Why Differentiating Is Not Enough
Or: Finding Your Courage
In my last post ( Designing Product Attributes ) I introduces the idea of thinking of your offering (product or service ) as small collection of attributes. Specifically :
In a more usable form this translates to :
The central idea is that any offering is composed of two kinds of attributes
- Qualifying attributes — which attract consumers mind. These are the faster, better, cheaper variety of attributes.
- Differentiating attributes — which engage your consumers feelings. These are attributes which talk to how your consumer experiences your offering. This it typically design of your product ( think Nest ) , service ( think Zipcar) or experience ( think Disneyland ).
Qualifying attributes are foundational. They need to be in place solidly before you consider differentiating.
One Size Fits All
The idea extends to individuals, startups or large companies. You can think of your self, your offering or your company being composed of these attributes. This post will focus on companies.
Here I explore a particular nuance — why differentiating will get you there but not keep you there. Let’s jump in.
The Phone Wars
I’ll take the example of the current phone wars. Specifically the uncomfortable position Samsung finds itself : between Apple and Xiaomi. Read more about it here and here .
First up : Samsung
Here is how Samsung started in 1993. The story of how Samsung got here is an amazing story in itself. Don’t give up Samsung ! — If you can make it here, you can make it out of here too ! ( need I say — I have a soft spot for the underdog ? )
Samsung qualifies — remember differentiating attributes gets the attention of your consumer — on quality. It specifies quality as being good enough. It’s specifications, hardware and software are good enough. Not spectacular, but good enough.
This is troublesome :Qualifying attributes are foundational.
You cannot differentiate on weak foundations.
Samsung differentiates — remember differentiating attributes engages the feelings of your consumer —on design. Specifically award winning industrial design. Since 2000 Samsung has earned a total of 100 citations at top design contests in the U.S., Europe, and Asia.
They were not the only ones to tap into the power of design. On the high end of the experience, Apple designed its own hardware and its software. However, there was nothing else remotely as well designed for the Android platform, which at the time felt like it was made for developers rather than professionals.
Beautiful designs, by virtue of their halo, made Samsung’s customer feel good about themselves. Feelings have tremendous pull — because they disable our rational thinking process.
Along Came: Xiaomi.
Then came Xiaomi in 2011.
Xiaomi qualifies —on two separate attributes Quality and Price.
It specifies Quality as high end specifications in contrast to Samsung’s good enough specifications.
It specifies Price as dramatically cheaper. And does several things very efficiently to make this possible. In contrast Samsung does not compete on price. Meaning, they decide to charge what the market can bear.High quality and low price ? If there was a hot button in us, this would be it.
All of us are on the lookout for next shiny object and the next deal.
We are happy to switch at a moments notice for it. This serves Xiaomi well, for now. Remember, qualifying attributes attract the attention of the consumer. And attention is fickle. Easy come, easy go.
This is not to say that efficient management of supply chain and marketing costs is an easy thing to do. However it is something a new startup with sufficient funding can replicate. Business models are not proprietary.
Xiaomi actively does not differentiate their experience — arguably, they replicate ( no wait — are inspired by ) highly desirable designs. Curiously, the take the good enough approach to design, where Samsung took the good enough approach to quality.
Differentiating experiences engages your customer’s feelings. So again, this serves them well — for now. However, they riding on the feelings they did not create. That belongs to the original designs.
As we will see — this is not sustainable.
Everyone’s Connected
Here what happens when Xiaomi enters the field of play : Xiaomi superimposes its qualifying attributes on Samsung. This is naturally uncomfortable for Samsung, since it choose different qualifying attributes and is now forced to take a hard look at them.
Essentially, Xiaomi has forced Samsung to re-qualify on its terms
This is so because qualifying attributes are foundational. If your foundations are weak, it gives your competitor the opening he needs. And affects your differentiator.
Design — Samsung’s differentiator is not relevant anymore. Xiaomi simply clones the best designs in the market. Samsung and Xiaomi are now comparable in their design.
It now about the quality and price of Samsung phones vs. Xiaomi phones.
Pressure, Pressure, Pressure
Basically, Xiaomi has pushed Samsung’s current differentiator — design from the blue ocean to the red ocean. In doing so, Xiaomi has also created the space for a new differentiating attribute.
But first Samsung has to re-qualify. These are better, faster, cheaper attributes and typically companies pick any two.
Better — For now Samsung is re-qualifying on better. It specifies this as better hardware and better materials.
What might the other attribute be ?
Faster — Speed is valuable, but there seems little point in speeding up delivery of offerings people don’t desire. Also, it not something you can build in. It’s something you build from. Like Zara, for example.
Cheaper — is interesting. It would obviously win back some customers. But it would start a race to the bottom. Moreover, because it isn’t something Samsung qualified on in the first place, their business model it not built for it. They would probably lose in a price war with Xiaomi, who’s business model is.
Samsung, then is forced to qualify on quality and design.
Since improvement of quality and design of hardware is ongoing, it likely we see the improvements to quality and design of software next.
That brings in the troublesome question of prices.
Let’s say Samsung phones arrive at the place where their hardware is as good as Xiaomi’s. The software is basically the same on both — Android. The question you expect their customers to ask is :
Why should I pay some much higher for the same experience ?
This means Samsung is being asked to invent a new attribute that will dramatically alter how their consumers experience their smartphones. This also means, they need to make their customers feel in a way they don’t about their smartphones today.
The Experience Economy
I would be oversimplifying the conversation to say what that might be. But there are some clues, from the Experience Economy :
Products are Useful, Services are Convenient, Experiences are Memorable
So Samsung is looking to graduate from the design of products to the design of services, mediated by its products. Car industries have known this for a while. Once products are more or less comparable, service becomes the differentiator.
With the Internet of Things already here, one approach is to design services for which Samsung’s devices become the prerequisite. Like in Zipcar, the cars are a prerequisite, but its the service that’s the differentiator. Oddly, this allows degrees of freedom which simply don’t exist in owning cars. My wife can choose a red Mini Cooper to match her dress to a wedding if she wants to.
What seems certain is that to keep the right to charge high prices, it needs to offer completely new experiences, never seen before.
The question is how ? How do I discover this new billion dollar attribute ?
The System
To do that we need to think of the attributes not in isolation but as a system. If we know the levers in the system, maybe we can figure this out. Here’s how:
Differentiating attributes and Qualifying attributes interact with each other as a system.
We know this because qualifying drives the desire to differentiate. This fuels innovation. When undertaken within the company it is a positive cycle. All the pressure is generated internally . Apple is an example. It’s wasn’t enough to make PC’s. It had to be a Mac.
The desire to differentiate can also be forced from the outside. In which case it becomes a need to differentiate. This is a negative cycle. This also fuels innovation, but also creates a sense of impeding doom. All the pressure is generated externally. Samsung is an example. Xiaomi forced Samsung to requalify and triggered its search for its new differentiator. This is a negative cycle.
Recovering
The first job if in a negative cycle it to flip the pressure from external to zero to internal. This means re-qualifying so that the products are comparable. For Samsung it means getting it product quality to be as good as Xiaomi’s.
This brings them back to zero.
To move into to a positive cycle, they then next to direct this momentum to finding the new attribute which dramatically alters the experience of the phone for their consumers.
Deep Waters
The question is where do differentiators come from ? If qualifiers come from outside, then my submission is differentiators come from inside.
The deepest you can go inside are your values — Why do you do what you do in the first place ? These are deep waters, we seldom venture. But this is what is asked of us to arrive at something truly new.
Differentiators come from knowing your own values. When you operate from your values, you are different.
It’s power comes from the fact that when operating from our values, we become formidable. There is no self doubt since we are being ourselves Other people sense this and it quickly becomes infectious. It also gives us the courage to take on what seems impossible odds.
Positive and Negative Values
Obviously values can be negative or positive . You can choose to pillage or transform. It’s neither good or bad — both have consequences. Negative value are self-limiting : consumers reject it eventually.
- Ever felt you were being forced to walk down a path in a mall ? Did you choose other malls which gave you freedom ?
On the other hands positive values are self-propagating : consumers sense it and recommend it to others.
+ Ever felt the need to talk about how great your Mac is ?
We’ve done some initial experiments in discovering values with startups, that gave us useful results. I’ll post about that soon.
Pushing the Limit
This brings me to an unlikely point. Someone needs to generate this pressure internally. By definition such people are not liked. Primarily because they push the limits of what is possible. And we don’t like being pushed. They appear as tyrants but serve a function — most of us lack the courage to go to the limits of what is possible by ourselves.
We owe a debt of gratitude to those to pushed us to our limits. If it wasn’t for them, we wouldn’t be here. That then is where differentiation comes from — from the desire to push the limits of what is possible in order to “push the human race forward,” make it better for all of us.
This is quite understandably not something everyone is ready to do — it takes a certain quality of intensity and courage to be this kind of a person.
We miss you Steve.
Thank you for reading.
Steve Jobs picture courtesy Detroity2k
