Everyone knows them, the plastic building blocks from Scandinavia. The blocks are practically all the same, and yet they can be used to build a whole host of different models, from a simple pirate raft to a complex spaceship. The Lego brand’s intergenerational recipe for success is as simple as it is ingenious. When a new Lego building set comes out on the market, it consists primarily of standard parts. Only a small proportion of the building blocks, by contrast, is produced specifically for that model. Thus, the broad range of possible models is based on consistent standardization of building blocks, making standardization the basic principle. What can we take away from this principle in our practical work with organizations?

Organizations caught in a double bind

There are a great many connecting factors when it comes to developing unique selling propositions in a competition situation: Strategy, personnel, technology, and organization are to be understood as functional equivalents in this regard. Competitive advantages are, then, consistently based on more innovative strategies, more capable employees, superior technologies, or “better” organizational structures. But what does it mean to be “better” than the competition in an organizational context?

Organizational topics are subject to various trends. Two such trends are standardization and differentiation. For some time, it was said that standardization was the secret to an organization’s success. Then, though, maximum customer orientation – to exaggerate, orientation toward the individual needs of each and every single customer – was held up as the guiding principle of every entrepreneur’s actions. The first approach may be low in costs, but makes providers completely interchangeable. The second path leads in the direction of uniqueness, but carries a crucial weakness: In the case of differentiation of this kind, costs explode! While sales volume rises, not much is left at the bottom line. So what does it all mean to a telecommunications company?

For one thing, telecommunications companies operate in largely saturated markets. To hold their own and win out against competitors in the long term, telecommunications companies have to be able to serve different market segments with various needs. At the organizational level, this implies a high level of differentiated structures, which constitute a central prerequisite for segment-specific market cultivation with differentiated service portfolios. But as if that weren’t enough, in addition to the challenges on the revenue side, recent years have also seen tremendous cost pressure in this segment as a result of competition. Telephony – voice and data communication – is perceived as a commodity, and one in whose case customers’ desire for ever-broader service spectrums coincides with simultaneously falling prices, creating a paradox – or not, if you are a customer (consider flat rates, for example). At the organizational level, this gives rise to demand for standardization as a contribution to cost-effectiveness. As a result, organizational decision makers are confronted with various challenges, some of them in direct opposition to one another: How much customer orientation does the company need, or how much differentiation is needed? Or would it be better to rely consistently on standardization in order to produce at optimum cost? And if so, what leverage does the company have when it comes to achieving savings?