I have had posts, emails and been questioned about differentiation so much recently, here are some thoughts on the challenge. Differentiation is clearly the lifeblood of successful completion in the market, so not surprisingly, everyone is focussed on the topic. The term ‘innovation’ usually comes up as part of such conversations. The dialogue also frequently alludes to the old Paretto ‘20/80’ principle, where 20% of what we do provides 80% of the results. The results being margin, revenues and market share.
Innovating to find a uniquely different idea is surprisingly easy. Most companies have available plenty of good people with ideas, plenty of challenges and the intrinsic capabilities to help them stand out from crowd, but creating differentiation comes from the execution. The ability to take ideas and transfer them into the real business-winning capabilities that feed through into financial results is really the difficult part. This raises another sub-question, which is the lack of expertise in building the solution around the use of new technology and with integrating existing IT to ensure that the final business ‘book to bill’ transactions are captured.
It’s not even a once-off challenge either. Whatever creates true market differentiation will rapidly be copied by competitors in some form or other. They might even innovate to add a new twist, but there is a need to see the innovation/differentiation as a continuous flow of new activities. As a result, every enterprise, and the industry as a whole, will struggle to find enough expertise to solve each new innovation differentiation as a unique solution, so we must find a reusable approach to preserve our sanity, otherwise we all simply will not be able to provide the enterprise with the solutions it needs to be competitive
My point is that it doesn’t have to be like this, instead of 20/80 think 2/18/80, whereby the 2 percent is the differentiating element; the 80 percent is the contextual operation of the enterprise supported by its existing IT systems; and the 18 percent is the business technology platform supporting and connecting the other two elements. The real challenge is to recognise this and use the new technologies with a ‘platform mentality’ in mind. This is not naturally the approach we think of in IT, as we are generally set up to handle ‘projects’ with a single focus and justification, complete with a mentality to stop ‘scope creep’. All of which is good practise, given the monolithic nature of the software application and need for dedicated resources.
The web and big ‘web centres’, which are now morphing into cloud computing, don’t work that way. Instead there has been a decoupling of the resources that allow the freedom to develop, operate, scale up/down and exit at will. As for the development of web-based apps: it’s a completely different game, with standardisation and simplicity in the tools reducing time & skill required. The reason is that the web is acting as a framework, or a platform, over and above the hardware of the servers and communications layers. This is not an argument that the web is an operating system or a link to Android, but it a pointer to how we should be thinking about internal development in the 18 percent.
Business technology is in most respects a child of – and development in the use of – the web and its web 2.0 and cloud-supporting characteristics. Therefore the argument about internal clouds is not one of hardware provisioning; it’s an argument about creating an environment internally that supports the way the two percent is deployed externally. So the 18 percent should not be focussing on supporting a one-off series of builds, but on the creation of a framework at the beginning, moving to a platform as the technology matures. Think of it as the new ERP, but if ERP is focussed on data and one version of the truth, what should the ‘business resources platform’ be based on. And for that matter how should it relate to and support ‘situational apps’?.
Looking forward to some good comments on this!