For an organization to scale beyond this point, the leaders become responsible for designing and altering the DNA and architecture of the organization to incorporate new things and remove old parts that allow it to compete more favorably in the industry or to beat out the competition entirely; this strategy is often referred to as a differentiation strategy. Creating a differentiation strategy has to be backed by market research and diligent decision-making because one wrong move can set an organization back even further.
Decide On Trade-Offs Carefully
The first struggle that leaders often face with achieving differentiation is agreeing to trade-offs at all. Most businesses and organizations get started with a broad vision and a specific goal, making it difficult for leaders to forego or de-emphasize any aspects of the company. When they agree to trade-offs, it becomes difficult to determine which ones to make.
Gabriel Pfeifer had this to say about their differentiation strategy, “Big visions are best achieved by starting small and then building outwards. In my experience, trade-offs are a necessary evil because they focus on what matters over time. Trade-offs aim to cut through complexity and achieve some simplicity in your organization, so that all resources can be applied towards the areas that yield the greatest returns.”
The right kind of trade-off creates customer value that competitors will not or cannot meet. Simply delivering the same service a little better is not real differentiation. A trade-off can either create more quality in a product or service, create substantial convenience and ease of use, create significant price convenience, or ramp up service benefits for your customers. For many companies, meeting one or more of these parameters involves selecting a smaller niche to serve.
After running a broad-reach digital marketing agency and working in sales for years, Gabriel Pfeifer and Kendall H. Shaw researched and decided to start Seven Figure Solar to focus on the underserved solar niche. This singular move helped them achieve 6% market penetration in a few months.
According to Kendall H. Shaw, “This pivot lost us some money initially, but it was part of a broader strategy. We have since acquired a solar company and so this way we understand the market deeply, we serve the industry and get the dividends directly as well.”
Without a broader strategy, it’s easy to make the wrong trade-off. The easiest trade-off is often not a suitable trade-off. Achieving differentiation often entails some major reorganization and sacrifice. This is why leaders should keep their fingers on the pulse of the market when making a trade-off.
Making the right decision will create the best-differentiated position for the organization. The next challenge becomes committing to it.
Committing To A Differentiated Position
“You may have to lose money and sometimes even customers and staff if you are to commit to a differentiated position,” Kendall explains, “The first and most important key is to ensure that your differentiation is properly communicated internally and externally. Then you need to cut off everything and everyone that will distract from this differentiation.”
A key strategy is to first look within your organization and harness the strengths of each individual towards achieving differentiation and then create a consistent reminder system that keeps everyone on point with regards to this goal. Differentiation takes some time to get into the company’s DNA, and this only comes from proper communication.
Gabriel advises that businesses should take advantage of social proof and targeted visibility as a means of external communication. In his words, “What a company is about needs to become very clear to everyone looking from the outside in. In our work with solar companies, we realized that a company is only as good as its brand perception. This is why we commit to helping leaders in the industry achieve targeted visibility that emphasizes their differentiated identity.”
Achieving differentiation is a long journey, and leaders have to shut their eyes off shiny objects and make some tough decisions. However, the results of proper differentiation often become very apparent in a reasonably short while.
The goal of every leader should be to stand out first and then to dominate. This is precisely why choosing the right differentiation strategy is a game-changer.
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