You Can’t Win With Average

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Research has shown that the average corporate acquisition destroys value.

And yet…

…the firms that are outstanding at Mergers and Acquisitions use this skill as a significant point of strategic difference.

Research has shown that the average job interview yields no usable data on whether or not you should hire someone.

And yet…

…there are people and firms that are outstanding at interviewing and use this skill as a significant point of strategic difference.

Research has shown that the average return on innovation is positive, but small.

And yet…

…you know where this is going by now.

Being average at these skills doesn’t do you any good at all. But being awesome at them can make all the difference.  Outliers drive the overall performance of most systems based on human interaction, including business.

This reminds me again of Different by Youngme Moon.

Moon2

She argues that lopsided beats well-rounded:

The truth of the matter is, true differentiation—sustainable differentiation—is rarely a function of well-roundedness; it is typically a function of lopsidedness.

…if Hummer were to come out with an advertising campaign boasting a family-friendly ride, it would hurt its claim to being the toughest motherf*cker on the road. If Ferrari were to come out with an advertising campaign that underscored its commitment to child safety, it would hurt its claim to being the baddest sports car on the market. Negative trade-offs are not only a marker of excellence, they are a marker of differentiation. This is as true for products and brands as it is for brain surgeons.

For businesses, however, the impulse to move to a more well-rounded output can be hard to resist. And the cumulative effect of this, in too many cases, is a herdlike regression toward the mean. As I write this, Starbucks is experimenting with offering breakfast value meals in its coffee shops while McDonald’s is experimenting with putting coffee bars in its fast-food outlets.

We must be different. We must be lopsided.

No more herdlike regression toward the mean – we must find the things that at which we’re great, and build on those.

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Student and teacher of innovation - University of Queensland Business School - links to academic papers, twitter, and so on can be found here.

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Category: complex systems
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6 thoughts on “You Can’t Win With Average”

  1. Hi Tim, Makes perfect sense. While we don’t want glaring negatives in essential areas to fatally damage our value proposition, if we want to stand out, we have to stand for something exceptional. Years ago, seemingly out of nowhere, Bath and Body Works became the US’s largest specialty retailer of personal care products by offering exceptionally appealing fragrant lotions and soaps. These products evoked intense likes versus the well rounded scents that mass market minded companies like Procter and Gamble and others have long pecialized in.

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  3. Hi Tim,

    The Gallup folk will nod their heads at this.

    This seems to go towards the idea that organisations, like people, have their own brand of special sauce which, when added to everything else in the MBA recipe (or similar template), loses it’s flavor and everyone ends up with mashed potato.

    This is a similar message to those business thinkers who call for firms to pivot on the things they do really well, rather than add ‘a bunch of other stuff’.

    So it’s about focused effort that follows clarity of enquiry into an organisation’s strengths.

    It’s this sort of thing that often has me pondering some of the inefficiencies of public service delivery. Other folk provide similar services far better. And heaven knows that parts of the private sector could do with several helpings of public sector governance-risk-compliance capability.

    But that’s another story.

    Another side to being average is with our ideas. The echo chamber that Alex Pentland writes about, where the same ideas are traded predictably within the same group. That’s another example of herdlike regression to average.

    And one that’s possibly more common than we like to admit.

    Thanks for another great post,

    Rohan

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