Aesthetics...the Last Frontier of Sustainable Advantage?

In this closing lesson of the module, I

want to spend some time just raising some provocative
questions, and perhaps
suggesting some some of the answers based on the
lessons that we've
seen in this module so far. One thing that we're left
wondering
is whether aesthetics might be the last frontier of
sustainable advantage? Maybe coolness and beauty and
things like that are difficult to imitate. Can people imitate
Vipp? Can people imitate Apple? Can people imitate Bang
and Olufsen? These are some interesting questions.
Clearly some things can
be physically imitated. But if you really want a Vipp trash
,bin
does having a knock off, something that you know isn't
,the real thing
really speak to you in the same way? So, this ability to
convince
people that products and services are cool, or beautiful, or
elegant, might actually be a source of
sustainable, competitive advantage. And might mean that
in those
industries we don't have to go the way of
hypercompetition. I mentioned Apple. Apple is the poster
child of this approach. Although we have to say Apple
has managed to not only sell small volumes of products at
higher
than normal margins for the category, they've also
managed to sell high
volumes of high margin products. Which is kind of like the
Holy Grail

Aesthetics...the Last Frontier of Sustainable Advantage?

of this kind of business strategy. Failing to obtain
competitive
advantage that is sustainable, should companies then
move towards
a strategy as capabilities idea? Maybe the only thing left
to do if you're
in a hypercompetitive environment is to acquire abilities to
create value, not necessarily knowing whether you're
going to be able to use them right away. So maybe we
should be on
the lookout all the time for differentiating strategies,
regardless of
whether we know what to do with them yet. That's a
possibility. Another set of ideas that pops up here and
compels us is an idea called
hyperdifferentiation. We've been talking about
differentiation
and extreme forms of differentiation. Well, Eric Clemons at
the Wharton
Business School, a friend of mine, has developed an idea
that he
calls hyperdifferentiation. Which he defines as the art of
reducing
the importance of price as the principal determinant of
customer selection
among alternative goods and services. So how do we
actually make
customers price insensitive? What makes customers not
care how much it costs? Well, we can encourage
customers to select goods and services based, Clemons
,says
on what he calls deep delight. And he talks about products

Aesthetics...the Last Frontier of Sustainable Advantage?

,that fit a particular chunk, maybe a very small chunk
of customers particularly well. Just how to do that might
be the new
frontier of business strategy. Now, clearly, technology
plays a role. The Internet democratizes production. It
means that we all have accessible
to us ways of producing things. It democratizes
distribution. It means that companies everywhere can
access the same retail outlets and the same ways of
moving products and
,services around the world. And it also changes, often
the way that we market. We may not market in mass
terms
through advertising on television, in newspapers, or in
magazines anymore. We might now target social networks
and
word of mouth, and this is all part of the same picture. In
fact, one of the interesting
ideas that might just be emerging is that if we can make
our products and
services things that people want to know more about,
things that have lots of
knowledge you can accumulate about them. So how much
can be known
,about your product? How much can be found out
how much can be memorized? That might actually be the
key to making
customers insensitive about price. Now if you watch Vipp
and how they
operate, for example, there are many, many things to be
informed

Aesthetics...the Last Frontier of Sustainable Advantage?

about with that product. You can know that it's in a
museum. You can know why it's in the museum. You can
know the story of how the bin
first came into being in 1939. You can know the story of
the special
edition color from this past year and every year before
that as well. A very interesting company also from this
part of the world, along these lines, is a company called
Moods of Norway. Moods of Norway is a fashion
company based in Oslo. They make everything from shoes
to
pants to shirts to hats to sunglasses, mostly for men, but
also for women. And what's distinctive about their
clothing is that they go out of their way to give you
something to talk
about about their clothing. So if you look at one of their
sports
coats, it has a number embroidered into the sleeve, and
,you may wonder
what is that number? You may be able to find
,out if you investigated, if you investigate on the web
if you ask someone at one of their stores. And what you
will find out is that number
is the number of tractors produced in Norway in the year
that
that clothing was produced. Another set of shoes that they
make includes instructions for how to do a Norwegian
dance
on the inside of the shoe. So that you can study the
,diagram
put the shoe on, and then proceed to dance in the way

Aesthetics...the Last Frontier of Sustainable Advantage?

of traditional Norwegians. But their clothing is
full of things like this, things embroidered on
the inner cuff of the pants. A surprising pink lining inside
a conservative black jacket. The whole idea with Moods of
Norway is
to give you things you can learn about, give you things
that you can talk with
people about, about their clothing. And the more that you
,have to be informed
the more that you're inclined to be informed, the more
that you
seem to be insensitive to prices, because their prices are
,rather high. They're not extremely high
but they are on the high side. They are priced about like
,Hugo Boss
or a fashion label like that. Okay, that's it for this module.
There's more to come on all of this. So we've looked at
how
the world is changing. We've looked at how companies are
adjusting tho how the world is changing. We've looked
specifically at how companies in Northern Europe
are implementing what I think of as 21st century
strategies to take
advantage of how the world is changing. And we talked a
bit about some of
,the other implications that result from this changed world
implications like hyper-competition. We're now gonna
move to
the capstone project. In the capstone project, we'll
introduce you to a project about

Aesthetics...the Last Frontier of Sustainable Advantage?

one of these 21st century companies, a company that's
having what I would
characterize as a 21st century problem. In the next
module we'll
talk about that company, their problem, and
give you an assignment that's related to all of the things
that we've
been talking about so far. So, thanks. We'll be back in a
.bit