Competing with your customers as you grow

A conversation taking place among colleagues over at the Kellogg innovation blog/web forum (http://marketdrivengrowth.blogspot.com) has to do with how you can move into spaces that are occupied to some extent by your customers,with the goal of making the whole pie larger for everyone.  The dilemma is that customers can mistrust your motives, but at the same time you need them to get whole ecosystems going or to develop certain kinds of innovation.  It’s a point that we often make - you have to create a whole product or solution before anybody will buy anything. 

One key issue that has been raised by both Clayton Christensen and Geoffrey Moore is that success of a more or less vertical integration strategy depends heavily on the evolutionary stage of your industry—in new spaces, vertically integrated players tend to win out.  In more commoditized spaces, advantage can go to specialists.  The shift inevitably causes channel conflict and some dismay. 

Here was my response:

One technique we have had good success with is using ‘discovery driven
planning’ to model the possible outcome
of a cooperation and show potential partner/competitors what the outcome
could look like in the event of success.  You can also show the
checkpoints at which you could stop further development if things go
adversely for either party. 

Somewhat more aggressively, if you can identify low-power partners who
stand to gain more from partnering with you than a better established
player can, you can benefit by leveraging their capability to create a
new space / ecosystem and eventually bring the larger players into your
orbit in the interest of not being locked out of the now-attractive
area. 

Share this article:      

• Posted Rita McGrath on October 24, 2007

Competitive Separation vs. Competitive Advantage

Posted by my colleague, Bob Cooper, for Driving Organic Growth group.

In an effort to further the discussion comparing competitive advantage vs. separation, I would like to introduce a very powerful tool developed by McGrath and MacMillan that is summarized in perhaps the greatest business book ever written � The Entrepreneurial Mindset. The tool is the Attribute Map and it shows the dynamic nature of how your target customers react to your offering�s attributes:



The labels going down the table POSITIVE, NEGATIVE, OR NEUTRAL describe the type of reaction from the customers. Obviously, the more positive and less negative the better. The labels on the top of the table BASIC, DISCRIMINATORS, and/or ENERGIZERS define the intensity of the reaction.

For the BASIC category:
- A POSITIVE defines table stakes � you need these attributes to play and you are conspicuous by their absence (Non Negotiable)
- A NEGATIVE defines attributes that the customer is willing to tolerate (Tolerable) if there is no other alternative.
- A NEUTRAL is one that has no or little impact (So What) on the customer but does add cost

The DISCRIMINATORS
- Differentiate between competitors to influence the purchase decision. The POSITIVE (Differentiator) attribute is in the positive direction and the NEGATIVE (Dissatisfier) is in the negative direction.
- The NEUTRAL is an influencer to the purchase decision but is not directly related to the purchase

The ENERGIZER:
- Attributes are so powerful that they overwhelm the purchase decision either positively �the Exciter � or negatively � the Enrager


An example, I usually illustrate the power of the Attribute Map using the history of the Big 3 auto dealers in the 70�s and 80�s when the Japanese initiated their onslaught of the U.S. market. At this time the U.S. consumer TOLERATED the poor quality of their automobiles from Detroit because there was no alternative. The Japanese came in pushing their superior quality and created a revolution since their new offering EXCITED the U.S. consumer toward their cars and shifted the attitude towards the Big 3 from TOLERABLE to a negative DISCRIMINATOR or even to ENRAGERS. Your ideal move against competition is to EXCITE your customers with a new offering while at the same time shifting their attitude towards the competitors to the negative. Interestingly, car quality is now considered a BASIC attribute. This dynamic shift usually occurs over time � this dynamic is what drives the Fair Value Line discussed in the last positing to the right in the Value Map.

Now lets discuss competitive advantaged vs. competitive separation in the context of the Attribute Map. If you have a strong competitive advantage, i.e., you are superior to competition, in an attribute that is considered a DISCRIMINATOR or an ENERGIZER by your customers, then you will achieve competitive separation. If your advantage is in an attribute that is BASIC or even worse, a NEUTRAL, you will not achieve competitive separation!! The goal should be competitive separation, not just advantage. Never assess your competitive position without real insight into what your customer really wants/needs.

Another issue is when is �just good enough� ok versus �best in class� or �unique in class�; the latter two usually costs vs. the first. Again, realizing that competitive separation is the goal, you should focus your added efforts to achieve �best or unique in class� for DISCRIMINATOR or ENERGIZER attributes, not BASIC or NEUTRAL categories.

Share this article:      

• Posted Admin on March 31, 2007

Search: