Differentiation Strategy Explained.

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Competition is for Losers. Differentiation Strategy Explained.


Competition is for losers. We all know it’s better not to think about it. However, we just like to think about it, hoping to find ways to win but not knowing the only way to win lies in creating values for people we care about and we serve. “How?” You may ask. Our CEO, Simon Severino along with certified Strategy Sprints coach, Antonio Cativa, who specialises in differentiation strategy, offer a three-step value innovation tactics to act on for designing a business and product of worth that makes you a winner in your competing field.

What is value innovation?

Simply, value innovation can be put in an equation like this: 

Solve current problems + Increase customer values + Decrease costs 

A successful value innovation means your business is able to remedy the existing problems of the industry, increase product values through improving customers’ experience, providing new elements that never offered before, and decrease inputs that are redundant and of low return.  

The three most impactful moves you can make right now:

1. Value Re-mapping 

Be different. To remap your business in a new value direction, you need to stop investing like everyone else. If you recall what you’ve just learned about value innovation, you will find creating new values and reducing unnecessary costs are key steps for re-mapping your game.

Case in point: The competition between Cable TV and Netflix. 

Netflix adopted a 4-Action Framework in their success of remapping the streaming TV industry.

 Step 1: Eliminate 

(e.g. Commercials, news programs, live sports)

Step 2: Reduce 

(e.g. Price, technical support staff, installation complexity)

Step 3: Raise 

(e.g. Parental controls customised for individual profiles)

Step 4: Create 

 (e.g. Movie selection, devices to watch on, full season available, watch anywhere)

2. Set New Boundaries 

Talk to non-frequent, even non-customers, redefine your market and make space for competition. 

  1. Think about: Who is near my market but isn’t regularly in my market? 

Consider going to places where customers are just sporadically buying your products. These are not your regular customers, but they can be, and they will jump on your side if you are able to offer just slightly better value in your products to win their hearts and the competition. 

  1. Ask yourself: Which company would I buy and why? 

You would consider demographic factors, values the company creates, and eventually look for the one that is not in your market but share the same target customers so that when you buy the company you would have a broader value for your existing clients. Of course, you are not going to buy all of the companies, but it can become a plan of starting a joint venture, which leads to the same goal of expanding beyond your actual market size. 

A quick drill to follow and redefine your market boundaries:

Current Market ➟ Tier 1: soon-to-be clients ➟ Tier 2: refusing clients ➟ Tier 3: unexplored clients 

3. Build and Measure 

Make it real with a strategy plan. A one-paged focus card will help you fit your plan to your business goal and vision. Create one with your team, and include five things : 

  • Vision in 3-5 years
  • Vision in 1 year
  • Vision this quarter
  • Metrics 
  • Domains 

When you finish, the card should be able to tell:

  1. What builds on what

Put down just five tasks and/or projects in each term, prioritise them based on the estimated return of revenue, reputation and goodwill. Then, ask yourself: how do they contribute to the overall strategy? If they do not contribute, the team should decide whether to stop the projects, and in most cases they should stop.

  1. Who owns what

Follow the rule of “One Domain, One Name” for task allocation. It keeps things clear and easy, so that everyone knows who’s doing what. For the same reason, you don’t want complicated and multi-level mechanisms of holding accountability. Avoid things such as primary and secondary responsibility. 

  1. Aligned execution

Set measuring standards and indicators in the ‘metric’ column.

  1. Track progress

Break down your goals in long, middle and short terms:

  • Long-term: 3-5 years vision 
  • Middle-term: Yearly goals
  • Short-term: Quarterly targets 


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