Differentiate they Say – but How? Art and Innovation as Differentiation Strategy

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It seems that we are living in the “California Gold Rush,” the 19th century phenomena that led many to leave their homes and run to California in search of gold. In 2016 it is the rush for innovation. You hear, read and see it everywhere – in magazines, podcasts, websites, conferences and other channels. Innovation is the key for a company’s survival – innovation is in many ways what’s differentiating one company from another – whether it is in products or services. You can divide the world roughly in two: companies that are different, such as Apple, Alessi, Bang & Olufsen, Muji, and all the others. What makes the former stand out? What makes them unique? A better question might be why are we, the customers, attracted to them in the first place?

I guess the answers are varied, it depends who you ask. Though, as I see it, these companies are not only innovative in the types of products, but also their product design and artistic aesthetic they integrated into their DNA.

These companies taught us that products and services that focus on functional, rational and practical aspect are not enough anymore. In order to stand out, you have to be different; you have to give your customers experience. Frequently it means infusing sophisticated aesthetic principles, structures and sensation. These companies understood, whether intentionally or not, that in the world we are living in today, being the same as the others won’t save you. What’s differentiating them is how they act upon it. Here is the point where we can learn some lessons from art and how to apply its intrinsic values to products and services differentiation.

BUT WHY ACTUALLY , BEING THE SAME AS OTHERS, EVEN A BIT BETTER, WON’T SAVE YOUR COMPANY?

In his 2005 book, Thomas Friedman used the term “the flat world” – the globalization process that has broken barriers and has made it easy for companies to produce in, communicate with, and ship from Asia. This flat world incentivized countless companies to move offshore production to countries such as China and India. While at the beginning of the process these companies moved mainly blue-collar jobs to Asia, in the last few decades the rise of qualified, well-connected and sophisticated labor has allowed companies to move white-collar jobs as well. Add there’s an important factor here: the low cost of this talent in comparison to the West. This as you can imagine makes it almost irrational for a company not to move operations to Asia. Nevertheless, moving to Asia, which many companies use as a strategy to remain competitive (by reducing costs), might actually initiate a counter affect because moving one’s factories offshore means exporting one’s know-how, processes, procedures and methods that might have taken years to develop. This know-how is being transferred, whether you like or not, to the local managers that later might use it to compete against the same company that taught them in the first place.

Exporting know-how is one thing. In order to compete globally you also need talented management and today this talented management in Asia is growing in numbers. Large numbers of Asian students have easy access to great education from the top Western education institutions – both online and offline; many of whom go back to their home countries to start companies. Local qualified and competitive talent equipped with managerial and business education from the West, that understand the working environment and business climate in their country, can be a fierce competitor.

However, It is not only the offshoring that threatens Western companies. It is also the rise of the entrepreneurship movement everywhere in the world – from Tokyo, Seoul, Beijing to Dubai, Aman, London, Berlin, Madrid and basically every major city. Companies are competing not only against each other but also against small teams of five people. The rise of artificial intelligence, in addition, makes the business environment a battlefield! With the development in the field of AI today, a team of five people can create an algorithm to make discoveries that large pharmaceutical companies still can’t – which is exactly what happened in the University of Toronto. A team led by Geoffrey Hinton won a competition for automatic drug discovery. What is astounding here is not just that they beat all of the algorithms developed by Merck Serono, one of the largest pharmaceutical companies in the world, or the international academic community, but nobody on the team had any background in traditional fields such as life science, chemistry or biology, and they did it in two weeks!!

SO WHAT CAN YOU DO?

Differentiate.

Differentiation is not about good marketing and branding strategy. Personally I prefer differentiation by innovation because that way you can differentiate yourself by producing new products, creating new services, by breaking barriers time and time again. If a company will focus on cost leadership only – “buy me because I’m like the others but cheaper” – instead of differentiation – “buy me, I cost more, but I’m better” – it’ll probably find itself out of business in the long run. For everything you can do, there is someone who can and will find a way to do it cheaper than you.

So what you need to take into consideration when approaching new services and products? You need to remember that rational, practical and functional only is not enough. You need to integrate the intangible,  artistic part. This is where art enters.

Don’t think about art as painting on the wall or sculpture in the garden. Think about art as a source for inspiration, experimentation, reflection, and innovation. Companies that want to differentiate themselves in the global competition can find integrating artistic practices, methods, procedures and of course aesthetics as competitive advantage. Apple and Alessi are doing it with products, Airbnb is doing it with great service and beautiful UX, and P&G did it in their training program. Companies that embraced this way of managing businesses proved to be successful. Yet, most of us in the business world are not trained to think that way; many of the business managers don’t know how, the brave ones, aware of their lack of know-how, and do something about it.

Art associates with originality, expression, novel ideas and make people believe. Isn’t what companies are looking for? The words that you might hear in the business environment might be different – customer experience, user experience, customer loyalty, customer engagement, etc., but if you, as manager, focus on costs only, make your products and services functional and rational only, why do you expect customers to relate to a higher meaning and value of your company’s products and services? Experiences that people can feel are becoming the forefront of the business concerns, and if managers will be ignorant of the customers’ need to feel, they may find their company being forgotten as well.

Daniel Pink, in his book, “A whole new mind” summarized it well:

For businesses, it’s no longer enough to create a product that’s reasonably priced and adequately functional. Anybody can do that. Today, it must also be beautiful, unique and meaningful. That’s why people buy Michael Graves toilet brushes, Karim Rashid trash cans, and Philippe Starck flyswatters…in an age of abundance, appealing simply to rational, logical and functional needs is insufficient. If those things, experiences or images aren’t also pleasing to the eye or compelling to the soul, fewer people will buy them.

Will you let your company be forgotten?

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