Nearly every product in the world, even products and services that
appear to have been commoditized, have forged new dimensions and
consumer value, enabled by cheap sensors, chip sets, the internet,
networks, displays, search, social, and so on. Today, almost every link
of the supply, manufacturing, and distribution chains has a new means
of differentiation. All of a sudden, products driven by technology and
defensible IP are the bomb.
However, don’t be trapped into thinking that product
differentiation is about the widget you’re selling. Differentiation can
occur where consumers discover the product, how they buy it, the
product itself, how it’s delivered, and so on. A worthwhile exercise is to
map out the value chain of your product or service from the origin of
the materials through its manufacture, retail, usage, and disposal...
and identify where technology can add value, or remove pain, from the
process/experience. You’ll find that this value can affect every step—
and if you happen to spot a step where it hasn’t, start a new company
there. Amazon is adding technology and billions to the fulfillment
segment of the consumer experience that will likely create the most
valuable firm in the world. Before Amazon, ordering from Williams-
Sonoma meant you would pay $34.95 to get the product in a week.
Now it’s free in two days or less. The most mundane part of the supply
chain ended up being the most valuable in the history of business.
Removal
When brainstorming for new ideas, entrepreneurs have a tendency to
focus on what can be added—how to enhance the experience—instead
of what can be taken away, thus making it less painful. But I’d argue
that the majority of stakeholder value created over the last decade has
been a function of removal. We, as a species, have mostly figured out
what makes us happy: time with loved ones, physical and mental
stimulation, substances that heighten or deaden those feelings,
Netflix, and sassy church signs.
You may be tempted to think that competitive advantage in the
internet age comes down to simply “more for less.” After all, that’s an
obvious edge enjoyed by Amazon. But what about Apple? It’s almost
always the premium-priced brand—and though its products are
typically better than the competition, they usually aren’t that much