|Photo by buckofive on Flickr|
HBS Professor Ranjay Gulati says, if that's happening to you, you may be spending too much time on the toilet and not enough time figuring out what your customers really want. In this HBR podcast, he explains his toilet analogy. When you go to a restaurant, he asks, will you go back again if, at the end of an otherwise good meal, you go to the restroom and it's a disgusting mess? No, probably not. How about if you go to a restaurant and the meal's horrible but the toilet is sparkling clean and has all the latest bells and whistles? It won't make any difference. You won't go back.
Restaurant toilets are what Gulati calls "hygiene factors" and what others call cost-of-entry attributes. These are must-have factors that will hurt you if you don't have them but have no upside potential once they pass inspection and are good enough.
In any competitive market, more and more things become hygiene factors over time. What was once breakthrough quality, performance or service becomes something that everyone else offers too and which customers take for granted.
The tough challenge is to recognize and accept that what once made you stand out from the crowd may have become a figurative restaurant toilet. The natural tendency is to stick to what you know and keep on trying to improve on what you're already good at. But that strategy won't work if what you are good at is already good enough.
When a once-signature feature becomes hygienic/cost-of-entry, more effort and investment to improve it will add cost but won't add customer value. Over investment in hygiene factors is what eventually opens the door to the Vizios of this world--they are able to produce stripped-down, good enough products at lower costs, then price aggressively to take market share.
How to avoid falling into this trap? Think about how to better recognize what value-add features customers are prepared to pay for, don't assume that your once strong differentiating factors will work for you indefinitely and watch out for factors that have started to decline in customer importance and value.
As key differentiators approach the "good enough" zone, slow down further investment in them and seek new sources of differentiation, even if these are outside your comfort zone. That's the best way to make sure your efforts, yes I'm going to say it, aren't flushed down the toilet.