In many marketplaces, there’s both value-driven competition, and higher-priced premium goods and services. Whether you shift to provide strictly value or develop a value proposition to validate a premium position, you will need to differentiate yourself. To do so, every aspect of your organization’s offerings, from products, to services, to people, must be analyzed to determine how each either adds or subtracts from its overall ability to deliver more for less, or more for more. To compete successfully, your differentiated organization must also keep costs in line and effectively manage pricing and promotions to ultimately project the image of “value” your customer expects.

What is value to your customer?

To determine your position, ask your management team two critical questions: “Who are our target customers?” and “What is our value proposition in serving them?” Review the answers and then consider your organization’s efforts. Does management say one thing, but actually try to be all things to all customers?

Companies need to define their target customer; without this clarity, there is no focused effort on providing the right products and services. Only by developing a focus on, and more intimacy with customers can companies build better products/services that satisfy their demand for, and definition of value.

Quality alone is not enough. Excellent service is not enough. Even customer satisfaction is not enough. What is enough: the right combination of quality, service, and price your customers want to meet their unique and individual needs. Delivering their idea of value starts inside your operations.

The marriage of operational effectiveness and differentiation

To set your organization apart, apply differentiation to your operational efficiencies. Efficiencies require a company to perform similar activities better than its rivals perform them, such as developing superior products, faster. Constant improvement in operational effectiveness is always necessary for profitability. However, the effort ultimately needs to be teamed with strategic differentiation, which is defined as performing different activities from competitors, or performing similar activities in different ways. Successful organizations today understand that business process design is about both operational efficiency and differentiation.

Process enhancement

CEOs and senior management teams also recognize that processes are key organizational assets that can be competitively leveraged when managed accordingly.

In many organizations, core functions (including sales and distribution) are complemented by support functions such as finance, human resource, and customer service. Requiring each area to break down their operations will reveal hundreds of subprocesses. Management-wide review of these will likely reveal better ways to facilitate the flow of information between each function while eliminating duplicate or unnecessary efforts. This examination will also uncover opportunities to differentiate.

A serious competitive advantage

As the marketplace forces companies to become more competitive, they’re rightly focusing on applying strategic differentiation to operational effectiveness. Redesigned and differentiated business processes enable companies to deliver value to their customers and give them a formidable advantage over the competition.