Let’s face it, differentiation has long been a struggle for us. And in the Cloud, it’s probably key to survival.
I spent the first half of my career in financial services. We had the same struggle. While we liked to think ourselves better than our competition, the stark reality was that there was little difference between us. Customers chose who to do business with on the basis of price and location. And we hung on like mad to razor-thin margins.
Until the rise of the “category killer”. Companies like MBNA changed the game by picking a niche focus (affinity credit cards), doing it better than all of us “generalists”, winning market share, and earning far better margins. I vividly remember Michael Porter (Harvard strategy guru) delivering a keynote and telling a North American gathering of bankers that none of us had anything approaching a strategy, and that this was a disaster for both ourselves and our customers. I could see the blood drain from my CEO’s face. He wasn’t alone.
I’m reminded of that moment as I observe the Cloud obliterating traditional Partner categories. No business model or traditional customer base in our ecosystem is protected. The Cloud has leveled the playing field because the customer is looking for real choices. They want someone who specializes in their “category”, whatever that happens to be.
And for clarity, categories are not necessarily always vertical in nature, although they often happen to be. The good news is that the Cloud enables entirely new categories. Creativity is rewarded, if it resonates with a particular customer segment and is well executed.
Our core differentiation challenge, I believe, is to define and then “kill” a category.
Are you ready for that?