Strategic differentiation, creating a lasting and positive effect.

Steve Cook, Head of The Craft Strategic Change Consultancy, wrote this insightful and though provoking piece on Strategic Differentiation…

In an increasingly competitive world, businesses need to be able to compete on something other than price.

Being the cheapest is, after all, a deliberate strategy that only one business can successfully realise in any given market. All other businesses that try to compete on price do so at considerable risk to brand, product, profit and business credibility.

In fact, to mis-appropriate a Jerry Garcia quote, even “Being the best of the best is no longer good enough. Now, you have to be the only one doing what you do”.

Differentiation has become something of a buzzword with marketing types, causing true ‘differentiation’ to lose its meaning and impact, with everyone jumping on the bandwagon and diluting the true point behind what the word means in a strategic business, brand and proposition sense.

For us, differentiation is the value and positive effect a business has on the mind and behaviours of its people, investors, buyers, opinion formers and markets.

Real differentiation is about defining, and absolutely believing in, the unique direction you take as a business, why that is important, how you create, sustain, evolve and reinforce it within your organization and then compel buyers to believe in it too.

The reality behind businesses being different has always existed, and it is still true that those who are consistently, beneficially different have a higher perceived value. Its this perceived value that will inform future strategy, create stability, yield greater market share, promote investor interest and drive offer and proposition development. It will also help reduce sales and marketing spend – delivering brands that gain higher, richer market penetration, longevity and growth.

In reality it’s the impact you have that will make you stand out, but it’s about being different and authentically unique, not just looking or sounding different, that will be a substantial contributor to success.

True differentiation is where buyers and brands meet, so there has to be a higher difference now, beyond simply a product or marketing campaign, with sustainable truth behind it. The way people buy is different now, as purchasing decisions are less based on price or transient products or services, and more about a higher meaning – something markets can really care about, align with and want to be a part of.

Differentiation is about creating and sustaining that environment for your buyers. This is a business strategic decision and process because to create the right environment for buyers means creating the right environment within your business. As the old adage goes “truth begins at home” and without every operational, cultural and developmental part of an organization delivering against the belief structures that differentiation creates, the organization is likely to be exposed.

We at The Craft define strategic differentiation as three distinct, rigorous but interlocked fundamentals:

  • Business Differentiation – The business or organization itself, its businesses, operations, territories and brand strategies, its people, culture and leadership and its organizational structure. We sum up our methodologies and processes to define strategic differentiation as Brand Conduct – the way that an organization conducts itself in the world, in totality.
  • Proposition Differentiation – What the organization offers the world, its products, solutions and services and also, importantly; its knowledge, wisdom, credibility and valuable contribution or benefit. It is also how it positions these elements globally, market-to-market, even directly into key accounts and to key stakeholders in these key accounts.
  • Experience Differentiation – Where the business meets the world, its markets and the people in these markets. This is how an organization defines how it will engage these  markets and people consistently and in the way they want, to compel them to interact positively with the business and its propositions.

We find that in these ways, true and valuable differentiation can be defined, developed and activated rapidly for any type of organization operating in any marketplace and under any condition.

And we’ve have successfully deployed the process defined above in markets and industries as diverse as Manufacturing, Financial Services, Telco & Media, Energy & Utilities, Retail and Public Sector and Health. We also find that if the business strategic process of defining a truly differentiated position is fully and rigorously carried out, the value for future long-term business decision making, future proofing, growth and efficiency is profound. All that’s required is the will to engage with strategic differentiation completely.

It amazes us that so many organizations are paying ‘lip service’ and stating that they are both differentiated and customer-centric.

Surely if you are truly these things you don’t need to just state it, you need to prove it by the actions you take and by measuring the success you are having in doing so. So often these phrases and buzzwords are used to paper over cracks. They are the equivalent of saying ‘that’ll do”.

With something as vital as a business survival, stability and growth, strategic differentiation should be taken far more seriously.

The alternative to being believably and powerfully different is to engender indifference – and no-one wants to be responsible for that. Your organization deserves better!

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