To Your Wealth

Racine Journal Times

Michael P Haubrich, CFP

The Demise of Differentiation

Each year, my staff and I spend time doing strategic planning. During these highly interactive sessions, we revisit our goals, review the current status of our client service activities and focus on maintaining our vision and competitive differentiator. It seems that may be becoming a lost art as more and more companies appear to be turning former differentiators into commodities that make them ripe for takeover or sale.

A recent example of this is the attention that Midwest Airlines has been receiving from AirTran. When I first heard of the latter’s bid to buy the former, I remember thinking “that was only a matter of time.” Unfortunately, I have watched the demise of Midwest Airline’s unique differentiator for quite some time now and as a frequent flyer with that airline, I mourn the passing of a once great customer service engine into what has become just another commodity product. And one that is ripe for a takeover—friendly or hostile. Whenever a company loses their competitive differentiator, all that is left is price cutting thereby turning the service or product into a commodity. The ultimate winner in that scenario is the lowest cost producer – Wal-Mart in retailing and Southwest and Air Tran in airlines.

Midwest’s chairman, Tim Hoeksema said in an article last month that Midwest continued to differentiate itself through outstanding service. I have to take exception with his statement. Significant changes have been made that have directly impacted the quality of service. Outsourcing the baggage handling, reconfiguring planes, more late flights have made my experience of flying Midwest over the past three years less than the pleasant experience of old “Best care in the air” airline. And it is not just me commenting on the experience. Nick Murray, another financial advisor wrote about his less than positive experience flying Midwest in his monthly column in Financial Advisor Magazine this past November.

Midwest Airlines once-upon-a-time differentiator was first-class service at a working man’s fare. Now Midwest is just like any other discount airline—lower fares to some markets with nearly half of their flights on the super-saver planes – five across cloth seats replacing the spacious four across leather seating. Midwest does, however, maintain their delivery of warm chocolate chip cookies and on this morsel Midwest Airlines is hopeful that once loyal customers will turn a blind eye to continuous maintenance issues, departure delays, slow baggage handling and at times less than courteous in-flight service. Hate to be a realist, but their cookies simply aren’t that good and there are many alternatives available at this level of “service.”

These experiences and the circumstance Midwest now finds itself in reminded me of an important principle: never, ever lose sight of the thing that makes you different from those who would position themselves as your competitors. If you lose your vision, you lose your way and ultimately you lose the customers who have made you successful. Perhaps Midwest will return to their vision and differentiator, but I sincerely think it may be too late for them and they may one day soon find themselves asking “who stole the cookies from our cookie jar?”

You may wonder what relevance this has to individuals. I believe that just as companies need to focus on their differentiators to succeed, so do each of us. It is through a constant process of developing the right skills that differentiate you from your competition – be it in your career, family or community that positions you for success.

If you have only one New Year’s resolution to make, perhaps it could be this one: I promise to work to maintain my vision for (my career) (my business) (my life) and to remain focused on providing a differentiator that makes me stand out from the rest. This commitment to your vision could help keep you from becoming a commodity in any area of your life.

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