When Differentiation is No Longer Advantage
Back in my undergraduate days, I discovered Michael E Porter’s, Competitive Advantage, 1985 and the subject of differentiation for business quickly became a favourite of mine for my career that followed.
The subject was the core principle for my thesis The Viability of the Internet as a Sales and Marketing Tool for the Small to Medium Enterprise, which as a mature student, I immediately turned into a business plan following graduation, using this theme to help businesses embrace the Internet to get ahead of their competition. I remember the champions of this fledgling industry back in the mid-nineties would repeat slogans such as “Any business not on the Internet will be dead in a year” that good old fear of missing out thing fuelling the speed that business acquired a domain name, a web site and email. Suddenly, I seemed that businesses who had jumped online early, were set to enjoy the return that their investment in a few pages of HTML, a few images, an info@ address and a dial up modem would promise to give them. However, to start with it was tough to find many people who actually had a firstname.lastname or an even @hotmail address to communicate with but slowly, this led to an element of first-mover competitive advantage for businesses that saw the light early on and started using their new platform to reach out to new customers.
I recall early on telling businesses with a web site how they had to then go market it. In other words, pre-SEO days, “go tell folk about it” as the belief that build it and they will somehow come, was like having a shop in the Sahara – no one will find you. Then business ideas emerged that the new Internet crowd jumped on to get ahead, with the concept of email marketing being tainted very early on when Xoom sent news of their anti-spam service to 6 million people without permission. Then later for example how The Million Dollar Home page in 2005 where for a mere £1 a pixel, your business would benefit from a new wave of Internet consumers looking to something new to click.
Since the early days, what I have observed repeatedly is technology, digital or analogue, whatever the advantage, only provides first move advantage for a short time. Unless a business employing a differentiated strategy does so in a way that they monopolise a market, competitors will ultimately copy and the niche quickly becomes crowded.
Today differentiation is a bit like being at an industry’s annual business exhibition. The cost of a stand/floor space and ‘standing out’ is extortionate, but the trade-off of not being there and the competition consequently gaining your share of the attention, is not worth the risk.
So, it troubles me to look at differentiation today, not as a way of gaining competitive advantage, but rather as a means of business survival. Where I ask myself, is differentiation a path to advancement or merely to keep up with the business Joneses?
Take the current pandemic and the many and varied effects that it has had on business.
During the early months (End of February-late April 2020), as every business was forced to send the majority of office-based staff to work from home, the IT teams were immediately thrust into the roles of being the organisation’s heroes, having to work beyond the call of duty, ensuring that everyone could still perform their roles. Whether it was perched on the end of their bed, kitchen table, or safely within their purpose built study. The challenges were the same, access to business-critical systems, email and telephony. During the first few months, apart from the “We don’t have enough VPN licenses” or “How do we divert our numbers” IT teams got through the early stages of their staff being located anywhere but the office by using what I refer to as string and sticky tape technology (unless of course they were already ahead of the game and had a solid business continuation plan in place for such an unprecedented event). Very few IT teams were at this stage talking to their suppliers about new IT projects. Projects that had been in discussion until then were put to the back of the queue and budgets reassigned to the ‘getting through this’ fund.
Then, as business owners and decision-makers started to observe how staff were, on the whole, doing more than getting by and were actually embracing the freedom from the daily commute, and autonomy, that working from home provided. Organisations started to promote their new ‘work from anywhere’ strategy as a permanent facet of their approach to agile working and questioning the longer term viability of the city centre palatial manors before realising that both office and home would become part of their future means of operating.
Industry speakers started to use this new term ‘Agile working’ and adopted this as the new drive to differentiate. In other words, enabling staff to work from anywhere, i.e. office or home, wherever it may be, would provide happier, more productive employees and a better customer experience.
Today, just a few months on, as we sit halfway through lockdown number two, cities are again quiet, and businesses continue to operate effectively in the new dispersed manner.
Or do they?
In some cases, those business keen to get ahead of the curve, have started to revisit cloud projects and address those that will enable agile working, knowing that by doing so, they will enhance customer and peer experience as well as differentiate. In doing so gaining competitive advantage.
However, for many businesses, they have yet to see that centralised IT and communications does not work for an agile workforce. Some are embracing it. As one IT director said to me recently ”We are getting there, many fellow directors now appreciate that we are no longer a 6-site business, but rather a 200-site business”
A 6 site MPLS network, a back of office server room, single internet access breakout with 200 VPNs is not an agile network. Whereas 200 business grade FTTC internet connections with a roaming 4G sim card in each router for failover on an SD-WAN providing priority for the business applications 8am – 6pm over the families Netflix and Xbox is. But all this takes time to design, procure and implement.
However “we use Teams” plus desk phones diverted to mobiles, or home phones, using mobiles to make outbound calls, main number forwarding to a single mobile is not differentiation, it’s a disadvantage. Though it is solvable in the short term by moving to the cloud via a reputable UC provider for voice, video and messaging, integrated into your critical business applications, such as Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) across the entire organisation. Regardless of where they are situated.
And once the foundations of continuous business communications amongst colleagues and customers have been established. Efficiency and effectiveness restored, the conversation of this new agile way of working should certainly become part of the continuous drive for competitive advantage.
And for those who don’t adapt and differentiate. I’m sure their competitors will be grateful.
Stephen Hackett, November 2020
The thoughts and opinion of the author are not his own, They are the fabric of the advice, experience and industry observations that we like to share with anyone who has an interest.