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As important as differentiation is, how can companies uncover their differentiation and shape it?
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As important as differentiation is, how can companies uncover their differentiation and shape it? (Shutterstock/File)
S
trong differentiation is a crucial factor for a company’s success. In a classic article published in the Harvard Business Review, strategist Michael Porter (1996) concluded that choosing a strategy is essentially about creating a unique and valuable position that involves a set of different activities. The essence of this differentiation is in choosing activities that make you stand apart from select competitors.
Those who do not stand out will get lost in the pack. In their book, Differentiate or Die (2001), authors Jack Trout and Steve Rivkin both provide some important notes related to differentiation: “If companies ignore their uniqueness and try to make everything for everybody, they quickly undermine what makes them different.”
As important as differentiation is, how can companies uncover their differentiation and shape it?
We describe it as “integrating the content, context and infrastructure of our offers to customers.” To create differentiation, a company can either focus on one of these aspects or, better still, combine all three to form a more solid differentiation.
As shown in the figure, there are three elements of differentiation which need to be considered by a company: Content (“what to offer”), Context (“how to offer”) and Infrastructure (“enablers”).
Content is a dimension of differentiation which refers to the core value offered to customers. For some companies, this could be tangible. For beverage companies such as Coca-Cola and Pepsi, content would refer to the taste and freshness of their drinks. For automakers Honda, Toyota, Hyundai and so on, the content would be about the performance of their vehicles, represented by their engines — how fast they can go or how fuel-efficient they are.
Whereas in the services industry, content is the core product offered by the company. For hotel businesses — Banyan Tree, Ritz Carlton and Four Seasons — content is the rooms they offer. As for technology companies such as Cisco, content differentiation lies in providing a comprehensive end-to-end network solution.
