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Creating sustained market leadership

Creating sustained market leadership

Everyone loves the big success stories of IT - Amazon.com, Dell Computer, SAP and Wal-Mart Stores. These companies' greatness comes not from doing it faster, better, and cheaper but from having achieved success differently - a lot differently. Sure, faster, better and cheaper has been the outcome and technology the enabler, but that's not what stirs the imagination.

Difference itself, and the size of the difference, is what counts. These companies didn't just ride the curve, they moved it. Leaders force you to compete in their arenas - which means that before you can even play, you must learn their rules. Just ask Barnes and Noble, IBM, Oracle and Sears - companies that are running hard to catch up with their above-mentioned successful rivals.

If companies are leaders precisely because they are different, by definition they're difficult to imitate. By imitating a leader you become a follower, of course. So for most companies and their integrator partners, the real challenge is not how to play catch-up - it's how to invent a different game altogether in which they set the rules.

Where do the ideas for these games come from? Here's a startling source: customers. Figure out what fundamentally new value proposition might break through your customers' walls of me-too products and services. Too often companies - especially technologically empowered companies - do it completely backwards. They start with what they are good at (or worse, what the market leader is good at) and then try to package it as something new and exciting. Incremental differentiation is really an attempt to change without actually changing. The consequences are bad, even for leaders.

Look at what's happening to Dell today. Given enough time, competitors will catch up. If Dell can't reinvent itself, that means the playing field will eventually be level again. To sustain leadership, companies must not only master what they're good at, they must be the first to learn how to defeat it.

This is the type of paradox Clayton Christensen discusses in his book, The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail. Companies, he says, have two options when confronting disruptive technologies: they can either "create a separate company or attack themselves".

In fact, for most of today's IT power players, IT isn't even a core business. That should tell you something (like, that technology only becomes disruptive in the hands of a disruptive competitor). Many leaders adopt technology only after they have already recognised an inherent opportunity for incredible shifts in value. That certainly was the case with Wal-Mart and Federal Express. Even Dell's "buy direct" strategy simply uses IT to do what Sears did 100 years ago with its first catalogue: exploit the power of the US Postal Service to reach more customers at a lower cost.

A more up-to-date example is short message services (SMS). You might, for instance, redefine SMS as a "go-anywhere source of real-time market data for busy investors".

Apple's "Think different" advertising tag line has helped it tremendously. But thinking different, or being different, is not about incremental change - it is about big change. Incremental differentiation is about trying to have it both ways - and it doesn't work. Because being different is something you can't imitate.


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