Like all humans, we business executives are subject to what behaviorists call “confirmation bias.” Nowhere is this dynamic displayed more prominently than in professionals’ perception of how well their firm is differentiated from rivals.
Confirmation bias is the tendency to interpret information in a way that confirms one’s preconceptions. For example, in one study, the statement “Our firm is highly differentiated” was agreed to by 88% of company managers. Meanwhile, only 8% of these same companies’ customers agreed. Just because some competitive differences exist within your company, they really don’t matter if no one else outside of your own board room perceives them. You’re much less differentiated than you think you are.
A philosophy is not a positioning
The reason most firms don’t stand out is because they have mistaken having a philosophy with having a positioning. Consider the “positionings” of the following real-life agencies, some of which are Madison Avenue stalwarts:
“We exist for one reason: to endear brands to people.”
“Our version of ROI is ‘Return on Inventiveness.’ The spirit of inventive thinking is in our DNA.”
“We are masters of 360-degree brand stewardship.”
These “positioning strategies” are undifferentiating not only because they fall into the realm of what every other agency could say; they fail to distinguish because none of them are actually strategies. As some of the world’s leading strategists remind us, strategy is about deciding 1) Where to play (distinctive markets) and 2) How to win (distinctive products and services).
Beware category cognoscenti
Youngme Moon, who teaches strategy and innovation at Harvard, believes that even marketing professionals fall prey to what she calls “category connoisseurship.” Moon says people who are deep inside their own industries are “category cognoscenti” who can detect and appreciate subtle differences, like car category connoisseurs detect and value small differences between seemingly similar makes and models of cars.
As a result, brands — including those that should know better, like agencies — get collectively locked into a “cadence of competition” in which the harder they compete, the more they begin to look and sound the same because they are reflecting and chasing one another’s strategies. Confirmation bias and category connoisseurship can turn your firm’s brand into a myth — what Moon calls a “false collective internal belief.”
It only matters if others can see it
Just as agencies preach to their clients, it’s the view of prospective customers that really matters. Which makes it all the more ironic that the vast majority of agency “positioning strategies” are laced with claims and features that only aficionados of the category could ever appreciate instead of putting a stake in the ground that unambiguously shows your firm as a best-in-class choice for clients who want a best-in-class solution to their problems.
This does not mean asking your clients what your strategy should be. Asking customers to advise you on your strategy will only pull you closer to the middle, because customers can only compare you to what already exists in the category, not what is possible. Steve Jobs famously hated focus groups for this very reason.
Have you ever been frustrated by a client who is so obsessed with keeping up with their competitors they fail to forge their own differentiated path? It’s quite possible you and your colleagues may be viewing your business strategy through the same lens. Remember, while your company may exist in reality, your brand only exists in the minds of your current and potential customers. If your prospects don’t perceive you as different, you’re not different.