Jeff Judy

Jeff's Thoughts - June 25, 2008

Unique? Are You Joking?

Did you hear the one about the business owners who walk into a bank? Two partners come into your bank, looking for financing of their new business. Their enthusiasm is infectious.

"We plan to be unique in our industry," they tell you, "and we intend to be market leaders in a very short time!"

"That's a wonderful goal," you tell them, "but what makes you think you can achieve that success so quickly?"

"We have thoroughly studied our industry and carefully analyzed all the best practices of our competition," replies one of the partners, throwing a thick stack of papers, covered with graphs and pie charts, onto your desk. "We have been able to identify a lot of business practices that these companies have followed for years and years, with no sign that they plan to change anytime soon."

"Ah, that's excellent," you say, warming to these intelligent and diligent prospective customers. "So your analysis has uncovered some new ideas, I assume, some different ways of doing things that will immediately distinguish you from the competition. That's how you plan to be unique in the industry, and a market leader, right?"

"New ideas?" gasps one partner. "Do things differently!" exclaims the other. "No, no," they say, "we can't be doing things differently, we have to match the competition. We did that research so we would know exactly what they were doing, and now we can what they do, too!"

Farfetched story? Maybe you have never had a conversation like that with a customer, but I have had plenty of them with bankers. In one classroom after another, just after we finish a discussion of a useful approach to one problem or another, some participant raises a hand and says, "That's a great idea, but we have some tough competition in our market, and we have to match them to keep our share of the business." All some participants really want to learn is what everybody else around them is doing.

It's a question of matching words and deeds. At many of the banks where I do consulting, the management of the organization talks about market leadership and being unique just as enthusiastically as our fictional business owners. But then that same management rewards employees for copying the competition, and punishes them for getting too creative.

Don't get me wrong: following the competition is a legitimate business strategy. If you are as good as they are at doing the same things they do, you're probably guaranteed a certain market share. You can count on achieving mediocre performance, which is better than being at the bottom of the pack.

You can also count on following the herd through the painful boom-and-bust cycles that are so characteristic of our industry. And you can forget about ever getting ahead of the competition.

So, if that's the way you want to go, you have my blessing . . . IF it is a deliberate decision. But you can't have it both ways: