Randomness can be an essential part of product differentiation.
Product differentiation vs. cost leadership?
The folklore goes……
Once upon a time, there are two business strategies you can choose from: product differentiation or cost leadership.
Make the right choice? You gain a sustained competitive advantage.
Make the wrong choice? Go figure ……
And everyone knows the strategy of cost leadership is a taboo – the race to the bottom, unless you are Walmart of course.
Product differentiation, therein, becomes the way to go.
Really?
What if your ‘differentiation’ is imitable? What if someone else comes up with an updated version of your ‘differentiation’? Do you really believe your ‘differentiation’ is sealed by those patents or trademark regulations?
Think twice.
For almost anything, as long as it can be coded, programmed, reverse engineered, standardized, or scaled, it is replicable. Tacitness might provide a layer of protection, but its decryption is only a matter of time. The moment the decryption kicks in, the moment the implicit mechanism will be uncovered.
Indeed, anything static is replicable.
To be replication-proof, businesses have to encourage randomness. Randomness is the antidote to codification and standardization.
But what is randomness?
Randomness is a combination of accidents, arts, contingencies, exploration, experiments, tryouts, surprises, variations, and even errors.
It sparks idiosyncratic values and idiosyncratic values are replication-free by nature. They are the only ones that can be truly qualified as being valuable, rare, and difficult to imitate, according to Jay Barney’s VRIO Framework.
What about the ‘O’ (organization) part in this VRIO Framework?
Three prerequisites for the ‘O’:
- Make room for randomness. An organization should allow and encourage variations and irregularities. There should be a mechanism or system in place in creating and extracting idiosyncratic values out of randomness.
- Hire ‘artists’ rather than workers. Dare to bet on the idiosyncratic values created by these artists because they know how to create, rather than manufacture, values.
- Breathe in humanity. Make humanity a part of your value proposition. Realize that humanity is spontaneous kindness. It is the ultimate value that will prevail across time and space.
Bear in mind that randomness goes hand in hand with risk and uncertainty. But isn’t that the very reason a business can be uniquely inspiring and intriguing?
100% randomness means chaos and 0% randomness means commodity.
Tell me how ‘random’ you are, and I will tell you how exuberant you can become.