Differentiation vs. uniformity

I recently stumbled across the book “Different: Escaping the Competitive Herd” by Youngme Moon. It's one of those thought-provoking books. A major takeaway for me is that heightened competition often leads to products and services becoming more alike. One might think that differentiation is crucial, particularly in highly competitive markets, but why is this not the case? There are various explanations for it:

• Alignment of Offers: Companies strive to match their competitors.
• Scaling: Scaling is a mantra but using it could mean missing out on differentiation opportunities.
• Innovation by Suppliers: In the software sector, innovation is often left to suppliers. While this is both intriguing and practical, it does not enable to stand out.
• Personal Risk Reduction: Differentiation comes with risks, while alignment is easier to justify to stakeholders. If you fail by aligning with the competition, you can blame the saturated market. However, failing while trying to differentiate often leads to being blamed for poor decisions. Many prefer to avoid this risk.

Yet, there are always companies that embrace distinctiveness and achieve success because of it:

• Positioning: Clear positioning involves making definitive choices about your identity and offerings.
• First provider of external innovations: One of my former employers distinctly positions itself as an innovation leader and they aim to be the first in Europe to offer innovations developed by one of the credit card networks.
• Use of “construction kits”: Modular “construction kits” are becoming more prevalent, especially with software. These allow customized solutions that promote differentiation.
• Innovation = something new: The riskiest approach is undoubtedly to develop and introduce innovations independently. This encompasses not only product innovations but also innovations in services, management systems, or customer touchpoints.

So what?

Thoughts are still swirling. Naturally, a balance between best practices, learning from competitors, and true differentiation is essential. Nevertheless, consciously differentiating through innovation can be worthwhile. Innovations should be assessed primarily on their potential for differentiation and uniqueness. This is the only way to stand out from the market’s uniformity.