Competitive separation requires innovation. This means doing new and different things for customers (giving them a “Wow!” experience); and ideally, these would be things that competitors can’t or won’t do (giving them an “Uh-Oh…” experience). Without this separation, goods or services becomes a commodity, things that are similar to what is available from everyone else in the same market space. Commoditization usually creates an enervating price war where no one wins — except, perhaps, the consumer, but only in the short-term, because as prices fall, quality and innovation usually decline, as well.
It’s also important to recognize different degrees of separation, which are connected with different levels of innovation. On the one hand, there is sustaining innovation, which is about things like constant improvement, reliability, scale, responding to trends, and best practices. And on the other hand, there is breakthrough innovation, which is about new solutions, unexpected surprises, experimentation, leveraging trends, and next practices. Sustaining innovation is about keeping up, while breakthrough innovation is about leaping ahead.
By adopting the state of the practice:
- Suppliers can make high-value goods at a high cost.
- Suppliers can make inexpensive goods at low cost.
As best practices change, companies need sustaining innovation just to keep up. On the other hand, breakthrough innovation is about going PAST best practices and adopting next practices.
Both of these types of innovation are essential, but it’s important to acknowledge that many organizations tend to instinctively gravitate toward sustaining innovation, in part because it’s easier to grasp and do than breakthrough innovation. For example, doing incremental innovations around things like “increased operational efficiency,” can offer some value, but it usually doesn’t provide the kind of “Wow!/Uh-Oh” impacts that everyone is looking for. The time to take bold steps in pursuit of breakthrough innovation is in the impossible or impractical phases of the Autodesk Innovation Continuum.