Roberto Goizueta, the late CEO of Coca-Cola, once said, “In real estate, it’s location, location, location. In business it’s differentiate, differentiate, differentiate.”
In my last column, I provided a detailed definition of differentiation. Here, I explain two fundamental ways of achieving it, which are to be better and to be different.
Better
The first way to differentiate is to be significantly better at a product attribute that everyone provides by doing the underlying activities differently.
Southwest Airlines is a classic example. Its strategy is to be significantly better with respect to price and frequent departures by doing a number of activities differently than other airlines, such as: not serving meals; not providing baggage transfers; not assigning seats; having the flight attendants clean the plane; limited use of travel agents; and so forth. Walmart is another example. The retailer is able to provide significantly better prices and product selection by performing its supply-chain activities different from other retailers.
I don’t know of a be-better-by-doing-it-differently example in the hotel industry, particularly one as industry-shaking as the strategies employed by Southwest Airlines and Walmart. However, I often wonder why some enterprising brand—particularly in the economy and budget sectors—hasn’t discovered a way to significantly reduce the time it takes to clean a guestroom by doing it differently.
Imagine what might happen if such a brand were to put together an innovation team comprising operators; architects; interior designers; furniture, fixtures and equipment providers; cleaning supply manufacturers; and so forth. And then task them with answering the question, “What are all the things we can do—including changes to the room design, FF&E design, work processes, incentives, cleaning tools and supplies and anything else—to cut the guestroom cleaning time by one-third?”
Different
The second way to differentiate is to create a meaningful product attribute that the competition doesn’t offer. Apple’s Siri, the natural language user interface, is an excellent example. Siri was introduced by Siri, Inc. as an iOS application and sold in the App Store. In 2010, Apple acquired the company in order to make Siri its own and forestall the development of the product for BlackBerry and Android phones.
In the lodging industry, all-suite hotels and extended-stay hotels are good examples of products that differentiated by introducing significantly different product attributes. (Like most successful innovations, the original versions of these products have been copied extensively, causing them to lose much of their power to differentiate.) One of my favorite recent examples of differentiating by being different is 21c Museum Hotels, which has introduced a significant differentiating attribute by incorporating a contemporary art museum in each of its hotels.
For most existing hotels—which have a substantial amount of money sunk in their existing facilities and are likely to have space and other constraints to deal with—devising and implementing a major new product attribute (like a museum) simply isn’t feasible. Fortunately, there are other ways to differentiate from the competition.
One way is to identify a variety of niche markets and differentiate specifically for them. Consider the following examples:
- The Hotel Monaco in Chicago offers 86-inch-long beds for professional athletes.
- The Tokyo Imperial Hotel provides planning services for high school class reunions.
- The Mandarin Oriental in Paris provides Printemps department store shopping experiences for its fashion-oriented guests.
Another way to identify new points of differentiation is to examine the guest’s entire experience of your offering. The best way to do this is to create a journey map. This is a two-dimensional matrix in which the rows consist of points at which your staff, marketing materials and physical property “touch” your guests. The columns consist of points in time before, during and after the guest’s stay at the hotel.
After you have created the journey map, you can then use various strategy, design and creativity methods to identify ways to differentiate your offering at each of the “touch points.”
Managers are naturally inclined to focus their innovation efforts on the “during” part of the guest’s stay.
For example, the hotel lobby has recently become a hot spot for innovation and differentiation, with a number of brands making it into a social hub and gathering place by providing a mix of comfortable seating, quiet nooks and communal work stations.
The value of journey mapping is that it also highlights opportunities to differentiate the “before” and “after” part of the customer experience. Consider, for example, what your hotel could do to differentiate its sales calls (before) and its billing process (after).
Whether you choose to be better or different, the key point to remember is that differentiation is the prime source of competitive advantage. So, differentiate, differentiate, differentiate.
Kevin Holt is the president of Co. Innovation Consulting, a lodging industry strategy and innovation consultancy. The company uses cutting-edge methods and technology to help hotels and industry organizations gain competitive advantage. Its services include hotel market studies, market segmentation studies, and design research and workshops and innovation initiatives pertaining to competitive and innovation strategy, B2B sales strategy, lodging concept design, service and customer experience design, and performance improvement. For more information, go to www.coinnovationconsulting.com. Or you can contact Kevin by calling 602-510-8080 or emailing kholt@coinnovationconsulting.com.
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