On Harvard Business Publishing today Umair Haque has a post entitled Detroit's 6 Mistakes and How Not to Make Them. In the post Haque states that the business models of the 20th century no longer work and need to be reinvented. He uses the bailout begging auto industry to illustrate his points.
One of Haque's points, Rule 5, appeared to me to be a restatement of my theme in a recent post on Scion. Haque states:
"New rule? Seek difference. Ultimately, the
problem is simple: differentiation is about perception. Difference is about reality.
People in the 21st century aren't the zombified, brain dead consumers
of the 20th century. And so the 21st century demands not
mere differentiation - a bean counters' eye view of the world if ever there was
one - but true difference. True difference is built by making different choices
from the ground up - different in the very essence of the value activities that
make the wheels of production and consumption spin. Porsche and BMW strove for
difference - not mere differentiation - and it is that choice that is at the
heart of their global leadership of the automotive sector."
Basically Haque is saying that product differentiation is not a function of physical product features and functionality but rather about how the customer perceives the value in the product. In many ways the value to the Scion owner is in non-product features such as the ability to express individuality.
Another way to think about the perception of value comes from another blog (can not find the link) that talked about how Nintendo perceives competition. Rather than thinking of Sony and Microsoft as the competition, Nintendo thinks of their product as "something to do in a person's free time". Consequently, competition becomes very wide ranging and not so traditionally defined. Nintendo's competition is reading a book, web surfing, jogging etc. With such a wide ranging view of competition, I think you are naturally led to define your product in terms of customer value and not fall into the trap of thinking only in terms of product features and companies that compete with you. For example, if you compare playing Nintendo with reading a book, high resolution or refresh rates probably do not come into the conversation. Concepts of "challenge" and "multi-player" may be germane. From these concepts we are on the road to understanding how the customer perceives value in Nintendo.
I have to stop blogging for today and go think about all the non-traditional competitors to this blog who may be taking you away from reading this blog and telling your friends about it. [hint].
