Finding the right balance

Ultimately, the most successful companies combine both process- and technology-driven differentiation. For example, Apple positions itself as a highly differentiated premium consumer electronics and services provider and as a lifestyle brand. On a more detailed level though, Apple understands that for the more established product lines (PCs, laptops) a differentiated premium positioning requires superior customer service. It takes pride in being rated number one in the American Customer Satisfaction Index for its Macintosh products and prominently positions its customer help desks, the so called “genius bars”, in its retail stores. Mature product lines are developed in small evolutionary steps with regular incremental update intervals in a low-risk approach. On the other hand, Apple carefully builds its strategic position a as a disruptive technology force with selected key products that each propel the user experience to the next level. Examples include multi-touch gestures on its MacBooks, re-inventing the usability of handling digital music with iTunes and the iPod, and bringing touch screen displays to mass market with the iPhone. Apple has consistently succeeded in leverage its design and usability capabilities to launch truly disruptive products where previous manufacturers had failed, such as most recently with its iPad tablet device. Apple CEO Steve Jobs is said to focus 80% of his efforts on one such disruptive product at a time and has led Apple to arguably the most differentiated strategic positioning in its industry.

Successful companies thereby realize that each route to differentiation requires unique capabilities. It is extremely difficult to leverage strengths in one area, e.g. processes, for another, e.g. technology. For example, leading telecom carriers have been increasing their efforts in innovative Internet-based services. However, many have found that their superior positioning in terms of customer service has not helped to close the gap in technology-driven Internet services. In order to compete in this field en-par with Google, Facebook and the like, carriers will have to commit to building up product-focused development capabilities in design, software and – to some extent – hardware. The other way around, Google has learned that neglecting customer service can be painful, too. As the launch of its Nexus One handset in the U.S. was accompanied by connectivity problems, it quickly showed that Google was missing a good customer helpline and that it had neglected to partner with one or multiple carriers that could provide more advanced customer service capabilities. Google’s FAQ forum and email support simply did not cut it. Word-of-mouth, usually a key source of marketing attention for Google’s products, quickly turned against it. Accordingly, Google has just announced to be abandoning its web-only sales strategy for the Nexus in favor of increasing its partnering efforts with carriers, also for subsequent launches in international markets.