Discovering New Points of Differentiation

by Ian C. MacMillan and Rita Gunther McGrath

Reprint 97408

Harvard Business Review

JULY-AUGUST 1997

Reprint Number

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Most profitable strategies are builton differentiation: offering cus-tomers something they value thatcompetitors don’t have. But mostcompanies, in seeking to differenti-ate themselves, focus their energyonly on their products or services. Infact, a company has the opportunityto differentiate itself at every pointwhere it comes in contact with itscustomers – from the moment cus-tomers realize that they need a prod-uct or service to the time when theyno longer want it and decide to dis-pose of it. We believe that if compa-nies open up their creative thinkingto their customers’ entire experiencewith a product or service – what wecall the consumption chain – theycan uncover opportunities to posi-tion their offerings in ways thatthey, and their competitors, wouldnever have thought possible.

Take the case of Blyth Industries, a candle manufacturer. By differenti-

ating and redifferentiating its prod-ucts, Blyth has been able to growfrom a $2 million U.S. producer ofcandles used for religious purposesto a global candle and accessorybusiness with nearly $500 million insales and a market value of $1.2 bil-lion. Not bad for a company in an in-dustry that, as CEO Robert B. Goer-gen says, “has been in decline for300 years.” Blyth’s story is, quitesimply, a manifestation of the powerof strategic differentiation.

Business history is full of storiesof entrepreneurs who stumbledupon a great idea that then becamethe cornerstone of a successful com-pany. But finding ways to differenti-ate one’s company doesn’t have to be an act of genius or intuition. It is a skill that can be developed andnurtured. We have designed a two-part approach that can help compa-nies continually identify new pointsof differentiation and develop the

ability to generate successful differ-entiation strategies. The first part,“Mapping the Consumption Chain,” captures the customer’s total experi-ence with a product or service. Thesecond, “Analyzing Your Custom-er’s Experience,” shows managershow directed brainstorming abouteach step in the consumption chain

M A N A G E R ’ S T O O L K I T

DRAWINGS BY PAUL MEISEL Copyright © 1997 by the President and Fellows of Harvard College. All rights reserved.

Open up your thinking to your customer’s entire experience with your product or service.

Discovering New Points of Differentiation

by Ian C. MacMillan and Rita Gunther McGrath

Ian C. MacMillan is the George W.Taylor Professor of EntrepreneurialStudies and a professor of manage-ment at the University of Pennsyl-vania’s Wharton School in Philadel-phia. Rita Gunther McGrath is anassistant professor in the Manage-ment of Organizations Division ofColumbia University’s GraduateSchool of Business in New York City.MacMillan and McGrath are coau-thors of “Discovery-Driven Plan-ning” (HBR July-August 1995) and“Discover Your Products’ HiddenPotential” (HBR May-June 1996).

can elicit numerous ways to differ-entiate even the most mundaneproduct or service.

Mapping the Consumption Chain

As we’ve said, the first step towardstrategic differentiation is to mapyour customer’s entire experiencewith your product or service. We rec-ommend that companies performthis exercise for each important cus-tomer segment.

To begin, assemble groups from all areas of your company – in par-ticular, those employees who usemarketing data and those who have

face-to-face or phone contact withcustomers. Charge the groups withidentifying, for each major mar-ket segment, all the steps throughwhich customers pass from the time

they first become aware of yourproduct to the time when they final-ly have to dispose of it or discon-tinue using it.

Naturally, every product or ser-vice will have a somewhat differ-ent consumption chain. However, afew activities are common to mostchains. Consider the following ques-tions, each of which illustrates oneof those activities. Then, as thegroup begins to get a feel for the spe-cial relationship between your cus-tomers and your products, ask ques-tions about more complex activitiesthat pertain to your business.

How do people become aware oftheir need for your prod-uct or service? Are con-sumers aware that youcan satisfy their need?Are they aware that theyeven have a need that canbe satisfied? Your com-pany can create a power-

ful source of differentiation if it canmake consumers aware of a need in a way that is unique and subtle.

Consider the problem of differen-tiating an everyday consumer prod-

uct, such as a toothbrush. For manypeople, brushing is a ritual to whichthey pay relatively little attention.As a consequence, many brushes areused well past the point when theirbristles are worn and are no longereffective. Toothbrush maker Oral-Bdiscovered a way to capitalize onthis widespread habit. The company,by introducing a patented blue dyein the center bristles of its tooth-brushes, found a way to have thebrush itself communicate to the cus-tomer. As the brush is used, the dyegradually fades. When the dye isgone, the brush is no longer effectiveand should be replaced. Customersare thus made aware of a need thatpreviously had gone unrecognized.So far, the idea sounds like some-thing out of Marketing 101. Whatgives it particular value is that theneed can be filled only by Oral-B’spatented process. The companyturned differentiation into a com-petitive advantage.

How do consumers find your of-fering? Opportunities for differenti-ating on the basis of the searchprocess include making your prod-

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4 HARVARD BUSINESS REVIEW July-August 1997

Oral-B created a powerful source of differentiation with a toothbrush that tells customers when they need a new one.

The first step is to mapyour customer’s entire

experience with a product.

uct available when others are not(24-hour telephone-order lines), of-fering your product in places wherecompetitors do not offer theirs (themini McDonald’s outlets in Wal-Mart stores), and making your prod-uct ubiquitous (Coca-Cola). Makingthe search process less complicated,more convenient, less expensive,and more habitual are all ways inwhich companies can differentiatethemselves. And when competitorscan’t or won’t do the same – at least,not right away – you have the poten-tial for a strategic advantage.

One example is the rapid growthof catalog sales in channels formerlydominated by retail chains. Con-sumers now can obtain detailed, up-to-the-minute information about abreathtaking range of products overthe telephone or through the Inter-net, without enduring the inconve-nience of visiting a showroom andthe often inadequate knowledge ofthe floor sales staff. The PC Connec-tion & Mac Connection, a companythat sells computers through its catalog, operates a 24-hour-a-day,seven-day-a-week toll-free phonenumber for people wanting informa-tion about computers, software, andrelated products. When a caller ex-presses an interest in buying a com-puter system, a company representa-tive asks a set of questions to narrow

down the possibilities to a few goodcandidates. The rep and the con-sumer then can discuss each optionin detail. What is remarkable aboutthis approach is that, in effect, it allows consumers to tailor the searchexperience to their own needs.

How do consumers make their fi-nal selections? After a consumer hasnarrowed down the possibilities, heor she must make a choice. Can youmake the selection process morecomfortable, less irritating, or moreconvenient? Look for the ideal situa-tion, in which competitors’ proce-dures actually discourage people

from selecting their products, whileyour procedures encourage people tocome to you. Citibank for years cap-tured a significant share of the col-lege student market for credit cardssimply by making it easy for stu-dents to obtain a card while com-petitors made it difficult.

Another example of this dynamicis playing out right now in the used-car business. For many potentialcustomers, the experience of choos-ing a used car is an ordeal – to the pointwhere one CEO of amajor automaker ob-served that some peo-ple would rather havea root canal. But a newmethod of selectingcars is transformingthe industry. Compa-nies such as CarMax Auto Super-store and AutoNation USA have tar-geted the selection experience astheir competitive focus. At a Car-Max showroom, customers sit infront of a computer and specify whatfeatures they are looking for in anautomobile. They can then, in pri-vate, scroll through detailed descrip-tions of cars that might meet theirneeds. The final (and only) price foreach vehicle is listed. A sales assis-tant then lets the customers inspectthe autos that interest them and

handles all the paper-work if they decide tobuy one. The “selling” isdone not by the salespeo-ple but by the selectionprocess the customerscreate for themselves.

How do customers or-der and purchase your product orservice? This question is particular-ly important for relatively low-cost,high-volume items. Can a companydifferentiate itself by making theprocess of ordering and purchasingmore convenient?

American Hospital Supply revolu-tionized its industry by radicallysimplifying the ordering and re-stocking process for such productsas bandages, tongue depressors, sy-ringes, and disinfectants. The com-pany installed computer terminalsat each hospital and medical supplystore with which it did business.

The terminals connected those cus-tomers directly to the company’ssystem, allowing direct drop ship-ment and automatic restockingwhenever supplies fell below a cer-tain level. Hallmark uses a similarapproach for its greeting cards.

Many companies, including ice-cream makers and pet-food manu-facturers, are also using this methodto stock supermarket shelves, reap-ing the benefits of preferred access

to these crucial outlets as well as of superior displays. Another, moresubtle benefit of this form of dif-ferentiation is that it imposes aswitching cost on customers thatmight be tempted to try anothersupplier. Once customers havesigned on, it is expensive for themto switch; this deterrent creates abarrier to competition and, onceagain, a potential strategic advan-tage for the supplier.

How is your product or service de-livered? Delivery affords many op-portunities for differentiation, espe-cially if the product is an impulsepurchase or if the customer needs it immediately. Let’s return to ourcatalog computer dealer, the PCConnection. Customers can call itstoll-free number as late as 3 A.M. toreceive “next-day” shipments ofitems in stock. How does the com-pany do it? The amazing turnaroundtimes are possible because the ware-housing and distribution facilitiesare conveniently located near anAirborne Express hub. Packages canbe picked up at the warehouse,transferred to Airborne, and shippedto the customer in a matter of hours.Not only does this delivery strategyconstitute a real benefit for cus-tomers, but, because there are a lim-ited number of opportunities forsuch a warehouse-hub connection,competitors will find it hard to adoptthe same strategy.

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HARVARD BUSINESS REVIEW July-August 1997 5

CarMax and AutoNation“sell” cars by lettingcustomers create their own selection process.

Can you make the buyingprocess more convenient

and less irritating?

What happens when your productor service is delivered? An oftenoverlooked opportunity for differen-tiation lies in considering what hasto happen from the time a companydelivers a product to the time thecustomer actually uses it. Opening,inspecting, transporting, and assem-bling products are frequently majorissues for customers.

That applies even to the deliveryof services. Consider how difficult itcan be to get an auto accident claimprocessed and paid by an insurancecompany. Now consider how Pro-gressive Insurance of Cleveland,Ohio, tackled the problem. Thecompany has a fleet of claims ad-justers on the road every day, readyto rush to the scene of any auto acci-dent in their territory. There theycan record all the information theyneed and often settle claims on thespot for policyholders. The processhas greatly increased customer satis-faction by eliminating the hassleand delay that so often accompanyconventional reporting, inspection,

and assessment methods. A sidebenefit for the company is that itsapproach also has decreased the inci-dence of fraud by reducing the op-portunity to file false claims and in-flate repair bills.

How is your product installed?This step in the consumption chainis particularly relevant for compa-nies with complex products. For ex-ample, installation has presented anenormous barrier for computer man-ufacturers trying to break into thenovice-PC-user market. Computerbeginners are notoriously intolerantof such on-screen messages as “DiskError 23.”

Compaq Computer, with its Pre-sario line, was among the first to tar-get installation as a source of differ-entiation. Instead of providing aninstruction book filled with techni-cal terminology, Compaq offers itscustomers a poster that clearly illus-trates the ten installation steps. Thecompany uses color-coded cords, ca-bles, and outlets to simplify installa-tion further and also has rigged its

computers so that a cheerful videoand audio presentation leads newusers through the setup and registra-tion process when they first turn onthe machine.

How is your product or servicepaid for? Many companies unwit-tingly cause their customers majordifficulties with their payment poli-cies. Here’s a test to see whetherpayment might be such an issue foryour customers: Take a walk over toyour accounts-receivable depart-ment and ask to see a copy of a re-cent invoice. If your company isanything like about 80% of those we have worked with, the invoicewill be virtually incomprehensible.Why? Because invoices are generallydesigned by systems people for sys-tems, not customers. Given theprevalence of this situation, yourcompany may find opportunities toset itself apart by making the wholepayment process easier for cus-tomers to understand.

You may discover even greater op-portunities by rethinking why yourcompany uses its current paymentpolicy in the first place. We onceworked with a company in the ener-gy control business that was havinga hard time selling its services to res-idential co-op owners. At every co-op, the company ran into oppositionfrom a hard core of owners who re-sisted the capital outlay involved ininstalling an energy managementsystem. The company eventuallywon a huge share of the co-op mar-ket by altering its policy. Customersno longer pay an up-front installa-tion fee; instead, they pay over time,out of the energy savings.

How is your product stored? Whenit is expensive, inconvenient, ordownright dangerous for customersto have a product simply sittingaround, the opportunities for differ-entiation abound. Air Products andChemicals, a producer of industrialgases, grew to dominate its marketsegments by addressing the prob-lem of storage. Realizing that mostof its customers – chemical compa-nies – would rather avoid the burdenof having to store vast quantities ofdangerous high-pressure gases, AirProducts built small industrial-gasplants next to customers’ sites. The

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6 HARVARD BUSINESS REVIEW July-August 1997

Compaq discovered a valuable way to differentiate itself: it provides customers with a user-friendly installation video.

move pleased customers; it also gen-erated switching costs. Best of all,once an Air Products plant was inplace, competitors had little oppor-tunity to move in.

How is your product movedaround? What difficulties do cus-tomers encounter when they musttransport 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 chainis another often-overlooked oppor-tunity for differentiation. Ask your-self the following questions: Doesthe customer find the product frag-ile? Difficult to package? Awkwardto move?

Consider how John Sculley’s mar-keting team at Pepsi-Cola usedpackaging as a way to differentiatePepsi from Coke. Sculley’s team cre-ated a distinct–if temporary–advan-tage for Pepsi in the early 1970s bydesigning plastic bottles that werelighter, and thus easier for cus-tomers to carry, than the heavy glassbottles of the time. The beauty ofthe move was that it not only madecarrying soda easier, but it also re-duced the advantage of Coke’s well-known contoured glass bottle. Atthe time, it was difficult to produceplastic bottles in that shape.

What is the customer really usingyour product for? Finding betterways for customers to use a productor service is a powerful differentia-tor. And such opportunities abound,especially for companies whoseproducts are expensive and used relatively infrequently. General Elec-tric’s Transportation Systems divi-sion, which manufactures diesel-electric locomotives, used this stepin the consumption chain as the ba-sis for rethinking its business.

With few exceptions, the railroadsthat are the customers for GE’s loco-motives are not all that attached to a particular unit. What they reallywant to know is, if they have freightto ship, will a locomotive be there tohaul it? GE is working on an arrange-ment through which the companywill guarantee that a locomotivewill be available on demand. Underthat arrangement, GE will take overthe management of all the engines inthe customer’s system. It will re-

lieve the customer of repair andmaintenance concerns, and also willgain economies of scale by managingan entire network. What’s more, theentry barrier created by such a sys-tem can be formidable.

What do customers need helpwith when they use your product?The company with the most helpfulresponse has a significant advantagehere. GE, for instance, has an enor-mously popular 800 number that isavailable 24 hours a day to help peo-ple who have difficulty using any ofthe company’s consumer products.Similarly, Butterball Turkey’s 24-hour hot line fields cooking ques-tions from hundreds of customersevery Thanksgiving. Butterball hasrecently supplemented its hot linewith an Internet home page and aturkey-cooking guide that its cus-tomers can download.

What about returns or exchanges?Too many companies put all their efforts into the selling side of theproduct life cycle, forgetting thatlong-term loyalty requires attention

to customers’ needs throughouttheir experience with a product.Handling things well when the prod-uct doesn’t work out can be as pow-erful as meeting the need that moti-vated the initial purchase.

Nordstrom is an excellent exam-ple of a company that has taken thisissue to heart. The clothing retailercaptured national publicity in the1970s when one of its store man-agers “took back” a set of tires froma customer despite the fact thatNordstrom did not sell tires. By fo-cusing on and aggressively promot-ing its no-questions-asked returnpolicy, Nordstrom has enhanced itsposition as a company that providesunique customer service. Customersmay be unhappy with the brandsthey return, but they are not un-happy with the store.

How is your product repaired orserviced? As many users of high-tech products will attest, repair ex-periences – both good and bad – caninfluence a lifetime of subsequentpurchases.

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Nordstrom takes its no-questions-asked return policy seriously, and the result is strong customer satisfaction.

An ideal solution, used by Tan-dem Computers – a company thatmakes computers with parallel cen-tral-processing units for applicationsin which downtime is a major prob-lem – is to try to repair a producteven before the customer is awarethat such service is needed. Tandemstaff members can spot a malfunc-tioning component through remotediagnostics, send the appropriatepart and instructions to the cus-tomer by express mail, and walk thecustomer through the repair processon the phone. This approach has al-most completely eliminated expen-sive and inconvenient downtime forthe company’s customers; it also haseliminated their need for a costly on-site service force.

Otis Elevator uses remote diagnos-tics in a different way. In high-trafficoffice buildings, where servicing ele-vators is a major inconvenience tooccupants and visitors alike, Otis us-es its remote-diagnostics capabili-ties to predict possible service inter-ruptions. It sends employees to carryout preventive maintenance in theevening, when traffic is light.

What happens when your productis disposed of or no longer used? In a world in which it is becomingincreasingly economical simply toreplace many products as they agerather than spend the money to fixthem, what do customers do withthe obsolete goods?

Canon offers an interesting exam-ple of how a company can differenti-ate itself at this step in the chain. Ithas developed a system that allowscustomers to return spent printercartridges at Canon’s expense. Thecartridges are then rehabilitated andresold as such. The process makes iteasy for customers to return usedcartridges: all they need to do is dropthe prepaid package off at a UnitedParcel Service collection station. Atthe same time, it enhances the im-age of Canon as an environmentallyfriendly organization.

Analyzing Your Customer’s Experience

Although mapping the consump-tion chain is a useful tool in itself,the strategic value of our approach

8 HARVARD BUSINESS REVIEW July-August 1997

lies in the next step: analyzing yourcustomer’s experience. The objec-tive is to gain insight into the cus-tomer by appreciating the contextwithin which each step of the con-sumption chain unfolds. It is crucialto remember that the customer is al-

ways interacting with people,places, occasions, or activities.Those interactions determine thecustomer’s feelings toward yourproduct or service at each link in thechain. When they are viewed strate-gically, they can shape the dynamicsof competition for that custom-er’s business.

Essentially, this step involves con-sidering how a series of simple ques-tions–what, where, who, when, andhow – apply at each link in the con-sumption chain. We have found thatthe most rewarding way to approachthis exercise is to have a group ofpeople from a company start down apath with any of their questions andbrainstorm until their ideas dry up.Sometimes a given question will notlead to any particular insight. That’snot a problem; the goal is to assem-ble an inventory of possible points of differentiation. Once the ideas are on the table, you can assess eachone and select those that are mostpromising for your situation.

Blyth Industries, the candle manu-facturer we mentioned earlier, pro-vides a good example of how analyz-ing your customer’s experienceworks in practice. By exploring theoptions raised by their analysis,Blyth employees were able to take aprosaic product that is easy to imi-tate and create a profitable competi-tive advantage. What is important tounderstand here is that Blyth makesno pretense of being able to createthe fabled “sustained competitiveadvantage” – so beloved of strat-egy texts – in any single segment ofthe candle market. Rather, what the

company seeks to do is be the first tocreate and then dominate manysmall niches in rapid successionover time, gaining economies of dis-tribution and scale by the sheernumber of products it has in themarketplace.

Consider some of thepossibilities that Blyth em-ployees uncovered whenthey applied the questionsto their business:

What? What are cus-tomers doing at eachpoint in the consumptionchain? What else wouldthey like to be doing?

What problems could they be experi-encing? (These problems may not bedirectly related to your product orservice.) Is there anything you cando to enhance their experience whilethey are at this stage of the chain?

Candles, when you think about it,can play a role in everyday life in ahost of different ways. Among otherthings, they are used to celebratebirthdays, create a festive atmo-sphere for dinner parties, warm buf-fet dishes, cope with power outages,and set the mood forromantic evenings.Candles can be pur-chased in specialtyshops, at crafts fairs, insupermarkets, and atcard stores. Further,their use can be ac-companied by a hugevariety of containers,displays, accents, and mood-creatingproducts. All this suggests that can-dle makers might do well to explorethe possibility of offering a complete“candlelight experience” by produc-ing or marketing complementaryproducts as well.

Where? Where are your customerswhen they are at this point in theconsumption chain? Where elsemight they be? Where would theylike to be? Can you arrange for themto be there? Do they have any con-cerns about their location?

Because candles can have so manyuses, it isn’t surprising that there areas many potential places for theiruse. Candles can be found at thebeach, on picnics, at proms, at wed-dings, at home, in restaurants, at

children’s birthday parties, and inplaces of worship. What quickly be-came evident to Blyth was that theconcerns and behavior patterns of itscustomers were likely to be differentin each location. That insight sug-gested the potential for differentia-tion on the basis of location.

For example, consider how can-dles are used in the home. Virtuallyevery room in the house has poten-tial: the dining room, living room,kitchen, bedroom, bathroom, andbasement can all conceivably pro-vide a setting for candle use, each fora different reason.

Who? Who else is with the cus-tomer at any given link in the chain?Do those other people have any in-fluence over the customer? Are theirthoughts or concerns important? Ifyou could arrange it, who else mightbe with the customer? If you couldarrange it, how might those otherpeople influence the customer’s de-cision to buy your product?

Honing in on the line of thinkingBlyth used about domestic candles,consider the use of candles in thedining room. Who else is going to be

there? The other people could bemembers of the immediate or ex-tended family, business associates,close friends, or a suitor. Each typeof person means a possible point ofdifferentiation; each type means adifferent experience, a differentmood, and a different time.

When? When–at what time of dayor night, on what day of the week, atwhat time of the year – are your cus-tomers at any given link in thechain? Does this timing cause anyproblems? If you could arrange it,when would they be at this link?

Take the scenario of a dining roomwith the family. Blyth found that thequestion when uncovered a wealthof opportunities for differentiation.Candles are used in the dining room

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HARVARD BUSINESS REVIEW July-August 1997 9

Candle makers mightexplore the possibility ofoffering a complete“candlelight experience.”

To analyze your customer’sexperience, consider how

five simple questions applyat each link in the chain.

with the family on birthdays, an-niversaries, holidays, and graduationdays, and at meals marking otherspecial occasions. Each occasionprovides a distinct experience. Im-portant for a candle maker, each alsotriggers distinct emotions. Blyth em-ployees were able to identify whatbecame several successful new areasof differentiation by exploring how

their candles might be designed inspecial shapes, colors, or scents.They also came up with a variety ofways to package the candles andcombine them with such accessoriesas napkins to suit each situation.

Candles intended for use with fami-ly members at Thanksgiving, for ex-ample, might be scented with cinna-mon, colored in tones associatedwith the holiday, and sold with spe-cial holders.

Because there are many holidaysand other occasions when families get together in the dining room, youcan begin to get a sense of the oppor-

tunities available for dif-ferentiation. Moreover, theprocess can be repeated foras many different compan-ions and settings as theimagination of your em-ployees can contemplate.Blyth, for example, also

has found a tremendous opportunityto differentiate its products for roman-tic meals. CEO Goergen has workedhard to design scented candles in vari-ous shapes in order to influence theambience of such occasions so that, as

he says, “eating becomes dining, anddining becomes romance.”

How? How are your customers’needs being addressed? Do they have any concerns about the way in which your company is meetingtheir needs? How else might you at-tend to their needs and concerns?

Think about how candles are usedoutdoors – say, at a company barbe-cue. Citronella candles come tomind. In addition to creating a fes-tive atmosphere, they are an attrac-tive way to protect people from in-sect bites.

As we’ve seen, there is consider-able potential for differentiationeven in products so simple that atfirst blush they seem like commodi-ties. Candles are but one. Gasoline isanother. (See the exhibit “Is There aWay to Differentiate Selling Gas?”)Understanding the customer’s expe-rience at any link in the chain for

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10 HARVARD BUSINESS REVIEW July-August 1997

Consider the “purchase link” of the consumption chain.

What else are your customersdoing when they buy gasoline?Among other things, they might becommuting, on a leisure trip, on abusiness trip, on vacation, shopping, orplanning to use equipment (such as amower or a tiller).

If you pursue the business-trip option, the next question is,Whom are they with when theybuy gasoline on a business trip?Your customer could be alone oraccompanied by a colleague. He or shecould be with a spouse or significantother. Your customer also could betraveling with a group of people.

If you pursue the idea that your customeris alone, the next question is,Where does your customer buygasoline while he or she is on thebusiness trip?Your customer might stop first at a localgas station, then again between citiesalong the way.

Even a simple productsuch as gasoline can be

differentiated.

Is There a Way to Differentiate Selling Gas?

any product offers companies the op-portunity to identify and exploremany nontraditional ways to createvalue. The task then becomes select-ing from among this wealth of possi-bilities; considering how each idea

meshes with a company’s particularskills, assets, and systems; and fo-cusing only on those that can gener-ate a competitive advantage. Eachidea also may open up an opportuni-ty to develop a new competence.

Too many companies pursue whatseem like great new ideas withoutcarefully assessing whether theirorganizations are well suited to do

so and how quickly competitors can respond. Robert Goergen knowsthat Blyth Industries has certainstrengths its competitors do not, in-cluding several unique productiontechniques and, more important, a

deep knowledge of fra-grances. Those specialstrengths, coupled with asolid understanding ofcustomers based on mar-ket research, give Blythan edge. Goergen thusevaluates opportunities

for differentiation based on thoseconsiderations and moves forwardonly with the ideas that promise thestrongest returns.

Focused CreativityVirtually every company we have

ever worked with has within itscores of people of considerable cre-ativity and imagination. Unfortu-

nately, all too often, the companynever benefits because that talentisn’t appropriately focused. It mayeven be squelched by the homoge-nizing pressures that any large orga-nization tends to impose.

An important benefit of the pro-cess we’ve outlined above is that itunlocks the creativity in an organi-zation so that the insights of particu-lar individuals can contribute to ashared understanding of the cus-tomer – so that the company, in ef-fect, knows its customers almostbetter than they know themselves.Companies that do this successfullyfind themselves deeply attuned totheir markets. And, like entrepre-neurs, they spend the imaginationthey have in lieu of the money theymay lack to outperform competitorswhere it counts.Reprint 97408To place an order, call 800-988-0886.

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HARVARD BUSINESS REVIEW July-August 1997 11

If you consider in depth the concern about personal security, one way to differentiatethe process of selling gasoline would be to reconfigure the structure of your gas stationsalong those highways that are principal business routes. For example, you could� ensure that your station is well lit and monitored;� provide an attendant to pump the gas;� provide a “travel adviser” at each station who has a detailed knowledge of thearea; such a person might be able to advise your customer about the safest routes,areas under construction, congested areas, and good restaurants 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.

Which leads to:Does your customer have anyconcerns in any of thosesituations, and how is yourcompany addressing them?Among other things, your customermight worry about getting lost orrunning out of gas. Or he or she mightbe concerned about personal security.Also, your customer certainly doesn’twant the car to break down.

Keeping those ideas in mind, consider:When does your customer buygasoline?Anytime: during the day or night; duringthe week or on the weekend.

Consider how each ideameshes with yourcompany’s skills,

assets, and systems.

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