Positioning in the Age of AI
I’m often asked how a company will know that its positioning needs to change. My answer is that there are categories of changes that will require you to shift your positioning:
Your product changes - unlocking new value for existing or potentially new customers
Your competitors change - closing the gap or leap-frogging your capabilities in a way that changes what you can claim as “differentiating.”
The market changes - This can include regulatory changes (that force buyers to prioritize capabilities differently), economic changes (where companies shift from growth to cost-cutting, or the reverse), unpredictable world crises (Covid, war, weather catastrophies), and lastly, huge technology shifts that cause customers to change their priorities (5G, the shift to the cloud).
AI technologies and capabilities are changing all three of these simultaneously, and companies are scrambling to shift their positioning as a result. In the past two years, every product I have worked on has either been a new, AI-native offering, a product that has been significantly re-architected with and for AI, or is facing an existential threat from one of the former two categories of products. March 2020 - the dawn of the global COVID outbreak - was the last time I saw so many companies abruptly struggling with their positioning. I think the impact of AI on positioning is potentially much more potent.
Here’s what I think is important when you are working on positioning right now, in the middle of an AI revolution.
1/ A Point of View About the Future is No Longer Optional
If you think navigating the changes happening in tech right now is difficult for your team, imagine what it’s like for customers who do not spend all day immersed in technology. Indecision, confusion, fear, and extreme risk avoidance - these are the biggest roadblocks we have to closing B2B deals right now. Customers are confused and wary. What they want from vendors is a vision of the future that makes sense for them and their business. They expect vendors to have opinions - on where the tech is headed, on what is strategic and what isn’t, on what groundwork they should be laying now in order to plot a path to the future. If you can’t give them a clear roadmap to get from where they are today to where they want to be, someone else will.
Three years ago, companies were getting away with telling customers that things were changing and they would change too - over time, that is. Today, customers want answers. Is your SaaS product going to be primarily frontended by a chat interface, agents, humans, or some combination of the three? Will your AI-native application replace SaaS applications companies currently use? How and when? Do you believe companies will create custom agents and applications? Who will do the work? What applications will go first? What does that mean for your install base and their business? What are the upsides of that future? What should they be doing today to get ready for that future? If you don’t have a strong opinion on these questions, you risk looking as lost as your prospects feel right now. Positioning based on a strong hypothesis of how the future will look wins in this market.
2/ Position Against Your Real Competition (But Plan for Future Competitors)
When the competitive landscape is shifting rapidly, it’s natural for companies to become overly fixated on fast-moving, well-funded potential competitors that seem poised to replace a wide swath of in-market products. However, what matters in positioning is not who COULD compete with you or who WILL compete with you in the future. What matters is how prospects are currently building a short list and who you really need to beat to win a deal. The competition that you need to position yourself against lives in the heads of your prospects, not on the pages of LinkedIn.
There are nuances to this that I think make holding the line on this extra tricky at this moment. First, you will need to articulate a vision of where you think the market is headed. If you are a publicly traded company, you will be communicating that vision to the markets. If you are a private company, that vision is what you are pitching to potential investors. However, your marketing and sales team should not be positioning against fantasy competitors that prospects don’t consider (at least not yet).
Ignore your future competition in your positioning, but never in your roadmap
Secondly, even though you aren’t seeing a particular competitor on short lists yet, if you are convinced they will, you will need to be building a product that can win in that future match-up. I’m seeing this in SaaS businesses that worry that, in the future, some customers will use a vibe-coding tool to replace their packaged software. In many of those cases, customers aren’t vibe coding at all today, so companies can get away without positioning against those tools. However, in many cases, teams are working hard to ensure that future versions of the product are well-positioned to win against vibe coding. Reminder - it’s perfectly fine if you are positioning one way today but building toward a different positioning in the future.
3/ Hype the Heck Out of the Future (where you can get away with it), but Connect it With Today
In technology, when there isn’t much change happening in a particular industry, we have to be very careful not to over-hype the future. Fixating too much on the future will often delay deals (customers will wait until you’ve delivered the cool stuff you’re talking about) or scare buyers off (this seems like too much change and risk all at once).
The exception to this rule occurs during periods of great technological upheaval. We saw this years ago in the shift to the cloud. Many companies that were not yet fully on the cloud (and were certainly not “cloud-native”) spent a lot of time reassuring prospects that they were planning a move to the cloud and, in some cases, a complete cloud re-architecture. Customers felt reassured that they weren’t closing off the ability to do things in the cloud if they chose this particular non-cloud technology today.
In times of great tech upheaval, we can hype the future - but be careful
Today, we are seeing something similar with AI technology. Two years ago, many non-AI-native companies were quick to bolt on a chatbot or adopt some surface-level AI technology to reassure prospects that they would not be left behind in an AI future. Fast forward a couple of years, and that simply isn’t enough. The market today has moved on to Agent technology as the next big wave, and traditional software businesses (particularly SaaS businesses) will need to discuss how they intend to support a future in which at least some work is done by agents rather than humans. Like I pointed out in the first point, if you are not a fully AI-native company, you will have to, at a minimum, have a point of view on what the future looks like for software like yours. Increasingly, you will have to demonstrate how your product works in a world of agents (even if your customers aren’t exactly ready for agents quite yet).
What this means is that you will have to walk the very thin line between hyping what your offerings can do in the future and convincing prospects that there is value in making a purchase today. This will likely mean you need to describe a pathway for customers from today to the future and be clear about the value to their businesses at each step along that pathway. This can be very challenging. Tilt too far into the future, and your deals will get delayed. Stick too much with what you have today, and you risk looking like a legacy offering without a future.
Don’t Let Your Team Get Distracted from Reality
In an environment where technology companies are rewarded for hyping a future that hasn’t happened yet, you need to be very careful that teams working on positioning don’t get caught smoking their competitor’s marketing. Product and marketing teams need to keep a very close eye on the current market capabilities vs. what is still under development.
4/ It Has Never Been More Important to Understand What Customers ACTUALLY Think
In times where markets are very noisy, it can feel like so much is changing so quickly that marketing and sales teams could never hope to keep up. The reality is that different types of prospects shift their attitudes and purchase behavior in ways that are often faster or slower than we could predict. The best signal we can get on how we should shift our positioning as markets shift is going to come from customers themselves. If you are an established business, there has never been a better time to develop formalized ways to gather feedback from prospects and customers to inform your positioning. Here is how some of my clients are doing this:
Customer advisory boards - and do not be afraid to shake up the membership in these boards if the shifting market sands indicate there is a new type of customer you should be listening to
Win/Loss analysis - few companies do it, but those that do often report it serving as a type of early-warning alert that things are changing in your market. Companies are often obsessed with losses, but I’ve found the wins more relevant to positioning work.
Executive Account Assignments - several of the larger companies I have worked with have a formal program where anyone with a VP or above title (across every function - not just marketing and sales) is assigned a large account and is expected to do monthly calls with them. These relationships are often very valuable for building the kind of trust that allows a customer to tell you the real truth about what is happening in their business.
The Big Principles Aren’t Changing, But the Little Stuff Can Kill Your Positioning
Interestingly, the main positioning principles don’t change when there is a big shift in technology, as we are seeing with AI. That said, there are enough changes in the nuances of what we need to pay attention to and what we can get away with that honing your positioning in this environment will feel extra challenging.
I am doing a couple of talks in the next few weeks. The
Toronto Product Con in Toronto on Thursday, May 28th
Mind the Product in London, UK on June 16th
If you are around at either of these events, come and say hi!
Lastly, I might not have mentioned that I dropped a 6-episode mini-season of my podcast for the new edition of Obviously Awesome. Check them out here.
Thanks for reading!
April
100% agree.
The confusion is between what a company actually sells and the vision it wraps around it. The vision imight be compelling and something to rally around, especially at the exec level, where people are actively investing (time and money) in it. They naturally want to believe customers will too.
But customers don't buy a vision. They buy to solve a problem that exists today, with confidence that what they choose will keep pace with whatever comes next. That gap between "solving now" and "ready for what's coming" is where the brand does its real work.
Lead with the vision, but close on the problem.
The gap between what feels urgent inside a company and what’s actually urgent to customers is very real.
I’ve seen this a lot with early-stage startups. The VC echo chamber can start shaping the company’s positioning before there are strong market signals behind it.
“There’s an X revolution happening.”
“AI is eating SaaS.”
“Buyers are moving this way.”
Those ideas can become internal truth pretty quickly, even when customer conversations haven’t validated them yet.
The issue isn’t that companies are paying attention to market shifts. They should be. The issue is when investor and peer narratives become a substitute for customer evidence.
That’s when you end up with a story that sounds current to investors, but doesn’t match how buyers actually think, prioritize, or build their shortlist.