Wednesday, November 19, 2008

Analogy #223: Do You Miss Me?

Here are two examples of stories which happen all too often:

Back in 2003, some people in Nashville started to realize that they hadn’t seen their neighbor Deanie Kelly in a few weeks. Her mailbox was starting to overflow with mail. So on the next Saturday, Greg, one of the neighbors, approached the house and found that the door was unlocked. He went in and found Deanie lying in bed dead from a self-inflicted gunshot wound. Police later said she had been dead for about three weeks.

In November of 2008, Police became aware of a situation at 90-year-old Margaret Bernstorff’s home in Evanston, a suburb of Chicago. Margaret shared the house with three of her siblings: Anita, Frank, and Elaine. However, by November of 2008, none of the siblings were still alive. Anita had died a few months earlier in May. Frank had died in 2003, and Elaine had died in the late 1970s. Yet they were all still inside the house, in different rooms, some wrapped in blankets.

People said that Margaret was a bit of a pack rat, but I think this goes a bit too far. After police discovered the bodies, Margaret was put into a senior care facility.

Death can be a sad occasion. Death is even more tragic when nobody notices that you are gone. Deanie Kelly had been dead for three weeks before being discovered. If it hadn’t been for her mail piling up, she might have gone undiscovered for an even longer time. Anita, Frank and Elaine had been dead for many months (and in Frank’s and Elaine’s case many years) without anyone noticing.

What does it say about someone’s life if nobody misses you when you are gone? It makes me sad to think of how little these people were connected to the world around them.

Like people, businesses come and go all the time. Many are missed when they disappear. Many more just go away quietly and almost nobody really notices that they are gone.

A good strategy should make your business so vitally important and necessary to your marketplace that people would instantly notice when you are gone and then morn the loss.

The principle here deals with indispensability. The idea is that the more critical your existence is to the marketplace, the more successful you will tend to be. Do your customers find you indispensible? Can you provide solutions in a unique way that would be instantly missed if you were gone?

One of the most important set of questions you can ask yourself in the strategy formulation process has to do with your level of indispensability. I typically start the conversation like this: “Why should someone prefer your product/service over all of the possible alternatives?” Or, if I want to make the question even more severe, say “Why should someone go out of their way to seek out what you have to offer?”

If you’ve done your strategy homework properly, these should be easy questions to answer. However, I am shocked by how often these questions are unanswerable by top executives. Sure, you might get some mumbling about how the company’s product performs a little better than the competition (and it might even be true). But how much better? Enough to get people to clamor for you over the competition?

If your offering did not exist, would your customer just switch brands and hardly notice the difference? It’s very difficult to create strong demand for your brand and get healthy profit margins if your offering is viewed as pretty much indistinguishable from the list of alternatives. One of the reasons why so few brands create strong loyalty is because there is nothing unique enough about them to cause one to become loyal.

A primary role of strategy is to create a position where you are uniquely best suited to serve the marketplace. Rather than being one of many similar options, you become the only sensible alternative for some segment of the population. In this way, if you were gone, there would be a gap in the marketplace no longer properly served.

Taking the indispensability approach can change the entire nature of your strategic conversation. Rather than talking about ways to become better, you will look for ways to become different. And as I and Michael Porter like to point out, it is your differences which make you valuable to the marketplace. And the more valuable you are, the more profitability you can extract.

Now you may be thinking to yourself that you sell something rather generic and that it is impossible to create any uniqueness. Well, just because the product is generic does not mean that the way you sell it has to be generic. As we saw in an earlier blog, even a company selling something as undifferentiated as sand or gravel can be seen as indispensible if it wraps the product into a unique value proposition. Your way of selling, means of delivery, speed of delivery, level of service or bundling of services can make the generic become quite unique.

Is the Apple Ipod the only available digital music player? No, there are lots of options. Is the Ipod indispensible to its customer? Very much so. Why? Because it is a unique total offering. Itunes was the first music downloading service that broke through the clutter and created demand. The link between Itunes and Ipod made Ipod more valuable. In addition, the design and workability of the features on the Ipod were unique. Finally, the Ipod is uniquely more “cool” than the alternatives. And, through rapid obsolescence, the Ipod is continually updated, so that it can continue to be unique. All of this uniqueness created great loyalty.

Once you determine your area of uniqueness, then the strategic conversation shifts to moving the organization to enhance itself more in the direction of that uniqueness. In other words, if you know what causes your indispensability, then you know what areas to concentrate on—those initiatives that accentuate your indispensability, make it stronger.

Successful strategies tend to create a position for their brand which is seen as indispensable to their customers. Then the work of strategy is to discover the point at which you are to be indispensable and then find ways to expand and extend the types of uniqueness which make the offering even more indispensable.

The irony in business is that the more you would be missed if your offering died, the less likely you will die. Indispensability is linked to immortality.

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