09.23.05
Long term differentiation
What is a long term differentiation for a business? Traditionally, there are 3 dimensions:
- Operational efficiency
- Product innovation and leadership
- Customer intimacy
In high tech, Dell is (1) and (3), Apple is (2) and (3) probably trying for (1) with low end Mac. Cisco, SUN etc are all trying to occupy all 3 dimensions. I have my doubts on whether it is possible for a company to excel at all three dimensions. One dimension layer that can be thought to be in parallel is a “global” dimension. The first 3 dimensions pretty well covers a specific market, but one needs to think carefully in a global economy. On a global dimension, a product innovation in one market does not guarantee its place in another market, neither is customer intimacy. For example, a 3G wireless leadership in Asia does not mean it would work well in US. NTT Docomo model would not work in the US because of the population density. And vice versa, bringing US’s model to Asia without modification would almost certain fail or take a long time to become successful.
