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Published: February 14, 2014

 
 

How Do You Compete?

Let’s think about this a bit, one at a time. Which is the safest airline? Though we can’t say for sure which one is, we can probably eliminate some. Would you want to fly on Aeroflot on a Yak-42, for example? But aside from those that we eliminate, we can’t really differentiate one major airline from another. So, let’s examine the second most important attribute: route. I don’t know about you, but if I were to fly from London to New York, I would kind of want to fly nonstop; I guess there’s always the Icelandair flight that stops in Reykjavik. However, again, in terms of route, I can’t differentiate one major carrier from another. What about schedule? Flights are so tightly packed on that route that there are usually seven or eight flights to choose from. So then how do I make my decision?

Enter salient differentiators.

While safety, route, and schedule may be the most important attributes, when all major competitors are equal on these key attributes (as is often the case), consumers typically make their actual decisions based on what we refer to as “salient differentiators.” In this case, these would be things like frequent flyer miles, flat beds in business class, on-time performance, and so on. The first three—safety, route, and schedule—are places where you can lose business. However, since they generally aren’t points of differentiation in this market, they’re not places where you can win business. It’s certainly necessary to do these successfully; however, it’s not sufficient. The firms that focus on the must-haves (here, safety, route and schedule) and end up on par with rivals ultimately lose business—particularly if their rivals focus on the areas that drive customers’ purchase decisions, the “salient differentiators.” Thus, you won’t gain share by highlighting your airline’s safety, since all airlines are equally safe. However, emphasizing your superior on-time performance or business class may indeed attract customers from your rivals. Make sure you have the “must haves” right, but recognize that it’s the “salient differentiators” that often win or lose the business.

Note that, occasionally, you can turn the must-haves into salient differentiators. Boeing’s 787 Dreamliner, for example, has turned route into a differentiator for both Boeing and its customers. The new, fuel-efficient plane can travel longer-haul point-to-point routes using 20 percent less fuel than traditional aircraft. Hence, airlines may be able to profitably fly routes nonstop that required going through a hub before. This has the potential to create a huge strategic advantage for both the Boeing Company and the airlines that fly the 787—wouldn’t you prefer a nonstop flight to one that requires a stop and a change of planes?

Think how important these elements are in your own purchase decisions—convenience with respect to mobile phones, for example. Think about it: is there another product for which we would accept such poor quality—dropped calls, not enough coverage, all those extra fees—as we get from our current mobile phones? Can you imagine getting in your car and having it turn off mid-trip, forcing you to start it again over and over? Or hitting the accelerator knowing that it will only respond some of the time?

So why do we accept such poor call quality in mobile phones? Convenience. We gladly trade off—and pay dearly for—the convenience of getting and making a call or using data, at any place, at any time (well, almost). Do we like dealing with these issues? Of course we don’t. Would we prefer the call quality of a landline? Of course we would. But, we pay for convenience. All attributes aren’t created equal.

 
 
 
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The Reviewer

  1. Roger Martin is the Premier’s Research Chair in Productivity and Competitiveness and the academic director of the Martin Prosperity Institute at the Rotman School of Management, where he served as dean from 1998 to 2013. Martin has written numerous articles and eight books, including Playing to Win: How Strategy Really Works (with A.G. Lafley; Harvard Business Review Press, 2013) and Fixing the Game: Bubbles, Crashes, and What Capitalism Can Learn from the NFL (Harvard Business Review Press, 2011). He is ranked third on the 2013 Thinkers50 list of the most influential global business thinkers.

This Book

  1. Compete Smarter, Not Harder: A Process for Developing the Right Priorities through Strategic Thinking (Wiley, 2013), by William Putsis

    William Putsis is a professor of marketing, economics, and business strategy at the Kenan-Flagler Business School at the University of North Carolina, Chapel Hill, and a faculty fellow for executive programs at Yale School of Management. Putsis is the president and CEO of Chestnut Hill Associates, a strategy and executive development consulting firm. Compete Smarter, Not Harder is his first book.

 
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