Differentiation through innovation: Is there a better way?

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innovation differentiation windmill
The Windmill Developments website: This business is an excellent example of successful differentiation through innovation

Recently I spent some effort on explaining the challenges of properly differentiating your business. My suggestion was that, from a marketing perspective, differentiation is either absurdly easy or extremely difficult, depending on its foundation. If you really had something worthy of market differentiation, you would know it right away and there would be no need to agonize over the process. On the other hand, if you are casting about for a “differentiator” and are trying to force one out of thin air, you will end up in a place of perpetual market frustration.

But that difficulty/simplicity belies another issue — the foundation. If you could find a way to truly innovate and come up with something really new that the market wants, you would solve the differentiation problem. But this is much more an existential business decision than a marketing choice. The marketing follows the innovation; and you can’t expect to magically pull it out of thin air.

Or can you?

Bruce Johnson suggests the cure to the innovation challenge is to “steal” Steve Jobs’ approach to innovation — and to avoid the most common approach to coming up with a new thing.

The wrong (and most commonly practiced) approach: Market research — asking your current and potential clients what they want.

The problem, as Jobs and Johnson learned, is that people can’t really “want” something they don’t know.

The better approach is to focus on trends and watch for new ideas that are being developed by other businesses (even in other industries) that are starting to gain traction, and capture/adapt, develop prototypes and if the early tests work, go “all in” on the new idea for your business/market.

The idea here is not to be the first in the world, but the first most people in your market even know about the idea. Example: The IPod, MP3 downloadable music and ITunes.  These ideas (at least the IPod/MP3) had been developed elsewhere — but Jobs/Apple caught on early enough and then created the demand through the ITunes system.

Okay, you are a general contractor, architect, engineer or industry supplier — and I doubt you either expect or want to create the next IPod.

But I think about a local developer in Ottawa, Jonathan Westeinde, who had the foresight to see the trend in environmentally responsible construction just before the trend hit the industry like a lightening bolt.  His Windmill Developments has become a go-to business for sustainable development. Soon other contractors jumped onto the environmentally responsible space, and many others did well — especially if they were in markets not directly competing with Westeinde. (In the local environment, the behaviour could be seen as “me too” behaviour — now necessary for survival rather than market leadership.)

So the answer to differentiation is to keep your eyes open. Look at other industries on the edge of your current market; look at other communities/markets (perhaps through attending regional or national association conventions) for industry leaders in different communities, and bring the new approaches home. Then develop a quick-and-dirty model/prototype and test it out on your clients to validate your assumptions. If it is good, go all-in. You’ll have discovered your differentiator.

These observations have caused me to rethink my views on effective differentiation. The answer to solve the puzzle is indeed to take the question out of the marketing department and put it at the centre of your business planning and vision. When you do (and discover the differentiator), the marketing will be easy, natural, and highly effective.

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