Strategies & Analysis
by Phil Phillips, PhD
Contributing Editor
phillips@chemarkconsulting.net
At the core to any strategy, is differ- entiation. 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.
STARTING POINTS:
Differentiation Flow
Diagram
Historic diagnosing evaluations of past
successes/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 5-10 (the more the bet-
ter) growth investments and ascertain
what they have in common. Determine
your most important differentiators in
these growth initiatives by screening your
judgments through these sets of funda-
mental questions:
• Are they truly distinctive?
•Are they measurable (quantifiable)
vs. competitors?
• Are they pertinent to your core customer deliverable?
• Are they mutually reinforce able?
• Are they obvious to all levels of the
organization?
Once this very difficult process is complete and thoroughly tested at all levels of
the company, one has a formula for focusing on innovation. Innovation in this case
refers to the complete spectrum of business
activity . . . not just technical innovation.
Additionally, it is very important not
only to recognize your differentiation but
also to test the sources of competitive in-
novation and its potential affect on your
key differentia table position. Experience
indicates that when your position is
strong and has a defensible position, even
disruptive innovations will affect only
one part of a business model.
Replicating successful differentia-
tion models is a key and time-consuming
tactic to successful strategic positioning.
Markets are changing faster than ever
experienced in the past. For example,
coatings and adhesives designed for rigid
packaging (metal cans, etc.) must change
dramatically when a rigid package loses
to a flexible packaging design. Those
formulators (and suppliers to formula-
tors) who supplied an interior coating for
a beer/beverage can may lose business if
it cannot bring a new coating/adhesive
system to the flexible beer pouch in this
transfer dynamic. Equally important is
being able to keep up with the flexible
packaging design change frequency ver-
sus the very slow-to-change rigid packag-
ing changes.
Therefore, to be a successful market
differentiator, constant and rapid change
in your markets must be accompanied by
swift learning and adjustment. CW
DIFFERENTIATION:
The Anecdote to a Disruptive Threat Part 2
