M A N A O F R ' S T O O l K I T

Open up your thinking to your customer's entire experience with your product or service.

Discovering New Points of Differentiation

by Ian C. MacMillan and Rita Gunther McGrathMost profitable strategies are built

on differentiation: offering cus-tomers something they value thatcompetitors don't bave. But mostcompanies, in seeking to differenti-ate themselves, focus their energyonly on tbeir products or services. Infact, a company has tbe opportunityto differentiate itself at every pointwhere it comes in contact with itscustomers - from the moment cus-tomers realize that they need a prod-uct or service to tbe time when theyno longer want it and decide to dis-pose of it. We believe tbat if compa-nies open up their creative thinkingto their customers' entire experiencewith a product or service - what wecall tbe consumption chain - theycan uncover opportunities to posi-tion their offerings in ways thatthey, and their competitors, wouldnever have thought possible.

Take the case of Blyth Industries,a candle manufacturer. By differenti-

ating and redifferentiating its prod-ucts, Blyth has been able to growfrom a $2 million U.S. producer ofcandles used for religious purposesto a global candle and accessorybusiness with nearly $500 million insales and a market value of $1.2 bil-lion. Not bad for a company in an in-dustry that, as CEO Robert B. Goer-gen says, "has been in decline for300 years." Blyth's story is, quitesimply, a manifestation of the powerof strategic differentiation.

Business history is full of storiesof entrepreneurs who stumbledupon a great idea tbat then becamethe cornerstone of a successful com-pany. But finding ways to differenti-ate one's company doesn't have tobe an act of genius or intuition. It isa skill that can be developed andnurtured. We have designed a two-part approach that can belp compa-nies continually identify new pointsof differentiation and develop the

ability to generate successful differ-entiation strategics. Tbe first part,"Mapping the Consumption Chain,"captures the customer's total experi-ence witb a product or service. Thesecond, "Analyzing Your Custom-er's Experience," shows managershow directed hrainstorming abouteach step in the consumption chain

Ian C. MacMillan is the George W.Taylor Professor of EntrepreneurialStudies and a professor of manage-ment at the University of Pennsyl-vania's Wharton School in Philadel-phia. Rita Gunther McGrath is anassistant professor in the Manage-ment of Organizations Division ofColumbia University's GraduateSchool of Business in New York City.MacMillan and McGrath are coau-thors of "Discovery-Driven Plan-ning" (HBR July-August 1995} and"Discover Your Products' HiddenPotential" (HBR May-fune 1996).

DRAWINGS BY PAUL MEISEL 133

M A N A G E R ' S T O O L K I T

Otal-B created a powerful source of differentiation with a toothbrush that tells customers when they need a new one.

can elicit numerous ways to differ-entiate even the most mundaneproduct or service.

( Mapping theConsumption Chain

As we've said, the first step towardstrategic differentiation is to mapyour customer's entire experiencewith your product or service. We rec-ommend tbat companies performthis exercise for each important cus-tomer segment.

To begin, assemble groups fromall areas of your company - in par-ticular, those employees who usemarketing data and those who have

The first step is to mapyour customer's entire

experience vs ith a product.

face-to-face or phone contact withcustomers. Charge the groups withidentifying, for each major mar-ket segment, all the steps throughwhich customers pass from the time

they first become aware of yourproduct to the time when they final-ly have to dispose of it or discon-tinue using it.

Naturally, every product or ser-vice will have a somewhat differ-ent consumption chain. However, afew activities are common to mostchains. Consider tbe following ques-tions, eacb of which illustrates oneof those activities. Then, as thegroup hegins to get a feel for the spe-cial relationship between your cus-tomers and your products, ask ques-tions about more complex activitiesthat pertain to your business.

How do people hecome aware oftheir need for your prod-uct or service? Are con-sumers aware that youcan satisfy their need?Are they aware that theyeven have a need tbat canbe satisfied? Your com-pany can create a power-

ful source of differentiation if it canmake consumers aware of a need ina way that is unique and subtle.

Consider the problem of differen-tiating an everyday consumer prod-

uct, such as a toothbrush. For manypeople, brushing is a ritual to whichthey pay relatively little attention.As a consequence, many brushes areused well past the point wben tbeirbristles are worn and are no longereffective. Toothhrush maker Oral-Bdiscovered a way to capitalize onthis widespread habit. The company,hy introducing a patented hlue dyein the center bristles of its tooth-brushes, found a way to have thebrush itself communicate to the cus-tomer. As the brush is used, the dyegradually fades. When tbe dye isgone, the brush is no longer effectiveand should be replaced. Customersare thus made aware of a need thatpreviously had gone unrecognized.So far, the idea sounds like some-thing out of Marketing 101. Whatgives it particular value is that theneed can he filled only hy Oral-B'spatented process. The companyturned differentiation into a com-petitive advantage.

How do consumers find yonr of-fering? Opportunities for differenti-ating on the basis of the searchprocess include making your prod-

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uct available wben otbers are not(24-hour telephone-order lines), of-fering your product in places wherecompetitors do not offer theirs (themini McDonald's outlets in Wal-Mart stores), and making your prod-uct ubiquitous (Coca-Cola). Makingthe search process less complicated,more convenient, less expensive,and more habitual are all ways inwhich companies can differentiatethemselves. And when competitorscan't or won't do the same - at least,not right away-you have the poten-tial for a strategic advantage.

One example is the rapid growthof catalog sales in channels formerlydominated by retail chains. Con-sumers now can ohtain detailed, up-to-the-minute information about abreathtaking range of products overthe telephone or through the Inter-net, without enduring the inconve-nience of visiting a showroom andthe often inadequate knowledge ofthe floor sales staff. The PC Connec-tion & Mac Connection, a companythat sells computers through itscatalog, operates a 24-hour-a-day,seven-day-a-week toll-free pbonenumber for people wanting informa-tion about computers, software, andrelated products. When a caller ex-presses an interest in buying a com-puter system, a company representa-tive asks a set of questions to narrow

Ian you make the buyingprocess more convenient

and less irritating?

down the possibilities to a few goodcandidates. The rep and the con-sumer then can discuss each optionin detail. What is remarkable aboutthis approach is that, in effect, itallows consumers to tailor the searchexperience to their own needs.

How do consumers make their fi-nal selections? After a consumer hasnarrowed down the possibilities, heor she must make a choice. Can youmake the selection process morecomfortable, less irritating, or moreconvenient? Look for the ideal situa-tion, in which competitors' proce-dures actually discourage people

from selcctmg their products, whileyour procedures encourage people tocome to you. Citibank for years cap-tured a significant share of the col-lege student market for credit cardssimply by making it easy for stu-dents to ohtain a card while com-petitors made it difficult.

Another example of tbis dynamicis playing out right now in the used-car business. For many potentialcustomers, the experience of choos-ing a used car is anordeal - to the pointwhere one CEO of amajor automaker ob-served that some peo-ple would rather havea root canal. But a newmethod of selectingcars is transformingthe industry. Compa-nies such as CarMax Auto Super-store and AutoNation USA bave tar-geted the selection experience astheir competitive focus. At a Car-Max showroom, customers sit infront of a computer and specify whatfeatures they are looking for in anautomobile. They can then, in pri-vate, scroll through detailed descrip-tions of cars tbat might meet tbeirneeds. Tbe final (and only) price foreach vehicle is listed. A sales assis-tant tben lets the customers inspectthe autos that interest them and

handles all the paper-work if they decide tobuy one. The "selling" isdone not by the salespeo-ple but by the selectionprocess the customerscreate for themselves.

How do customers or-der and purchase your product orservice? This question is particular-ly important for relatively low-cost,high-volume items. Can a companydifferentiate itself by making theprocess of ordering and purchasingmore convenient?

American Hospital Supply revolu-tionized its industry by radicallysimplifying the ordering and re-stocking process for such productsas bandages, tongue depressors, sy-ringes, and disinfectants. The com-pany installed computer terminalsat each hospital and medical supplystore with which it did business.

Tbe terminals connected those cus-tomers directly to tbe company'ssystem, allowing direct drop ship-ment and automatic restockingwhenever supplies fell below a cer-tain level. Hallmark uses a similarapproach for its greeting cards.

Many companies, including ice-cream makers and pet-food manu-facturers, are also using tbis methodto stock supermarket shelves, reap-ing the benefits of preferred access

CarMax and AutoNation''selP' cars by lettingcustomers create their

selection process.

to these crucial outlets as well asof superior displays. Another, moresubtle benefit of this form of dif-ferentiation is that it imposes aswitching cost on customers tbatmight be tempted to try anothersupplier. Once customers havesigned on, it is expensive for themto switch; tbis deterrent creates abarrier to competition and, onceagain, a potential strategic advan-tage for the supplier.

How is your product or service de-livered? Delivery affords many op-portunities for differentiation, espe-cially if the product is an impulsepurchase or if the customer needsit immediately. Let's return to ourcatalog computer dealer, the PCConnection. Customers can call itstoll-free number as late as 3 A.M toreceive "next-day" shipments ofitems in stock. How does tbe com-pany do it? The amazing turnaroundtimes are possible because the ware-housing and distrihution facilitiesare conveniently located near anAirborne Express hub. Packages canbe picked up at the warehouse,transferred to Airborne, and shippedto the customer in a matter of hours.Not only does this delivery strategyconstitute a real benefit for cus-tomers, but, because there are a lim-ited number of opportunities forsuch a warehouse-hub connection,competitors will find it hard to adopttbe same strategy,

HARVARD BUSINESS REVIEW July-August 1997 135

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What happens when youi productor service is delivered? An oftenoverlooked opportunity for differen-tiation lies in considering what hasto happen from the time a companydelivers a product to the time thecustomer actually uses it. Opening,inspecting, transporting, and assem-bling products are frequently majorissues for customers.

That applies even to the deliveryof services. Consider how difficult itcan be to get an auto accident claimprocessed and paid by an insurancecompany. Now consider how Pro-gressive Insurance of Cleveland,Ohio, tackled the problem. Thecompany has a fleet of claims ad-justers on the road every day, readyto rush to the scene of any auto acci-dent in their territory. There theycan record all the information theyneed and often settle claims on thespot for policyholders. The processhas greatly increased customer satis-faction by eliminating the hassleand delay that so often accompanyconventional reporting, inspection.

and assessment methods. A sidebenefit for the company is tbat itsapproach also has decreased the inci-dence of fraud by reducing the op-portunity to file false claims and in-flate repair bills.

How is youi product installed?This step in the consumption chainis particularly relevant for compa-nies with complex products. For ex-ample, installation has presented anenormous barrier for computer man-ufacturers trying to break into tbenovice-PC-user market. Computerbeginners are notoriously intolerantof such on-screen messages as "DiskError 23."

Compaq Computer, witb its Pre-sario line, was among the first to tar-get installation as a source of differ-entiation. Instead of providing aninstruction book filled with techni-cal terminology, Compaq offers itscustomers a poster tbat clearly illus-trates the ten installation steps. Thecompany uses color-coded cords, ca-bles, and outlets to simplify installa-tion further and also bas rigged its

Compaq discoveied a valuable way to differentiate itself:it provides customers with a user-friendly installation video.

computers so that a cheerful videoand audio presentation leads newusers through the setup and registra-tion process when tbey first turn onthe macbine.

How is your product or servicepaid for? Many companies unwit-tingly cause their customers majordifficulties with their payment poli-cies. Here's a test to see whetherpayment might be sucb an issue foryour customers: Take a walk over toyour accounts-receivable depart-ment and ask to see a copy of a re-cent invoice. If your company isanytbing like about 80% of thosewe bave worked witb, tbe invoicewill be virtually incomprehensible.Why? Because invoices are generallydesigned by systems people for sys-tems, not customers. Given theprevalence of tbis situation, yourcompany may find opportunities toset itself apart by making tbe wbolepayment process easier for cus-tomers to understand.

You may discover even greater op-portunities by rethinking wby yourcompany uses its current paymentpolicy in tbe first place. We onceworked with a company in the ener-gy control business tbat was havinga hard time selling its services to res-idential co-op owners. At every co-op, tbe company ran into oppositionfrom a bard core of owners who re-sisted the capital outlay involved ininstalling an energy managementsystem. Tbe company eventuallywon a huge share of the co-op mar-ket by altering its policy, Customersno longer pay an up-front installa-tion fee; instead, they pay over time,out of tbe energy savings.

How is your product stored? Wbenit is expensive, inconvenient, ordownright dangerous for customersto bave a product simply sittingaround, tbe opportunities for differ-entiation abound. Air Products andChemicals, a producer of industrialgases, grew to dominate its marketsegments by addressing tbe prob-lem of storage. Realizing that mostof its customers - cbemical compa-nies-would ratber avoid the burdenof having to store vast quantities ofdangerous higb-pressure gases. AirProducts built small industrial-gasplants next to customers' sites. The

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move pleased customers; it also gen-erated switching costs. Best of all,once an Air Products plant was inplace, competitors bad little oppor-tunity to move in.

How is your product movedaround? Wbat difficulties do cus-tomers encounter when they musttransport a product from one loca-tion to another? Whether the jour-ney is across a room or across a state,this step in the consumption chainis another often-overlooked oppor-tunity for differentiation. Ask your-self the following questions: Doesthe customer find the product frag-ile? Difficult to package? Awkwardto move:

Consider how John ScuUey's mar-keting team at Pepsi-Cola usedpackaging as a way to differentiatePepsi from Coke. Sculley's team cre-ated a distinct-if temporary-advan-tage for Pepsi in the early 1970s bydesigning plastic bottles tbat wereligbter, and thus easier for cus-tomers to carry, than tbe heavy glassbottles of tbe time. The beauty ofthe move was that it not only madecarrying soda easier, but it also re-duced the advantage of Coke's well-known contoured glass bottle. Atthe time, it was difficult to produceplastic bottles in that shape.

What is the customer really usingyour product for? Finding betterways for customers to use a productor service is a powerful differentia-tor. And such opportunities abound,especially for companies whoseproducts are expensive and usedrelatively infrequently. General Elec-tric's Transportation Systems divi-sion, wbicb manufactures diesel-electric locomotives, used this stepin tbe consumption cbain as the ba-sis for rethinking its business.

With few exceptions, the railroadsthat are the customers for GE's loco-motives are not all tbat attached toa particular unit. What tbey reallywant to know is, if tbey bave freightto ship, will a locomotive be there tohaul it ? GE is working on an arrange-ment through which the companywill guarantee that a locomotivewill be available on demand. Undertbat arrangement, GE will take overthe management of all tbe engines inthe customer's system. It will re-

Nordstrom takes its no-questions-asked return policy seriously,and the result is strong customer satisfaction.

lieve the customer of repair andmaintenance concerns, and also willgain economies of scale by managingan entire network. What's more, theentry barrier created by such a sys-tem can be formidable.

What do customers need helpwith when they use your product?Tbe company witb the most belpfulresponse has a significant advantagebere. GE, for instance, has an enor-mously popular 800 number that isavailable 24 bours a day to belp peo-ple wbo bave difficulty using any oftbe company's consumer products.Similarly, Butterball Turkey's 24-hour hot line fields cooking ques-tions from hundreds of customersevery Thanksgiving. Butterball hasrecently supplemented its hot linewith an Internet home page and aturkey-cooking guide that its cus-tomers can download.

What about returns or exchanges?Too many companies put all theirefforts into the selling side of theproduct life cycle, forgetting thatlong-term loyalty requires attention

to customers' needs throughouttheir experience with a product.Handling things well wben tbe prod-uct doesn't work out can be as pow-erful as meeting tbe need that moti-vated tbe initial purcbase.

Nordstrom is an excellent exam-ple of a company tbat bas taken thisissue to heart. The clothing retailercaptured national publicity in the1970s when one of its store man-agers "took back" a set of tires froma customer despite the fact tbatNordstrom did not sell tires. By fo-cusing on and aggressively promot-ing its no-questions-asked returnpolicy, Nordstrom has enhanced itsposition as a company that providesunique customer service. Customersmay be unbappy with tbe brandsthey return, but they are not un-happy with the store.

How is your product repaired orserviced? As many users of high-tech products will attest, repair ex-periences - both good and bad - caninfluence a lifetime of subsequentpurchases.

HARVARD BUSINESS REVIEW fuly-August 1997 137

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An ideal solution, used by Tan-dem Computers - a company thatmakes computers with parallel cen-tral-processing units for applicationsin which downtime is a major prob-lem - is to try to repair a producteven hefore the customer is awarethat such service is needed. Tandemstaff memhers can spot a malfunc-tioning component through remotediagnostics, send the appropriatepart and instructions to the cus-tomer by express mail, and walk thecustomer through the repair processon the phone. This approach has al-most completely eliminated expen-sive and inconvenient downtime forthe company's customers; it also haseliminated their need for a costly on-site service force.

Otis Elevator uses remote diagnos-tics in a different way. In high-trafficoffice buildings, where servicing ele-vators is a major inconvenience tooccupants and visitors alike, Otisuses its remote-diagnostics capabili-ties to predict possible service inter-ruptions. It sends employees to carryout preventive maintenance in theevening, when traffic is light.

What happens when your productis disposed of ot no longer used? Ina world in which it is becomingincreasingly economical simply toreplace many products as they agerather than spend the money to fixthem, what do customers do withthe obsolete goods'

Canon offers an interesting exam-ple of how a company can differenti-ate itself at this step in the chain. Ithas developed a system that allowscustomers to return spent printercartridges at Canon's expense. Thecartridges are then rehabilitated andresold as such. The process makes iteasy for customers to return usedcartridges: all they need to do is dropthe prepaid package off at a UnitedParcel Service collection station. Atthe same time, it enhances the im-age of Canon as an environmentallyfriendly organization.

Analyzing YourCustomer's Experience

Although mapping the consump-tion chain is a useful tool in itself,the strategic value of our approach

continued on page 143

lies in the next step: analyzing yourcustomer's experience. The ohjec-tive is to gain insight into the cus-tomer by appreciating the contextwithin which each step of the con-sumption chain unfolds. It is crucialto remember that the customer is al-

o analyze your customer'sexperience, consider hovsrve simple questions apply

at each link in the chain.

ways interacting with people,places, occasions, or activities.Those interactions determine thecustomer's feelings toward yourproduct or service at each link in thechain. When they are viewed strate-gically, they can shape the dynamicsof competition for tbat custom-er's business.

Essentially, this step involves con-sidering how a series of simple ques-tions-what, where, who. when, andhow-apply at each link in the con-sumption chain. We have found thatthe most rewarding way to approachthis exercise is to have a group ofpeople from a company start down apath with any of their questions andbrainstorm until their ideas dry up.Sometimes a given question will notlead to any particular insight. That'snot a problem; the goal is to assem-hle an inventory of possible pointsof differentiation. Once the ideasare on the tahle, you can assess eachone and select those that are mostpromising for your situation.

Blyth Industries, the candle manu-facturer we mentioned earlier, pro-vides a good example of how analyz-ing your customer's experienceworks in practice. By exploring theoptions raised by their analysis,Blyth employees were able to take aprosaic product that is easy to imi-tate and create a profitable competi-tive advantage. What is important tounderstand here is that Blyth makesno pretense of being able to createthe fahlcd "sustained competitiveadvantage" - so beloved of strat-egy texts - in any single segment ofthe candle market. Rather, what the

M A N A G E R ' S T O O ! '

company seeks tu do is he the first tocreate and then dominate manysmall niches in rapid successionover time, gaining economies of dis-trihution and scale hy the sheernumher of products it has in themarketplace.

Consider some of thepossibilities that Blyth em-ployees uncovered whenthey applied the questionsto their business:

What? What are cus-tomers doing at eachpoint in the consumptionchain- What else wouldthey like to he doing?

What problems could they be experi-encing? (These prohlems may not bedirectly related to your product orservice.) Is there anything you cando to enhance their experience whilethey are at this stage of the chain?

Candles, when you think about it,can play a role in everyday life in ahost of different ways. Among otherthings, they are used to celebratebirthdays, create a festive atmo-sphere for dinner parties, warm buf-fet dishes, cope with power outages,and set the mood forromantic evenings.Candles can be pur-chased in specialtyshops, at crafts fairs, insupermarkets, and atcard stores. Further,their use can be ac-companied by a hugevariety of containers,displays, accents, and mood-creatingproducts. All this suggests that can-dle makers might do well to explorethe possibility of offering a complete"candlelight experience" by produc-ing or marketing complementaryproducts as well.

Where? Where are your customerswhen they arc at this point in theconsumption chain? Where elsemight they be? Where would theylike to be? Can you arrange for themto be there? Do they have any con-cerns about their location?

Because candles can have so manyuses, it isn't surprising that there areas many potential places for theiruse. Candles can be found at thebeach, on picnics, at proms, at wed-dings, at home, in restaurants, at

children's birthday parties, and inplaces of worship. What quickly be-came evident to Blyth was that theconcerns and behavior patterns of itscustomers were likely to be differentin each location. That insight sug-gested the potential for differentia-tion on the basis of location.

For example, consider how can-dles are used in the home. Virtuallyevery room in the house has poten-tial: the dining room, living room,kitchen, bedroom, bathroom, andbasement can all conceivably pro-vide a setting for candle use, each fora different reason.

Who? Who else is with the cus-tomer at any given link in the chain?Do those other people have any in-fluence over the customer? Are theirthoughts or concerns important? Ifyou could arrange it, who else mighthe with the customer? If you couldarrange it, how might those otherpeople influence the customer's de-cision to buy your product?

Honing in on the line of thinkingBlyth used about domestic candles,consider the use of candles in thedining room. Who else is going to be

Candle makers mightexplore the possibility ofoffering a complete"candlelight experience.'

there? The other people could bemembers of the immediate or ex-tended family, business associates,close friends, or a suitor. Each typeof person means a possible point ofdifferentiation; each type means adifferent experience, a differentmood, and a different time.

When? When-at what time of dayor night, on what day of the week, atwhat time of the year-are your cus-tomers at any given link in thechain? Does this timing cause anyproblems? If you could arrange it,when would they be at this link?

Take the scenario of a dining roomwith the family. Blyth found that thequestion when uncovered a wealthof opportunities for differentiation.Candles are used in the dining room

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M A N A G E R ' S T O O L K I T

Is There a Way to Differentiate Selling Gas?Consider the ''purchase link" of the consumption chain.

If you pursue tbe business-trip option,the fiexf question is,Whom are they ^ t h when theybuy gasoline on a business trip?Your customer could be alone oraccompanied by a colleague. He or shecould be with a spouse or significantother. Your customer also could betraveling with a group of people.

What else are your customersdoing when they buy gasoline?Among other things, they might becommuting, on a leisure trip, on abusiness trip, on vacation, shopping, orplanning to use equipment [such os amower or a tiller).

If you pursue the idea that your custormis olone, the next question is.Where does your customer buygasoline "while he or she is on thbusiness trip?Your customer might stop first at a localgas station, then again between citiesalong the way.

with the family on birthdays, an-niversaries, holidays, and graduationdays, and at meals marking otherspecial occasions. Each occasionprovides a distinct experience. Im-portant for a candle maker, each alsotriggers distinct emotions. Blyth em-ployees were able to identify whatbecame several successful new areasof differentiation by exploring how

Even a simple productsuch as gasoline can be

differentiated.

their candles might be designed inspecial shapes, colors, or scents.They also came up with a variety ofways to package the candles andcombine them with such accessoriesas napkins to suit each situation.

Candles intended for use with fami-ly members at Thanksgiving, for ex-ample, might be scented with cinna-mon, colored in tones associatedwith the holiday, and sold with spe-cial holders.

Because there are many holidaysand other occasions wben familiesget together in the dining room, youcan hegin to get a sense of the oppor-

tunities available for dif-ferentiation. Moreover, theprocess can he repeated foras many different compan-ions and settings as theimagination of your em-ployees can contemplate.Blyth, for example, also

has found a tremendous opportunityto differentiate its products for roman-tic meals. CEO Goergen has workedhard to design scented candles in vari-ous shapes in order to influence theambience of such occasions so that, as

he says, "eating becomes dining, anddining becomes romance."

How? How are your customers'needs being addressed? Do theyhave any concerns about the wayin which your company is meetingtheir needs? How else might you at-tend to their needs and concerns?

Think about how candles are usedoutdoors - say, at a company barbe-cue. Citronella candles come tomind. In addition to creating a fes-tive atmosphere, they are an attrac-tive way to protect people from in-sect bites.

As we've seen, there is consider-able potential for differentiationeven in products so simple that atfirst blush they seem like commodi-ties. Candles are but one. Gasoline isanother. (See the exhibit "Is There aWay to Differentiate Selling Gas?")Understanding the customer's expe-rience at any link in the chain for

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Which leads to:Does your customer have anyconcerns in any of thosesituations, and how is yourconipany addressing them?Among other things, your customermight worry about getting lost orrunning out of gos. Or he or she mightbe concerned obout personal security.Also, your customer certainly doesn'twant the car to break down.

Keeping those ideas in mind, considerWhen does your customer buygasoline?Anytime; during the day or night; duringthe week or on the weekend.

If you consider in depth the concern about personal security, one way to differentiatethe process of selling gosoline would be to reconfigure the structure of your gas stationsalong those highways that are principal business routes. For example, you couldD ensure thot your station is well lit and monitored;D provide on ottendant to pump the gas;• provide 0 "travel adviser" at each station who has a detailed knowledge of thearea; such a person might be oble to odvise your customer about the safest routes,areas under construction, congested oreas, and good restauronts and hotels;• arrange for customers who buy gas to rent a mobile phone at the gas station,possibly negotiating with the phone company to share usage revenues.

any product offers companies the op-portunity to identify and exploremany nontraditional ways to createvalue. The task then becomes select-ing from among this wealth of possi-bilities; considering how each idea

Consider ho>v each ideameshes v/ith yourcompany's skills,

assets, and systems.meshes with a company's particularskills, assets, and systems; and fo-cusing only on those that can gener-ate a competitive advantage. Eachidea also may open up an opportuni-ty to develop a new competence.

Too many companies pursue whatseem like great new ideas withoutcarefully assessing whether theirorganizations are well suited to do

so and how quickly competitorscan respond. Robert Goergen knowsthat Blyth Industries has certainstrengths its competitors do not, in-cluding several unique productiontechniques and, more important, a

deep knowledge of fra-grances. Those specialstrengths, coupled with asolid understanding ofcustomers based on mar-ket research, give Biythan edge. Goergen thusevaluates opportunities

for differentiation based on thoseconsiderations and moves forwardonly with the ideas that promise thestrongest returns.

Focused CreativityVirtually every company we have

ever worked with has within itscores of people of considerable cre-ativity and imagination. Unfortu-

nately, all too often, the companynever benefits hecause that talentisn't appropriately focused. It mayeven be squelched by tbe homoge-nizing pressures that any large orga-nization tends to impose.

An important benefit of theprocess we've outlined ahove is thatit unlocks the creativity in an orga-nization so that the insights of par-ticular individuals can contribute toa shared understanding of the cus-tomer - so that the company, in ef-fect, knows its customers almostbetter than they know themselves.Companies that do this successfullyfind themselves deeply attuned totheir markets. And, like entrepre-neurs, they spend the imaginationthey have in lieu of the money theymay lack to outperform competitors

wherejt counts. yReprim 97408"To order reprints, sec the last page of this issue.

HARVARD BUSINESS REVIEW July-August 1997 145