After 17 years of experience as a marketing professor, teaching, doing research, and working with companies, I settled finally on a 9-word imperative to help students understand competitive strategy...
Be different from competitors in ways important to customers.
I was pretty excited about this phrase – I believed it reduced a lot of important literature in economics, marketing, and strategy in a simple, accessible way.
One problem, however. The students did not share my excitement. A few would find the words enlightening. But they were unsure what to do with them. Others would nod their heads politely. Still, others looked completely confused - not at the words, per se - but at why their professor thought there was anything useful in such an obvious statement.
That is the paradox in these nine words. They are simple words, making a simple point that most people understand easily. In fact, most executives believe in their hearts they are following this prescription (but many are not - a story for another day).
The reality is there is a lot of complexity in applying this simple nine-word prescription. Ironically, the most complex part of it – knowing the customer - looks on the surface to be the easiest. However, in the face of endless internal and external pressures that distract from the uncertain task of understanding customer needs, customer focus fizzles more often than not.
While I knew there was a lot of meat to the 9-word phrase, I struggled with how to convey and illustrate it effectively. After noodling on some visual ways to present the idea, I found a timely scenario in which to test one out. One January, in my job as Associate Dean of Graduate Programs at the Mendoza College of Notre Dame, I was preparing staff and students for strategic planning meetings. I had a meeting with the President of the MBA Student Association - an engaged, smart young student (the perfect guinea pig!).
At the time, a variety of new school rankings had just emerged, and it was becoming an increasingly competitive MBA marketplace. One point I wanted to explain to him was that we had to push beyond the traditional view of strategic planning as “how do we allocate resources"? We had to transform it into an exercise of “how do we build competitive advantage"?
To illustrate the notion, I drew three circles:
Thinking about corporate recruiters as a key customer segment for our program, it is clear that they make choices in investing their recruiting resources. The upper right circle in the diagram above is meant to capture the set of this customer’s needs regarding new MBA hires. The other two circles are intended to capture how candidates from our program (Notre Dame) were believed to deliver value for those recruiters relative to the students from top competitors (like Northwestern’s Kellogg school). It’s fair to assume that recruiters see different strengths and weaknesses in students coming out of each program, so each program may “own" different aspects of value.
The primary point of the drawing, though, was to bring attention to what mattered in this deliberation: the area labeled “A" or what Vennli now calls the “Green Zone". That area of the model represents those nine words precisely. It is the important value we deliver to customers that our competitors do not.
I expected yet another polite nod. Instead, this student seemed to light up with more insight about competitive advantage and, perhaps, how to explain it to others.
Encouraged by this reaction, I began to apply this framework in other teaching and consulting scenarios, including an executive MBA course I taught with my colleague, Jim Davis. In discussions with students and Jim, there were signals that there might be more here than I originally thought.
When I later took over the core marketing course in the Executive MBA program, I decided to get some data. I organized the course around a growth strategy project. That project involved diagnosing students’ growth cases with research about customer value visualized using this three-circle Venn diagram model.
Translation: I made my executive students go out and talk to their customers about how they made their choices.
This was a frightening assignment for many of them, but one they pulled off to great effect. For several reasons, my students obtained significant new insight by asking about customers’ choices and thinking through the lens of the Venn diagram. And they turned insight into action.
One major Archdiocese increased fundraising for a scholarship program by 71 percent. A community hospital was able to increase its emergency room volume by 7 percent almost immediately. One executive student grew his wife’s counseling business by $180,000, while another increased revenues in his family’s business enough to pay for his EMBA degree “three times over."
In a fun volunteer project, a VP of human resources who had recently become president of the Music Boosters club at her daughter’s high school doubled the sales of the organization’s football concession stand. One of the larger outcomes of this class project was a $100 million shift in spending for the technology division of a major stock exchange.
Over seven years, our Executive MBAs and other graduate students have produced over 800 growth strategy projects. A few conclusions thus far:
- Each of the seven areas of the Venn diagram has important strategic meaning.
- Executives can easily break down customer value and customer assessments of competitive offerings using this model.
- Customer perception of value can be compared to the executives’ expectations. There are often significant differences between expected and actual customer perception.
- Once value is categorized, what follows is a natural brainstorming process. Executives generate ideas within each area to build, defend, and strengthen their competitive advantage, neutralize the competition, reduce cost, and innovate around unmet customer needs.
Dave Erickson, VP of Acquisitions & Investment Strategy, S&E Investments, effectively summarized the types of returns possible from this growth strategy project:
“The customer interviews provided terrific guidance and insight as to the ‘why’ behind their buying decisions. In addition to improved customer communications, it incubated revenue growth strategies, a promising multi-million dollar cost savings plan, increased efficiency, and underscored my customer’s priority."
Somewhere underneath these positive outcomes are the original nine words. But the nine words alone were not effective enough in inspiring the learning, focus, and energy needed to identify and act on new growth opportunities - also required was a way to easily visualize this customer conversation-driven process in order to understand the customers’ choices. And that's how Vennli was born.