The Uniqueness Paradox

by Steve McKee

The Uniqueness Paradox“The most important word in strategy is uniqueness, uniqueness, uniqueness.”

Those are the words of Todd Zenger, a professor at the Olin School of Business at Washington University in St. Louis. His observation is as true as it is simple, but things get more complicated as he continues the thought: “On the other hand, there’s this message from the market which is simple, simple, simple, common, common, common, familiar, make it look like what others are doing so it’s understandable.”

Zenger is referring to a phenomenon confronting strategy-makers called the “uniqueness paradox.” In a paper titled Corporate Strategy, Analyst Coverage, and the Uniqueness Paradox, Zenger and two colleagues explain how capital markets systematically discount strategic uniqueness because it drives up their costs of collecting and analyzing information to determine the future value of a corporation. Thus, a company implementing brilliant strategy may actually be undervalued by the investment community, specifically because of that strategy. Now that stinks.

Unfortunately, the uniqueness paradox can have damaging effects within corporations as well. Jerry Thomas, president and CEO of Decision Analyst, explains how the paradox can hinder product development research: “We see many highly unique concepts killed by companies every year because purchase intent scores are marginal,” Thomas says. “The more unique a concept is, the greater its chances of success in the marketplace. A highly unique product will tend to enjoy a monopoly—since nothing else is quite like it. However, the more unique a concept is, the lower its “purchase intent” scores will tend to be.”

This insidious paradox can infect any and all forms of marketing and advertising, from tactic development to integration strategy to creative execution. “New” is by definition different, and different is scary. Zenger and Thomas correctly point out how uniqueness can color the opinions of investors and consumers, but marketers must also be cognizant of their own susceptibility to the paradox. Anyone who isn’t a natural risk-taker can be effectively grounded by it.

The solution? Thomas recommends that in new product testing “extra points” be given to highly unique concepts, simply because they’re unique. That seems like a good rule of thumb to follow in general. When you find yourself sweating over something because it’s unfamiliar and a little bit scary, that’s a sign not to pull back, but to press forward.


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Steve McKeeSteve McKee is a BusinessWeek.com columnist, marketing consultant, and author of “When Growth Stalls: How it Happens, Why You’re Stuck, and What To Do About It.” Learn more about him at www.WhenGrowthStalls.com and at http://twitter.com/whengrowthstall.

No comments

  1. Steve,

    Great post. An interesting dilemma for innovators. A former boss once pointed out this truism, “People in life don’t know what they like . . . they like what they know”.

    The challenge is how to do you build uniqueness into your product or service. And how do you do it in a way that is understandable, relevant and sticky.

    It’s my opinion that marketers should focus on adding signature added value. Finding ways to differentiate themselves through a concept called marketing lagniappe. Here are a few examples:

    Southwest Airlines and ‘Bags Fly Free’, TD Bank and their ‘Penny Arcade’, Five Guys Burgers & Fries and ‘Free Peanuts and Extra Fries’, Doubletree Hotels and their ‘Chocolate Chip Cookie’

    The challenge is finding that unique element that becomes ‘added value’ to your product or service. Doing it right will help you achieve three things: Product Differentiation, Customer Retention and Word of Mouth.

    Best,
    Stan

    @9INCHmarketing

    The longest and hardest nine inches in marketing . . . is making the journey from the brain to the heart of your customer

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