Business

In the diagram, 4 dog walking companies, Sue's Dogwalking, Tom's Dogwalking, Joe's Dogwalking and Betty's Dogwalking all compete for the same customers. Lets say you need a dogwalker. You can't tell the difference between the 4. It's a tie. So to break the tie you decide to go with whoever is cheapest - you phone around and get their prices. That's commodity pricing. If Sue wants your business, she has to cut her price to the bone. So she doesn't make much profit.

But notice the space around the 4 combatants represented by the gray cloud. Lets say the gray cloud represents relevant needs of potential customers. No one is serving those needs. So a new entrant is better off to differentiate their business offering by doing something different. That's the 'hit'. Still within the relevant needs of potential customers. But not competing on price with the 4 others. Lets say it's a dog companionship matching service: finds suitable companion dogs for your dog to socialize with, matching personality, size, breed. Takes them on outings together (walks?) Now when you call around, you may say yes, that would be a nice treat for my dog, lets go with the companion-dog service. You don't even call for pricing, or its just to pretend like it's your criterion so as not to let the monopolist abuse you too much with their pricing power. You bluff that you may walk away if the price is too high, while already being sold and committed.

Lets say someone else starts yet another service, and this time its for matching dogs with suitable cat companions. That may be seen as irrelevant -not a perceived need by potential customers- and be a miss: not make any sales or money.

So businesses try to innovate their offering to be differentiated -and aim for those unclaimed gaps between hotly contested areas- but still serve relevant needs. To know what's relevant requires some insight into potential customers and their needs. Perhaps a sticky problem no one else is solving. Then use innovation processes to solve the problem.

You don't absolutely need to differentiate. And you don't need innovation to differentiate - you can do geographic differentiation (you're located differently than your competitors), and/or copy a differentiation approach you see elsewhere. You don't need books or this website to differentiate or to innovate..

But as a tune-up or double check -to reduce your risks when innovating- books from gurus can be very helpful by providing insight into why some things work and some things don't, and summarizing a lot of hard-won experience into simple prescriptions. We've reviewed dozens of books on innovation for business. General suggestion: don't take any book as absolute. Rather take what works for you and leave the rest.

Our favorite books: Jump Start Your Business Brain and Ten Types of Innovation (see links below) because they're easy to read, provide meaty insight and apply to the most businesses. Here's a larger sampling so you can go deeper if you wish.

Small, direct-to-consumer business offering differentiation:

Jump Start Your Business Brain, Doug Hall, 2005

- a marketing and innovation guru with Proctor and Gamble background gives his simplified and well researched prescription

- fun, easy-to-read, lots of charming real-world examples

- featuring 3 Laws of Marketing Physics: 1. Overt Benefits 2. Reasons to Believe 3. Dramatic Difference

- cuts your marketing costs by helping you focus your communications, product and operations on relative benefits

- better predict the success of an offering before committing

Ongoing businesses looking to spice up business models or product-lines, and start-ups aiming for sophistication out of the gate:.

Ten Types of Innovation, Keeley et al, 2013, Wiley

- by professors who run a consulting firm specializing in helping firms innovate (recently acquired by Deloitte)

- has 10 business model element categories and 104 business model generic innovations

- you combine a selection of the generic innovations to create your innovative business model

- gives you a disciplined process for spicing up / refreshing your offering in the marketplace

- benefit: improved stock price -double your stock price in 5 years vs no growth for average innovators

Classic:

Competitive Advantage, Michael E Porter, 1998

- a professor sums up the idea of differentiation, and how you would not just change your customer-facing product, but also your upstream suppliers and internal operations to support your differentiation strategy

Ongoing businesses adding or repositioning products in a portfolio:

Blue Ocean Strategy, Kim & Mouborgne, 2005

- professors - how to position a new product on different dimensions than competitors

Winning at New Products, Cooper, 2001 or 2011

- business consultant - stage-gate / waterfall process for new product development - similar to more general project management discipline

The Innovators Dilemma, Christensen, 2011

- business consultant - what happens if in the process of innovating you discover something that will wipe out your business as you know it?

101 Design Methods, Kumar, 2012

- see our 2014: Creative Design page

Business Model Generation, Osterwalder & Pigneur, 2010

- featuring a Strategy Canvas for organizing current business model understanding and revision, and proposed new business models

Innovation and Organizational Culture:

TED talk: The Unexpected Benefit of Celebrating Failure Astro Teller, 2016

(google) X moonshots:

- aim for high scale impact

- reward early failure / early proof of infeasilbility

TED talk: Become a Now-ist Joi Ito 2016