Differentiation:
The Anecdote to a Disruptive Threat
The core of any
successful strategy
is differentiation.
by Phil Phillips, PhD
Contributing Editor
phillips@chemarkconsulting.net
There are two ways a company makes a desired profit: (1) by performing a task considered valuable to its customer base;
(2) by being different from competitors in a
manner that is appreciated by that base.
From a customer’s perspective, 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 in North America. First,
PPG is the market leader in this technology (> 20
percent market share – M. Porter’s definition).
Plus, PPG protects its market leading 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 and
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.
The reason for this is that the growth created by
successful differentiation creates a more multifaceted company. This new complexity, in most
instances, provides amnesia, that is, 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;
and consistency loss, just to name a few.
Unfortunately, past successful differentiators,
once starting a downhill trend, have a com-
pelling 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/ser-vice/market quest for a competitive difference,
and (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 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.
Starting Points: Differentiation
Flow Diagram
Historic diagnosing evaluations of past successes
and failures are not much fun but it is an exercise,
properly addressed, that can make a great deal of
sense in building a differentiation model.
Take the past five to 10 (the more the better)
growth investments and ascertain what they
have in common. Determine your most impor-
tant differentiators in these growth initiatives by
screening your judgments through these sets of
fundamental questions:
• Are they truly distinctive?
