Tales of the Unexpected: Rethinking Differentiation

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Executive Summary

Differentiation is commonly misunderstood. It is not a function of your organisation – from your perspective – but a function of the client – from their perspective. Most ‘differentiation guides’ suggest ways in which firms can push their way in front of the competition and encourage a focus on “Why we’re different” and “What makes us unique”.

It’s time for firms to rethink this approach to differentiation. It doesn’t matter why you think you’re different or what you tell clients makes you different, what matters is that your clients are different – with their own needs, values, beliefs and worldviews – and that you can adapt your behaviour and act in a way that aligns with these needs.

This will often mean deliberately choosing to act in a way that is out of the ordinary for your industry, to not just stand out from within the crowd but to make a conscious decision to move away from the crowd.

For professional services firms who traditionally prefer the status quo, this can feel uncomfortable and risky. But as we show in our latest Point of View article, the rewards can be great. Choosing to be deliberately different – to not do what is expected – can have a significant impact on a firm’s brand and reputation because it shifts the position of the firm in the mind of the client and dramatically changes the narrative they tell themselves about the firm.

In this Point of View, we highlight some well-known brands – including a prestigious consulting firm – who decided to move away from the crowd entirely to align themselves with the identified needs and values of their clients and employees.

Finally we suggest a few ways in which professional services firms might rethink their approach to differentiation by deliberately choosing to move away from the crowd – to not do what is prescribed by current industry norms.


 Rethinking Differentiation

“Strategy is about making choices, trade-offs; it’s about deliberately choosing to be different.”

Michael Porter

The Consumer Electronics Show – now known as ‘CES’ – is the flagship event in the consumer technology industry’s calendar. Every January, anyone who is anyone in the industry heads to the Las Vegas Convention Centre to discover the new products and technologies that will soon be introduced to the market.

It’s strange, therefore, that for over a decade, Apple – the behemoth of the consumer technology industry – has decided not to exhibit at CES.

In 2008, Steve Jobs decided that a company like Apple shouldn’t follow the crowd to CES. It’s a decision that current CEO Tim Cook has, so far, continued to support.

Jobs resolved that Apple had earned the right to be ‘bigger’ than the market and was interesting enough to consumers and journalists that whatever event the company holds and whatever products they launch, they will always gain attention and coverage.

But more than that, Steve Jobs recognised that Apple’s customers don’t want to be associated with a company that is ‘just like all the rest’ but with a company that does things in their own, exceptional, unique way.

As Apple’s customers dare to be different, so does Apple.

What is particularly interesting about the decision taken by Apple not to appear at CES is that it is a deliberate decision to not behave in a way would be expected in the sector, to not just stand out from within the crowd but to move away from the crowd entirely.

Most ‘differentiation’ strategies are about pushing your way in front of the competition – about getting noticed – and might include: cosmetic changes (a new logo or website), focusing on a specific market segment or specialisingin a specific service line.

Suggesting that firms make a deliberate decision to become the outlier or to specifically not to behave in a way that is expected in the market is rarely mentioned in differentiation guides.

Why? Because it’s much more difficult – and risky – for companies to recognise that there are customers, clients (and employees) who want to buy from (or work for) businesses who represent their beliefs, values and ‘who they are’ and then act on this insight by doing things in an entirely different way, away from the status quo.

Seth Godin summarises this idea clearly in his essay “People like us do things like this”:

For most of us, from the first day we are able to remember until the last day we breathe, our actions are primarily driven by one question, “Do people like me do things like this?”

Even when we adopt the behavior of an outlier, when we do something the crowd doesn’t often do, we’re still aligning ourselves with the behavior of outliers.”

Unfortunately and particularly in the risk-averse world of professional services, choosing to act in a way that goes against conventional wisdom requires a level of bravery and boldness that few company leaders wish to contemplate.

What leaders often fail to recognise is that the impact on an organisation’s brand and reputation of not behaving in the same way as the competition can be more significant than trying to stand out from within the crowd.

Why? Because a firm’s brand is determined in the mind of a client. It is “The stories that people tell each other about the firm”, “The way people think about the promise the firm makes” (credit to Seth Godin) or “The things they say about your firm when you’re not there.

Above all, an organisation’s brand is a shortcut for clients to know what to expect from that company.

By making a clear decision to step away from the crowd or to behave in a way that is unexpected, the signal sent to clients – the shortcut to know what to expect from the brand – is much clearer.

For customers who want to align themselves with a brand that matches their values and worldviews, choosing not to take a predictable course of action is the clearest way for an organisation to send a them a message that they can align with.

Deliberately choosing not to behave in a certain way – particularly if it is the norm for the industry – significantly alters the position of the firm in the mind of the client and dramatically changes the narrative they tell themselves about your firm. As a result, what you choose not to do has a greater impact on your brand and reputation than what you choose to do.

Here we offer a few examples taken from outside the world of professional services to illustrate how some organisations have decided to deliberately step away from the crowd to align with the needs, values, desires and worldviews of their customers.

Four Tales of the Unexpected: Illustrative Case Studies

1. Chanel

Customer Insight: People who buy Chanel products don’t like being ‘traffic-stopped’.

Company’s Approach: Premium brands don’t ‘forcibly interrupt’ people.

Entering a department store can send chills down the spine of even the hardiest of shoppers. Why? Because to simply get to the Bureau de Change on the top floor you have to run the gauntlet of the ground floor cosmetics department. You have to navigate a rabbit warren of beauty counters while simultaneously trying to avoid being accosted – or sprayed with toilet water – by an eager and overly-friendly sales rep.

In defence of the people who work on the beauty counters, they have little choice but to try to interrupt you because the vast majority are targeted by their cosmetic brand to achieve a specific number of “traffic stops” (yes, it really is called that!) per hour. The theory being that the more people you can stop, the more sales you will make.

The vast majority – but not all. One exception is Chanel. Beauticians working on the Chanel beauty counter are explicitly told not to traffic stop.

Chanel reason that the type of people who buy Chanel do not like to be interrupted – so “We won’t do it.” What’s more, “We don’t need to forcibly interrupt people because we’re Chanel.”

In order to uphold their premium brand and reputation in the market, Chanel send a powerful signal to their customers, to the rest of the market and to their employees, that they will not follow the crowd and behave in the same way as all the others.

2. Direct Line, Aviva and Zurich Car Insurance

Customer Insight: Not everyone is interested in simply getting the cheapest price.

Companies’ Approach: We won’t enter a race to the bottom on price

When renewing their car insurance, most people in the UK will visit one or more price comparison websites to compare the cheapest quotes from a vast number of insurers.

There are however, a few insurance providers – including Direct Line, Aviva and Zurich Car Insurance – who make it very clear that they do notappear on price comparison websites. If you want to get a quote from them, then you must visit their website or contact them directly.

These insurance companies realise that not everyone is interested in simply getting the cheapest price. Some people will choose insurance providers based on the benefits and solutions they offer and the peace of mind that comes from choosing a respected brand name that isn’t going to cut back on features simply to offer the cheapest price and will pay out without question or hassle.

These firms send the message to their customers that the service they offer is not comparable to other firms on price comparison websites. In essence, not only are they not interested in winning a race to the bottom on price, they’re not even willing to enter the race.

3. Louis Vuitton, Rolex, Vans shoes, Barbour, The North Face, Patagonia and Ralph Lauren

Customer Insight: Some people don’t want or expect to buy our products through Amazon

Company’s Approach: We are ‘bigger’ than Amazon and don’t fit in a ‘marketplace’

According to Business Insider, these ‘luxury’ or ‘premium’ brands refuse to sell their products on Amazon.com. They have made the explicit decision to move away from the ‘open market’ to protect their brands, not only from resellers and counterfeiters, but also to avoid a race to the bottom on price.

Seth Godin summarises the situation in a recent blog article ‘Managing reputation in the age of infinity’: Amazon is “Relying on an algorithm that rewards low prices and high ratings. But the best way to lower prices is to make junk. And the best way to high ratings is to fake them.

These brands have decided that their clients do not want – and do not expect – to buy premium products through a reseller. “People like me shop in the Barbour store, not with the masses on Amazon.” Again, it’s easy to see how an organisation’s decision to not do something predictable sends a clear signal to the market and to prospective customers.

4. Daimler

Employer Insight: Our employees don’t want to be contactable 24 hours a day, 365 days a year, especially when they’re on holiday.

Customer Insight: Customers want to buy a car from an organisation who cares for their employees.

Company’s Approach: We will automatically delete incoming emails while employees are on holiday.

It’s important to recognise that a decision to step away from the crowd not only affects an organisation’s position in the mind of customers but can have a profound impact on the organisation’s reputation and standing in the mind of their employees.

In 2015, the German car manufacturer Daimler implemented a new program, “Mail on Holiday” to allow employees to set their email software to automatically delete any incoming emails while they are on holiday.

Daimler recognised – quite accurately – that their employees do not want to be available 24 hours a day, 365 days a year, particular when they’re meant to be out of the office on holiday. They also realised – quite rightly – that their employees are not gaining the maximum benefit from a break from the office if they are constantly logging on to keep on top of correspondence.

Here’s how ‘Mail on Holiday’ works: Anyone sending an email to a Daimler employee while they are on holiday receives an auto-reply telling them that their email will be automatically deleted. They then have two options: They can email another Daimler contact if the email is particularly urgent or they can email again when the employee returns to work. Clients have to decide if their email is urgent enough.

It’s easy to recognise how this decision benefits employees but it is also risky because it challenges expectations of instant responses that have been moulded over many years.

Daimler recognised that the majority of their customers would rather have their expectations managed and do want to buy a car from a manufacturer who cares for their employees. If customers don’t share these values, that’s ok, but they are not the customers for Daimler.

Once again, Daimler’s bold decision to behave in a way that was alien to the industry sent a clear signal about the firm to its clients and to its employees and significantly altered its reputation and brand.

A Professional Services Example

These examples from outside the world of professional services clearly show how some firms are changing the narrative about their organisations by deliberately choosing to step away from the crowd.

Now consider an example from within professional services – specifically management consulting. Our example comes from a Procurement Director of a former FTSE 100 organisation. We have chosen not to name any of the firms.

Prestigious Consulting Firm

Client Insight: Some clients want to work with a prestigious firm for peace of mind and to boost their own organisation’s status. Not all clients are interested in simply getting the lowest price.

Firm’s Approach: When it comes to pricing, we will hold our ground. We will not get trapped in a race to the bottom.

Several years ago, a FTSE 100 company undertook a comprehensive review of their ‘preferred’ list of consultancy service providers. After the preliminary rounds of written proposals, interviews and presentations, more than 60 consulting firms across 13 different service types remained in the process. Most of these firms went on to become preferred suppliers but the last leg in the process was to participate in an online auction to level set their underlying rate cards.

The idea was that during the auction each firm could see what other anonymised firms were setting their rate card levels at – and have the chance to alter their day rate accordingly. The procuring FTSE 100 organisation were not using this information (alone) to exit anyone from the process – the exercise was designed to more intelligently compare firms of a similar size and maturity.

It was also intended to bake in corporate level discounts that were regularly offered during the sales process, thereby enabling the procurement department to focus on negotiating any additional savings that were purely related to the individual projects themselves.

Each firm supplied their starting rates at the beginning of the auction and then, as the auction progressed, something quite dramatic happened, as you can see from the diagram sketched by the Procurement Director below:

Despite commenting beforehand that they would be very unlikely to move from their initially submitted core day rates; as the auction progressed, almost every firm did choose to reduce them as they saw how they sat in relation to the others in their segment. In some cases, very significantly.

Almost every firm, but not all.

For one consulting firm – Firm A – the day rate was exactly the same at the end of the auction as it was at the beginning. This well-known, prestigious firm decided categorically that it would not follow the crowd and compete on price.

While they had to enter the auction – it was a prerequisite if they wanted to be considered for projects – they would not follow the rest of the organisations in their service segments. This firm were so certain of the value of their proposal they saw no reason to lower their fees.

They also reasoned that many of the consulting clients in this FTSE 100 organisation were motivated by factors other than simply price, including the peace of mind that comes with working with an established brand – think “no one ever got fired for hiring IBM” – and the status that transfers to the procuring organisation by working with such a prestigious firm – think “Firms like us, choose consulting firms like this.”

By making a conscious decision not to follow the crowd, this consulting firm sent a clear signal to the FTSE 100 organisation that merely reinforced the market image of their prestigious brand. They were added to the preferred supplier list because of their expertise and track record, and were allowed to compete with everyone else in their segment in totality.

Conversely, consider the impact of the auction on the reputation and credibility of Firms B, C and D who were willing to lower their day rates significantly to win the work. It raises questions in the mind of the prospective client around the firm’s assuredness and authority: “We thought you were a prestigious firm? How are you planning to lower your fees to such an extent? Will you do an inferior job? Will you offshore the work? Will you only allocate Juniors to our projects? How can you justify your initial quote if you can now propose much less?”

More Professional Services Examples

Here are a few other ways in which professional services firms might decide to consciously step away from the crowd to send a direct message to the firm’s clients or employees:

To the firm’s clients:

  • We don’t respond to Request for Proposals (RFPs) or Invitations to Tender (ITTs) unless we can meet the buyers in person beforehand
  • We don’t bill our clients by the hour or for every short phone call
  • We charge double the market rate – because we can show we deliver three times the value
  • We don’t discount or lower our fees for anyone

To the firm’s employees:

  • We include business development time in utilisation targets
  • We don’t tolerate toxic team members
  • We don’t set our employees billable hours targets
  • We don’t allow people to use mobile phones or laptops during team meetings
  • We won’t tolerate people eating lunch at their desks
  • We don’t expect our staff members to respond to emails 24 hours a day, at weekends or on holiday

Adapting Your Firm’s Approach to ‘Differentiation’

Typical ‘differentiation’ strategies focus on how to elbow your way in front of the competition. Rarely do they suggest stepping away from the competition entirely.

A firm’s brand and reputation is determined in the mind of a client. Choosing to not behave in a way that is expected has a far greater impact on the narrative your clients tell about your firm – your firm’s brand – than doing something in the same way as everybody else but “better.” Firm’s shouldn’t simply enter the same race as everyone else, but run their own.

We have tried to show how some organisations have deliberately chosen to behave in a way that is out of the ordinary for their industry in order to send their target customers a clear message that aligns with their values, desires and worldviews.

Here’s how we would suggest professional services can do the same:

1. Determine the impact that behaving in a certain way might have on your firm’s brand, reputation and credibility. Recognise the signal that might be sent by behaving in this way and how it will position your firm in the mind of your clients.

2. Make the bold and brave decision to start behaving in a way that aligns with your clients’ needs – even if it means stepping away from the crowd. Tell your clients: “Firms like us, do things like this”

3. Give your clients a dramatically different narrative they can tell themselves about your firm and send them a clear message about your firm that they can align with. They will tell themselves: “Clients like me, work with firms like them.”

4. Once you have decided to behave in a different way, do not tolerate those who try and revert back to the status quo – even if the pull is great.

It’s time for firms to rethink their approach to differentiation. As Dr. Seuss said:

“Why fit in when you were born to stand out?”