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Differentiation Equals Competitive Advantage

2014-04-04

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Roberto Goizueta, the late CEO of Coca-Cola, once said, “In real estate, it’s location, location, location. In business it’s differentiate, differentiate, differentiate.”


In my last column, I provided a detailed definition of differentiation. Here, I explain two fundamental ways of achieving it, which are to be better and to be different.


Better


The first way to differentiate is to be significantly better at a product attribute that everyone provides by doing the underlying activities differently.


Southwest Airlines is a classic example. Its strategy is to be significantly better with respect to price and frequent departures by doing a number of activities differently than other airlines, such as: not serving meals; not providing baggage transfers; not assigning seats; having the flight attendants clean the plane; limited use of travel agents; and so forth. Walmart is another example. The retailer is able to provide significantly better prices and product selection by performing its supply-chain activities different from other retailers.


I don’t know of a be-better-by-doing-it-differently example in the hotel industry, particularly one as industry-shaking as the strategies employed by Southwest Airlines and Walmart. However, I often wonder why some enterprising brand—particularly in the economy and budget sectors—hasn’t discovered a way to significantly reduce the time it takes to clean a guestroom by doing it differently.


More details at hotelnewsnow.com