The Problems of Product “Differentiation”

24 Jun 2021

It seems obvious that there are advantages to standing out from the crowd—to differentiate your product or service from the others in your space. But successful differentiation doesn’t mean that people will choose your product. In fact, asking and acting on the issue of differentiation has at least two important problems when seen through the lens of Jobs to be Done (JTBD).

The first problem is that “differentiation” pushes focus onto the product, not the customer. Of course, discussions of differentiation are not completely untethered from customers. Still, differentiation tends to constrain considerations to what we can do with our solutions—added features, new promotions, etc.

But JTBD theory tells us that successful and repeatable sales emerge from understanding the demand side of the equation. Differentiation, unfortunately, directs attention to the supply side of things.

The second problem is that differentiation tends to confine considerations of a product that stands out in intra-category comparisons. The most common advice about differentiation is for a firm to understand what their competitor firms are offering and find opportunities to “differentiate,” to attract more attention in a way that delivers more customers.

But JTBD theory reveals something we all know intuitively: when we look for a solution, we do not confine our search to products in the same category or firms with the same SIC code.

In fact, one of the best strategies for uncovering an unmet JTBD is to find what I call a “strange competitive set.” Years ago, when Clay Christensen and I were drafting early versions of a working paper, I used the example of the mid-afternoon slump. We all experience a nadir in our attentiveness around 3pm each afternoon. To fulfill the “afternoon slump” JTBD we seek out coffee, exercise, napping, will power, Snickers bar, and, my favorite, 5-hour energy. (Not my favorite solution, but a favorite example of mine.)

None of the things commonly used for this universal daily human experience are in the same product category, and the firms that offer them are not in the same SIC grouping.

Differentiation for its own sake doesn’t lead to more and better customers. The focus on what a firm supplies and the straightjacket of product categories cause firms to miss potentially very big opportunities that can only be understood from a demand-side JTBD approach.

The Problems of Product “Differentiation” is built on the principles we teach in our live, online Product Science Bootcamp.

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