Create Customer Advantage: Don't Miss the Forest for the Trees

Last Updated Aug 20, 2007 4:56 PM EDT

Businesses are always trying to gain competitive advantage by tweaking their products and services to one-up the competition and grab the customer's eye. Which is just common sense and good business, right?

Wrong, actually, according to an interesting post by Erich Joachimsthaler on today's Harvard Business Review Conversation Starters. Not that trying to improve your company isn't a good idea, it's just that, according to Joachimsthlaer, we're often missing the forest for the trees.

Companies that are too focused on competitive advantage don't make big changes. They spend their time examining their own service or product and their competitors, which blinds them to the truly innovative. Instead, Joachimsthaler says, they should be focused on their customers, or they risk missing out on the next big idea. He uses the major airlines as an example:

"These airlines have missed what possibly was their biggest opportunity for innovation, growth, and increased profits. Four chic but cheap business-class start-ups, Eos, MAXjet, Silverjet and l'Avion have launched all-business-class flights on the incumbents' most profitable routes from London to New York with huge success. They offer new services for business travelers that are so obvious and valuable: extremely late check-in, fast paths through the airport to avoid the masses, guaranteed luggage immediately upon arrival, private departure and arrival lounges, and all-business-class seating at very reasonable prices."
And why have the established airlines missed the boat? They are "far too obsessed with differentiation, benchmarking, and trying to win on the better feature set. This kind of focus doesn't result in breakthrough innovation."

So instead of examining the whole of customers' travel experience and discovering what they really want, the airlines expended all their time and energy on improving the food or creating a slightly more comfortable seat. As Joachimsthaler puts in: "What matters is customer advantage, not merely competitive advantage." And to create customer advantage companies need to be willing to see the totality of customers' routines and desires, rather than simply the discreet elements of the services and products already offered.

For more information, check out Joachimsthaler's book "Hidden in Plain Sight: How to Find and Execute Your Company's Next Big Growth Strategy."

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    Jessica lives in London where she works as a freelance writer with interests in green business and tech, management, and marketing.