As the fable goes:
A thirsty Stag went down to a pool to drink. As he bent over the surface he saw his own reflection in the water, and was struck with admiration for his fine spreading antlers.
My antlers make me different from most other creatures in the forest, the stag thought to himself. Few animals are as handsomely adored. I wish the rest of me was so well put together. These skinny legs and little hooves are no match for such a noble headpiece, he felt nothing but disgust for the weakness and slenderness of his legs.
While he stood there looking at himself, he was seen and attacked by a Lion; but in the chase which ensued, he soon drew away from his pursuer, and kept his lead as the ground over which he ran was open and free of trees. But coming presently to a wood, he was caught by his antlers in the branches, and fell a victim to the teeth and claws of his enemy.
“Woe is me!” he cried with his last breath; “I despised my legs, which might have saved my life: but I gloried in my horns, and they have proved my ruin.”
The moral:Few people appreciate the very things that are most useful to them or What is worth most is often valued least.
According to Noonan, what do you think differentiates your firm from the competition? Differentiation means offering your customers something that is unique and valuable above and beyond lower prices. In fact, successfully differentiated firms can demand premium prices for their products and services, and expect customer loyalty during business downturns.
A firm can differentiate itself in many ways; FedEx developed an integrated logical system that provided unheard of reliability in small parcel delivery. Firms can differentiate themselves anywhere along their product lines. Steinway makes pianos using high quality raw materials of the finest possible wood. Michelin uses high grade rubber for its tires. Estee Lauder when it comes to distribution, uses only select outlets for its products. Rolex watches, Rolls Royce cars, Gulfstream jets and Porch cars sell prestige because that is what their brands portray.
Porter offers eight steps to help organizations develop differentiation strategy:
- Determine who the real buyer is: – Firms, institutions, and households don’t buy products – people do. Talk to them, and find out exactly what they value.
- Identify the customer value chain: – Help your customers lower their cost or raise their performance. Examine their buying channels.
- Determine purchasing criteria priorities: – Is it utility? Then create value. Is the value there? Then help your customers uncover it.
- Assess potential sources in the value chain for uniqueness: – look at procurement, human resources, raw materials, operations, marketing, sales, and service.
- Determine the cost of differentiation: – Differentiated firms deliberately invest more in certain activities to become unique.
- Choose those activities that provide the most value: – It’s likely that your company may have to alter more than one of its activities to create that value.
- Test the differentiation for sustainability: – Can competitors easily imitate your lead? Do customers perceive the value to be long-lasting? If not, the differentiation isn’t sustainable.
- Reduce costs in activities not associated with the differentiation: – If there are facets of your product that customers don’t value, aggressively cut costs in those areas.
Differentiation is hard and sustaining it is harder. Like the saying goes: “the biggest enemy of success is success”. The company that understands the facets of its products and services valued most by its customers is the one least likely to end up like the stag.
Business Moral: Help your company become unique at something that your customers truly value.
Noonan, David. Aesop & the CEO: Powerful Business Insights from Aesop’s Ancient Fables. Nelson Books