Strategic Planning Analogy #556: Position Vs. Proof

THE STORY
Imagine this conversation with an entertainment promoter. We’ll call him Bob.

Bob: I’m so excited! I just booked a night to use the stage at Carnegie Hall. This is such a great venue to perform in. Some of the greatest performers in the world have had some of their greatest performances at Carnegie Hall. This is the place where winners perform. Success is mine.

Me: So who will you have performing at Carnegie Hall? What will they perform?

Bob: I have no idea. That’s just a minor detail. The important thing is that whatever it is, it will be on that successful stage.

Me: If you don’t know what the act is, how do you plan to sell tickets?

Bob: I’ll just say that great stuff happens at Carnegie Hall. Come see the greatness.

Somehow, I don’t think Bob has this thing fully figured out.

 

THE ANALOGY
In my long line of strategy blogs, one of my favorite topics to talk about is positioning. Dozens of times, I have talked about the necessity for businesses to choose a position if they want to succeed. They need to find a place where they can win.

Perhaps I have focused so much on the importance of positioning that people think that strategy is little more than choosing a position. But strategy is far more than just finding a position in the marketplace. In fact, if all you have is a position, you are likely to fail.

Consider the story above. Bob the promoter found the ideal position—a place where he could win. That place was Carnegie Hall. A lot of performers have won at that position.

But just because Bob had found the ideal place to play does not mean he would automatically succeed. To succeed, he needs to sell tickets. And to do that, Bob needs to figure out what to perform and how to convince people to pay to see it. Owning an empty stage will not draw crowds. Just saying “come see the greatness” won’t work.

In the same way, businesses only succeed if they convert their positioning into preference—a proposition that causes consumers to actually give their money to you (rather than someone else). Being on the right stage only matters if people pay to see it. Therefore, strategy needs to not only find they place where you can win, but a reason for customers to choose to support it.

  

THE PRINCIPLE
The principle here is that positioning is mostly an internal strategy. It tells a company where to play. It talks about the solution it will own and how to structure the company to achieve it. A second strategy, which we will call “the compelling reason”, is needed to get customers as excited about the position as the company is—enough to spend their money with the company. That is the external strategy. Both are needed to win, just as Bob needed both the stage (the position of Carnegie Hall) and the compelling performance for that stage (a reason to come to Carnegie Hall).
   

It is easy to get confused and think that the position and the compelling reason are the same. After all, a position must be desirable to a consumer if it is to be successful, right? Yes, but in reality, what it takes to win internally is not the same as what it takes to win externally.

Trust Issue

Positions tend to rest on owning some idealized superiority, such as highest quality, most luxurious, easiest to use, coolest, cheapest, “ultimate driving machine”, and so on. This type of positioning is what Les Wexner of LBrands refers to as answering the question “What are you Best At?”

Yes, customers like things that are the best. The problem is that customers are jaded. They’ve been hearing claims of superiority their whole lives. After all, how many brands try to claim a position of mediocrity? No, everyone shouts about their superiority. They can’t all be best. Hence, there is a trust issue. You cannot just claim a position of superiority. Nobody will believe it merely because you claim it. No, you have to prove it in order to overcome their lack of trust.

There’s a reason why user and expert opinions/ratings are so sought after on the internet. It’s because consumers don’t blindly trust claims made by the brand. They want them verified by others. They want proof.

So “positioning” determines the claim to be made (what am I best at) and “the compelling reason” determines how to prove to the customer that the claim is true. The two are not the same.

Two Components of Proof

There are two components to the compelling reason. Without them, there is not enough proof to make the claim of the position believable.

The first component is difference. You have to prove that you are different from the alternatives. The logic is simple: If are seen as doing the same thing as others, then you cannot be seen as superior…only the same. You must do something different in order to be perceive as different from the others.

And to make the difference believable, it needs to be easily understood and verifiable.

The second component to the compelling reason is linkage. You need a way to link the difference to the position of superiority. Just saying we’re different because we wear green shirts won’t work, because there is no linkage between wearing green shirts and producing a superior product. The difference needs a direct link to the superiority—proof that the difference causes the superiority.

For example, Dove soap has the position of being “the best beauty soap.” Their point of difference is in saying that their soap is one-fourth moisturizing lotion (and the others aren’t). The linkage is that moisturizing lotion is associated with beauty, so soap with moisturizing lotion can be the superior beauty soap.

Back when Oxydol was the #1 laundry detergent, the position claimed was superiority in cleaning. The difference was putting little green crystals inside the detergent (which others didn’t do). The linkage was that the little green crystals supposedly added bleach to the detergent. And customers could believe that combining bleach to detergent would cause superior cleaning.   

Linkedin’s position is to be the best place for professionals to connect. The difference is that they have far more active professional people in their network than anyone else. The linkage is that you are more likely to make the professional connections you need in the place where the most connections with professionals are possible.

Uber’s position is to provide transportation as reliable as running water, everywhere for everyone. Their point of difference is that their business model abandons all of the conventions of taxis and public transportation. All the rules have been reinvented, including the mobile interface. The linkage is that these changes have dramatically increased the numbers of people providing transportation and improved the interaction with them, making transportation more reliable and more everywhere.

Two Messages

So, as you can see, the positioning message and the compelling reason messages are not the same. In fact, they move in different directions. The positioning message moves towards the broader, more generalized, more universal concepts and solutions. The compelling reason is more specific to a particular company and the “unique ingredients” in its offering.

The position lets you know if the company is relevant to your needs. The compelling reason lets you know if this particular brand is the best alternative in that space (compared to others claiming the same relevancy).

Positioning is about ideals. The compelling reason is about proof.

Both messages are essential. Both need to be a part of the strategy process.

SUMMARY
Although positioning is a key component of strategy, it is not the only key component of strategy. Another key component is the compelling reason. A position is merely a claim that is made concerning where you have chosen to play to win. A compelling reason is the proof as to why customers should believe your claim. Although they are similar concepts, they are not identical. Therefore, if you have only created the position, you are not yet finished with the strategy process.

FINAL THOUGHTS
The problem with claiming a stage like Carnegie Hall is that it is not the only stage. Consumers have other alternatives. So even if Carnegie Hall is the best stage, consumers will go to another stage it they think they will enjoy a better performance. Therefore, you need to work on two fronts: finding your platform/stage AND making sure you are perceived as having the preferred performance.

Strategic Planning Analogy #538: Three Questions (Part 3)

THE STORY
We have a persistent cat. When it wants to go outside, it is determined to go outside. However, we do not let the cat out when the weather is really bad, such as a thunderstorm or a blizzard.

When the cat wants to go out, it meows by the door. If the weather is bad, we show it the bad weather through the window and tell the cat it cannot go out.

This will satisfy the cat for about five minutes. Then it will go back to the door and meow again. We show it the bad weather and say no. This again satisfies the cat for about five minutes. And then the cycle repeats itself, over and over again.

It reminds me of the old definition of insanity: Insanity is doing the same thing over and over expecting a different result.

THE ANALOGY
The cat kept going to the door, expecting a different result (to be let out). However, because the situation had not changed (the weather outside was still bad) the results did not change (cat still not let out). The only way the outcome would change is if the situation changed (the weather improved).

It sounds simple, but the cat didn’t get it. Sometimes I think business leaders are a lot like that cat. They want an improvement in their financial outcomes, similar to a cat wanting to go outside. They go to their financial dashboard, just like the cat went to the door, to see if their desire will come true.

The dashboard says that the outcomes haven’t come true. That satisfies the executives for a short while, but then they keep going back to check the numbers—over and over again—and the numbers do not change.

The problem is that the company has not done anything significantly different in the way it approaches the marketplace. And as long as nothing significantly different has been done, one should not expect significantly different results. So we’re back to the definition of insanity.

To get out of this loop, we need to emphasize doing things differently to create a more positive outcome.

THE PRINCIPLE
This is the third of three blogs looking at the three questions businesses need to ask themselves if they want to prosper into the future. Those question are:

1. What problem are you trying to solve?
2. Why should the customer naturally prefer your solution over the alternatives?
3. What are you doing differently to prove your superiority?

In the first two blogs (here and here) we looked at the first two questions. We saw that success comes from focusing on solutions and developing preference as the best solution. In this blog we will be looking at the third question and further understanding how to create that preference.

The Formula for Success

The key idea comes from the following truism:

a)     As long as you are seen as similar to the alternatives, you will never be seen as better than the alternatives.

b)     As long as you are not seen as a better than the alternative, you will not be chosen as preferred.

c)     Therefore, the formula for preference is as follows:

a.      First, create an obvious, meaningful difference between yourself and the competition.

b.     Second, use this difference to prove superiority over the competition.

c.      Third, use this superiority to create a purchasing preference over the competition.

Everything breaks down if you skip the first step. You have to start with differences. Otherwise you have no foundation for proving superiority. After all, how can you believe something is superior if you perceive it to be the same as the alternative? And without the perception of superiority, there is no reason to expect a natural preference.

So if you want better results in the future, you have to start by focusing on doing things differently. After all, as we saw in the analogy, if you don’t do something different, you shouldn’t expect different results.

But we’re not talking here about just any difference. We a looking for differences which will help the marketplace perceive us as superior.

Oxydol

One of my favorite stories is that of Oxydol detergent. Oxydol was the first laundry detergent to add bleach to its formula. That was supposed to be the change which created a perception of superiority. But it wasn’t working.

The problem was that consumers were having a hard time perceiving the difference. Oxydol looked exactly like the competition. You used it in your laundry exactly like the competition. Nothing felt different. Therefore, consumers concluded it wasn’t really meaningfully different. The net result was that consumers had no natural reason to see Oxydol as superior or preferable.

So Procter & Gamble put useless green crystals into the detergent. Now Oxydol looked different than the competition. Proctor and Gamble attached this difference to the fact that they had bleach in their formula and the competition did not.

Since the consumers now believed Oxydol was different, and that the difference made Oxydol superior, they began to prefer Oxydol. From that point on, Oxydol became the #1 laundry detergent in the US. It stayed #1 until Proctor & Gamble decided to shift its emphasis to making Tide #1.

So creating the perception of a difference made all the difference in creating superiority and then preference.

Followers, By Definition, Are Not Leaders

If all you do is follow and imitate the leader, you will never be seen as different in a superior way. If any difference is seen at all from your imitation, it would be that you are similar, except for being smaller and weaker and not the leading brand. That is not the formula to success.

If you want to be seen as better than the leader, you must do the opposite: stop imitating and do something differently.

Think about Dodge Ram trucks. They used to be a minor player in the world of trucks, way behind the Ford F-150 and Chevrolet Silverado. They were seen as just like the other guys only smaller, weaker and not the leading brand—the formula of death.

So Dodge abandoned imitation and went for differentiation. Instead of making their trucks look like Ford and Chevy trucks, they made them look more like the cabs of a big, industrial semi truck. To add to the differentiation, they put engines in these trucks that were manufactured by the same people who built engines for semis. Then the marking experts at Dodge used these differences to create the impression of superiority with a particular truck-buying segment.

It took some time to change the perception, but eventually it worked. Now Dodge Ram trucks have skyrocketed in sales and have captured a meaningful share of the market. And because they captured that share with natural preference build on differentiation rather than on bribery, the business is more profitable.

So, if you want different (better) results like Dodge Ram, you first have to do something different.

SUMMARY
To succeed in the marketplace, one needs answers to three questions:

1. What problem are you trying to solve?
2. Why should the customer naturally prefer your solution over the alternatives?
3. What are you doing differently to prove your superiority?

Regarding the third question, everything hinges on building positive differentiation. It is the differentiation which allows customers the ability to no longer classify you as the same as everyone else. You can use this to say that your difference is what makes you superior. Then you can turn this superiority into preference. And that’s how you win.

FINAL THOUGHTS
What are you doing differently from everyone else?