Phil Phillips, Contributing Editor05.09.16
At the core to any strategy, is differentiation. There are two ways a company makes a desired profit: (1) by performing a task considered valuable to its customer base & (2) by being considered different from ones competitors in a manner that is appreciated by that base.
Obviously, within the customers’ perception, the sharper a company’s differentiation, the greater its’ market advantage. An example of this sharp differentiation would be PPG’s E-Coat position in the metal coatings market places in North America. First, PPG is the market leader in this technology (>20 percent market share – M. Porter’s definition) plus, PPG protects its’ ML position by (a) constant and timely improvement innovations; (b) blanket service with highly trained personnel; and (c) total systems management. Another example would be FORREST Paint with its’ high temperature (>500°) coatings & paints market niche leadership position. FORREST focuses on its technical strengths and the fact that their claims of performance meet the stringent high temperature performance tests, while many others do not.
In any dynamic market segment, the problem market differentiators run into is the fact that over time, a differentiated product/service, without judicious upgrades in that differentiation, results in market share loss. The culprit in this scenario is usually internal to the company itself. REASON: the growth created by successful differentiation creates a more multifaceted company . . . . this new complexity, in most instances, provides amnesia . . . . i.e., a disregard for what core elements it has been good at.
This new complexity can be caused by several different or a combination of different influences. It always comes from change which could be the result of: acquisitions; proliferation of services/products; the C-suite becoming more abstract and less involved with the “real” business; consistency loss, just to name a few.
Unfortunately, past successful differentiators, once starting a downhill trend, have a compelling knee-jerk reaction and feel they must thoroughly change their original business model and “reinvent” themselves. Most successful companies do not reinvent themselves through periodic dramatic change strategies. Successful companies learn how to relentlessly build on the differentiation model.
The basic key to a successful long-term differentiation strategy is (1) constant technical/service/market quest for a competitive difference & (2) making certain that everyone in the organization is thoroughly and constantly on the same page.
It is important to note that successful differentiators build their strategies on a few brilliant forms of differentiation, when performed as a system, support and strengthen one another in the business process. Again, it must be redundantly mentioned, success is only as good as the company’s personnel being totally in the know (transparency) while buying into the specific differentiation strategy wholeheartedly. A totally transparent, in combination with overall buy-in throughout the organization will result in dramatically improved quality and efficiency in communications which, in turn, further distinguishes it from competition.
Obviously, within the customers’ perception, the sharper a company’s differentiation, the greater its’ market advantage. An example of this sharp differentiation would be PPG’s E-Coat position in the metal coatings market places in North America. First, PPG is the market leader in this technology (>20 percent market share – M. Porter’s definition) plus, PPG protects its’ ML position by (a) constant and timely improvement innovations; (b) blanket service with highly trained personnel; and (c) total systems management. Another example would be FORREST Paint with its’ high temperature (>500°) coatings & paints market niche leadership position. FORREST focuses on its technical strengths and the fact that their claims of performance meet the stringent high temperature performance tests, while many others do not.
In any dynamic market segment, the problem market differentiators run into is the fact that over time, a differentiated product/service, without judicious upgrades in that differentiation, results in market share loss. The culprit in this scenario is usually internal to the company itself. REASON: the growth created by successful differentiation creates a more multifaceted company . . . . this new complexity, in most instances, provides amnesia . . . . i.e., a disregard for what core elements it has been good at.
This new complexity can be caused by several different or a combination of different influences. It always comes from change which could be the result of: acquisitions; proliferation of services/products; the C-suite becoming more abstract and less involved with the “real” business; consistency loss, just to name a few.
Unfortunately, past successful differentiators, once starting a downhill trend, have a compelling knee-jerk reaction and feel they must thoroughly change their original business model and “reinvent” themselves. Most successful companies do not reinvent themselves through periodic dramatic change strategies. Successful companies learn how to relentlessly build on the differentiation model.
The basic key to a successful long-term differentiation strategy is (1) constant technical/service/market quest for a competitive difference & (2) making certain that everyone in the organization is thoroughly and constantly on the same page.
It is important to note that successful differentiators build their strategies on a few brilliant forms of differentiation, when performed as a system, support and strengthen one another in the business process. Again, it must be redundantly mentioned, success is only as good as the company’s personnel being totally in the know (transparency) while buying into the specific differentiation strategy wholeheartedly. A totally transparent, in combination with overall buy-in throughout the organization will result in dramatically improved quality and efficiency in communications which, in turn, further distinguishes it from competition.
