Can an organization be too different?: The Strategic Value of Optimal Distinctiveness

Can an organization be too different?

I spend a lot of time with organizations that are trying to strengthen the perception that they are different, so that they can distinguish themselves from their competition. They want their customers to see that they offer something that no other organization can.

Because being different is critical to competitive advantage, it was surprising for me to spend time with an organization that is concerned about being too different.

This organization has an unconventional approach to creating their product, and some potential customers feel uncomfortable with the company.

Potential customers wonder:

• Can we trust this organization?
• Do they really know what they’re doing?
• Can they repeat their results next year too, or were this year’s accomplishments just a fluke?

At the heart of the customers’ questions is a business decision: Should they hire this company, or should they choose instead to do business with an organization that is more conventional?

The organization works in a conservative industry, where both customer and supplier organizations are risk averse. Innovators are looked upon with suspicion. Given a choice, customers prefer safe, conventional firms with decent products to innovative firms with more promising products. (I said it was a conservative industry!)

The Wrong Way to Manage ‘Being Different’

The organization, in its efforts to manage clients’ uncertainty, presents itself as much like the other successful firms in the industry. They tell potential customers:  “Yeah, we’re a little different but it doesn’t matter.”

The firm tries to manage the uncertainty created by being different by saying that differences don’t matter.

But that’s not true.

This firm is different, it is different in meaningful ways, and its difference is what explains how it gets superior results.

Rather than deny that they are different, this firm needs to establish their “optimal distinctiveness“. 

Optimal Distinctiveness

Optimal distinctiveness is a concept from individual psychology that addresses our personal balancing act when it comes to being similar to and different from each another. Establishing our optimal distinctiveness in each particular social context helps individuals maintain a sense of being  special while also allowing us the comfort of being part of a larger group.

For organizations, optimal distinctiveness is strategic balance— a secure place within the field, but with a distinctive hook that creates the organization’s competitive advantage.

Similarity => Perceived Legitimacy

Every organization needs to strike a balance between being different from and being like other organizations in its industry. Being like everyone else makes an organization recognizable — we know what ‘kind’ of organization it is and we know what to expect from it. Similarity makes the firm look “normal” and legitimate.

Difference => Perceived Advantage

Every organization needs to be different enough to stand out from the competition, so that people know that the organization has something different (and perhaps better) to offer them. Differentiation enhances a firm’s competitiveness by suggesting that it has no equivalents or substitutes.

When a firm tells potential clients that it doesn’t matter that the firm is different, the firm is telling clients that the firm isn’t distinctive. They are telling clients that the firm has no special skills or insights, and that there is no real reason to pick their firm over another firm.

They are dismissing their source of distinctiveness and their claim to real competitive advantage.

Manage ‘Being Different’ by becoming Distinctive

Instead of backing away from their different-ness, the firm needs to embrace it. The firm needs to establish its optimal distinctiveness, by:

• Clarifying what makes the organization different, so that they can represent themselves accurately

• Recognizing that this difference is meaningful, so that they can understand how to use it to their advantage

• Understanding this difference as something inherent to who the organization is, something based on the firm itself (e.g., not just relative to other firms), so that they can own and use this difference

• Linking this difference to their business processes and results, so that they can explain why this difference is valuable

When an organization can name, claim and explain how it is different from other firms, and when it can link these differences to skills, knowledge, and processes that make a difference, the firm can shift from being merely different to being optimally distinctive.

The ways that a firm differs from similar firms are the source of its competitive advantage. So why deny that your firm is different? Instead, find your optimal distinctiveness.

See also:
Is Authenticity the key to being “Meaningfully Different”?
Measuring Meaningful Differences: College Rankings and Identity

Tagged as: authenticity and distinctiveness, being distinctive, central distinctive and enduring, competitive advantage, David J. Deephouse, optimal distinctiveness, Organizational Identity, Strategic Management Journal, strategic self-presentation, uncerainty