Netflix founders Reed Hastings and Marc Randolph could have just built another video rental store. Undoubtedly, they could have opened a business offering real marginal improvements over your run-of-the-mill local Blockbuster franchise — improvements in customer service, price, selection, and so on.
Instead, they chose a more raffish route, opting to be different and build a business that attacked a problem no one even knew existed, creating a category no one knew they wanted: online home-delivery video rental.
In the years since, Blockbuster has become a relic of an analog age and a cautionary tale of dawdling business design in the face of market disruption. Meanwhile, Netflix has continued to develop a reputation as one of the most innovative, disruptive, and valuable companies in the world.
The classic company growth strategy is all about being “better” than the competition. Being “better” typically denotes a focus on operational improvements, such as speed or quality, which can allow a company to increase price or volume (and, in some rare cases, both). By being “better,” a company’s strategy is to gradually carve off slivers of the market share pie from other existing companies.
Being different, on the other hand, is about aggressively creating markets so that your company is the only choice in the eyes of the customer. Through successfully defining and owning a market, the truly differentiated company is able to position itself to dominate for years to come.
By defining, articulating, and solving a new problem, customers will flock to your business and effectively create a new market where none existed before. Not only will your company effectively be “first to market,” but you will be able to build a moat in the minds of your customers that you understand the problem the best.
Being better is about fighting for crumbs. Being different is about baking a new pie.
How do you go about creating a company that’s actually different? Being different is about effectively deploying category design — what the authors of Play Bigger define as “creating a great product (along with its experience), a great company, and a great category at the same time” .
Effective category design begins by reframing traditional business creation practice — by putting the customer, not the product, at the center of the innovation cycle. Importantly, putting customers at the center of innovation is not merely asking them what they want you to do. As Henry Ford famously said, “If I had asked people what they wanted, they would have said faster horses.”
Instead, category design is about
Thus, the true quest of a category designer is not to merely push solutions, but to identify and establish a new problem that resonates in the hearts and minds of customers. After marketing this new problem, your prospective customers will practically demand that you provide a solution.
The main reason potentially well-differentiated companies fail to make an impact is this: most just want to say they’re different without actually being different.
Saying you are different is pretty easy, and it gives most people the warm fuzzies — even when it’s not true. Most company executives operating in a crowded market will allege that they are fundamentally different from the competition. When asked what makes them different, however, they’ll say the exact same things as the competitor down the street — our product, our service, our people, etc.
Being different, on the other hand, is a more holistic and complex endeavor. Truly differentiated companies have a unique perspective on the problem they are solving in the world. That perspective, in turn, informs their customer-facing messaging, as well as their decision-making and organization throughout the entire company, from product development to company design.
Without a compelling vision, strong and engaged leadership, and actual institutional adoption, even the best differentiation strategies will inevitably die on the vine.
It’s a tautological yet essential point to say that to be different, you have to actually, well, be different.
Being different isn’t the right strategic choice for every business – and that’s ok. “Being better” is a time-tested and worthy business strategy for those who can execute on it, and many companies exist — and will continue to exist — with operational improvement as their core strategic play. There’s money to be made and comfortable lifestyles to be had by choosing this well-trodden path.
For those who choose to be different, the risks and rewards are greater, and there’s likely to be more fun along the way. Many who end up choosing to be different are compelled to be different, and couldn’t have it any other way. These are genuine market rogues who want to make their own rules rather than play someone else’s game.
Making an honest choice of whether to just say you’re different or actually being different should be the first strategic step in your business-building adventure.
As you consider optimizing your workspaces, one easy comparative model that can help sort out your options is the Organization-Chaos Spectrum.