Note: This is part 1 of a 4-part series.
One of Peter Drucker’s famous quotes is a simple but powerful insight:
Because the purpose of a business is to create a customer – the business enterprise has two – and only these two basic functions: marketing and innovation.
When I think back to the focus of the CEOs that I’ve worked with over my career, many were heavily focused on innovation: building new products, creating operational efficiencies to lower costs, and determining how to add more value to customers.
Few were heavily focused on marketing.
It’s a great insight, and since that’s the purpose of a business, then certainly a top area of your focus should be to strategically and innovatively separate yourself from your competition.
Since few of us have an array of patents, exclusive strategic distribution, or other powerful legal barriers to entry, we must learn to separate ourselves in the mind of our market. And you can separate yourself by leveraging the power of your competitive advantages!
Differentiate, or Die a Slow Death
Regardless of whether you refer to your differentiation as competitive advantages, making your message sticky, creating a tipping point, creating a unique selling advantage (USA) or a dominant selling idea (DSI) or even developing an X factor or sniper advantage, the end result must be that for your business to compete in today’s marketplace, you must create some very specific competitive advantages that separate yourself from the pack.
It’s no longer safe or smart to expect that what got you to where you are today will keep you there, or even sustain you in the future. The old saying, “if you always do what you’ve always done, you’ll always get what you’ve always gotten,” is no longer true – “you will get less – and often times a lot less!”
In her book, Creating Competitive Advantage, author Jaynie Smith says that in researching small and middle market companies, she found only two out of 1,000 CEOs could clearly identify their company’s extraordinary advantages.
Confusion Creates Inaction
My experience is consistent with that finding. When you cannot identify your competitive advantages, the only thing the market can do in making a buying decision is compare you to your competition by using price, or worse, something that occurs far too often – your prospects simply take no action because you and your competition are not compelling enough to cause them to take action.
In 10 years of research and consulting with mid-market companies under $100 million in revenue, 20 years as CEO of a mid-market company, and in talking with associates in a variety of industries, I have yet to find a CEO who doesn’t have a strong opinion on subjects like pricing, production, process, people, sales and strategy; yet, there is a sudden thud of thought and conversation when the question is asked, “Other than price, tell me what the market would say is truly different about your product or service … why do your prospects buy from you?”
This conversation is muddled; it’s typically vague, confusing and uninviting. If that’s the message the market is hearing, no wonder only 4% of the businesses in the SMB marketplace grow at more than 15% per year, year over year.
It’s not an over reaching statement to say that one of the most, if not the very most important challenge for a CEO is to define a clear, compelling and excitable understanding of their company’s unique competitive advantages for their product or service.
The marketplace is a cruel judge of your effectiveness in creating a competitive advantage. If you can’t do it, it will destroy your profit; then it will pull your people away; and then your reputation; and finally, the morale of the company is gone and before you know it, you’re a part of somebody else’s plan – not your own.
Think about your competitive advantages and how you currently differentiate yourself in the marketplace. Next week, we’ll dive into the mind of your buyer, to see if they’re seeing and hearing what you’re telling and sharing.