1. M A N A O F R ' S T O O l K I T
Open up your thinking to your customer's entire experience with yourproduct or service.
Discovering New Points of Differentiation
by Ian C. MacMillan and Rita Gunther McGrath
Most profitable strategies are built ating and redifferentiating its prod- ability to generate successful differ-
on differentiation: offering cus- ucts, Blyth has been able to grow entiation strategics. Tbe first part,
tomers something they value that from a $2 million U.S. producer of "Mapping the Consumption Chain,"
competitors don't bave. But most candles used for religious purposes captures the customer's total experi-
companies, in seeking to differenti- to a global candle and accessory ence witb a product or service. The
ate themselves, focus their energy business with nearly $500 million in second, "Analyzing Your Custom-
only on tbeir products or services. In sales and a market value of $1.2 bil- er's Experience," shows managers
fact, a company has tbe opportunity lion. Not bad for a company in an in- how directed hrainstorming about
to differentiate itself at every point dustry that, as CEO Robert B. Goer- each step in the consumption chain
where it comes in contact with its gen says, "has been in decline for
customers - from the moment cus- 300 years." Blyth's story is, quite Ian C. MacMillan is the George W.
tomers realize that they need a prod- simply, a manifestation of the power Taylor Professor of Entrepreneurial
uct or service to tbe time when they of strategic differentiation. Studies and a professor of manage-
no longer want it and decide to dis- Business history is full of stories ment at the University of Pennsyl-
pose of it. We believe tbat if compa- of entrepreneurs who stumbled vania's Wharton School in Philadel-
nies open up their creative thinking upon a great idea tbat then became phia. Rita Gunther McGrath is an
to their customers' entire experience the cornerstone of a successful com- assistant professor in the Manage-
with a product or service - what we pany. But finding ways to differenti- ment of Organizations Division of
call tbe consumption chain - they ate one's company doesn't have to Columbia University's Graduate
can uncover opportunities to posi- be an act of genius or intuition. It is School of Business in New York City.
tion their offerings in ways that a skill that can be developed and MacMillan and McGrath are coau-
they, and their competitors, would nurtured. We have designed a two- thors of "Discovery-Driven Plan-
never have thought possible. part approach that can belp compa- ning" (HBR July-August 1995} and
Take the case of Blyth Industries, nies continually identify new points "Discover Your Products' Hidden
a candle manufacturer. By differenti- of differentiation and develop the Potential" (HBR May-fune 1996).
DRAWINGS BY PAUL MEISEL 133

2. M A N A G E R ' S T O O L K I T
Otal-B created a powerful source of differentiation with a toothbrush that tells customers when they need a new one.
can elicit numerous ways to differ- they first become aware of your uct, such as a toothbrush. For many
entiate even the most mundane product to the time when they final- people, brushing is a ritual to which
product or service. ly have to dispose of it or discon- they pay relatively little attention.
tinue using it. As a consequence, many brushes are
( Mapping the Naturally, every product or ser- used well past the point wben tbeir
Consumption Chain vice will have a somewhat differ- bristles are worn and are no longer
As we've said, the first step toward ent consumption chain. However, a effective. Toothhrush maker Oral-B
strategic differentiation is to map few activities are common to most discovered a way to capitalize on
your customer's entire experience chains. Consider tbe following ques- this widespread habit. The company,
with your product or service. We rec- tions, eacb of which illustrates one hy introducing a patented hlue dye
ommend tbat companies perform of those activities. Then, as the in the center bristles of its tooth-
this exercise for each important cus- group hegins to get a feel for the spe- brushes, found a way to have the
tomer segment. cial relationship between your cus- brush itself communicate to the cus-
To begin, assemble groups from tomers and your products, ask ques- tomer. As the brush is used, the dye
all areas of your company - in par- tions about more complex activities gradually fades. When tbe dye is
ticular, those employees who use that pertain to your business. gone, the brush is no longer effective
marketing data and those who have How do people hecome aware of and should be replaced. Customers
their need for your prod- are thus made aware of a need that
uct or service? Are con- previously had gone unrecognized.
sumers aware that you So far, the idea sounds like some-
The first step is to map can satisfy their need? thing out of Marketing 101. What
your customer's entire Are they aware that they
even have a need tbat can
gives it particular value is that the
need can he filled only hy Oral-B's
experience vs^ith a product. be satisfied? Your com- patented process. The company
pany can create a power- turned differentiation into a com-
ful source of differentiation if it can petitive advantage.
face-to-face or phone contact with make consumers aware of a need in
customers. Charge the groups with a way that is unique and subtle. How do consumers find yonr of-
identifying, for each major mar- fering? Opportunities for differenti-
ket segment, all the steps through Consider the problem of differen- ating on the basis of the search
which customers pass from the time tiating an everyday consumer prod- process include making your prod-
134 HARVARD BUSINESS REVIEW [uly-August 1997

3. M A N A G E R ' S T O O L K I T
uct available wben otbers are not from selcctmg their products, while Tbe terminals connected those cus-
(24-hour telephone-order lines), of- your procedures encourage people to tomers directly to tbe company's
fering your product in places where come to you. Citibank for years cap- system, allowing direct drop ship-
competitors do not offer theirs (the tured a significant share of the col- ment and automatic restocking
mini McDonald's outlets in Wal- lege student market for credit cards whenever supplies fell below a cer-
Mart stores), and making your prod- simply by making it easy for stu- tain level. Hallmark uses a similar
uct ubiquitous (Coca-Cola). Making dents to ohtain a card while com- approach for its greeting cards.
the search process less complicated, petitors made it difficult. Many companies, including ice-
more convenient, less expensive, Another example of tbis dynamic cream makers and pet-food manu-
and more habitual are all ways in is playing out right now in the used- facturers, are also using tbis method
which companies can differentiate car business. For many potential to stock supermarket shelves, reap-
themselves. And when competitors customers, the experience of choos- ing the benefits of preferred access
can't or won't do the same - at least,ing a used car is an
not right away-you have the poten- ordeal - to the point
tial for a strategic advantage. where one CEO of a CarMax and AutoNation
One example is the rapid growth major automaker ob-
of catalog sales in channels formerly served that some peo- ''selP' cars by letting
dominated by retail chains. Con- ple would rather have
sumers now can ohtain detailed, up- a root canal. But a new customers create their
to-the-minute information about a method of selecting selection process.
breathtaking range of products over cars is transforming
the telephone or through the Inter- the industry. Compa-
net, without enduring the inconve- nies such as CarMax Auto Super- to these crucial outlets as well as
nience of visiting a showroom and store and AutoNation USA bave tar- of superior displays. Another, more
geted the selection experience as subtle benefit of this form of dif-
the often inadequate knowledge of their competitive focus. At a Car-
the floor sales staff. The PC Connec- ferentiation is that it imposes a
Max showroom, customers sit in switching cost on customers tbat
tion & Mac Connection, a company front of a computer and specify what
that sells computers through its might be tempted to try another
features they are looking for in an supplier. Once customers have
catalog, operates a 24-hour-a-day, automobile. They can then, in pri-
seven-day-a-week toll-free pbone signed on, it is expensive for them
vate, scroll through detailed descrip- to switch; tbis deterrent creates a
number for people wanting informa- tions of cars tbat might meet tbeir
tion about computers, software, and barrier to competition and, once
needs. Tbe final (and only) price for again, a potential strategic advan-
related products. When a caller ex- each vehicle is listed. A sales assis-
presses an interest in buying a com- tage for the supplier.
tant tben lets the customers inspect
puter system, a company representa- the autos that interest them and How is your product or service de-
tive asks a set of questions to narrow handles all the paper- livered? Delivery affords many op-
work if they decide to portunities for differentiation, espe-
buy one. The "selling" is cially if the product is an impulse
Ian you make the buying done not by the salespeo- purchase or if the customer needs
it immediately. Let's return to our
process more convenient ple but by the selection catalog computer dealer, the PC
process the customers
and less irritating? create for themselves. Connection. Customers can call its
toll-free number as late as 3 A.M to
How do customers or- receive "next-day" shipments of
down the possibilities to a few good der and purchase your product or items in stock. How does tbe com-
candidates. The rep and the con- service? This question is particular- pany do it? The amazing turnaround
sumer then can discuss each option ly important for relatively low-cost, times are possible because the ware-
in detail. What is remarkable about high-volume items. Can a company housing and distrihution facilities
this approach is that, in effect, it differentiate itself by making the are conveniently located near an
allows consumers to tailor the search process of ordering and purchasing Airborne Express hub. Packages can
experience to their own needs. more convenient? be picked up at the warehouse,
How do consumers make their fi- American Hospital Supply revolu- transferred to Airborne, and shipped
nal selections? After a consumer has tionized its industry by radically to the customer in a matter of hours.
narrowed down the possibilities, he simplifying the ordering and re- Not only does this delivery strategy
or she must make a choice. Can you stocking process for such products constitute a real benefit for cus-
make the selection process more as bandages, tongue depressors, sy- tomers, but, because there are a lim-
comfortable, less irritating, or more ringes, and disinfectants. The com- ited number of opportunities for
convenient? Look for the ideal situa- pany installed computer terminals such a warehouse-hub connection,
tion, in which competitors' proce- at each hospital and medical supply competitors will find it hard to adopt
dures actually discourage people store with which it did business. tbe same strategy,
HARVARD BUSINESS REVIEW July-August 1997 135

4. M A N A G E R ' S T O O l K I T
What happens when youi product and assessment methods. A side computers so that a cheerful video
or service is delivered? An often benefit for the company is tbat its and audio presentation leads new
overlooked opportunity for differen- approach also has decreased the inci- users through the setup and registra-
tiation lies in considering what has dence of fraud by reducing the op- tion process when tbey first turn on
to happen from the time a company portunity to file false claims and in- the macbine.
delivers a product to the time the flate repair bills. How is your product or service
customer actually uses it. Opening, How is youi product installed? paid for? Many companies unwit-
inspecting, transporting, and assem- This step in the consumption chain tingly cause their customers major
bling products are frequently major is particularly relevant for compa- difficulties with their payment poli-
issues for customers. nies with complex products. For ex- cies. Here's a test to see whether
That applies even to the delivery ample, installation has presented an payment might be sucb an issue for
of services. Consider how difficult it enormous barrier for computer man- your customers: Take a walk over to
can be to get an auto accident claim ufacturers trying to break into tbe your accounts-receivable depart-
processed and paid by an insurance novice-PC-user market. Computer ment and ask to see a copy of a re-
company. Now consider how Pro- beginners are notoriously intolerant cent invoice. If your company is
gressive Insurance of Cleveland, of such on-screen messages as "Disk anytbing like about 80% of those
Ohio, tackled the problem. The Error 23." we bave worked witb, tbe invoice
company has a fleet of claims ad- will be virtually incomprehensible.
Compaq Computer, witb its Pre-
justers on the road every day, ready Why? Because invoices are generally
sario line, was among the first to tar-
to rush to the scene of any auto acci- designed by systems people for sys-
get installation as a source of differ-
dent in their territory. There they tems, not customers. Given the
entiation. Instead of providing an
can record all the information they prevalence of tbis situation, your
instruction book filled with techni-
need and often settle claims on the company may find opportunities to
cal terminology, Compaq offers its
spot for policyholders. The process set itself apart by making tbe wbole
customers a poster tbat clearly illus-
has greatly increased customer satis- payment process easier for cus-
trates the ten installation steps. The
faction by eliminating the hassle tomers to understand.
company uses color-coded cords, ca-
and delay that so often accompany bles, and outlets to simplify installa- You may discover even greater op-
conventional reporting, inspection. tion further and also bas rigged its portunities by rethinking wby your
company uses its current payment
policy in tbe first place. We once
worked with a company in the ener-
gy control business tbat was having
a hard time selling its services to res-
idential co-op owners. At every co-
op, tbe company ran into opposition
from a bard core of owners who re-
sisted the capital outlay involved in
installing an energy management
system. Tbe company eventually
won a huge share of the co-op mar-
ket by altering its policy, Customers
no longer pay an up-front installa-
tion fee; instead, they pay over time,
out of tbe energy savings.
How is your product stored? Wben
it is expensive, inconvenient, or
downright dangerous for customers
to bave a product simply sitting
around, tbe opportunities for differ-
entiation abound. Air Products and
Chemicals, a producer of industrial
gases, grew to dominate its market
segments by addressing tbe prob-
lem of storage. Realizing that most
of its customers - cbemical compa-
nies-would ratber avoid the burden
of having to store vast quantities of
dangerous higb-pressure gases. Air
Compaq discoveied a valuable way to differentiate itself: Products built small industrial-gas
it provides customers with a user-friendly installation video. plants next to customers' sites. The
136 HARVARD BUSINESS REVIEW luly-August 1997

5. M A N A G E R ' S T O O L K I T
move pleased customers; it also gen-
erated switching costs. Best of all,
once an Air Products plant was in
place, competitors bad little oppor-
tunity to move in.
How is your product moved
around? Wbat difficulties do cus-
tomers encounter when they must
transport a product from one loca-
tion to another? Whether the jour-
ney is across a room or across a state,
this step in the consumption chain
is another often-overlooked oppor-
tunity for differentiation. Ask your-
self the following questions: Does
the customer find the product frag-
ile? Difficult to package? Awkward
to move:
Consider how John ScuUey's mar-
keting team at Pepsi-Cola used
packaging as a way to differentiate
Pepsi from Coke. Sculley's team cre-
ated a distinct-if temporary-advan-
tage for Pepsi in the early 1970s by
designing plastic bottles tbat were
ligbter, and thus easier for cus-
tomers to carry, than tbe heavy glass
bottles of tbe time. The beauty of
the move was that it not only made
carrying soda easier, but it also re-
duced the advantage of Coke's well- Nordstrom takes its no-questions-asked return policy seriously,
known contoured glass bottle. At and the result is strong customer satisfaction.
the time, it was difficult to produce
lieve the customer of repair and to customers' needs throughout
plastic bottles in that shape.
maintenance concerns, and also will their experience with a product.
What is the customer really using gain economies of scale by managing Handling things well wben tbe prod-
your product for? Finding better an entire network. What's more, the uct doesn't work out can be as pow-
ways for customers to use a product entry barrier created by such a sys- erful as meeting tbe need that moti-
or service is a powerful differentia- tem can be formidable. vated tbe initial purcbase.
tor. And such opportunities abound, What do customers need help Nordstrom is an excellent exam-
especially for companies whose with when they use your product? ple of a company tbat bas taken this
products are expensive and used Tbe company witb the most belpful issue to heart. The clothing retailer
relatively infrequently. General Elec- response has a significant advantage captured national publicity in the
tric's Transportation Systems divi- bere. GE, for instance, has an enor- 1970s when one of its store man-
sion, wbicb manufactures diesel- mously popular 800 number that is agers "took back" a set of tires from
electric locomotives, used this step available 24 bours a day to belp peo- a customer despite the fact tbat
in tbe consumption cbain as the ba- ple wbo bave difficulty using any of Nordstrom did not sell tires. By fo-
sis for rethinking its business. tbe company's consumer products. cusing on and aggressively promot-
With few exceptions, the railroads Similarly, Butterball Turkey's 24- ing its no-questions-asked return
that are the customers for GE's loco- hour hot line fields cooking ques- policy, Nordstrom has enhanced its
motives are not all tbat attached to tions from hundreds of customers position as a company that provides
a particular unit. What tbey really every Thanksgiving. Butterball has unique customer service. Customers
want to know is, if tbey bave freight recently supplemented its hot line may be unbappy with tbe brands
to ship, will a locomotive be there to with an Internet home page and a they return, but they are not un-
haul it ? GE is working on an arrange- turkey-cooking guide that its cus- happy with the store.
ment through which the company tomers can download.
How is your product repaired or
will guarantee that a locomotive What about returns or exchanges? serviced? As many users of high-
will be available on demand. Under Too many companies put all their tech products will attest, repair ex-
tbat arrangement, GE will take over efforts into the selling side of the periences - both good and bad - can
the management of all tbe engines in product life cycle, forgetting that influence a lifetime of subsequent
the customer's system. It will re- long-term loyalty requires attention purchases.
HARVARD BUSINESS REVIEW fuly-August 1997 137

6. IT BEGAN AS A LETTER TO HIS GRANDCHILD.
Now IT'S MUST READING EOR YOU, TOO.
An ideal solution, used by Tan-
dem Computers - a company that
At age 72, with a pacemaker makes computers with parallel cen-
checking his heart rhythms, Gordon tral-processing units for applications
Cain became an entrepreneur. in which downtime is a major prob-
He revolutionized an industry. lem - is to try to repair a product
Made more than $100 million for even hefore the customer is aware
himself. Made millionaires of more that such service is needed. Tandem
than 100 managers. Shared millions staff memhers can spot a malfunc-
more with employees in profit-sharing tioning component through remote
and ESOPs. diagnostics, send the appropriate
Then he wrote an autobiography. part and instructions to the cus-
tomer by express mail, and walk the
It reminds us of what's right about
customer through the repair process
American business. on the phone. This approach has al-
Everybody Wins! A Life in Free Enterprise most completely eliminated expen-
by Gordon Cain $24.95 sive and inconvenient downtime for
the company's customers; it also has
eliminated their need for a costly on-
Available at bookstores or from "Gordon Cain is my Ail-American." site service force.
Chemical Heritage Foundation Jon M. Huntsman.
315 Chestnut Street Chairman and CEO, Huntsman Corp. Otis Elevator uses remote diagnos-
Philadelphia. PA !9106'2702 tics in a different way. In high-traffic
"The perfect antidote to cynicism about office buildings, where servicing ele-
America's tree enterprise system." vators is a major inconvenience to
Ph: 888-224-6006 Edward H. Crane III. President. Cato Institute occupants and visitors alike, Otis
Fax. 215-925-1954
uses its remote-diagnostics capabili-
http://www.chemheritage.org "I commend this book to you." ties to predict possible service inter-
Mention Prioritv Code H Michaei C. Jensen. Harvard Business School
ruptions. It sends employees to carry
out preventive maintenance in the
evening, when traffic is light.
What happens when your product
Investment Opportunities & is disposed of ot no longer used? In
Strategies for Trading Today's a world in which it is becoming
increasingly economical simply to
Foreign Exchange Markets replace many products as they age
rather than spend the money to fix
SUPERIOR Selection of Managed Accounts them, what do customers do with
the obsolete goods'
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France 0800902246 Grme 00800119213013 Germany 0130829666 Hong Kong 800967209
Ireland 1800559294 Imel 1771000102 Italy 167875928 Japan 0031126609 Analyzing Your
Korea 0038110243 iiaemboarg 01*004552 Mexico 958008784178 Netherlands 060220657 Customer's Experience
M Antilles 18009945757 N.Zealand 0SOO44I880 Portugal 050112632 Singapore 8001202501 Although mapping the consump-
S. Africa 0800996337 Spain mmmi Sweden 020793158 Switzerland 08(HI8')7233 tion chain is a useful tool in itself,
the strategic value of our approach
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continued on page 143
US-Toll Voice Line+714-376-8020 . US-Toll Fax Line+714-376-8025

7. M A N A G E R ' S T O O ! '
lies in the next step: analyzing your company seeks tu do is he the first to children's birthday parties, and in
customer's experience. The ohjec- create and then dominate many places of worship. What quickly be-
tive is to gain insight into the cus- small niches in rapid succession came evident to Blyth was that the
tomer by appreciating the context over time, gaining economies of dis- concerns and behavior patterns of its
within which each step of the con- trihution and scale hy the sheer customers were likely to be different
sumption chain unfolds. It is crucial numher of products it has in the in each location. That insight sug-
to remember that the customer is al- marketplace. gested the potential for differentia-
Consider some of the tion on the basis of location.
possibilities that Blyth em- For example, consider how can-
o analyze your customer's ployees uncovered when
they applied the questions
dles are used in the home. Virtually
every room in the house has poten-
experience, consider hovsr to their business: tial: the dining room, living room,
What? What are cus- kitchen, bedroom, bathroom, and
ve simple questions apply tomers doing at each basement can all conceivably pro-
at each link in the chain. point in the consumption
chain- What else would
vide a setting for candle use, each for
a different reason.
they like to he doing? Who? Who else is with the cus-
ways interacting with people, What problems could they be experi- tomer at any given link in the chain?
places, occasions, or activities. encing? (These prohlems may not be Do those other people have any in-
Those interactions determine the directly related to your product or fluence over the customer? Are their
customer's feelings toward your service.) Is there anything you can thoughts or concerns important? If
product or service at each link in the do to enhance their experience while you could arrange it, who else might
chain. When they are viewed strate- they are at this stage of the chain? he with the customer? If you could
gically, they can shape the dynamics Candles, when you think about it, arrange it, how might those other
of competition for tbat custom- can play a role in everyday life in a people influence the customer's de-
er's business. host of different ways. Among other cision to buy your product?
Essentially, this step involves con- things, they are used to celebrate Honing in on the line of thinking
sidering how a series of simple ques- birthdays, create a festive atmo- Blyth used about domestic candles,
tions-what, where, who. when, and sphere for dinner parties, warm buf- consider the use of candles in the
how-apply at each link in the con- fet dishes, cope with power outages, dining room. Who else is going to be
sumption chain. We have found that and set the mood for
the most rewarding way to approach romantic evenings.
this exercise is to have a group of Candles can be pur-
people from a company start down a chased in specialty Candle makers might
shops, at crafts fairs, in
path with any of their questions and
brainstorm until their ideas dry up. supermarkets, and at explore the possibility of
Sometimes a given question will not card stores. Further,
their use can be ac-
offering a complete
lead to any particular insight. That's
not a problem; the goal is to assem- companied by a huge "candlelight experience.'
hle an inventory of possible points variety of containers,
of differentiation. Once the ideas displays, accents, and mood-creating
products. All this suggests that can- there? The other people could be
are on the tahle, you can assess each
dle makers might do well to explore members of the immediate or ex-
one and select those that are most
the possibility of offering a complete tended family, business associates,
promising for your situation.
"candlelight experience" by produc- close friends, or a suitor. Each type
Blyth Industries, the candle manu- ing or marketing complementary of person means a possible point of
facturer we mentioned earlier, pro- products as well. differentiation; each type means a
vides a good example of how analyz- different experience, a different
ing your customer's experience Where? Where are your customers mood, and a different time.
works in practice. By exploring the when they arc at this point in the When? When-at what time of day
options raised by their analysis, consumption chain? Where else or night, on what day of the week, at
Blyth employees were able to take a might they be? Where would they what time of the year-are your cus-
prosaic product that is easy to imi- like to be? Can you arrange for them tomers at any given link in the
tate and create a profitable competi- to be there? Do they have any con- chain? Does this timing cause any
tive advantage. What is important to cerns about their location? problems? If you could arrange it,
understand here is that Blyth makes Because candles can have so many when would they be at this link?
no pretense of being able to create uses, it isn't surprising that there are Take the scenario of a dining room
the fahlcd "sustained competitive as many potential places for their with the family. Blyth found that the
advantage" - so beloved of strat- use. Candles can be found at the question when uncovered a wealth
egy texts - in any single segment of beach, on picnics, at proms, at wed- of opportunities for differentiation.
the candle market. Rather, what the dings, at home, in restaurants, at Candles are used in the dining room
HARVARD BUSINESS REVIEW fuly-August 1997 143

8. M A N A G E R ' S T O O L K I T
Is There a Way to Differentiate Selling Gas?
Consider the ''purchase link" of the consumption chain.
If you pursue tbe business-trip option,
the fiexf question is,
Whom are they ^ t h when they
buy gasoline on a business trip?
Your customer could be alone or
accompanied by a colleague. He or she
could be with a spouse or significant
other. Your customer also could be
traveling with a group of people.
What else are your customers
doing when they buy gasoline?
Among other things, they might be
commuting, on a leisure trip, on a If you pursue the idea that your custorm
business trip, on vacation, shopping, or is olone, the next question is.
planning to use equipment [such os a Where does your customer buy
mower or a tiller). gasoline "while he or she is on th
business trip?
Your customer might stop first at a local
gas station, then again between cities
along the way.
with the family on birthdays, an- Candles intended for use with fami- he says, "eating becomes dining, and
niversaries, holidays, and graduation ly members at Thanksgiving, for ex- dining becomes romance."
days, and at meals marking other ample, might be scented with cinna- How? How are your customers'
special occasions. Each occasion mon, colored in tones associated needs being addressed? Do they
provides a distinct experience. Im- with the holiday, and sold with spe- have any concerns about the way
portant for a candle maker, each also cial holders. in which your company is meeting
triggers distinct emotions. Blyth em- Because there are many holidays their needs? How else might you at-
ployees were able to identify what and other occasions wben families tend to their needs and concerns?
became several successful new areas get together in the dining room, you Think about how candles are used
of differentiation by exploring how can hegin to get a sense of the oppor- outdoors - say, at a company barbe-
tunities available for dif- cue. Citronella candles come to
ferentiation. Moreover, the mind. In addition to creating a fes-
Even a simple product process can he repeated for
as many different compan-
tive atmosphere, they are an attrac-
tive way to protect people from in-
such as gasoline can be ions and settings as the sect bites.
imagination of your em-
differentiated. ployees can contemplate.
As we've seen, there is consider-
able potential for differentiation
Blyth, for example, also even in products so simple that at
their candles might be designed in has found a tremendous opportunity first blush they seem like commodi-
special shapes, colors, or scents. to differentiate its products for roman- ties. Candles are but one. Gasoline is
They also came up with a variety of tic meals. CEO Goergen has worked another. (See the exhibit "Is There a
ways to package the candles and hard to design scented candles in vari- Way to Differentiate Selling Gas?")
combine them with such accessories ous shapes in order to influence the Understanding the customer's expe-
as napkins to suit each situation. ambience of such occasions so that, as rience at any link in the chain for
144 HARVARD BUSINESS REVIEW July-August 1997

9. M A N A G E R ' S T O O L K I T
Which leads to:
Does your customer have any
concerns in any of those
situations, and how is your
conipany addressing them?
Among other things, your customer
might worry about getting lost or
running out of gos. Or he or she might
be concerned obout personal security.
Also, your customer certainly doesn't
want the car to break down.
Keeping those ideas in mind, consider
When does your customer buy
gasoline?
Anytime; during the day or night; during If you consider in depth the concern about personal security, one way to differentiate
the week or on the weekend. the process of selling gosoline would be to reconfigure the structure of your gas stations
along those highways that are principal business routes. For example, you could
D ensure thot your station is well lit and monitored;
D provide on ottendant to pump the gas;
• provide 0 "travel adviser" at each station who has a detailed knowledge of the
area; such a person might be oble to odvise your customer about the safest routes,
areas under construction, congested oreas, and good restauronts and hotels;
• arrange for customers who buy gas to rent a mobile phone at the gas station,
possibly negotiating with the phone company to share usage revenues.
any product offers companies the op-so and how quickly competitors nately, all too often, the company
portunity to identify and explore can respond. Robert Goergen knows never benefits hecause that talent
many nontraditional ways to create that Blyth Industries has certain isn't appropriately focused. It may
value. The task then becomes select-strengths its competitors do not, in- even be squelched by tbe homoge-
ing from among this wealth of possi-cluding several unique production nizing pressures that any large orga-
bilities; considering how each idea techniques and, more important, a nization tends to impose.
deep knowledge of fra- An important benefit of the
Consider ho>v each idea grances. Those special strengths, coupled with a
process we've outlined ahove is that
it unlocks the creativity in an orga-
meshes v/ith your solid understanding of nization so that the insights of par-
customers based on mar- ticular individuals can contribute to
company's skills, ket research, give Biyth a shared understanding of the cus-
assets, and systems. an edge. Goergen thusevaluates opportunities
tomer - so that the company, in ef-
fect, knows its customers almost
meshes with a company's particular for differentiation based on those better than they know themselves.
skills, assets, and systems; and fo- considerations and moves forward Companies that do this successfully
cusing only on those that can gener- only with the ideas that promise the find themselves deeply attuned to
ate a competitive advantage. Each strongest returns. their markets. And, like entrepre-
idea also may open up an opportuni- neurs, they spend the imagination
ty to develop a new competence. Focused Creativity they have in lieu of the money they
Too many companies pursue what Virtually every company we have may lack to outperform competitors
seem like great new ideas without ever worked with has within it wherejt counts. y
carefully assessing whether their scores of people of considerable cre- Reprim 97408"
organizations are well suited to do ativity and imagination. Unfortu- To order reprints, sec the last page of this issue.
HARVARD BUSINESS REVIEW July-August 1997 145