Differentiation vs. Development

by Chris Kenton on January 19, 2007

I’ve gotten some great comments from Jens that started on the iPhone thread, but have now delved into some interesting questions about what is truly changing about marketing and business today. His post started by rightfully supporting Apple’s product development prowess:

lots of contemporary product strategy can be summed up in three factors: develop products with passion, introduce them with entrepreneurial guts and always have a portfolio diverse enough not to risk your whole substance in one field.

corporations in our new century need two key abilities: whole-hearted product development and gutsy investing.

When I asked how this is different from the past, the conversation got interesting.

i think one difference between yesterday and tomorrow is the difference between "product differentiation" and "product development". product differentiation = economics of scale + styling (surface variations)
product development = entrepreneurial guts + design (as in smart solution that pay respect to a number of constrains) ((+ portfolio strategy))
the former tries to keep the risk outside of the organisation the latter invites risk into the heart of the organization.

This is a good conversation to have, as it gets to the heart of how companies define marketing. As Jens points out:

every discipline, every operation needs a starting point. marketing’s starting point is a given product or a given service or a given corporation or brand.
you take that order, look at the markets, come up with a strategy and make all the styling adjustments and communication campaigns that it might take. and like mickey mouse as the little wizzard you create some magic around it.

So, let’s pull on a few threads here and expand the discussion. My first response is that Jens’ characterization of marketing is accurate, but the notion that marketers *begin* with a given product is only one of at least two dominant corporate strategies. The other is that marketers *begin* by understanding the needs of the market, and developing products to fit. This isn’t splitting hairs–there have been very strenuous debates and deep divides over whether it’s smarter for companies to be "market driven" followers, or "market driving" innovators. The truth is, the former is much less risky, and leads to a marketing paradigm driven by surface differentiation, and far more companies follow that path–it’s the corporate strategy that enshrines "core competencies" and relies on production efficiency and quality, and has given us TQM, six sigma, balanced scorecard, Porters 5 forces, lean production and a whole host of derivatives.

The problem is, market driven companies tend not to innovate outside the lines of production, and competition from startups who have the flexibility and drive to be market driving often disrupt the status quo.

Where this gets interesting to me is that market driven philosophies, popularized by TQM, Porter and all their derivatives–philosophies that marginalize marketing’s role to demand generation and messaging fluffery–have been so dominant for the past few decades, that businesses are finding themselves boxed into an efficiency corner. Look at the tremendous popularity of the Innovation meme, and the desperation companies are feeling trying to get their product development teams to think outside the box.

I think Jens is right, there is a major difference between yesterday and tomorrow, and it may well have to do with a shift from the corporate strategist’s relentless focus on market driven efficiencies, to more of an embracing of market driving innovations. If that’s true, it’s one more signal of a major change in course for marketing–ironically, just as marketers are catching up to the efficiency mentality.

{ 3 comments… read them below or add one }

Adelino de Almeida January 19, 2007 at 2:10 pm

In other words, re-focus from cost-cutting to innovation and marketing… just like Peter Drucker would have it: http://adelino.typepad.com/adelino_marketing/2007/01/quote_of_the_mo.html

jens January 22, 2007 at 5:20 am

thanks chris for the exposure and for a wonderful re-framing of my thoughts.

business press and management thought leaders – especially in north america – have done a marvelous job in picking up the fancy design hype and immediately transforming it into a profound discussion on innovation.
the verdict may still be out, but as much as the current “innovation movement” touches most/all parts of an organization it touches marketing. – even more so as marketing is the corporation’s classical market interface.

the party may feel like 1997 – thank god – but especially in marketing we are well advised to carefully listen to the beat. – not every old step may be in tune with the new rhythm.

Chris Kenton January 22, 2007 at 6:26 am

I also think the “new” innovation movement isn’t really that new at all. Remember the “Change” movement that dominated the 1990s? Different drivers, same message.

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