Uncommon Sense: How to Turn Distinctive Beliefs Into Action
It’s widely recognized that a company’s leadership, culture and core competencies can be important to its success. But another, often overlooked, critical source of differentiation is the company’s beliefs.
With the launch of its TotalCare engine fleet management service, Rolls-Royce sought to neutralize a competitor’s strategic move in the aircraft engine industry.
Image courtesy of Rolls-Royce.
One hallmark of a successful company is that it stands out from the crowd. Perhaps its approach to customer service is groundbreaking, the opportunities it offers its employees more exciting or its products just cooler than the competitors’. In a world of fierce competition and rapid imitation, companies that dare to be different capture our attention and our admiration. Some are globally recognized, such as Apple, Google, Tata, Virgin and Zara; others are less well known, or are niche or local players.
What enables some companies to be consistently and resolutely different? Business writers have pointed to such attributes as visionary leadership, a unique corporate culture and a distinctive set of core competencies. Although there is little doubt that such elements can sometimes play a key role, we argue that, in the end, a company’s beliefs — or what we refer to as its “uncommon sense” — are often the most critical source of differentiation.
We are by no means the first ones to highlight the role of belief systems as a major differentiator. Peter Drucker’s “theory of the business” focuses on the underlying beliefs held by the organization’s leaders about what the business does. Yet while many recognize that beliefs form the platform for actions and capabilities, it’s less clear how managers can apply this insight. Research in this area has tended to focus, for example, on how competing businesses converge on the same set of beliefs or “industry recipes” over time, or how a company’s “dominant logic” locks it into a narrow way of thinking about its business opportunities.1 Our approach, by contrast, is to show how managers can generate a distinctive belief system — their uncommon sense — and translate it into action.
The Origins of Distinctiveness
The Leading Question
What role do a company’s distinctive beliefs play in strategy?
Findings
- Winning strategies are grounded in distinctive beliefs that ring truer with customers and prospective customers than the beliefs of rival companies.
- Managers need to re-examine their company’s beliefs and challenge its ‘sacred cows.’
- Successful companies adopt a conscious strategy of experimentation to test their beliefs.
References
1. See J.C. Spender, “Industry Recipes: An Enquiry Into the Nature and Sources of Managerial Judgment” (Oxford: Blackwell, 1989); and C.K. Prahalad and R. Bettis, “Dominant Logic: A New Link Between Diversity and Performance,” Strategic Management Journal 6, no. 7 (1978): 485-501.
2. W.C. Kim and R. Mauborgne, “Blue Ocean Strategy” (Cambridge, Massachusetts: Harvard Business School Press, 2005).
3. This quote is taken from Sam Walton’s autobiography, “Sam Walton: Made in America” (New York: Bantam Books, 1992).
4. V. Nayar, “Employees First, Customers Second” (Cambridge, Massachusetts: Harvard Business School Press, 2009).
5. This quote is from the “key speech” of Arup’s founder, Ove Arup, available online at www.arup.com/Publications/The_Key_Speech.aspx.
6. Individuation, according to Carl Jung, is the process by which an individual personality is developed: “It is the development of the psychological individual as a being distinct from the general, collective psychology.” (C.G. Jung, “Psychological Types” (Princeton, New Jersey: Princeton University Press, 1971).
7. The material on Ikea is taken from two sources: C.A. Bartlett and A. Nanda (1990), “Ingvar Kamprad and Ikea,” Harvard Business School case study, 390132-pdf-eng; and A. Jonsson and N.J. Foss, “International Expansion Through Flexible Replication: Learning From the Internationalization Experience of Ikea,” Journal of International Business Studies 42, no. 9 (December 2011).
8. The Twenty case study can be found at: www.managementexchange.com/story/twenty-building-better-model-ground.
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