Just what is this “thought leadership” stuff, anyway? Well, it has nothing to do with winning at Scrabble, Jeopardy, or Wheel of Fortune. And thought leadership is not related to whether you graduated Phi Beta Kappa, summa cum laude, or “Lawdy-how-come?” (Think about it.)

Rather, thought leadership comes about when an individual or business demonstrates expertise on a subject, gaining credibility and creating the perception of being an expert (or leader) on the subject.

Many years ago, my good friend Arthur Laffer introduced an economic model called the Trickle Down Theory, popularly known as the Laffer Curve. His thought leadership on supply-side economics landed him in the White House as President Ronald Reagan’s chief economic advisor at the ripe old age of 29. He has served as counsel to every succeeding president, earning the title as “the father of supply-side economics”. Today, he publishes economic forecasts and newsletters for investment firms throughout the world and is a popular public speaker. He is clearly viewed as one of America’s thought leaders.

And remember that ad slogan several years back for the investment firm E.F. Hutton? You knew that “when E.F. Hutton talks, people listen.” The slogan was successful, because it differentiated E.F. Hutton from other investment firms by positioning its brokers as experts in their industry.

Now, many professional-service firms have caught on to this notion as well, as evidenced by the contents of my mailbox in the past few years. I receive several newsletters every month in which the firms that publish them choose a specific topic – business succession planning, for instance – and feature in-depth “white papers” on the subject by one or more of their professionals, who thereby demonstrate their expertise. If you needed to hire someone to assist you with succession planning, you probably would think about calling these firms first.

But you don’t have to be a securities or professional services firm to be able to market your expertise in your industry, of course. Whether you sell products to businesses or consumers, an undeniable fact is that your customers have other choices – often many choices – in today’s competitive environment. So the question is always, how do you differentiate yourself from the herd?

Harnessing Intellectual Equity

New challenges require new thinking – in other words, they are the opportunity to establish your thought leadership, to build credibility, and differentiates yourself and your business from everyone else in your industry.

But the process does not begin with the writing of white papers. It starts before that, when you build a broad and deep team of the best and brightest in your industry, a team of people who think past the way things are to the way the things should be, people who think on the leading edge.

When you have a Super Bowl team assembled, then you should put together a statement of philosophy about what you do and why you do it.  Only when your organization understands and is committed to this philosophy is it ready to communicate its beliefs clearly and persuasively to its customers and others.

You can do that by publishing articles in your own company publications, but also in industry journals or even mainstream media. Do radio and television interviews, if you can. Speak to industry organizations and take leadership roles in those groups.  Some companies host their own client conferences, workshops, and training classes. These venues lack the “endorsement” of a third party, but nonetheless build credibility and differentiate your business.

Take as an example a medical technology company that sells catheters used to administer medications, among other applications. The company’s continued heavy investment in research and development has made it the technological leader of its industry. However, this firm has realized that innovation and patent protection isn’t the be-all and end-all anymore. So it continually increases it’s dominant market position by differentiating itself as the thought leader in its field, providing research papers and extensive training classes, including hands-on training during medical procedures. Physicians and nurses may use a wide range of catheters, but they rely upon this company to help them do their jobs better and provide improved patient care. Positioning your organization as the thought leader of your industry goes beyond differentiating your products and has much more staying power.

Last but not least, offer your white papers, case studies, and market research reports on your Web site, or send them to an e-mail list of customers, industry leaders, and potential customers. The other day, my colleagues and I came across a direct marketing firm with a section titled “Thought Leadership” on its Web site, under which it had questions and answers about issues in the direct marketing industry, and white papers and case studies that could be downloaded as PDF files. If I were hiring a direct marketing firm and spent some time reviewing all the information on the Web site, this firm would become foremost in my mind as knowledgeable and a leader in its industry. Pretty good differentiation, huh?

Customers Have the Upper Hand

In 1980, Theodore Levitt wrote about differentiation in the Harvard Business Review, saying “As a rule, the more a seller expands the market by teaching and helping customers to use his or her product, the more vulnerable that seller becomes to losing them. A customer who no longer needs help gains the flexibility to shop for things he or she values more, such as price.”

The thinking of the day was that sellers had the power. How times have changed! The balance of power has shifted, and today consumers have the upper hand. If you don’t give them the help and knowledge they demand, they will take their business elsewhere.

Obviously, there are good reasons for secrecy about proprietary products or techniques that represent a sustainable competitive advantage. However, remember that if someone tries to imitate you, they can never fully reproduce your implementation of an idea, and the pioneer is always rewarded by price appreciation. In other words, it’s okay to give away the science, because imitators can’t imitate the art.

The Leader’s Role               

A business leader’s primary role in differentiation by thought leadership is not simply to become a visible person in the industry by writing superb articles and delivering first-class speeches. In fact, not all CEOs are cut out for those things. Rather, the leader’s most important role is to manage marketing: to be aware of what’s happening in the market, how and why customers buy and use the products, who makes the buying decisions, and so on. Then, the leader’s job is to translate that market knowledge into a vision and strategy built upon the intellectual equity of the organization’s people.