“The marketplace is a wind tunnel, and the wind wants everything to be the same.” 

That simple statement by Bruce Philp, branding guru to ING Direct and co-author of The Orange Code, is what makes identifying and landing new prospects so difficult. But being different from your competitors isn’t all that it appears to be.

In the second of three interviews with CZ, Philp debunks the myths of differentiation:

Brand & Strategy: What are the myths of differentiation?

Bruce Philp: I think there is just one dangerous myth: differentiation is rational. That’s fatal thinking.

How so?

There are two reasons–and the first is practical. There is almost no innovation that can be sustainably proprietary anymore. Performance differences are either so slight as to be irrelevant as a basis for choice, or they are impossible to own for long in a world where fewer people make things than sell them.

You can be Apple, and live what is surely the hell of having to beat yourself every time you go to market, or you can be P&G and make a full-time job out of engineering performance claims year after year. Those are successful businesses, there is no doubt, and it would be foolish to argue that it’s impossible to differentiate with innovation.

But, for most companies, innovation is expensive. And it’s often pointless, and very easily emulated by competitors who, maybe even with pride, see themselves as fast-follow marketers bent on commodifying their categories.

And the second reason why it’s fatal to believe differentiation is rational?

It’s more complicated. I think that consumers, regardless of what they may say in focus groups, don’t want the burden of comparison shopping for everything on the basis of rational performance. It’s a lot of work, and it puts too much responsibility on them. They want a proxy for that.

A proxy for what?

Consumers want a reasonable excuse to make a choice that is right for them and not feel vulnerable as a result. Very frequently, this is the job of a brand. People look at what they think a brand stands for, what sense they have of its past conduct in this regard, and the authenticating coherence of its presence in the marketplace. Consumers ask, “Do the values motivating this company align with mine, as they relate to the product I’m about to buy?”

And if the answer is yes?

Then the choice begins there, and not on a spec sheet. It’s not very different than the way we would pick an auto mechanic. I can’t judge whether the guy who’s going to work on my old sports car knows what he’s doing, but I can intuit his love of cars, I can see that his workshop is clean, and that he seems to take pride in his work. I can be reassured by the way he looks me in the eye and firmly shakes my hand.

So differentiation is instinctual.

Yes. The door to trust is opened emotionally and instinctually. Only after that is it about performance.

I think this exposes differentiation for the art it truly is. The best work I’ve seen done in this part of the branding process has always started not with what a product can do, but with who made it and why. Almost unfailingly, that leads you to the basis for sustainable differentiation. This type of differentiation is virtually immune to what competitors might do, or how circumstances might force your hand tactically in the future.

Show me a category where this isn’t true, and I’ll show you a commodity business–now or imminently.

It’s a bank that claims to not be a bank. 

And it doesn’t siphon off its customers’ money with hidden fees and service charges. Instead, ING DIRECT promises to help you save money—at a great interest rate.

In an industry in which “bank” has become a new four-letter word because of the sector’s general disregard for its customers, ING DIRECT has become a stand-out—even likeable—brand.

In an interview with CZ President Dave Goetz, Bruce Philp, principle of Brand Engineering and chief brand architect of ING Direct, and co-author of The Orange Code, identifies what your brand must do to trump the competition:

Brand & Strategy: You wrote, “… don’t dominate the category, subvert it.” How do you do that? 

Bruce Philp: People tend to use the word subversive when they really mean “iconoclastic,” or even just “unconventional.” My definition of subversive is much more orthodox.

Like it or not, when you position a brand, you have to face the brands against which consumers will compare it. In our case, we were going to be compared to the status quo, which would never be a level playing field for our low-cost business model. If the status quo doesn’t support your business concept, then don’t dodge the comparison—undermine it.

Reframe it and cast doubt on it.

Don’t try to fool people into thinking you’re the “best” something. Be the only alternative to a flawed something.

How did that work with ING DIRECT?

We said the last two things you’d ever expect a bank to say: “We’re not a bank,” and “Save your money.” And we said them with such confidence that consumers couldn’t help but challenge their own assumptions about both.

That’s subversive positioning.

You talk about the dangers of boredom when messaging to your audience. What are some signals that it’s time to rethink your advertising strategy?

I think it’s important not to lose sight of what advertising really is. Too many people in our business tend to unconsciously equate it to branding. But of course they aren’t the same thing, and probably haven’t been since, say, the 1970s. Advertising isn’t a brand, it’s a brand asking a consumer to do something.

When we think about boredom or wear-out, we have to think of it in terms of how we’re asking them—not what, and certainly not in what character.

Do you believe that consumers own your brand?

I don’t, even if they seem to say so in focus groups. I think brands exist by the consumer’s grace, but consumers don’t want to own brands any more than, say, they want to govern themselves by plebiscite. They want to be heard, but they don’t want brands to delegate leadership to them.

Left to their own devices, consumers can figure out what a product needs to do, but they’re not going to inspire themselves.

If you leave branding to consumers, you’ll wind up with low margin, commodity businesses. Great brands are like lighthouses, an illuminating beacon that consumers find in the darkness.

How do brands become this “lighthouse”?

“Gut” is really important. By “gut” I don’t mean an ability to predict how people will react to something. I mean the conviction to pursue your agenda as a brand and trust that, if it’s in the best interest of enough consumers, the marketplace will reward you.

It’s guts more than it is a gut instinct.

Apple is a poster child for this notion. Virtually nothing they do is entrepreneurial. Nor is it the product of permission marketing. Nearly all of what they do is the product of a fierce, singular, take-it-or-leave-it vision. I know that not every business can function like that, but it’s amazing how many of the ones we admire the most do.

What are other traits of this brand gutsiness, especially in a down economy?

The brands that seem to be acting like those lighthouses share the following qualities:

• They have not abandoned their purpose. By not dropping their principles like hot potatoes at the first sign of pressure, they have proven they’re authentic at the moment when doing so would have the greatest impact.
• They have reached out to their customers and tried to turn them into a community.
• They have not exploited the anxiety of the times.
• They have concentrated on value.
• They have listened hard to what people are really feeling and put a special effort into being genuinely empathetic.

What is your best positioning advice for senior leaders in universities and other third-sector organizations?

Dare to have a purpose.

In my work with such organizations in the past, I’ve very often seen a stultifying kind of commodity mentality. It’s a product of well-meaning people who believe that they’re betraying their callings if they focus on one constituency or one mission to the exclusion of all others.

The exception to this reluctance is the charitable organization that exists to fight a disease, for example. It’s no coincidence that these are some of the most strongly branded NGOs. They have a singular cause.

By contrast, organizations like industry associations and universities have a pathological fear of taking a stand. They don’t want to leave, as we put it in The Orange Code, “money on the table.” And it’s tragic to see how often they fail, or at least never seem to get anywhere, as a result.

What about those willing to take a stand?

Make a mental list of the most prestigious and superbly branded post-secondary institutions in America. Is there even one brand on that list that isn’t famous for just one or two defining vocations? I bet not.

What makes that a bit mystifying is that when a school decides to promote true excellence in one or two areas and succeeds at it, the entire school becomes more prestigious. Excellence is a reflection of the brand, not the curriculum. Just about any resume is better with Harvard on it—even if it has nothing to do with medicine, law or business.