If we believe the experience of most innovators, then we understand that innovation is typically born from failure. In my experience, differentiation is a response to pressure — usually panic, induced by shifting economic or industrial paradigms. As we begin to see financial successes in our businesses, we tend to add more operational tiers to support the project as it exists. We move away from envisioning an evolving company and begin to see it as a growing — yet singular — entity, where the endpoint is a larger version of the present. As a companies structure flexes under the pressures of bloating operational expenses and increasingly savvy competitors, the natural tendency (other than cost-cutting measures) is to look for ways to continue differentiating yourself from your competitors.
The problem with differentiation is that its uniqueness is not sustainable and that it rarely offers *lasting* value back to the customer. Instead, it’s often a temporary solution to a much more significant problem. In many cases, companies spend more time pondering how to extend (read: differentiate) the business as-is, rather than the bolder step of asking if they’re even playing the right game. I remember at one meeting, a group of people I truly respected asked an audacious question: “If we were to start this company right now, what would it look like?” The answer revealed something quite different from where they were. The question was a starting point — but for it to have meaning, it required action. Unfortunately, that question was left undone.
Another problem with differentiation is that temporary “wins” remove the space — the urgency — for substantial change (read: innovation).
Successful companies continue to evolve — they continue to reinvent themselves. They look to the future and don’t see a destination that comfortably resembles the present. They look to the future, embrace the unknown and revel in the opportunity it presents.