A Wall Street Journal story about Motorola's relationship with Verizon and Google yesterday made me think of the tough situation mobile phone makers are in. The company is betting on partnerships with Verizon and Google for its future. Verizon as a carrier is important, but Verizon will go wherever the next iPhone wannabe is, not caring who makes it. Google, on the other hand, is where the risk lies.
Using a common operating system is nothing new. Nokia's Symbian was used by many manufacturers successfully for almost a decade. But this common foundation, while breeding a 3rd party app developer ecosystem, drastically increases the demand to produce great hardware. If your device cannot cut it, consumers will reject it. The alternative is to ditch the common operating system and create a combined, premium software/hardware combination. Apple succeeded, Palm did not, Samsung dreams it can. In Motorola's case, its own old basic operating system survives on low-end phones, while it realizes savings from avoiding its own Linux-based operating system's development costs.
In a way Motorola has something a reason for optimism. It DID produce excellent designs in the StarTac and Razr series. But now, if the hardware is not compelling enough, it will be toast. Worse, it is relegated the ranks of generic hardware manufacturers like HTC (well, they wish they were HTC at this point), LG, Samsung and Pantech. So the key here is design. And design translates to a unique proprietary flavor. The gist of 'why would I buy this phone as opposed to the others'.
Is this a unique business situation in a specific marketplace? Not really. Retailers compete to sell the same product on shelves they think are better organized, in stores they hope are cleaner and providing service that excels beyond that offered by their competitors. Technology offers a level playing filed in creating something that a brand can say is unequivocally superior. Snappier operating system experience is one; better video playback, a great keyboard or camera, remarkable call quality and stability are others. Again – proprietary flavor, a unique business proposition, the differentiator.
Working in an agency we operate in a miasma where beloved clients who love you have 6-18 months on average in a job. The next guy will bring his own agency and you're gone. Interchangeability is the name of the game and being on par with your peers is a good and common place to be. That is the core of why the problem is similar: if your agency lacks differentiation, you will be considered, invited, known, but nothing will pop to people's minds when they think of you. If you have a good idea that services the client well, great; you might get the assignment. What is missing is that differentiator, and I look right back at that concept of 'proprietary'. Proprietary is the hook. Proprietary is what you can do, only you have access too, and is a factual advantage to you. And when the client likes that proprietary capability/service/offering – they have no choice but stick with you.
For an agency that might mean having creative that knocks the ball out of the ballpark every single time. But that's difficult to achieve and can be draining. I am a technologist. I care about building stuff. And I think an agency needs to invest (!) in building technology that is the differentiator, maybe even the foundation, for its relationship with clients. That's really challenging, and may be expensive, but can simplify customer relationship lifecycle – acquisition, retention, expansion – from the current rat race. It is a very steep slope to crawl upon. You need to discover a need, do it once, and bet on repeating it. Worse yet, the agency suddenly needs to support technology, not only customer needs. Having a product is an entirely complex ball of wax all by itself.
Do agencies have a choice to avoid it? I am not sure. You can still partner with vendors – like Motorola does with Google – but your competitors can do so too and come up with a better offering that you will. Brands are not stupid either. They are happy to go straight to startups to get their own edge and to avoid paying agency overhead.
Therefore, agency folk, the choice is yours: become more of a startup, get your proprietary flavor, or remain adrift in a very flashy variety of a sea of gray.
