Not long back, such questions were asked in strategy offsites, marketing huddles and board rooms. The focus was around big product-led, feature-based differentiation. The bigger, the better.
And then life changed. New technologies emerged. But competitive war room games quickly equalised any significant product-led advantage. To stay ahead, companies frantically built innovation factories, Future farms with renewed focus on R&D.
While all this was happening, something was changing. Consumers were discovering exciting new ways of buying, transacting, consuming and experiencing products. ‘Experience’ was becoming the big differentiator. Consumers were beginning to search and find the right product at the right price through the power of online search or the magic of modern retail. Consumers were beginning to define the kind of differentiation they wanted and organisations began to build differentiation around what consumers wanted. That simple.
It was a new market place where consumers were beginning to decide on almost everything, including differentiation.
Let’s face it. The age of big product-led differentiation may just have given way to a new world where small, simple but very meaningful areas of differentiation are emerging around experiences, design and service delivery.
Starbucks changed the way coffee was consumed. It became more than a lifestyle. With wireless internet access, coffee wasn’t just coffee anymore, but an experience. And Amazon – pivotal in the development of the internet as a medium of e-commerce, making book browsing and the shopping experience pleasant, magical and fun. Similarly, Facebook’s integrated social experience adds a unique dimension to design but this time through the power of UI (user interface).
Does this mean that companies in the future will not invest in R&D or build a strong agenda around product innovation? No, companies will continue to invest deeply in R&D, passionately anticipating needs, trends and emotions. But sustainable differentiation will come from emotional and sensory experiences. This will give rise to new breed of talent who will envision this new world. The value for the consumer will be around experiences, sensory dimensions of design and how service is customised and finally delivered.
(The writer is Joint MD,Microsoft India, heading Consumer & Online Business)