BE KNOWN AS INNOVATIVE. The incredible resurgence of IBM is a lesson in innovation. The company that turned its back on the PC and couldn't imagine anyone wanting a portable computer has resurrected itself by a number of tactics, including its commitment to set the standard in laptop computers. Its top-of-the-line ThinkPad 760 communicates a powerful message: IBM sets the standard. Whoever buys a laptop must make at least a mental comparison with the 760.
In the same way, we predicted Sears would be dead and buried within five years. And by 1995, the old Sears was dead and dismantled. From the ashes rose a totally new Sears that focused on meeting the needs of today's customers. The giant had been slain, but a versatile, innovative retailer was born. As a result, Sears' sales are climbing.
BE SEEN AS THE LEADER. Being viewed as a leader is far different from saying, 'We're proud to be the leading [whatever].' That's yesterday thinking. Chrysler is close to the best at understanding this issue. The moribund name of Plymouth is now affixed to star products.
But it isn't products alone that make a company into a leader, it's how the company is perceived. The Plymouth's new $35,000 'jaunty jalopy,' as Businessweek calls it, turned out to be the answer. The name Prowler goes right to the heart of the matter because it comes right out of the nation's prestige decade, the 1950s. Chrysler won and Oldsmobile lost with its ill-fated 'It's not your father's Olds' campaign, which alienated everyone, including the fathers. With the Prowler, Chrysler made a leadership statement.
BE CLEARLY DIFFERENTIATED FROM COMPETITORS. It isn't necessary to be big to accomplish this goal. A real estate salesperson in Maryland promoted himself effectively with a compelling gimmick. His advertising talked about 'Chuck and buddy' and featured a photo showing him standing next to a full-sized cut-out of himself. 'I work twice as hard as anyone else,' he said. This is compelling differentiation.
In a rural area of Wisconsin, Tom Helbach did the same thing with Mosinee Insurance Agency, a family-owned business. He went after the first contract between a national insurance organization and a local agency and got it. Mosinee Insurance is in a strategic alliance with Marsh & McLennan. 'It's not enough to say you are different,' notes Helbach. 'The customer must believe it.'
Proper differentiation helps solve difficult credibility problems, which can cause lost sales. It places a company in a league of its own.
BE TECHNOLOGICALLY COMPETENT. In effect, every company must be a high-tech business to stay in business. Boston Gear, a century-old New England manufacturer of gears, may seem far from the cutting edge of technology. Gears are gears and Boston Gear has been making them in about 20,000 variations since horse-and-buggy days. But place an order with Boston Gear and technology takes over. Chances are you will have the right part the next day. Technology is the value Boston Gear has added to the business.
One communications company makes the copywriting, design, and printing process seamless. The copywriter writes the brochure, newsletter, or ad copy, which is transmitted to the art department, where it is designed and then sent to the company's prepress operation, which outputs it on film ready for printing. This technology speeds up the production process and avoids errors and misplaced jobs.
BE KNOWN AS THE CUSTOMER'S BUSINESS ADVISOR. At Boston-based Atlantic Charter Insurance Company, employers get more than competitively-priced Workers Compensation protection. The company focuses on training employers how to take charge of job-related injuries so that the employee receives the proper medical care quickly, efficiently, and without stress — and then gets back on the job as soon as possible. Atlantic Charter sees Workers Comp as a business issue, not just an insurance problem, and empowers the employer to act accordingly. It's another instance of adding value to the business.
ADT Security Systems takes the same approach with its business customers. Unlike many other firms in the same business, ADT positions itself as a company that specializes in asset protection, as opposed to a burglar alarm outfit. The products it installs are part of a plan to help its customers avoid unnecessary loss from a variety of sources — everything from temperature sensitivity to shoplifting. For ADT, having better products is only one factor; having a better plan is what adds the value.
BE LEAN AND FOCUSED. When AT&T announced it was breaking up into three operating companies, it also said that it was reducing its work force by 40,000. Although technology makes such dramatic change possible, AT&T was willing to endure the pain of laying off so many employees because it was sending a powerful message to the marketplace that it knows how to compete. It also sent another message — Empire building belongs in the past.
Sears, Roebuck accomplished much the same goal by ripping out its venerable catalog operation and selling off subsidiaries such as Allstate Insurance. Today, it's not just a matter of downsizing for the sake of getting rid of the fat (which will continue to occur unabated, contrary to some estimates). The goal is to be totally and completely focused — a concept that has to do with adding value to the business and not just to what a company produces or sells.