Are you Differentiating or Alienating?

Since the earliest days of 3Pillar, I have wanted to create a different kind of culture.  I believe that the highest-performing teams value each member of their team. Employees are to be valued not just for what they can do, but because they are innately worthwhile. Respecting the dignity of every individual is core to who I am and I wanted that to be embedded into the company.

That’s why, early on at 3Pillar, I decided that we would provide premium healthcare benefits, not only to our employees but to their entire family. I wanted to create an environment where people understood that we valued and took care of our employees – even the part of it that was unrelated to their work.

So I decided that we would not only provide a platinum healthcare plan, but we would pay for 100% of the health premium for both our employees and their families. For me, this was a way of both living our values and differentiating ourselves as an employer.

Unfortunately, this decision backfired.

What I failed to recognize is that there’s a difference between differentiating yourself from the market and alienating yourself from the market. By doing something that was so unusual and so far outside the norm, we became an outlier. The market (in this case the employee) doesn’t understand or appreciate an outlier.

Differentiation is a unique approach that helps you stand out from your competition.  It allows you to compete on a different dimension than your competition.  Instead of competing to be better, you’re able to compete on the basis of being different.  If done right, differentiation provides a unique value proposition that only you can provide.

Alienation is a unique approach that is so far outside the norm that it prevents you from competing in the basic areas of competition that the market expects.  You may be seen as unique, but you are likewise misunderstood. It is difficult to make sense of you. You are an outlier and you are not embraced.

That’s what has happened at 3Pillar.  The health insurance burden was so great that for a while we were unable to compete in other areas.  For years our employees have complained that we underinvest in training.  They don’t realize that the amount we spend on healthcare is a far greater value to them, they only recognize that it inhibits our ability to invest in other areas.

We are such an outlier in health benefits that it forces us to be an outlier in other areas where typical companies compete.  While many appreciate the benefit on the surface, at the end of the day it began to hurt us more than it helped.  That’s why two years ago we stopped paying 100% of the premium plan and asked our employees to share the expense if they wanted to to “buy up” to more than a typical “market” plan.  We still provide “better than market” benefits (as of today, we still pay 100% for the employee and their family), but the plan isn’t as rich as it used to be.

Learn the how to tell the difference between differentiation and alienation.  As a general rule of thumb, I tend to look at it this way:

  • If it’s a core strategy – something related to the primary product or service I provide, then you want to be bold and different. Go all in.
  • If it’s not a core strategy – something related to the operations of your company, then a bold move may lead to alienation.  Proceed with caution.

Being different is good, but being an outlier is not.

What businesses do you know of that have alienated their customer base?  Which companies were so bold, and so different, that they totally failed?  I’ll bet you can think of a few – they typically go out with a big bang.

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