Thinktiv on the Technical Differentiation Recession
Jonathan Berkowitz’s post on Thinktiv’s blog articulates something perfectly that lots of us have been observing in Enterprise software.
There’s a technical differentiation recession.
“Tech diff” was the single largest moat one could build around enterprise software. Back then, the rise of the consumer Internet was nascent and it was difficult to hear over the din of the enterprise markets. Selling software and retaining customers was largely a function of whether or not the technology in question consistently outperformed its competitors in capability, performance, scalability and cost. These were the four criteria that drove purchase and renewal decisions.
I remember even further back to the early 90’s – when we had technical evaluations where our software solved problems the competitors products could not solve. Ever. Talk about differentiation. Or where we slowed our product down so that the solution was computed in 8 seconds instead of .8 seconds, because our customers wouldn’t believe it was real if it was that fast. Because competitors products would take 30 minutes or more on superior hardware to solve the same problem.
And so we won a lot of software deals, at high prices, because of technical differentiation. Almost every prospect put software vendors through a grueling piloting or proof of concept phase – against other software vendors. Failure to win a few deals in a row would put some companies out of business because of the sales investments required to compete.
But times have changed- and even 10 years ago it was becoming clear to me that technical differentiation wasn’t enough. Lombardi began preaching the “Lombardi Experience” in 2004 – based on great customer outcomes and experiences working with our stellar services (and support, and product, and sales) teams.
Jonathan puts it well:
Today, we build businesses in a different world. Today, technical differentiation is not required to achieve product-market fit. I find this to be true in many markets within the enterprise space, and also when considering the consumer Internet.
In a way, this is too bad. It is a sad day for software engineering when technical differentiation is not top of mind. But as a consumer, this isn’t such a bad thing. The focus now has moved to something more exciting as a consumer of technology: experience differentiation.
Warby Parker [...] changed the way people buy sunglasses, by introducing home try-ons, flexibility and choice into the experience. There’s no specific technology differentiation inside Warby Parker that drove their success. They acquired experience-to-market fit, and that was brilliant.
Taking a step back: experience is becoming more and more important. It is BP3’s mission to win the contest of experience – for our customers to experience a better BPM through BP3’s skills, products, and services. We’ve had technical differentiation from day 1- a depth of experience that no one can match – and we’ve had differentiation in our customer results- tackling problems that others considered too hard.
The result we’ve been building toward is a differentiated experience that scales with our business. Differentiated experience that isn’t just about one person’s heroic efforts to make a customer happy, but is also about the company’s culture and assets making BPM a great experience overall for our customers.
When there’s a technical differentiation recession, it feels good to be focused on experience differentiation…