Setting a business apart from its competition

BLURB: Identifying the organisation's core differentiator is the key to building a sustainable business that outperforms its peers, writes Randal Godden at The Executive Caucus (TEC) South Africa in the first of a series of articles on challenges that face South African CEOs .

One of the most important challenges that CEOs and entrepreneurs face is identifying the key differentiator, or the unique selling proposition, that will set their business apart from the competition and allow it to develop into the best in its field.

This differentiator must be enduring enough to form the core concept on which the business can be built. It needs to define an unequivocal purpose by identifying clearly what the business can and cannot do, creating a consistent platform for long-term growth.

The differentiator must excite passion about the business, particularly among the staff and management; it needs to be something that they can buy into. In addition, it must create economic drivers that ensure the core value proposition is one that keeps customers coming back. Once it has been identified, tested and proven, the differentiator becomes the barometer against which all future strategies and plans are measured.

It is imperative that businesses continually adapt their strategies, tactics and operating procedures to match the needs of a constantly changing business environment. However, it is just as important that those adaptations remain consistent with the core differentiation.

To be sustainable, a business needs to achieve consistent growth, which demands the ongoing development of new business elements, products or services. In addition, the organisation should have products and services at differing levels of maturity - for example, development, infancy, adolescence and prime. Yet again, all of these elements must be measured against and be true to the core business differentiator.

Unless the leaders of the business are willing to change that core, all elements that are not consistent should be eliminated including strategic thinking, planning and implementation. This will ensure that the organisation retains its core focus and wastes no time on non-core activities.

There are many case studies of how the identification of a core purpose can help to create above-average returns. One of the most celebrated is Lou Gerstner's turnaround strategy for IBM in the early 1990s. At that time, the once mighty computer group was struggling with an outdated core purpose and posting massive losses.

Gerstner, brought into the organisation as its new CEO, quickly figured out that the old platform of building the organisation on dedicated IBM hardware was no longer sustainable. He and his management team determined that the way forward was to change the core purpose of IBM from a hardware or technology platform provider into a solutions-based firm that supplies total computer services to its customers.

During the course of the nineties, the change in the core proposition was successfully implemented and resulted in an $US18 billion profit turnaround over five years. Today, IBM is a totally re-energised company with a new passion and culture built around that core purpose.

There are many examples of owner operated, entrepreneurial business who have also identified a key differentiator, and who have as a result created a sustainable and long term focus for the organisation.