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A contrarian buzzword - Don't Be Unique, Be Simply Better

«Think Inside the Box»

An interview with Séan Meehan, professor at IMD in Lausanne
By Jorge Nascimento Rodrigues, editor of Gurusonline.tv, September 2004

Think Outside the Box is terrific in PR, marketing and advertising if you are ALREADY leading the market in delivering generic category benefits. Be unique, with an unique value proposition, as the motto says, is great, but, the trivial thing is different: for most businesses in most markets, the FIRST PRIORITY should be to become simply better than the competition at giving customers and clients what matters to them most. So, be realistic, guys! It's the Client Routine Needs fulfillment that matters! Not the cosmetics. So, first, Think Inside the Box. IMD Professor Séan Meehan is profoundly impressed by Toyota - the lesson from this Japanese "keiretsu" it's simple: exclude the gimmicks and pursue the essentials, always.

Séan Meehan with Patrick Barwise just published at Harvard Business School Press "Simply Better". They presented the book at Sloan Management Review this Summer (2004). At "Contraria" section, Séan and Patrick wrote a summary of their new book, and pointed out: "Customers rarely buy a brand because it offers a unique feature or benefit". Also, in the Summer edition (2004) of Business Strategy Review, London Business School magazine, the authors presented "6 Rules to Become Simply Better".

Séan is professor of Marketing and Change Management at IMD, the European Business School at Lausanne, Switzerland.


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The 6 Trivial Rules of Simply Better
Rule 1: Think Category benefits, not unique brand benefits
Rule 2: Think Simplicity, not sophistication
Rule 3: Think Inside, not outside the box
Rule 4: Think opportunities, not threats
Rule 5: Exception - Ok for creative advertising, forget Rule 3
Rule 6: Think Immersion, not submersion


Since Michael Porter's competitive strategy in the 1980s we listen from the consultants that differentiation and uniqueness is the secret for business success. Even more: discover a niche of uniqueness is a true receipt for excellence. What's wrong with this "incumbent" idea?

The problem isn't Porter's idea per se, rather the pride of product oriented managers that are so excited about adding the latest gizmo, or frankly irrelevant feature just because it differentiates their offer (literally) from the competition. The problem is that customers often don't care about this feature. Rather, customers, have some basic expectations, of each product or service they purchase. These are, what we call, generic category benefits, and related to the functionality of the product or service. Differentiation or uniqueness, at the cost of not providing this, can be a costly error, because you land up not giving the customer what really matters. Differentiation must be related to something that truly provides value and matters to customers.

Can you give examples?

Orange, for instance, has practiced this since the early 1990s and has been providing its customers a reliable, high quality experience with a good value for their money. Today, as the leading mobile phone services company in the UK, it has won the J.D Power and Associates mobile telephone customer satisfaction study for four years in a row by focusing on the generic category benefits. It pioneered per second billing, a simple rate plan, a money back guarantee, and free itemized billing at a time when customers had an extremely negative image of existing players in the industry. Orange anticipated the customer's needs and exceeded their expectations. The hotel group, Ritz Carlton, is another organization that inculcates its service philosophy into every aspect of its operations. By studying top performers in other organizations, it develops an ideal profile for each position, hires upbeat and ambitious people and thereby incorporates, into its values and philosophies (known as Gold Standards that are published on its website), a service level that not only commits to compliance but also anticipation of its customers needs. These are but a few of the examples of companies who truly believe and operate on the credo that the customer is king. However, in today's world, this is, unfortunately, differentiation from the pack.

«As Toyota, the world's most profitable automotive company puts it, the trick in the offering is 'excluding gimmicks and pursuing the essentials'.»

In Marketing we listen people saying that unique features and special and sophisticated benefits are the way to "capture" and fidelize clients. Your research points out that we can be "salient", standing out from the crowd, without offering anything unique. Can you explain this paradoxical conclusion?

As already pointed out, the first priority should be to satisfy the basic functionality of the core product or service offering. As Toyota, the world's most profitable automotive company puts it, the trick in the offering is "excluding gimmicks and pursuing the essentials." Cemex provides this in its cement offerings to the construction industry, Tesco provides this in the grocery store business, and Ryanair provides this to those looking for really cheap air travel. Each of these companies has chosen to be the best in providing the generic category benefits, those that customers expect most out of their interactions and experience with these companies; they are "Simply Better". Performance on these basics can be so varied as to dominate any other sources of differentiation on which competitors might tend to position themselves. And as these companies continuously refine their offerings, customers see them as different, different as in simply better, and not necessarily with a differentiated or a unique offering.

If reliability and utilitarian upgrades are enough, how we innovate, even if changing of the rules of the game is rare?

Innovation is life for our exemplary companies. We provide a host of examples of how Orange was the first to bring specific innovations that customers really cared about to the market year after year. They addressed customer needs by broadening the basics, i.e. setting new standards. Tesco, one of the most successful food retailers, beat all comers in showing them how to take advantage of the internet developments of the late 1990s - unlike Webvan, it did NOT think out of the box, it just used the web interface to enhance the fulfillment of the most basic category benefits: good range, good price, on time as promised. Tesco.com is now the world's most successful online grocer. The lesson is you innovate by focusing on the generic category benefits and thinking about how you can nail them better and better.

The lesson is you innovate by focusing on the generic category benefits and thinking about how you can nail them better and better.

Evolution in the continuity it's better than out of the box revolutionary thinking? Or it depends on the context?

Thinking outside the box is too often an excuse for sloppy thinking. Yes of course, quantum leaps are good, but only if in the right direction - one must protect the business system and the customer value proposition to the target market. And in the process of doing so, accept that there will be difficult trade offs to make while choosing what and how to bring to market. Ryanair is clear in articulating its customer value proposition - a low airfare, a safe flight, normally on time. It does not promise food or accommodations in case of a delay Ryanair has not thought out of the box. It has simply developed a business model that clearly defines its offering and the value to the customer. And the company strives to consistently deliver this. Its customers recognize this and so does the media. In a recent UK article, the columnist reported that while the airline infuriated many of its customers, these very customers would take a gamble and fly with the airline again. Its core offering was simply too good to pass up, simply better than any other they could find in the market.

Be second or third to entry the market, it's the best solution for survival and growth, learning with others' mistakes?

In an ideal world most executives would prefer to be creators and innovators rather than followers but entering into the unknown is expensive and these ventures generally fail. Analyses suggest anything between 1% and 10% success rates for new product launches. There is an analysis of the so-called first mover advantage in new categories that shows that being first to market, while potentially advantageous, is both risky and less important than other factors. The main factor is to be the first that "gets it right" once the market has started to get established. P&G is defined as the early leader in disposable diapers, Sony, JVC and Matsushita in video recorders and RCA in color TVs. Similarly Kellogg, Hershey, and Wrigley in cereals, chocolate, and chewing gum. Yet, none of these was a pioneer.

Analyses suggest anything between 1% and 10% success rates for new product launches. There is an analysis of the so-called first mover advantage in new categories that shows that being first to market, while potentially advantageous, is both risky and less important than other factors. The main factor is to be the first that "gets it right" once the market has started to get established.

Marketers and consultants tell us that "socializing" is key to fidelize customers. What's the best way to connect with clients and to create communities of word of mouth or fans?

Creative advertising and marketing must start with a clear understanding of the target market and what you want this market to think, feel, or do, in response to your campaign. This communications objective must follow from one's business objective. There is a framework to this process, one described in detail in our book, Simply Better, and originally developed over thirty years ago at J. Walter Thompson. The framework requires you to understand where the market (the target market, as discussed above) is now, the customer's perceptions that determine the brand's performance, and the communications which suggest the changes in actions of those exposed to the message. The next aspect relates to how to get to the intended positioning. And this is the out-of-the-box creative thinking typically done at an advertising or communication agency. And the last aspect, of whether the strategy is yielding its results, involves data gathering and analysis, something generally done by the company once again. The process of best connecting with clients and creating fans is typically an iterative one where constantly refining the steps in this framework allows one to more easily navigate the path towards the end goal.

From the 6 rules you mention, which will you "choose" as your favourite?

Rule 3, Think Inside not Outside of the Box.

Can you give an example of the strategy you recommend that impressed you more?

I am absolutely impressed by the impact of Toyota. It has eschewed the fads and fanciful trends of the auto industry to build a company that delivers to the mass market so well it has a market capitalization great than Ford GM and Daimler Chrysler added together.


Séan can be contacted at: Meehan@imd.ch

 
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