I’ve been waiting a long time for my insightful colleague Tim Williams to put his thoughts on purpose and branding into a book.
Well, it’s finally available: Positioning for Professionals: How Professional Knowledge Firms Can Differentiate Their Way to Success (from Wiley Professional Advisory Services).
Tim has done more than anyone to convince me of the importance of purpose, sometimes now being referred to as “why,” based on Simon Sinek’s book, Start With Why.
Tim has graciously allowed us to post an excerpt from his book: “How to Expand By Narrowing.”
I hope you enjoy this excerpt, and more importantly, Tim’s book. Every time I read his work, speak with him, or hear him speak, he never fails to enhance his reputation as a true thought leader for professional knowledge firms.
How to Expand By Narrowing
The urge to copy is exceptionally strong in the human species. The underlying explanation is the “copying” mechanism that has allowed humans to survive and evolve for the past few millions years. In fact, some behaviorists believe that copying is our species’ primary learning and adaptive strategy.
So building a successful brand means going against your instincts. Common sense would tell you to closely examine what competitors in the category are doing, make sure you are offering the same or better features, and adopt the “best practices” in the industry. But while others are studying and following best practices, the innovators and category leaders are developing the “next practices.” They are resisting the natural urge to copy. And instead of just working to improve their brand, they are working to differentiate it.
The best and all the rest
This explains the alarming disparity between the world’s top brands and all the rest. Because most brands are more likely to copy than to innovate, the measurement referred to as “brand equity” has been in decline on average since 2004. But a handful of leading brands actually are growing in brand equity. In fact, what the consultancy Core Brand calls “brand equity value” is concentrated among the top 100 brands, which account for over 90 percent of all brand equity value. This isn’t because the top 100 brands outspend their competitors, but because they out-differentiate them.
The reason top brands in a category outpace their rivals is not the power of share of market (as regularly taught in business schools), but rather their share of mind. This is the power of the brand. While companies may occupy a position on the stock exchange, brands occupy a position in the mind of the customer. This is how the term “positioning” was coined. Positioning is the foundation of branding, because it identifies what the brand stands for.
Positioning is not common sense
Especially in tough economic times, “common sense” would suggest that a business can improve its revenue streams by expanding products and services, broadening capabilities, and appealing to more customers. It seems like common sense, but it’s exactly the wrong response. The best growth strategy—in good economies or bad—is to decide what not to do. The best way to expand is by narrowing.
Imagine two architectural firms: one that’s extremely focused with a clear value proposition, and one with an unfocused business strategy that attempts to do everything for everybody. Which of these two firms would have:
- The strongest earning power?
- The largest geographical market area?
- The fewest competitors?
- The greatest degree of respect from clients?
- The most sophisticated clients?
The answer in every case is the focused firm.
Your customers buy your brand, not your company
Professional firms like advertising agencies, law firms, and accounting firms usually see themselves as counselors and advisors that work for brands rather than being brands themselves. Firms staffed with knowledge workers usually resist the concept of marketing (the ultimate irony: advertising agencies that don’t advertise). But the truth is every company is a brand whether it wants to be or not. You can be a brand either by design or by default.
In professional services—as in packaged goods—customers buy brands, not products. A brand is the customer’s idea of the product. While a product or company exists in reality, a brand exists only in someone’s head. But it’s this perception of your firm that drives all customer behavior.
Not just better, but different
It’s not the best companies that prevail in the marketplace, but rather the best brands. The goal of business strategy is not just to be better, but different. The most profitable business strategy is not to aim at the center of the market, but rather at the edges.
It’s no coincidence that a handful of top firms win the most business, attract the best talent, and earn the highest margins. They’re the ones that have staked out a differentiating positioning strategy that capitalizes on their strengths. They have learned the counterintuitive truth that the best way to expand your business is to narrow your focus.
Tim Williams is founder of Ignition Consulting Group and is a senior fellow of VeraSage Institute. This post is an excerpt from his new book, Positioning for Professionals: How Professional Service Firms Can Differentiate Their Way to Success.