Monday, June 25, 2012

New Different

In the last blog, we looked at the shortcomings in a strategy approach I call “More Better.”  The idea behind more better is this:  If you take the status quo and incrementally change it by either a) adding MORE features; or b) making the current features perform BETTER, then you will have improved success.

As we saw in that blog, “More Better” does not always improve success, and in many cases makes things a lot worse.  The Problems with More Better are that:

1) It focuses the strategy on what the offering can do rather than on what the customer experiences.  And More Better often makes the consumer experience worse.  Happier consumers beat out fancier products any day.

2) Eventually, performance can get so good across the entire industry that customers needs are well taken care of.  All the effort to improve beyond that point may not be noticed or appreciated.  It may cost more than people are willing to pay for it.

3) Adding more features to the status quo often adds confusion and complexity, which can lessen the consumer experience.  In addition, it is hard to excel in performance in any given area when you are trying to offer everything.  The added features tend to cancel each other out and create an overall mediocre offering.

4) There are barriers to a consumer switching to your offering, such as having to learn a new product, getting rid of replacement parts, forming new supply relationships, having to make new capital investments, having to take a risk on an unfamiliar or less prestigious brand, and so on.  You may not be able to create a large enough improvement to the status quo to overcome these barriers.  As Al Reis and Jack Trout put it, you need to be at least three times better to unseat the market leader.  That is hard to do.

5) As markets consolidate, there are fewer players to take market share from and they are harder to take share from because the remaining firms are all strong.  It they are all playing the More Better game, it will be nearly impossible to reap large gains from merely doing More Better.  

If More Better is a risky strategic approach, can we find a better approach?  Often times, the superior approach is something I call “New Different.”  The idea behind New Different is as follows:

1)  Rather than adding more features to the status quo, consider eliminating status quo features.  Perhaps even eliminate nearly all the ways the status quo performs and create an approach which is totally new.

2) Rather than measure performance the old way, find a solution which works on a different business model.  By focusing on the consumer experience rather than current offerings, you may find a way to please customers in a completely different manner that the status quo.

Here are some examples of New Different at work.

1) Apple
One of my favorite strategy stories is the one told by strategy professor Richard Rumelt.  Back in 1998, Rumelt had a chance to speak with Steve Jobs.  When Jobs returned to Apple, the company was in a bit of a mess and was so small that it was on the verge of becoming a totally irrelevant company.  Rumelt was curious as to what strategy Jobs would use to try to grow the company long-term.  So he asks Jobs what the long-term strategy was.  Job’s response?  “I am going to wait for the next big thing.”

The point here is that Jobs refused to fall into the More Better trap.  He was not going to try to win by making the Apple computers do more functions or just make them a little bit better.  No, he was going to do the New Different approach.  Good bye status quo, hello next big thing.

Rather than add new functionality to the Apple computer, he took away nearly all the functions and just focused on music.  And rather than do music the same way it had always been done, he took a radically different approach by making a seamless closed system for buying, storing and playing music.  The result was iPod and iTunes and all the rest of the new business model for music.

And I’m sure that Apple could have never achieved the level of success it had with iPod by merely doing a More Better approach with the Apple computer status quo. 

2) Cirque du Soleil
The circus industry has been on a long, agonizing path to obsolescence. People had used “More Better” to try to resurrect the industry.  Let’s add more acts; let’s make it bigger.  That didn’t work because the competition was not other circuses, but other entertainment.  Even the biggest and the best version of the status quo circus would provide an inferior customer experience when compared to all of the other modern entertainment choices.

Then along came Guy Laliberté.  He wasn’t a circus expert.  Laliberté was a street performer.  And rather than focus on how to improve the circus, he focused on how to improve the consumer’s experience of live performance.  Out of this process came the wildly successful Cirque do Soleil.

Rather than trying to do more, Cirque du Soleil does less.  It eliminated the animals.  It eliminated all the little stories in a circus and replaced it with a single theme for the entire performance.  Then it redid the entire business model, including a new targeted audience, new venues, new marketing, new performances, and changes to everything behind the scenes.  This was not a More Better circus.  It was a New Different entertainment experience.

3) Weight Loss
Over the years, the way to win in the weight loss business is not to try to take the current fad and make it bigger and better.  No, success comes from doing something completely different.  If the current fad is around a particular diet, then replace it with a new exercise.  Then replace the exercise with a medical device or pill.  Then replace the medical device with yet another way to look at food.  Then replace that with a surgical approach, then a way to lose weight while you sleep, and so on.

The idea here is that instead of focusing on the particular offering, focus on the customer problem.  If the customer is frustrated with the current fad (and eventually all lead to frustration), then doing it bigger and better won’t solve the problem.  Instead, try something totally different.

I remember near the end of the high carb diet fad, someone wanted to do the ultimate More Better approach.  They designed an entire grocery store to sell nothing but high carb foods.  Shortly after that, the fad ended and went on to something else, and I’m sure that grocery store soon died.

In many ways, the New Different approach is similar to the Blue Ocean strategy.  The idea is that if you go into a highly competitive, relatively mature environment, you are in for a blood bath.  The fighting is intense and the profits meager.  The return on More Better is very low.

By contrast, if you seek out new, unclaimed territory, then there is less competition.  You get to set the rules in your favor.  You can become the leader by default and reap the rewards of leadership.

This is accomplished by moving away from seeking incremental improvements and add-ons to the status quo.  Instead, start with the consumer experience and re-engineer the entire business model to create an entirely new approach.

Given the problems with the More Better approach to strategy, greater emphasis should be given to the New Different approach.   

It takes guts to go against the flow of the status quo and sail out to the Blue Ocean.  But no guts, no glory.


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