entire funnel with a totally new audience.

It’s not something to be attempted without planning and (potentially) partnerships. (Hit me up if you work in the corporate training world by the way - still exploring options here).

The High-Risk, High-Reward Strategy

These simultaneous horizontal and vertical moves are the kind of scaling strategies you should only consider if you're in a strong business position with the funds to make a big move. They require confidence, resources, and a willingness to take significant risks.

You have to be OK with it not panning out.

Ironically (or perhaps not), these tend to be the sort of moves new entrepreneurs often make!

They'll take big swings with new products for new markets, and if one thing doesn't work, they'll retool entirely and go for something totally different. While this approach can lead to big rewards, it's a difficult play when you're just starting out and don't have the resources to weather potential failures.

So, how can we identify these potential big plays - moves that combine horizontal and vertical scaling by finding a new market and deploying a new offer just for that market?

Let's use a prompt to help generate some ideas

You are an AI assistant specialising in advanced business growth strategies. Your task is to help the user identify potential "big play" moves that combine horizontal and vertical scaling simultaneously. Use the following context and framework to guide your response:

Context:
Combined horizontal and vertical scaling involves entering a new market (horizontal scaling) with new products or services tailored for that market (vertical scaling). This is a high-risk, high-reward strategy best suited for businesses with strong market position and financial resources.

Instructions:
1. Ask the user to provide the following information (if not already given):
   a. Description of their current business
   b. Their primary market and target audience
   c. Their current sales funnel (products/services at different price points)
   d. Their business's strengths and unique selling propositions

2. Based on the provided information, suggest 3 "big play" moves that combine creating a new offer for a new market. For each suggestion:
   a. Identify a new market to enter (e.g., B2C to B2B, agency to client, institutional to government)
   b. Propose a new set of products/services tailored for this market
   c. Explain how this move leverages the business's current strengths
   d. Describe the potential benefits of this move
   e. Outline the main risks and challenges

3. For each suggested move, provide:
   a. An estimated timeline for implementation
   b. Key resources or capabilities needed
   c. Potential partners or collaborations to consider

4. After presenting the ideas, offer guidance on:
   a. How to evaluate these opportunities
   b. Initial steps to validate the potential of each move
   c. Warning signs that might indicate it's not the right time for such a move

This prompt will help you identify potential "big play" moves that combine creating a new offer for a new market. Remember, the move doesn't have to necessarily be bigger. It just means opening up new unchartered frontiers.

When to Consider This Strategy

Again, I want to emphasise that this is an advanced tactic. It's best suited for businesses that have:

1. Achieved product-market fit in their current market

2. A strong cash position

3. The ability to weather a potential failure without the company going under

This is a high-risk, high-reward strategy. But when you are feeling hungry for expansion this is how you take the business up a gear.

What's Next?

In our final part tomorrow, we'll be looking at acceleration strategies, including funding and financing options. We'll explore how to fuel your scaling efforts using additional resources.