There’s no question that great people can be a significant benefit to a business, indeed it’s hard to imagine a successful business without dedicated and hardworking people behind it. But when I hear businesses say “it’s our people that make the difference” I cringe. Maybe it’s just feel-good, self-motivating rhetoric from HR that’s designed to give your people a boost and a pat on the back. And that’s fine – unless you actually start to believe it.
Are your people really different? Can you quantify the difference between your people and the competition’s people? Do you have demonstrably longer and more comprehensive training programs, or require certifications that the other guys don’t? Can you say with certainty that your people have more years of relevant experience? Are you measuring “better service” and can you discern a clear difference between you and your competitors?? In all likelihood, “It’s our people that make the difference” is just a well-meaning and self-flattering acknowledgement that you have no distinct value proposition. That good people are crucial is undeniable, but when feel-good cheer leading distracts from the fact that there’s actually nothing unique about your business, it needs to be acknowledged and it needs to be addressed.
A true sustainable competitive advantage requires a resource or capability that is valued by customers and is both scarce and immobile. A patent, for example, is owned by a company (immobile) and owned by one entity at a time (scarce). This provides a competitive advantage (since no one other company has it) that is also sustainable (it’s legally protected for a period of time). The problem with considering people a competitive advantage is that a person can pack up his or her desk and leave a company; in other words, they are not immobile. And while great employees are an asset, they are typically not so scarce or unique that they create distinct advantages. Companies poach employees from each other constantly; how can they do that and still claim that their employees are really the best? It’s not unusual for two competitors in the same market to emphasize that it’s their people that make the difference – how can they both be right?
The real issue here is not the people, it’s that many companies’ value propositions have vanished, and leadership needs something to cling to. A value proposition answers the question “why should I buy from you” and because many businesses cannot come up with a convincing answer to the question, they fall back on the feel-good “our people.”
Volvo is often berated for abandoning safety as their differentiator, the core of their value proposition. Arguably the entire brand essence was safety, but they didn’t abandon it – it was cut out from underneath them. Other car manufacturers like Mercedes began making credible and verifiable claims about the safety of their cars, and Volvo’s point of differentiation became a point of parity almost overnight. Volvo is not alone, there’s no shortage of companies that start with a key differentiator, only to wake up one morning and find that there’s no longer anything that sets them apart.
Falling back on the “people” justification comes from the fear of knowing that you’re supposed to have a differentiator but don’t. But the fact is there are a lot of businesses that are indistinguishable from their competition. Home Depot and Lowes? Would you drive 20 minutes past one to get to the other? If my local Home Depot becomes a Lowes tomorrow, I’m pretty much a Lowe’s shopper. What sets one divorce lawyer apart from the next? Plumbers? How about CPGs like Crest and Aquafresh? The fact that we bounce between name brands and private labels with such ease suggests that consumers don’t see as many differentiators as we’d like to think. (Incidentally, true customer loyalty and plain old habit can appear the same to a business – but that’s the subject of another post.)
So it’s not necessarily “differentiate or die” as the old marketing text would suggest, but rather “differentiate if you can, and if you can’t, then get people to like your brand and market the hell out of your business and profit while coexisting” (we’ll return to this below).
Companies that coexist without discernible differentiators can reach a state of competitive equilibrium, where neither side has a distinct competitive advantage. They each have their customer base, acquired and maintained for various reasons (proximity, trial, habit). They trade small shares of customers (a customer has a bad customer service experience, so they switch), but overall it’s a state of equilibrium where customers have no real incentive to switch. These are not true barriers to switching, it’s more about inertia than anything else – and if the competitor is basically indistinguishable, there’s no benefit and only a little perceived risk in trying the other guy. This can carry on for years or even indefinitely. But the danger is that an apparently stable customer base can convince you that you actually have some kind of competitive advantage or differentiator when you really don’t. You can’t define your advantage, so you comfort yourself with banal platitudes like “it’s our people.”
The real danger, however, is that at some point a fundamental change in the competitive landscape comes along, and because you’ve deceived yourself for too long, you get hammered. Remember Blackberry, Nokia, and Blockbuster? These were the victims of true disrupters. (Unfortunately the term “disrupt” is now used to describe pretty much anything and everything a company does to try and compete, thus rendering it nearly devoid of all meaning.) But true disrupters fundamentally reshape the competitive playing field, and the self-deceiving are the most likely to get hurt. The danger here is not that phrases like “our people” get used as feel-good team building statements – the danger only comes when leadership believes it.
First, take an unflinching, “emperor has no clothes” look at the business, without succumbing to the temptation to manufacture a differentiator out of thin air. If you find that you no longer have one, you have a few options.
One, you can try to change the frame of reference and reposition the company in order to develop a differentiator. Domino’s Pizza became Domino’s, and is emphasizing the slogan “We didn’t stop at pizza” by running ads featuring salads, sandwiches and pasta. They want to be “dinner delivered” rather than just “pizza delivered.” They came to the conclusion that selling $9 pizzas in a highly competitive space was an ill-fated race to the bottom.
Second, (and as an alternative) you can also try to manufacture some kind of perceived differentiator. Creating brand associations necessitates that you create links between your brand and positive associations or consumer “category entry points” for your products or services. I saw a website for a general contractor that had clearly identified a key pain point of those who might hire a GC to redo their kitchen. His hook? Integrity. While he naturally referred to “quality work” and “fair prices” his core message was integrity. He made no reference to any other contractors, and he may or may not have more integrity than others. But this was the theme he hammered on, creating an association in customer minds that, at least in appearance, set him apart from the others on a key decision criterion.
Third, (in conjunction with 1 and 2) you should market aggressively, be visible in all channels all the time and take care not to “oversegment” or artificially winnow out potential category buyers. The temptation these days is to use a “sniper rifle” when targeting and in effect emphasize direct response marketing. As controversial as this may sound, if you and your competitor look the same you’re better off getting in front of every possible category buyer in a consistent and persistent way. As for messaging, bear in mind the perceived differentiator you’re trying to hammer home. And when there are no discernible differences between offerings, emotional connections may be sufficient to maintain your customer base. Depending on how “involved” the purchase is, consumers are more likely to purchase based on memory (I saw your ads, posts, etc), and affect (I liked your message, your ads made me feel good). “You can do it, we can help” is not a cognitive appeal. It’s an appeal to affect (emotion); it makes us feel good and capable and it’s one we recognize due to frequency. And, of course, that slogan does not suggest any differentiation from its competition. As a bonus, affect also improves memory, making it more likely that your brand is recalled when the need arises. Cognitive processing of ad content is typically last, and in most cases serves only to justify decisions that have been already made based on emotion. (A post that goes into more detail on how ads work is forthcoming.)
The bottom line is simply this – your business and your customers are too important to get wrapped up in feel good slogans or cheer leading. The lack of true differentiation is not unusual, in fact it’s more likely than not. The critical issue is to take an unflinching and perhaps uncomfortable look at your business and the competition, and take steps to ensure your continued success.