Differentiation is easy to say, harder to do. Ask any professional services firm.
Differentiation is the strategy of leading with your point of difference. The one and only thing you have that others don't. “Differentiation is the only way to compete,” says Jack Trout in Differentiate or Die, published 2001.
Former Coca-Cola Chairman, Director and CEO, Roberto Críspulo Goizueta (1931 – 1997) said: “If you can’t be different, you might as well be damned”.
Clearly it’s been topical for decades, so you’d think that if differentiation works more companies would do it. However, there’s a gap. The gap between thinking you have it sorted and whether the market (your market) see the difference. A recent article in Harvard Business Review referenced a survey which revealed 80% of managers said they believed their company was strongly differentiated, but fewer than 10% of their customers agreed. The only ‘difference’ here is the space between perception and reality.
As markets change over time the need to differentiate keeps coming up as the only effective strategy. In his book Brand New, Wally Olins writes: “the more the world homogenises and globalises the more it provokes and inspires heterogeneity and individuality”. So the times are new and the challenges are different, but the solution is the same.
So what are the commandments to help your company achieve real differentiation?
1. Know thyself
To differentiate your company must embrace inward reflection and honesty. Without any genuine deep dive into your company's strengths and weaknesses you won’t have a solid basis to make a good decision. Great differentiation requires a brutal honesty to call out what your company is good at and also what it isn't. This company ‘self-reflection’ demands that you know your business inside and out, know your purpose, know your areas of competitive advantage and identify the quirks that only you own. It might be confronting but it’s necessary.
2. Know your competition
Take stock of your competitive position by assessing your competitors’ strengths and their positioning. Look closely at what they do and don't do well. Understand their core customer and market. If you can’t be objective, engage outside help to better ‘see’ your competitor through the eyes of your customer.
3. Know your customer
Are all your customers the same? Do you understand which ones are the best for your business? Differentiation can lead to some customers leaving. Make sure you understand your best customers and what they value, otherwise you'll aim to please everyone and in turn, no one. You want to differentiate in way that brings you closer to your preferred customer and strengthens the relationship.
4. Be committed
Where companies fall short is the ability to follow through on their agreed differentiation strategy. It requires a consistent effort to inject that difference across your business strategy, identity and processes. It needs to flavour everything you do and offer with the CEO's support to make it happen. Then it requires a corporate memory that can withstand movement in and out of the organisation. Look at it like a long relay race and you have to seamlessly pass the baton to the next player. If the process is solid the effort will be less. Differentiation that goes deep into your business will show and be noticed by your customer.
5. Be original
Does your company have a desire to stand out and yet the desire to fit in? You can’t have it both ways and still expect to be effective at differentiating. It’s counter intuitive to follow the pack when you need to separate yourself. Adolescents have this struggle too. They want to look and behave like everyone else while making other moves to draw attention to themselves. Unfortunately a differentiated business needs to show its adolescent days are behind it and exhibit a maturity that comes from knowing who it is. It means being authentic and it's easier than being something you're not.
6. Be courageous
In Purple Cow, author Seth Godin said "being safe is risky". If you sit on the fence nothing good can come from that position. Differentiation is like the medicine your business needs but doesn’t always want to take. It will make you better so long as you follow the prescription. It’s the treatment you have to revisit over the years to make sure it’s still working as it should. If it isn’t, you need to change to a better medicine. Are you ready to swallow that pill?
7. Make the effort
If differentiation was easy everyone would do it and do it well. That has to be reason that so many companies don’t do it, or think they’re doing it but aren't really. It requires effort to determine your point of difference and effort to keep that differentiation alive throughout the business, regardless of the changes that occur over time. To ensure you can make it work, only differentiate in a way that your business can and will deliver. Ensure you have that company commitment first.
Differentiation in a nutshell
When can define qualities within your business that are unique, measurable against your competition, aligned with what your customer wants, are not easily replicable, and can be supported throughout your business, then you have the basis of a solid differentiation strategy.
If you can't follow the seven commandment then the alternative is to search for a blue ocean along the lines that authors Chan Kim and Renee Mauborgne outlined in their book Blue Ocean Strategy. And once your company is successfully swimming in that blue ocean it might not be long before your competitors start to swim with you. At this time you'll need to revert to a differentiation strategy of claiming you were the first to swim in that ocean. A claim no competitor can match - and differentiation nirvana.