We’ve written often about the challenge of commoditization and the related goal of value-based pricing. The latter can only happen when firms successfully differentiate their expertise and services.
“Important lessons from Walt Disney”
It takes a lot of effort to keep yourself out of the commodity game. Five minutes after you start your exciting new business, three competitors open across the street, all of whom seem happy to undercut your pricing. While this sounds depressingly like Sisyphus, doomed forever to push the rock up the hill, only to have it roll back, this is also the excitement, the challenge, and the creativity of entrepreneurship.
Back in the 1920s a young illustrator penned a charming character that became known as Mickey Mouse. By combining the character with the emerging technologies of animation and sound, Walt Disney was the first to produce a cartoon with synchronized sound. Steamboat Willie was released in 1928 and was an immediate hit. Disney made good money. Then the competitors showed up.
Walt’s strong entrepreneurial spirit wouldn’t allow him to be one of many, so he made a really long cartoon and in 1937 audiences flocked to see Snow White and her seven dwarfs, the first full-length animated feature film. And more competitors came.
By the mid-1950s animated cartoons and movies had become commonplace, and Disney wanted more. This time he took his characters, combined them with 85 acres outside Los Angeles, and created Disneyland. While the world had plenty of cartoon characters and amusement parks, no one had ever seen a theme park before, and the profits rolled in.
Then, in 1970, with theme parks popping up around the country, Disney again stayed ahead of the pack by turning a day at the park in Anaheim into a family vacation in Orlando.
Since then Disney has continued to expand by exploring new ideas. Today it is feature film studios, cruise lines, real estate development, and all manner of profitable ventures. This type of continuous reinvention and business creativity has kept Disney fresh, alive, and at the forefront of business success for the better part of a century.
Interestingly, Disney’s business creativity not only includes new business ventures, it is equally driven by letting go of old ideas that are no longer viable. When was the last time you watched a new Mickey Mouse cartoon?
Every time the competition tries to catch up, Disney brings out its creative muscle to reinvent and repackage the products and services it offers, introduce new ideas, and prune out dead wood.
When was the last time you introduced a new service? When was the last time you adjusted the services you offer to keep in tune with, or ahead of the needs of, your clients? When was the last time you stopped offering an old service because the profit margins had slipped and competition was too intense?
When was the last time you thought carefully about the value you bring to your customers, rather than the total number of hours you’ve worked multiplied by your billing rate?