A company’s ability to compete is based on how it differentiates its proposition to its customers. Innovation usually results in some degree of differentiation, but is it enough to attract customers away from competitors’ offerings? Or if it’s a brand-new offering, is the value created sufficiently differentiated to generate enough demand so you can scale?

If the innovation is sufficiently differentiated, there is a higher probability that the proposition would attract enough customers to make the business viable. Differentiation through innovation can take different forms. A good way to categorise these innovation themes is the Ten Types of Innovation, a methodology by Doblin (acquired by Deloitte).

Most people focus only on product innovation, or “the offering”, as the Doblin methodology puts it. By combining product, experience and configuration types of innovations, you can make your innovation more difficult to copy.

Consequently, it has never been more important to expand your offering innovation to include experience or configuration innovations. 

Many companies are therefore incorporating experience into their differentiation, intentionally using “services as the stage, and goods as props, to engage individual customers in a way that creates a memorable event” – or what’s better known as the experience economy. This doesn’t mean that every proposition must focus on the experience, but it caters to the possibility that if you can, it could be a more sustained differentiation.

Finally, be sure to scan the environment to mitigate investments in technologies or trends that don't have longevity.