decommoditization (no longer being a commodity)

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“The greatest illusion of this world is the illusion of separation. Things you think are separate and different are actually one and the same. We are all one people. But we live as if divided.”

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 The Last Airbender

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So.

It seems like I have been talking with a lot of businesses about differentiation & distinctness. Inevitably the conversation turns to ‘brands, branding & being different.” Three painful B’s. And once that happens inevitably the conversations turns to well known brands (Apple, Amazon, Coke) and viewing all those B’s as a reflection of who & what they are.

There may be some value in that conversation but, here is the deal, unless you have worked only at “glamour brand” companies (think Nike, Coke, McDonalds, etc) you have spent an entire career making your unglamorous brand/company/service not look like a commodity (because pretty much all non-glamour brands all get thrown into some confused perception/awareness cluster).

Oh.  By the way.

Even ‘glamour’ brands struggle with differentiation (or not dropping into a functional commodity status) in the b2b market (see Kodak, IBM, etc.  as prime examples).

So. Unless you have worked on a glamour brand where people line up to show your logo somewhere on their body you have had to become an expert in the decommoditization business.

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decommoditization:

Meaningful differentiation is difficult.  It is more than features & benefits and it is absolutely more than sheer ‘puffery’ <the claim that we are unique and everyone will beat a path to our door>.

This is truly the challenge of what a really smart guy named Hugh McLeod calls ‘decommoditization.’ Most businesses simply begin from the wrong place. They either seek ‘white space’ in the competitive environment or they believe they are different and set out to tell the world about it.

That is good old school ideology.

But it is bad because it is old thinking.

In today’s more cynical world the mind’s perception map assumes everyone is equal until proven otherwise.

Every day a business is decommoditizing itself or it is slipping down the slippery slope to commodity.

Unless your business is lean hogs, rough rice, natural gas or soybeans <all commodity futures you can invest in> you better have your head focused on decommoditizing.

Bruce McTague

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I know I have on my resume (somewhere) something like “an ability to differentiate in commodity like categories.”

What do I mean by ‘commodity-like’? Think banking, grocery stores, department stores, pest control, motor oil, eye drops, pretty much any P&G product you can think of, healthcare, cellular.

(all industries of which I have worked in).

Well. Okay. That said. In today’s internet world and an endless depth of available information at everyone’s fingertips, where everyone is someone’s competition for expectations, almost everyone is in a commodity like category.

On a separate note. Other than a happy few this also summarizes almost the entire b2b category. Everyone fighting themselves out of the ‘lowest cost provider’ status into ‘great value’ (which by the way is ‘brand’) status.

It doesn’t sound glamorous, but I haven’t been in the branding business or the marketing business or whatever strategy business someone wants to call it. I have been in the decommoditization business. In fact. Anyone who says something like that in an interview? Hire them. And hire them now.

Anyway.

My view is in today’s world the moment you stop and rest on the thought you are a ‘brand’ and have added value in someone’s mind (b2b or consumer) you are screwed. Every minute you do nothing you slip backwards toward commodity.

Hugh MacLeod did the cartoon to the right and I laughed when I first saw it because, while I don’t know him personally, he used almost the exact same words I/we used in a new business presentation to a state tourism business in the late 90’s (and then used over and over again with retail and commodity-like businesses).

It’s not just advertising. It’s relevant to all business.

If you own a business or selling anything to anyone, life isn’t top down (brand to product). Life is down to up – product to brand (constantly seeking to insure your head is above the commodity water).

Does that sound defensive? God. I hope not.  It’s just smart. It doesn’t mean you aren’t on the offensive and building value and thinking long term, it simply means you have a practical objective – I don’t want to be a damn commodity.

Anyway.

Meaningful differentiation is hard, REALLY hard. I believe businesses would find it easier if they focused less on brand and more on decommoditizing (which inherently is about value creation).

 

 

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Written by Bruce