Differentiate or Die (Jack Trout)
A short history of business and a quick reality check.
As the late Steve Paul Jobs said “You cannot connect the dots looking forward. It is by looking backward that we make sense of the world in which we live”. The only way we earn the moral right to venture into the future is by establishing context of where we are. We have to find our true north. Let us examine the history of business as it relates to the interplay between production and marketing (two crucial domains) that has shaped the last 100 years of business and our world. The objective of this essay is to inspire this esteemed reader of the imperatives of business success in our post modern world.
In the pre-industrial era, businesses grappled mainly with the problem of manufacturing. The nature of markets were basically supplier-led. Those who owned production pretty much determined the prices. Ability to determine sales price unilaterally is a big deal. In those days, customers had no choice than to be loyal to a company because there were few products to start with. Marketing was also pretty easy. You open shop and wait for customers to come. Surely, they came.
Fast forward to the industrial era and things began to take a new turn. There was a sudden boom in manufacturing and business would never be the same again. Businesses now had to worry about distribution. This is perhaps the beginning of the customer’s era. When there are alternatives, pricing ceases to be an easy thing. In that dispensation, customers began to enjoy the power of choice. They could infact boycott a product because they now had a choice. This era led to a massive turn in marketing. Manufacturers had to figure out not just what to produce, how to produce, for whom to produce but essentially worry about competition. Marketing would never be the same again.
Many have said that we are in the post-industrial era driven by upsurge in information. They call it the information age. The narratives on this are a dime and a dozen. In this era, almost all the factors of production are now commodities. Marketing (making things that people want and making them want it) has changed tremendously. The marketing budgets of many organisations have increasingly grown without any assurance of growth in revenue and/or profit. Startups are not left out of this knottiness, they have to figure out how to compete in a saturated world of cut throat competition. The world is now uber-interconnected meaning that many businesses now have access to global markets and supply chain.Thanks to the internet and the ever changing technology landscape. This is good news and bad news because traditional industries are basically disappearing. Its difficult to separate things. There are no walls anymore. The world is officially flat!
The curse of sameness.
Times they are changing. Things are not quite what they used to be. Technology is disrupting channels, industries and indeed corporations. In a world stricken with a curse of sameness, conformity is unwise. The antidote to enterprise failure is radical differentiation. As a rule of thumb, 8 out of 10 new businesses fail under three years. According to Gartner Research, “Eighty percent (80%) of new product launches fail to deliver on the goals. The fail. The reason for this may not be unconnected to the flood of “me-too” products. It is a tragic reality today that most products are developed as a response to competition. Many have burnt their hands doing this (Think Blackberry, General Motors e.t.c). The marketplace is flooded with a superfluity of undifferentiated offerings. Most attempts at differentiation are either too myopic or lacking in innovation (not creativity). This essay is not intended to be a strategy play-book but if it achieves anything, I hope it challenges this reader to make a deliberate effort to escape this entropy. The road to hell is paved with proliferation.
If we agree that the world has become noisy and that businesses especially new up-starts and entrants cannot afford to waste resources by competing, what then can we do about it? The answer to commoditisation is radical innovation. Let us examine high level principles that could be useful in building a product, service, company, solution that matters.
- Innovate by all means. Innovation has become a cliché. It is a thoroughly abused concept that needs re-definition. For the records, innovation is not the same thing as creativity. Creativity is necessary for innovation to occur. To innovate is to create something of immense value. It is not incrementalism. Far from it. Innovation is about solving existing problems in new ways. True innovation is not about increasing the features of a product marginally. The problem with most innovation programmes is that the scope is often to narrow. Product innovation is just one possible route. There are other sustainable routes to create value. According to Doblin; a Deloitte company, there are at least 10 types of innovation. The entrepreneur of today must build competencies in Business Model Innovation
- Build a brand. This (brand), is another abused word. A brand is not a logo. A brand is not a product. A brand is a strategic and culturally relevant idea. This definition strips to bare what is essential. People don’t buy WHAT we do but they buy WHY we do it (Simon Sinek; Author, Start With Why). To overcome the curse of sameness, the entrepreneur must commit to building a differentiated point of view. Coke A.K.A Coca Cola is a remarkable brand that has lasted over a century. In some territories, Coke has become the defacto category name to the extent that when consumers request for Coke, they might actually mean that they want Fanta or even Pepsi; its arch rival. The reason why Coke is still relevant today is because it has become a cultural symbol. Coke is not just a beverage. The value proposition of Coke is Happiness; this is purely altruistic. Many of the celebrated brands pretty much share the same Coke dynamism. They are fundamentally love marks.
- Tell a story. Human beings are storytelling organisms. The difference between man as a biological organism and other mammals similar to him is the ability to record and re-tell his story (history). Marketing is not about flashing products and services in people’s faces. Its not about throwing stuffs at people. Its not about about intruding into their privacy sending bulk emails/sms hoping that they read them (most of which they delete). Marketing is dating. You don’t propose marriage to a random visitor you meet on the road. Tales of love at first sight are but a tale. If you or your company must be memorable, you have to tap into the neurological, emotional and vulnurable side to people. They want to be loved and more. Africa is a particularly ripe ground for brands that want to use stories to win.
There you have it, the story of business in the last 100 years; the fundamentals and its ever evolving nature. It is not enough to just start something. Doing business in our noisy world is about daring to be different. It is about creating things that matter. Now, go and start something that matters.