by Phil Phillips, PhD
Contributing Editor
phillips@chemarkconsulting.net
At the core to any strategy, is dif- ferentiation. 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 differ-
ent 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 in-
volved with the “real” business; consistency
loss, just to name a few.
Unfortunately, past successful differ-
entiators, 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 com-
petitive difference & (2) making certain
that everyone in the organization is thor-
oughly 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 whole-
heartedly. A totally transparent, in com-
bination with overall buy-in throughout
the organization will result in dramati-
cally improved quality and efficiency in
communications which, in turn, further
distinguishes it from competition. CW
DIFFERENTIATION:
The Anecdote to a Disruptive Threat Part 1
Differentiation Flow Diagram
