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The True Price of Differentiation In Product Management

I have yet to talk to a company executive that doesn’t want their teams to produce more unique and differentiated products that meet customer needs. However, saying those words simply isn’t enough, I’m afraid – and sometimes we need to admit to ourselves exactly why that is.

Developing Differentiated Products

Developing differentiated products that have even the slightest chance of attaining any level of commercial success will generally require three things from the companies that create them:

  • A proactive understanding of customer needs
  • A culture that embraces true creativity
  • A seemingly uncomfortable appetite for risk

Unfortunately, these three things cannot be decoupled from one another, and, collectively, they all come at a price that not all companies will be willing to pay.

A Proactive Understanding

Having a proactive understanding of customer needs is not about asking customers what they want. Instead, it’s about knowing what problems customers face and translating those problems into needs and desires ahead of customers doing it themselves. To master this, companies must invest in teams of people who are tasked with observing customers in their natural environments – sometimes not even in relation to any particular product or service that is currently being offered. In this way, customer needs can be extracted before they become requests and, consequently, before they can be addressed by someone else.

Once needs are understood, they must be quickly translated into unique solutions – which can only be accomplished within a culture that embraces true creativity.

This involves more than just hiring a few clever people and allowing them to brainstorm. Instead, this is about creating an entire infrastructure that encourages large teams of people to sit around whiteboards for days on end doing nothing but churning out “blue sky” ideas and envisioning the future. For these companies, “thinking outside the box” isn’t just a corporate catchphrase; it’s a way of life.

Thinking Outside Of The Box

Embracing this level of creativity will require that companies also maintain a seemingly uncomfortable appetite for risk. This means using decision gates as a way of encouraging investment ideas rather than blocking anything that doesn’t guarantee a 2-year payback. Believe it or not, companies that really want to differentiate are often willing to bet huge sums of dollars on a multitude of new ideas that have no chance of ever seeing the light of day; all with the hope that just one of those ideas will become a colossal, breakthrough marketplace success.

I don’t say that companies need to encourage failure, but those who wish to differentiate must certainly learn to embrace some level of failure in the early stages of product ideation and prototyping, and entrust their employees enough to do the same.

The Cost of Differentiation

The truth is that differentiation often comes at a price. Simply demanding differentiated products is not likely to produce any significant results. Instead, that demand must be backed up with real resources, time, and money – along with a very real expectation that at least some portion of these expenditures may result in little to no immediate or direct return.

That may be a difficult culture for some companies to embrace, especially if the expectations of their investors doesn’t normally allow for it. But companies who are not willing to fully support their own internal demand for differentiation must also accept the fact that, no matter how creative their employees may be, safe investments are likely to produce safe results.

And true breakthrough differentiation unfortunately, doesn’t always thrive within that world.

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