Sunday, December 9, 2012

X Marks The (Differentiated) Spot

X
It does not matter what industry you work in, there is always a company that is held up, and more often than not Benchmarked, as the best. In technology it is Apple, in retail it is Zara, in the 80's Toyota was the automotive doyen and in the airline industry South West Airlines seems to spring to the fore. These companies are defined by commentators as 'the best' with Business Schools and Consultants charging clients fortunes to try emulate the success.

In a recent article in the UK publication, Mark Ritson, examines Microsoft's strategy which appears to merely replicate Apple. Mr Ritson states, "There are three things wrong with competitor orientation. First, it’s impossible to differentiate because you are literally doing what your rival did before you. Second, you struggle to pull off your strategy because it was designed for a different organisation with different brand associations and very different core competencies. And third, there is no guarantee over the long haul that a brand like Apple has the right strategy either. Who knows if following it is actually the best move for the future?"

Such a statement should be of no surprise to followers of Harvard University Professor, Michael E.Porter, who is generally recognized as the father of the modern strategy field, and whose ideas are taught in most business schools around the world. Professor Porter is quoted as saying, "The granddaddy of all mistakes is competing to be the best, going down the same path as everybody else and thinking that somehow you can achieve better results."

In the article, 'Stop Competing To Be The Best', author Joan Magretta articulates Professor Porter's thinking by writing, "Everyone in the industry follows the same advice. Companies benchmark each other's practices and products. Customers, lacking meaningful choice, buy on price alone. Profitability deteriorates...... Nothing is more absurd — and yet more widespread — than the belief that somehow you can do exactly what everyone else is doing and yet end up with superior results."

With this in mind, think about your own position, whether you are a 'one-man-band' or part of a much larger organisation. Do you want to aim to be the best or do you want to be differentiated? One sees it time and time again, be it banks fighting each other based on interest rates, telco's fighting over handset prices or large accounting and legal practices winning business based on fees. Very little differentiation other than price! Trying to create value on price alone is an incredibly difficult strategy particularly if there is an established price leader - just ask all those failed businesses who have tried to compete against Aldi (German), Tesco (UK) or Walmart (US) on the basis of price. Yet it is differentiation that allows Target to co-exist with Walmart.

So what makes you or the business you work in unique? What is that point of differentiation that allows you to create value? Are you following the same path as your competitors, hoping it will lead to a better place, or have you clearly marked your differentiated X on the business landscape? Joan Magretta sums it up best when she writes, "Porter urges a different kind of competition: compete to be unique. Focus on innovating to create superior value for your chosen customers, not on imitating and matching rivals. Give customers real choice and price becomes only one competitive variable."

So how many competitive variables do you have?

0 comments:

Post a Comment

Comments Policy