To Stop Selling on Price, Start with this Business Model Innovation Book

Beyond Price – Differentiate Your Company In Ways that Really Matter, by Mary Kay Plantes and Robert Finfrock, is a comprehensive manual for escaping the problem of selling on price. Having come from a highly commoditized industry – packaging – I know how dangerous it is for a company to -

• Be perceived by customers as being “just like the other guys”
• Have points of differentiation that really don’t matter to customers
• Watch margins erode as competitors close quality and service gaps

If you suffer from any of the above, don’t feel alone. The authors explain in the preface -

“Commoditization is the gravity of our marketplace, an economic force pulling competing products and services down to the same level, until price determines which company wins and which loses customers. This force is getting stronger each year as technology makes it easier and easier to copy competitors’ product and service innovations, at the same time that globalization and the Internet are creating more copycat competitors. Furthermore, the Internet creates more powerful customers capable of searching out lower prices and creating auctions in which the lowest-priced bidder wins the order.” (Beyond Price, Preface)

Companies respond to the challenges of the 21st Century marketplace in a variety of ways. Some ignore the problem, figuring everything will get back to “normal” after the recession. Others look for quick fixes with hollow advertising and marketing campaigns. Others accept commoditization, sell on price, and chop overhead to the point of jeopardizing their long term survival. The authors suggest the only sensible way to fight price selling is through business model change. Beyond Price shows you exactly how to do that, walking you through an eight-step process that starts with knowing where you are and ends with aligning your culture with your strategy.

Any b2b or b2c firm will benefit from the authors’ recommendations, which run the gamut from strategy to hands-on tactics. The authors are well suited for the task. Mary Kay Plantes is an MIT-trained economist; Robert Finfrock is business owner who led his concrete manufacturing firm through a highly successful business model change.

Here are a few more excerpts to give you a taste of what business model innovation is all about.

• “Communication positioning is to strategic differentiation what painting a house is to its design and construction.” (page 25)
• “By the time your customers articulate new needs, there are already suppliers serving the market, ensuring commodity competition.” (page 41)
• “Absent a well-defined market-understanding process, the urgent will drive out the important in day-to-day activities, and the company will move back to being internally focused.” (page 44)
• “Solutions that eliminate the traditional compromises that customers experience in your industry, or that take on jobs your customer is delighted to be rid of, are at the heart of differentiation.” (page 63)
• “The only way to overcome push back is to make sure you have strong, diverse, nonjudgmental, and creative conceptual thinkers at the table when you do the strategic assessment.” (page 97)
• ” … a differentiated value promise is a pipe dream without advantages and attributes that create the higher value.” (page 109)
• “If customers could buy your offerings and be guaranteed benefits while never knowing anything about your industry or company, they likely would chose to know nothing about your industry or company.” (p 121)
• “In fact, purpose is more important than vision.” (page 158)
• “There are no good or bad cultures when it comes to achieving major change, only enabling or disabling cultural attributes …” (page 209)

Is Your Firm Positioned for Profit?

Mary Kay Plantes likes to say that not every company can be – or wants to be – its industry’s Wal-Mart. Unless you are ready, willing, and able to become biggest and lowest cost producer in the field, price warfare is a losing proposition. Creating a new business model isn’t easy – a conclusion you are bound to reach after reading this book, if you don’t know it already. Look at the obstacles that must be overcome -

• Changing organizational structures
• Changing customer relationships and expectations
• Doing business is a new way
• Bringing employees together under the banner of a new purpose and vision

The very words “changing” and “new” are enough to scare off most business leaders and management teams. Essentially this is why, despite the almost irrefutable logic of business model innovation, few companies even make a wholehearted attempt at it, let alone succeed in achieving it. Fortunately, Beyond Price provides detailed guidance to help a firm navigate the waters of business model change. And speaking of navigation, it serves firms well to recall where business model innovation leads. While change and new may well be obstacles along the path, the destination – profitabliity – is well worth the journey, wouldn’t you say?

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Disclosure – Mary Kay Plantes is a Word Sell, Inc. client, but I’m not receiving any compensation for this book review. Please check out her Business Model Innovation blog for thought provoking observations and discussion of strategy issues relevant to just about any size organization.