Avoiding the Pitfalls of Our Same-Different Impulse
For decades, Reuters and Thomson Financial duked it out with Bloomberg for the lucrative global market of leasing desktop terminals that provide live data-feeds for the world’s financial traders, who need the live data to figure out what, how and when to trade. Thomson and Reuters even merged in 2008 order to better compete with Bloomberg by increasing their scale and then sinking huge investments into making its terminals and feeds as high quality and functional as Bloomberg’s. Yet Thomson Reuters was never been able to carve into the lopsided share lead of Bloomberg and eventually threw in the towel by selling a majority stake in the business to Blackstone in 2018, which hasn’t fared any better since.
Why did the attempt to compete with Bloomberg come up so short? Bloomberg really was in a different business — the communications business. Its chat function enabled thousands of traders to communicate with each other about their trading while they traded. It wasn’t about the data feeds; it was about the social network. Bloomberg was and continues to be just plain different, even though from a cursory glance, it looked the same.
During the 1990’s Crest lost its long-held market share leadership in toothpaste to rival Colgate. During that period, Crest focused on the difference between two segments of consumers. One segment — Crest’s segment — focused on mouth health, that is protecting against cavities and the dreaded gingivitis referred to in scary terms in advertising copy. The other segment focused on aesthetics — bright, white teeth. To the folks working on the Crest business at the time, it was all about the difference: was a consumer a serious mouth health aficionado or a flighty aesthetics person? However, the folks at eternal rival Colgate came to the conclusion they weren’t so different and in fact virtually all consumers wanted mouth health and aesthetics and introduced a product that addressed both aspects: Colgate Total. That brilliant product knocked Crest off the toothpaste pedestal and left the Crest folks dazed because they had simply never thought of consumers as being that similar.
For decades, I have watched this phenomenon of the exaggeration of both similarity (Thomson Reuters versus Bloomberg) and difference (Crest versus Colgate) played out repeatedly to the detriment of company performance and wondered why it was happening. Now neuroscience research has provided revelation with its cornucopia of insights on how our unconscious mind works in ways we never imagined. Our mind is like an iceberg, with the conscious mind the 10% that is visible for all to see above the waterline and the remaining 90% (or more) unconscious and invisible, even to ourselves.
It turns out that the unconscious mind loves analogy. It understands and processes the world through analogy, which represents a strength but also a hidden weakness that requires explicit thinking processes to overcome in order to make better business decisions — and avoid really bad ones, like those above.
The Power of Analogy
It turns out that when the mind perceives an object or situation for the first time, its immediate instinctual reaction is to ask: To what is this analogous? Notice that I did just that in the paragraph above. When I read the research that describes how the mind works, my mind immediately went to the analogy: the mind is like an iceberg.
The mind’s impulse on this front is very powerful because a key part of its ability to understand the world is driven by analogy. Some even argue that the only way the human mind can comprehend something is by way of analogy. The mind has no way of understanding a new phenomenon — whether an object or a situation — if it can’t say to itself: “This thing is like another thing that I already know.”
Craig Wynett, who headed the efforts at P&G to take advantage of the latest neuroscience research findings, provided me a powerful example of the power of analogy — or in this case, the lack of it. Long before the launch of the Segway, while it was the hot-as-a-pistol, next brilliant forthcoming innovation, funded by hundreds of millions in venture capital, code-named Ginger, and brought to the world by superstar inventor Dean Kaman, Craig predicted that it would be a failure. “Mark my words, Roger,” predicted Craig, “this is not going to be a garden variety disappointment. This is going to be a failure of epic proportions.” Well, Craig was right. Segway ceased production on July 15, 2020 having failed utterly and abjectly in its 20-year journey to the ashbin of history.
Craig didn’t forecast that the magnificently sophisticated technology wouldn’t work or that it failed to address a real user need. The flaw on which Craig based his dour forecast was that the Segway analogizes to absolutely nothing at all. It is a little wheeled platform, on which you stand upright, largely motionless while moving forward. You didn’t sit as in a car, or peddle as on a bicycle, or steer as with a motorcycle. It was unique — and for the brain, that is simply not a good thing.
Think of the last time you saw a rare Segway in use and recall your reaction. For me, it was at an airport and a police officer was patrolling the arrivals level on a Segway. She looked totally weird and laughably geeky on the contraption and I bet your reaction is the same every time. Our mind simply doesn’t like it because it doesn’t know to what other thing in our mental repertoire to compare it.
It isn’t a horseless carriage — i.e. a carriage that has a motor in the front rather than a horse. It isn’t a motorcycle — a bicycle with an engine for propulsion. Or a snowboard — a skateboard for the snow. Or a now-ubiquitous motorized scooter, which looks just like, well, a scooter. Those had powerful positive impacts on the part of the brain below the waterline because each had immediate and compelling analogies that enabled the brain to comprehend and categorize this new-but-not-so-new item. The unconscious brain did not send a ‘watch out, I am uncomfortable’ signal, but rather a ‘yup, got it, we’re OK here’ vibe. That smoothed the adoption processes rather than put roadblocks in their paths.
Long before neuroscientists figured out how and why the brain loves analogies, great marketers and branders always used the power of analogy to drive user acceptance and enthusiasm. It wasn’t a personal calculating device; it was a personal computer — like that big one in the data center only yours for your own use. Tide with Bleach was the Tide we’ve always loved plus the bleach we have always needed to dump in separately. Or the BMW 5-series or 7-series: same as the beloved 3-series only bigger and more luxurious. Your iPhone was just like an iPod but with a telephone included. And the iPad: well, what could possibly be more comforting — it was either a lightweight MacBook or an iPhone with a nice big screen, whichever struck your subconscious first?
The Problems with Sameness or Difference
However, as with most things about our unconscious mind, the impulse to analogize is not an unalloyed good. The drive is too powerful in two ways. First, when we decide a thing is analogous, we are inclined to slip into treating it as ‘the same.’ We analogize and then create identity. This competitor is in the same business. This customer is the same as the other customers. These employees are the same as the other employees. This era for our industry is the same as the previous era.
But if a phenomenon doesn’t fit handily into the ‘same’ category, it tends to get pushed to the absolute far extreme, to ‘different.’ It gets tossed completely out of the ‘same’ category and thrown into a ‘different’ category to be analogized to something else entirely — those aesthetics-oriented toothpaste consumers are like fad dieters; they are superficial and don’t pay attention to fundamentals like proactive health.
The problem, of course, is that there are differences in sameness and sameness in differences — and the world gets into big trouble the moment that it allows its subconscious to secretly convince it that a phenomenon is entirely the same or entirely different.
Think of the Vietnam War. This was just another American war, the same as World War II and the Korean War, right? Of course it started out as a non-war — American advice and then a ‘police action’ but when it became a war, it was prosecuted as an American war with American battle techniques — overwhelming air superiority flying above highly equipped and organized troops who would advance slowly but steadily with overwhelming force until the enemy was subdued. Of course, we all know the sad history. The enemy never stood and fought in a traditional way. It struck randomly and then retreated. It snuck into neighboring countries when pursued. It used the jungle terrain to its best advantage and defeated the world’s most powerful and advanced military, which never really internalized that some things about this war were the same as previous wars and some things were dramatically different. That ignominious defeat precipitated the creation of an entirely new American military doctrine (Sea Land 2000), which was a good thing, but it didn’t bring back any American Vietnam casualties or erase the downsides of an armed conflict that accomplished little or nothing.
On the other side of the coin, the focus on and accentuation of differences lay behind the tragic end of the Titanic and the lives of 1500 passengers and crew. Until an iceberg sliced open its hull like a knife through butter, the focus was on the differences between the Titanic and any other ship that had been built in human history. Not only was it bigger and more opulent, it was ‘unsinkable’ — that is, until it wasn’t. Had the ship-owners and crew spent time thinking that even though it was bigger than any passenger ship in history and heavier and thicker-hulled, it was remarkably similar to every other ship in its relative size (miniscule) compared that of a garden-variety iceberg (monumental), the Titanic would have probably charted a safer course — to the benefit of its owners and the 1500 victims and their families, though to the detriment of the entertainment careers of James Cameron, Leonardo DiCaprio, Kate Winslet and Celine Dion!
Misplaced Sameness in Business
The Thomson Reuters story is repeated over and over in business with a damaging focus only on what is the same. When Southwest Airlines entered the U.S. scheduled air transport business, its competitors viewed it as just another airline start up — albeit one in the low cost segment like People’s Express or Continental or Texas International. But it was basically just the same as everybody else. That was a damaging conceptualization to every single one of the others — many of which are no longer with us. Southwest had a substantially different model, one that helped it grow to the largest in passenger-seat miles in the U.S. market. Would that have been easy to stop if the incumbent carriers had treated Southwest as fundamentally different from the very start? No. But they would arguably have had a chance of a less sobering outcome.
Treating all customers as if they are the same is another error of sameness. After deregulation of the US long distance telecom industry in 1984, the incumbent, AT&T, continued to treat all of its customers as if they were largely the same because that is how it treated them during its time as a monopoly. The new entrants, who became MCI and Sprint, saw customers as having similarities but also important differences in terms of their inherent profitability potential and service level needs. Many factors contributed to the eventual demise of AT&T and its acquisition by SBC (which adopted the AT&T brand name), but misplaced sameness was a contributing factor.
Identical treatment by a company of all its employees is yet another example of misplaced sameness. It is easy to analogize from one employee to the next and say that they are sufficiently the same to give the same package of employment benefits. Only relatively recently have companies more widely understood that employees in the same company in the same job category might well have such considerable differences in economic situation and financial desires that they need to offer flexible benefits packages that all employees can tailor to their own circumstances.
Finally, companies typically fall instinctively into the trap of seeing the future as the same as the past — that nothing is changing in the industry structure or dynamics that would give cause to changing their approach. This is one explanation behind the global financial crisis during which investors assumed that the future performance of AAA-rated securities would be the same as previous performance — even though there were meaningful differences between these complex packages of derivatives compared to simple corporate bonds of the past. Rather than thinking about the differences between the future and the past, the companies focus on and accentuate the sameness and don’t react or react very modestly.
Misplaced Difference in Business
As with the Crest example, businesses equally fall prey to the other extreme. They look only at the differences and ignore entirely the similarities.
Companies can instinctively categorize new competitive threats as utterly different and totally ignore them at their peril. I experienced frustrations in this category while on the board of one of the large North American electronic manufacturing services (EMS) companies. EMS companies grew rapidly beginning in the 1990s as the large integrated computer companies including IBM and HP ramped up their outsourcing of manufacturing to them. At the same time, another industry grew based in Taiwan. These companies were called ODM’s — original design manufacturers. They got their start in producing lower-end electronics, principally laptop computers. Indeed their offering was different. Rather than having a computer company contract to have its own design manufactured for them by an EMS company, in this case the computer company would simply ask for a laptop of a given power and feature set and the ODM would both design and build one for them.
To the management of our company, this meant ODMs were completely different than EMS companies like ours and deserved to be entirely ignored. They were low end. They didn’t have sophisticated engineering departments. They didn’t have patents. They were just different. It turned out that if you looked more closely, the biggest ones had more engineers and patents than we did. And of course, they were soon in virtually every segment in which we competed and now, there is greater threat of an observer erring to the side of EMS and ODM being ‘the same’ than them being different.
Lest these be seen as just classical examples of Clay Christenson-style low-end disruption, the same thing happened to P&G in the highest end of diapers while I was working with that business. Based on observing Japanese disposable diaper manufacturer Unicharm succeed with the product in its home market, Kimberly-Clark entered the U.S. market in 1989 with a pull-up version of its second place Huggies brand, which at the time trailed P&G’s leading Pampers brand. The standard in the market at the time was the ‘taped diaper,’ a disposable diaper that was placed around the baby’s bum and fastened in the front with adhesive tabs. The pull-up was like underwear with absorbency built in and pulled on just like underwear (once again demonstrating the power of analogy to generate understanding). It was a considerably more expensive product that had substantially higher margins for Kimberly-Clark.
However, the dominant reaction of the P&G diaper business at the time was that it was a different market — a tiny fringe market at that! Even as pull-ups grew to over 30% of the volume in the US market, P&G kept measuring its market share of the taped diaper market until that became so ludicrous and untenable that it had to recognize the inherent sameness of pull-up diapers and introduce its own — but that took five years for a first and ultimately failed try in 1994 and until 2002 until it had a permanent competitive solution.
As with exaggeration of differences with competitors, the same happens with customers. When news information began to be consumed from on-line sources, there was the conception that there were ‘online readers’ and ‘print readers’ and they were entirely different. It seems hard to imagine today! But many print outlets felt they simply had to recognize that they served print readers only and other outlets (not competitors) served these other creatures known as online readers. It mattered not to them that many of those on-line readers (other than the really young ones), used to be their loyal customers and others consumed some kinds of news (e.g. sports) online and other kinds (e.g. local politics) in print. No, they were just plain different. This conception helped slow their competitive response to online competitors.
The same thing happens with employees. Few companies think that white collar and blue-collar workers have much if anything in common. They are simply different and deserve to be treated utterly differently, which helps to disaffect blue-collar workers and reduce what might otherwise be healthy migration between these classes. A similar attitude can be seen when there are discussions of Millennial employees, who apparently aren’t at all like other human beings.
Finally, the business falls prey to declaring that the future is entirely different from the past. At no time was this clearer than in the dot.com era. There was a ‘new paradigm.’ The rules of business were changing entirely. It was about eyeballs not profits. First to the Internet was the key to success. Everything would be done on line. Clicks would utterly dominate bricks, etc. Of course, there were differences — no question. But it wasn’t as different as the vast majority saw and the resulting ‘difference bubble’ burst spectacularly. The best analogies, in fact, were to tulip and South Sea bubbles of the past.
Inoculating against the Downsides of Analogy
Oftentimes, meaningful problems necessitate complex solutions — many steps, complex frameworks, etc. Fortunately, the solution to this problem is just not that complex or complicated; it is just important.
Until someone figures out a way to regulate that vast part of the iceberg under the water — and I don’t see that happening anytime soon — we are going to have to accept that the iceberg part of our brain will shove into the center of our consciousness an evaluation of either ‘this is the same’ or ‘this is different.’ Once that reaction hits our consciousness, we have the power to do something useful.
Dealing with the Sameness Message
If our subconscious sends us the message ‘this is the same as that,’ it will provide us very quickly and seamlessly everything that is the same about the thing on which it is focusing. We don’t need help on that front. But we need to do hard conscious work on the differences. It is tremendously important to work through the list of what about the thing in question is different. Line them up against the things that the mind has spewed out instantly as ‘the same.’
In what ways is this competitor really just not like us? Don’t stop until you have a few ways that it is fundamentally different. Even though it serves some of our customers, is it really different in some fundamental ways? Does it actually serve needs in a fundamentally different way like Southwest? Does it serve an aspect of the customer’s needs that actually we don’t provide like Four Seasons? Does it produce the product in the same way and sell it to the same customers but get it to the customer in a different way like Avon.
In what way is this customer actually fundamentally different from other customers? Though it may buy the same thing the same way, are they different in terms of the experience they want? Do online readers not just want to read the news on the same platform but rather want fundamentally different experience — curated news pushed to them? Do discount outlet shoppers actually want a different shopping experience like Costco shoppers? Don’t stop until you have something different.
Is this employee fundamentally different than other employees? Even though this employee has the same job at the same pay as numerous other employees, is this one meaningfully different because she has worked for only two companies in her 30 year career? Is this employee different because he is a single parent?
Perhaps the easiest sameness trap in which to fall is to see the present and future environment in which the company operates as the same as the past. Because the world often changes very slowly, this appears to be a safe assumption — no individual slice of time is very different from the prior slice. It is just like when friends comment on the growth in your daughter and you hadn’t noticed because you see her every day. So it is important to ask, in the sea of sameness, what made last week or month different than all the previous months?
Dealing with the Difference Message
In parallel fashion, if our subconscious sends us the message ‘this is the different than that,’ it will provide us very quickly and effortlessly everything that is different about the thing on which it is focusing. Hence, we need to do hard conscious work on the sameness; to line up aspects of sameness to go with the differences that our mind has automatically spewed out.
Even if this competitor looks different and seems to sell a different product/service, how might it actually meet the same need as us? Do video gaming competitors actually serve the same need for entertainment as us if we are a movie production company? Even if the competitor uses an entirely different process, it is actually producing a very similar product/service? Is Nucor, in fact, as real a steel company as we are? Even if it gets to the customer in a very different way, does Amway really deliver similar value to P&G?
Even if two sets of customers appear different at first blush, in what ways are they actually quite similar? Do Southwest Airlines customers actually want mostly the same as American/United/Delta customers — a safe, convenient, on-time flying experience? Do Costco customers actually want quality, uniqueness and value nearly as much and in similar fashion to Nordstrom customers? Do Amazon customers think nearly the same about buying stuff as Walmart customers?
Despite seeming very different on the surface, do Millennials actually want many of the same elements of a relationship with their employer as Baby Boomers? Are blue-collar workers as different from white-collar workers as they are assumed to be at first blush? Might they share deep similarities that need to be considered?
While everything about the environment might be screaming ‘paradigm shift’ or the ‘new normal’ or ‘the end of an era,’ what aspects of it might be remarkably consistent with the past? Might bricks coexist with clicks, localization with globalization, narrowcast with broadcast? What is the sameness to go along with all the difference?
It is not possible to claim with certainty that had Thomson Reuters paid close attention to the differences with Bloomberg and P&G to the sameness of customer segments while competing with Colgate that their competitive outcomes would have been meaningfully superior. But it is hard to imagine that the dollars would have been invested in the pattern that they were. And while nothing about the future can be certain and competition is never entirely predictable, making a conscious effort to balance the mind’s automatic impulse to race to the extreme of ‘same’ or ‘different’ gives the greatest wealth of insight and information on which to build more robust decisions.