Yes, But You’re Still Ugly . . .

Once upon a time there was a man and a woman who had known each other for several months.  Over time, the man had grown quite fond of the woman and one day he finally got up the nerve to ask her out.  “I’m sorry” she told him, “you seem like a very nice guy, but I just don’t find you physically very attractive.”

The man was disheartened at first, but soon he was energized by the rejection. The very next day he started hitting the gym, and that weekend he got a new haircut at the most expensive salon in town.  Over the next several weeks he continued his workout regimen and spent a fair amount of his paycheck to update his wardrobe.  He even went to get a manicure and facial.

After about a month of his self-improvement plan, he went to the woman and asked her out again.  “I’m sorry” she once again told him, “I can see that you’ve really taken steps to improve your appearance, but there is still just not enough of a physical attraction for me to decide to go out with you.”

While one can certainly challenge the shallowness of this woman’s decision-making process, we can certainly see how businesses, finding themselves in the same situation as the hapless gentleman of this story, adopt the same line of thinking as they seek to improve themselves.

When I was at Sears nearly ten years ago, we had a new senior executive who spent hours and hours digesting the mounds of consumer research that laid bare the challenges we faced in regaining our competitive position.  He was struck by the analysis the showed how our target consumers rated us on important dimensions versus tough competitors like Kohl’s and JC Penney.   “I now see exactly what we need to do” he told us dramatically at an early morning strategy session.  “If we can just focus on closing these gaps, we can really make some progress.”

As I left the meeting–with strong visions of needing to update my resume dancing in my head–one of my direct reports turned to me and said quite sarcastically, albeit accurately: “great, our new strategy is to suck less.”

Better is not necessarily good.  Simply getting closer to what the customer truly values doesn’t engender loyalty and brand evangelism.  “New and improved” does not guarantee a win.

So are you going to be spend your time and resources merely closing the gap with your competition?  Or are you going to innovate, take a risk and leapfrog the pack to do something truly remarkable and-dare I say-beautiful?

Defying the Sea of Sameness

Any business school course on strategy will devote significant time to the importance of competitive differentiation.  We attend marketing conferences where speakers pontificate on the need to have a unique value proposition.  Excellent books like Seth Godin’s Purple Cow preach the benefits of being remarkable to separate yourself from the herd.

Yet any visit to the mall or surfing of the internet quickly reveals an often numbing “sea of sameness.”

This has long been true for many retailers.  But I believe the recession has made it worse.  As retailers have slashed inventory, desperate to demonstrate inventory productivity progress to investors, merchandise assortments have become less interesting, less differentiated, decidedly less remarkable.

By now it should be apparent that a full recovery is going to be slow in coming.  That means revenue growth must come primarily from stealing market share.

Now is the time to go on the offensive.  Now is the time to commit to deeply understanding your target customers’ needs, compromises and preferences and to find ways to innovate, to be truly remarkable.

For some companies, this means embracing the trusted agent role, going out into the market and curating a unique offering for a discerning clientele.  This is what the best specialty boutiques do.

For others, it means finding more exclusive products in the market, leveraging existing vendor relationships to construct a unique offering and/or developing their own compelling private brands.  This is happening across the price spectrum.  Kohl’s recently reported that 47% of revenues now come from exclusive products.  Saks Fifth Avenue is aggressively working to significantly increase its percentage of private label and national brand exclusives to differentiate itself in a challenging luxury market.

I think two basic principles are at work here.  First, a willingness to move away from a product-centric, gross margin rate maximization mind-set to embrace customer-centricity and all that entails.  Second, an acceptance that it is actually more risky to play it safe and swim in the sea of sameness.

Someone in your industry will decide to break away from the herd and gobble up share while the competition is on their heels.  What’s your choice?