The “Rear View Mirror” Problem With Differentiation
Most differentiation efforts are set up to fail. But they don't have to when your business has the right perspective.
Last week, I shared the idea of “differentiated aim.” The idea is pretty simple: it’s not enough for your business to be aligned on your aim if you are simply playing the same game as competitors.
Differentiated aim is when your business goes beyond internal alignment to pursue a unique strategic direction that sets it apart from competitors who are all solving the same problems in similar ways.
A differentiated aim keeps you from building the same business as everyone else. It’s how you own a unique spot in your buyers’ minds and win market territory.
But a lot of marketers get hung up on finding a differentiated aim because they don’t feel like they have enough to work with.
It’s not their fault, though.
It happens because the traditional approach to positioning only takes a retrospective view on differentiation. The process usually goes like this:
Examine the product as it exists today.
Try to find out what’s unique about it.
Figure out why that matters to customers.
Pull that forward into sales and marketing.
Because the product is simply treated as a given, marketers are at the mercy of whatever product they’ve been handed. And when you can only differentiate by looking in the rear-view mirror, you run into two problems:
Most products are not meaningfully different beyond a handful of features.
What’s different today may simply be the status quo in a quarter or two.
That’s why most positioning efforts don’t do much to help the business. They don’t create enough differentiation today, and that differentiation doesn’t last.
Looking At What Exists Today Rarely Provides Lasting Differentiation
When differentiation work only looks at “what is”, it leaves you back to square one: a product that’s not seen as different enough to cause buyers to take action. That’s why marketers must work across the business to gain a forward-looking lens, too.
Because a retroactive approach to differentiation rarely provides a lasting outcome, you have to approach differentiation from a proactive perspective as well. You have to think about how the product should be different, and then rally the business around making that a reality.
When you look at the businesses that have a lasting advantage, that’s exactly what they did. Here’s a quick story to illustrate this:
How TSMC Found Its Differentiated Aim
TSMC makes most of the world’s computer chips. They did over $80B in revenue last year. They also have one of the most defensible businesses ever, because there are massive barriers to entry (capital, economies of scale, and specialized knowledge). But TSMC was able to establish this moat because, early on, it decided a priori what its differentiated aim should be.
They made an explicit decision that they were going to be the best in the world at manufacturing chips, and nothing else. They weren’t going to design chips (like Intel). They weren’t going to create products. They weren’t going to have a consumer brand. They had a maniacal focus on what their differentiated aim should be, and then they made that a reality.
Deciding on the differentiated aim up front is why TSCM was able to commit to such massive investments in the first place. The aim came first, and the advantage came later.
More Examples of Differentiated Aim, Decided Up Front
Shopify decided early on that its differentiated aim was to help entrepreneurs make their first dollar online (unlike open-source e-commerce platforms that focused on control over the experience).
Cybersecurity company Wiz decided that a cloud-agnostic platform was in the best interest of its customers (unlike other cloud security options that only worked with one vendor).
Commercial HVAC company Q-PAC decided its aim was to build fans so simple that purchasing, installation, and maintenance would be frictionless (unlike other fan designs that require heavy human intervention).
Rivian decided (before its factories were ever built) that its differentiated aim was to build EVs for outdoor adventurers (unlike other EV manufacturers who make general-purpose vehicles).
Clay decided that its differentiated aim was to give GTM teams more flexibility and control without a complex tool stack (unlike other GTM tools, which lock you into their data and their way of working).
Do these brands continue to examine existing aspects of their products that can help them accelerate this differentiated aim even further? Of course. There are always things about your product that don’t get their due or could be presented to customers in a better light.
But most of what they do is think about how their differentiated aim informs what they can become.
I’ll leave you with this:
You don’t stumble upon a unique advantage and then decide that’s where you’ll aim the business. You aim the business so you can build the unique advantage.
3 Questions to Leave You With
When thinking about differentiating your product, how much time do you spend on “what is” instead of “what could be”?
Who is involved in discussions around differentiation today? Is it just sales and marketing, or are product, engineering, and design involved?
Assume your competitors get to feature parity with you in 6 months. Do you have an idea of where you’ll go next? Or will you be back to reacting?
Thanks for reading.
If you don’t know me, I partner with executive teams to align on their strategic narrative, so they can win the next chapter of their business. To chat with me, head here or say hello on LinkedIn. Cheers,
John Rougeux
Founder, Flag & Frontier