What you can learn from Madonna

This morning, I sat in on a webcast presented by Oren Harari, author of Breaking from the Pack: How to Compete in a Copy Cat Economy, and much of what Harari discussed can be applied directly to differentiation in the financial services industry. Perhaps the most interesting topic of discussion was how Madonna has, and continues to break from the pack – and of course, how this relates to the business world.

As Harari explains: Even though she is successful with what she is currently doing, Madonna is constantly scanning the market for the next emerging trend; she finds it; she leaps on it; she builds it up, she owns it, she brands it – and she is once again a success. She is still Madonna, but she continues to innovate and create new perceptions about herself. Highlighting another concept from Harari, Madonna’s successes are the result of radical innovation – not incremental improvements. Incremental improvements have to happen; radical innovation has allowed Madonna to experience one success after another.

Radical innovation is severely lacking in the financial services industry. Most executives like to play it safe and they are comfortable with slow, incremental improvements. However, these incremental improvements can at best give incremental results, especially in today’s commoditized financial services industry. Harari’s presentation also included discussion around a question that many of today’s financial executives are asking: “How do we stand out in a sea of white?” In other words, in an industry where financial institutions are looking more and more alike, how can we differentiate?

Not surprisingly, Harari’s response is very similar to our observations in working with our clients: This is where leadership comes in. Without leadership in place to both recognize the need to differentiate and to execute a differentiation strategy which influences customers to perceive an institution as truly different, institutions don’t have a chance.

I’d like to close with the same Jack Welch quote used to close the presentation: “You cant’ behave in a calm, rational manner. You’ve got to be out there on the lunatic fringe.”