Conventional Wisdom or Distinctive Differentiation?

“Autodesk represents one of the most dramatic examples of how a company has made the most of a hidden customer asset. In the late 1990s, Autodesk made a series of moves it would live to regret. The company decided to expand beyond the design tools that had been the keystone of its success and instead add services and products that were neither part of its core business nor natural adjacent businesses. Autodesk also decided it could save on costs by selling to its customers directly and over the booming Internet, instead of through its network of resellers. ‘The company had adopted a Hail Mary strategy, trying lots of new and different things, often throwing business analysis and [proven] practices to the wind,’ says CEO Carl Bass.

“The strategy backfired. Not only were the new offerings unsuccessful, but the company also learned -- the hard way -- that its resellers were better at selling its products than Autodesk was. Performance plummeted, and Autodesk knew it needed to change. But the how-to wasn't obvious. Like many other companies, Autodesk didn't know where it was falling short with its customers and where it could differentiate itself by developing new products and services.

“In a 2004 survey of 259 executives worldwide, Bain & Co. found that for many, there is a huge gap between perception and reality when it comes to serving customers. Among respondents, 80% of executives thought they were doing a good job of delivering ‘very differentiated’ products and services. But when we compared this belief with a similar sample of their customers, only about 8% said they thought their suppliers were highly differentiated. “

(“Autodesk's Turnaround Secret; How the CAD software maker reinvented itself by refocusing on its customer segments, product differentiation, and a new sales model.” Chris Zook and George Cogan. BusinessWeek.com. April 1, 2008)

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