Nature has mastered differentiation (i.e. fingerprints… snowflakes… zebra stripes…). Businesses are constantly striving to do the same in their battles to survive. In business there’s a ‘Differentiate or Die’ reality. If a company falters or becomes stagnate there are myriad others ready to take its place. Even if it performs well, competitors are always challenging for market share.
Differentiation doesn’t just apply to what a company sells. It applies to all aspects of the business including…products, services, pricing, talent, location, relationships, accessibility, value, business model, communication, customer perceptions, financial strength, leadership team, delivery team, etc. In my experience, traditional analyses of differentiation are surface level only, primarily focused on products, services, pricing and value. Yes, those are critical to any business that wants to remain a going concern, but what is it that makes some companies better at differentiation than others?
A company’s ability to 'simply' differentiate what it sells is a result of a deeper differentiation capability in its DNA.
What is the Differentiation Intersection?
Differentiation is the intersection of innovation and awareness (see Intersection 4 graphic below). Successful differentiation happens because a deliberate, intentional mindset exists within an organization.
Innovation is the opposite of the status quo, just as idleness is the antithesis of differentiation. Innovation drives entrepreneurs to create. It’s why established companies pour money into research and development. Innovation is the lifeblood of change in the global economy.
Innovators are always asking why and how.
Why do we do it that way?
Why don’t we try this?
How is this done?
How do we change the way it’s done?
Innovation is applicable in all aspects of a business, not just products and services. Its objective is improvement (of a process, for example) in some form or fashion. It results in making something better, bigger / smaller, faster, cheaper, more powerful / useful / efficient, and so on.
I’ve seen businesses where innovation was feared. The attitude of management was “We fear change” (Nod to a quote from one of my favorite movies). Management that fears change isn’t really leadership, its just a group of managers about to get crushed by the competition. Without innovation there is no differentiation.
Intersection 4: Differentiation = Innovation + Awareness
Awareness is the other side of the differentiation intersection. In order to differentiate an awareness of the current state of a company, product, service or process is required. Awareness comes from a deep understanding of what exists, why it exists and how it fits into the current company or industry ecosystem. It stems from an observational mindset and capability, which may sound basic and universal but it’s not. Awareness in the context of differentiation requires purposeful focus. It’s developed through research, learning, questioning, trial-and-error and an ability to calculate the risks and rewards of taking one action over another (i.e. opportunity cost).
Awareness of possibility, even if something has never been done before, is needed. Successful differentiators take what exists and create ways to improve it, whether incrementally or through whole-sale change, even to the point where there is little to no comparability between the new and the old. Sometimes it’s a better mousetrap, sometimes it’s an entirely new mousetrap.
One of the most important aspects of awareness is corporate self-awareness. This type of awareness answers questions like:
What are we doing today that can be done better?
Do we have the resources to create change?
What is the impact to the business while change is taking place?
What are the expected results once we’ve made the change?
Companies with self-aware leaders are more apt to be corporately self-aware which enables the agility and ability to make differentiation leaps more efficiently.
What Can Leaders Do?
Leaders who want to differentiate must be open-minded. They recognize the need for and create environments in which both innovation and awareness can happen. The quickest way to kill progress is to stifle those elements within an organization.
Good leaders are self-aware and surround themselves with talented, outside-the-box thinkers empowered to chart a better, differentiated future.
Wrap Up & Up Next
Differentiation is why companies stay competitive and remain in business long-term. Plus, innovative and self-aware companies are just more fun to be around.
Next time we’ll examine the 5th intersection of performance, which is the Engagement Intersection.
In this series of articles, we explore The Intersections of Performance, of which there are 30. The Intersections of Performance framework is based on the experience and insights of Brett Simpson, Managing Director of Elevate Simply, over his 20+ years of leadership in large and small organizations, and as an entrepreneur, advisor and investor.