Blue Nile's divergence from industry norms begins with its purpose. Most jewelers exist for the jewelry. Tiffany & Co., for example, describes itself as "the world's premier jeweler and America's house of design."
While this positioning may seem innocuous, it exerts a powerful pull on how Tiffany's people see their business and the thousands of daily decisions they make that compose the company's real strategy.
They focus on making beautifully designed jewelry and gift items. They particularly focus on developing proprietary designs that become Tiffany's signature items. To sell these designs, they place them in an environment that enhances the company's "premier" positioning. Tiffany's language, history, and mission direct its people toward taking a sales stance.
Indeed, Tiffany was even sold for six years (1978 to 1984) to Avon, a company whose historical advantages stem from its innovative sales practices.
By contrast, when I asked Blue Nile's CEO Diane Irvine how she described her company's purpose, she said, "Our focus is empowering the customer with information."
Looking back through the company's history and observing Blue Nile's customers' behavior, we see this company is engineered to educate, rather than push diamonds. The average customer looks at over 200 pages of information, spends more than three weeks on the Blue Nile site, and calls Blue Nile's customer service line in Seattle to talk things through with a live person.
Further bolstering this information focus, Blue Nile's customer service representatives do not receive a commission for their sales, so they have no motivation to push customers to make a quick decision.
Try imagining a Tiffany store salesperson cheerfully greeting a customer who has been popping in for the past three weeks and walking that customer through 200 pages of information before they ever commit to purchasing a diamond. Now you can begin to see the disruptive power of Blue Nile's focus.
As Diane says, "We really have a customer who's looking for a lot of information and we're providing complete transparency. So it's something that has been very disruptive in the industry from a supply chain standpoint and certainly on the retail side."
This strategic pattern—approaching an existing business as someone from another industry would—lies at the beginning of numerous disruptive companies. This is pattern #4: stay out of their stronghold.
CarMax, for example, forced its much larger competitors out of the used car retail business by approaching the job of selling used cars the way a retailer would instead of the way a car dealer would. The company was founded by retailers, and they made a concerted effort to only fill top management slots with retailers. As a result, they made decisions that made sense to retailers but were confounding to car dealers. They gave their salespeople a flat sales commission instead of one based on the price they could get for a car. They built an inventory tracking system so complex that the company's car-dealing competitors simply did not know how to duplicate it.
Do your people define your business differently than the competitors define theirs? If not, its worth looking for a new perspective. By approaching your industry or business from a different point of view, you can find unexpected and valuable new strategies. A subtle shift in mindset, if shared among everyone, can orchestrate thousands of unorthodox daily choices that your competition will have difficulty duplicating.
Ask yourself the questions below to see how you can stay out of your competitor's stronghold while stealing more market share:
- At its core, what does our business do? Are we in retail, in service, etc.?
- How would someone from a completely different industry look at our organizational structure?
- How does this new vision change internal behavior?