The many variables of differentiation

In 1995, I read a book that changed the way I thought about business. The book is now, based on its often repeated principles, a business classic: “The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market” by Michael Treacy and Fred Wiersema. Back in that part of my career, I was fairly solidly focused on how one technology could be better or worse than another – or simply trying to understand the ever changing landscape. But this book stated there are three dimensions that a company can excel in: Operational excellence/cost leadership, product/innovation leadership, and customer intimacy/service leadership. What? Something else other than technology might matter? The ideas were probably theoretical for me back then, because my business experience is not as broad as it is today, but the ideas caught my imagination in a powerful way. I still think about the principles, and I still reference them, even if I might comprehend the nuances much better than in 1995. [Note: the book did warn that you have to have some level of competence in all three, in addition to exceling in one].

20+ years later, we tend to talk about a business model as having many more than just three variables, as abstractly described in:

So by today’s standards, the ideas of Treacy and Wiersema seem quaint in comparison, but their simplicity still capture the imagination. I remain a big fan, though the dimensions they illuminate probably bleed together more in my mind than they once did. For example, in an agile, instant gratification world, I might not associate operational excellence simply with cost/price leadership, notwithstanding that the link between efficiency and those variables remains true. In a cloud services world, I also might not associate technology simply with “product” innovation. I might even go so far as to say, that in today’s world, technology touches every aspect of a company’s excellence.

Well maybe not every aspect? This week I read an interesting article provocatively asking whether your next CEO will be your current head of Human Resources / Talent Management.

The Name Of Your Next CEO Will Surprise You

At the very least, the article suggests, if you don’t feel your head of HR is capable of being the CEO, maybe you have the wrong head of HR; talent management, and the skills that it takes to be a talent manager, being so important to a company. So managing talent is a variable of being a market leader.

While we tend to think of operational excellence as a rigorous set of systems/processes and quality control mechanisms, one article suggests companies should Implement First, Ask Questions Later (or Not at All). I assume there are at least some operations people that might roll their eyes at that suggestion. OTOH, we also can see this sentiment in many IT trends: CD/CI for example.

And perhaps that idea is not greatly dissimilar from the idea a former colleague put forward this week that the path forward is Innovating with Small Bets in a Big Bet World. It’s a good thought, even if, not all battles can be won, or launched, with small bets, but let’s keep our minds open to both.

Making customers really happy, providing a low cost offering, and having the best offering are still very powerful ideas, and as relevant as they have always been. But we also know, there is a great deal of scaffolding supporting these ideas, including, but not limited to:

·     How do you know what makes your customers happy, and how are you measuring it?

·     How will technology disrupt the economics of creating and delivering products and services?

·     What defines the “best” product / service in your market: is it the number of features, the quality of the offering, the pace of evolution, price/performance, various combinations of all these things, or something else completely different?

Focusing on all the possible ways to win obviously has the potential downside of confusing the heck out of everyone, including yourself, and losing focus on what makes you great. If what makes you great is still relevant to customers, prospects, and growth opportunities, then, you are in a happy place. If what makes you great is not as relevant, then considering the many potential variables of differentiation might be worth some consideration. Maybe after consideration of all these things, you will still come back to who you are: a technology leader, an operational leader, a service leader, a talent management leader, a leader in partnering, culture leadership,… or whatever. Maybe you will rediscover yourself, just with a new refreshed, and more relevant portfolio, but leading in the same ways you always have.

What is for sure, as you sit with your “only the paranoid survive” hat on, there are many things to be paranoid about in business, and many angles to be attacked from. That level of combinatorial complexity can be, well, complex. So perhaps Treacy and Wiersema’s words are still as relevant as they always were. Pick something to be good at, and be great at it. Perhaps that is the only way to get above the complexity of trying to be OK at everything, or worse still, great at everything. However, probably still worth doing a business model variable scan once and while. You never know where the next disruption will come from – there are many ways to differentiate, there are many angles to be attacked from.

Ultimately, any good #strategist is going to be keeping an eye on opportunities, and vulnerabilities, across a broad range of business and technology issues.

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