What does it mean for a business to be different?
Book review by Andre de Waal (HPO Center): Different, Escaping the Competitive Herd (succeeding in a world where conformity reigns but exceptions rule) by Youngme Moon.
Organisations often find it very difficult to create a genuinely distinctive identity. Youngme Moon, Marketing Professor at Harvard Business School, has come up with an interesting explanation for this: the more fiercely organisations compete with one another in an attempt to bring a different value proposition to the market (a new service, an improved product), the more closely they resemble one another. And the longer this competitive battle goes on, the more difficult it becomes for the consumer to tell the difference between what is being offered by the manufacturers. Anyone who has ever been in an American supermarket will agree that Moon has a point. How many brands of cola does humanity really need?
Moon explains that each new product category is dominated by one or two products, such as Coke and Pepsi for example. As the product category matures and more competitors arrive on the scene there is an exponential increase in the number of product alternatives. It took Coca-Cola 96 years to bring out a first alternative in the form of Diet Coke (or Cola Light as it is known in the Netherlands). Yet in the last three decades we have seen the introduction of Cola Zero, Cherry Coke, Vanilla Coke, Diet Coke with Lime, Diet Coke with Splenda sweetener and Diet Coke Plus (the last three have yet to be launched in the Netherlands). However, Moon warns that product proliferation should not be confused with product diversity. In fact the differences between the growing number of products actually become more and more trivial until it is almost laughable that there are products still claiming to be different. At that stage the product category has reached the point where product heterogeneity is experienced as product homogeneity by the consumer. This is a dangerous point for businesses because the essence of business is the ability to compete and the ability to compete depends on the ability to differentiate. ‘Differentiate or die,’ as the Americans put it. Moon defines this point as a situation of heterogeneous homogeneity: a situation in which there are actual differences between products, but for the consumer these differences have disappeared into an ocean of sameness.
At this point the concept of competitive differentiation essentially becomes obsolete. Moon seeks the reason for this in the huge emphasis that businesses now place on the gathering of business intelligence – all kinds of information about their competitors. As the advances in information technology make it easier to gather intelligence and speed up the process, businesses are able to respond to the introduction of a new product or feature by a competitor more rapidly. So when one airline introduces a frequent flyer program, it isn’t long before other airlines offer something similar. This exerts a powerful impetus towards conformity: what is done by one competitor will immediately have to be matched by another competitor so as not to get left behind. As a result consumers are generally offered more and more but they can obtain the same thing from every competitor. At a certain point they start to take the new offer for granted and begin to demand it. This ensures that all competitors eventually include the offer as a standard feature, at which point they have to start looking for something new so the whole process begins all over again.
Fortunately there are some brands that manage to stand out causing consumers to become loyal fans who will defend the brand to the hilt. These brands distinguish themselves in different ways.
One way is to not offer what competitors are offering and what consumers have come to expect, but to come up with another proposition. Apple, which supplies its MAC without a two-button mouse and its iPhone without a removable battery, is a typical example. Yet the ‘lack’ is outweighed by outstanding design and a superb interface that make Apple fans some of the most fanatical brand advocates in the world. Another tactic is to reduce service to a minimum. IKEA is an example. The store makes a point of doing nothing: no pre-assembled furniture, no standard delivery, little variety in terms of design, no sales staff to assist customers. Yet IKEA has managed to turn the process of buying furniture, which is one of the consumer’s least favourite activities, into a happening: the children go and play in the ball pit while their parents buy not only the furniture but also all of the related accessories which are conveniently displayed nearby, and after that they can go and catch their breath in the restaurant. A more intriguing tactic is that of not being available. The trendy Japanese clothing brand A Bathing Ape (BAPE) never advertises, it is only sold in the back streets of Tokyo, and it usually only produces one version of a garment that is only sold for a short period (so if you see someone wearing a BAPE shirt and you want one, you know you’re too late). Despite all this, it is the most highly coveted clothing brand among fashion-conscious young people. Moon gives other examples, which include the usual suspects such as Google, Harley-Davidson, Benetton and Red Bull, and explains why their approaches work. Yet these are not simply banal stories, because Moon perceives and describes these brands with a fresh eye.
The nice thing about Different is that Moon has written up the results of her research in her own style. Rather than using the standard business language used in virtually all management books, she employs more personal language that allows plenty of scope for anecdotes from her own life. She often recounts these anecdotes with a touch of humour, as can be seen in the following passage, in which she describes her experience of the luxury beds that have now become a standard feature in all expensive hotels, after one such hotel chain, Westin Hotels, introduced the beds as a novelty.
(p. 68): I stay in a lot of hotels and I have to say, the last time I stayed in a hotel in DC, I needed climbing equipment to clamber over the mountain of mattress toppers, comforters, duvet covers, pillows and back rests that lay on the gigantic bed that dominated my room. There are moments when I am ashamed to be living in the 21st century. This was one of them.
By writing in this style Moon ensures that Different is an enjoyable read. She also ensures that her book will stand out from the plethora of other management books, which is quite an achievement.
The question is: besides presenting a very good critical analysis, does Moon have any suggestions for improvement? At the beginning of the book she covers herself by informing the reader that Different is not a ‘How To’ book. She also says that she does not intend to present ready-made solutions. And she is as good as her word. But just before I am about to close the book with a slight feeling of disappointment, in the last chapter she mentions three criteria that she believes the brands of the future will need to meet in order to stand out. Firstly that the brand will have to offer something that is difficult to obtain. BAPE is an obvious example. Secondly the brand will need to be part of a larger idea: it will need to tie in with a new way of working or living. By purchasing the brand the consumer will be able to show that they are different. Think of Harley-Davidson: once a brand favoured by motorbike gangs, it now enables middle-aged men (and women) to feel like a rebel again. And thirdly the brand will need to be humane. In other words, it will need to cater for the complex human psyche so it is better able to meet people’s needs. The brand Dove, which now stresses the fact that women don’t all have to be skeletal in order to be perceived as beautiful and attractive, is a good example.
Moon points out that differentiation is essentially a different way of thinking, a different mindset, a commitment to engage with consumers in a different way, a way that treats them with respect. Key qualities needed to achieve this are imagination and creativity, both of which have become increasingly scarce in the modern business environment. If Moon is right, organisations that manage to reinfuse their core competencies with imagination and creativity can look forward to a glorious future.
DR. ANDRÉ DE WAAL MBA IS ASSOCIATE PROFESSOR AT THE MAASTRICHT SCHOOL OF MANAGEMENT AND ACADEMIC DIRECTOR OF THE HPO CENTER (WWW.HPOCENTER.COM).
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