I’m reading Douglas Rushkoff’s book on innovation called Get Back in the Box: Innovation from the Inside Out. It has some intriguing ideas. Here is how he outlines the basic premise of the book:

Just last year, I got a phone call from the CEO of a home electronics chain, asking if I could devise a new communications strategy for him. He had read one of my books on Internet culture and was wondering if I could help him make use of some of this ‘below the line’ advertising he’d been hearing so much about lately. He wanted his marketing to be ‘less Saatchi and Saatchi and more craigslist.’ By this he meant he wanted to rely less on the expensive, high-concept traditional television advertising created by agencies like Saatchi & Saatchi, and somehow do his communications through bottom-up online communities, like the one that had developed around the craigslist online bulletin board.

As I reviewed the company’s dossier, product line, and customer experience reviews, I realized this CEO had a much bigger problem than his ads. The chain had lost its way. It had alienated its core customer base by abandoning the electronics business and becoming more of an appliance store. It had pushed design and manufacturing offshore, leaving headquarters without talent who really understood electronics. As a result, the quality of store-brand products had deteriorated, leading customers to buy other brands at thinner margins. Finally, corporate HQ had alienated its store managers through infantilizing incentives schemes, and irritated its employees with oppressive ‘loss prevention’ (antitheft) policies. Yet this CEO really thought a shift in marketing would change his whole business.

That’s when it hit me: What this fellow needed was not to hire companies who could market like craigslist but to be more like craigslist, himself. That is, simply understand what specific product or service he’s really offering, and then do it as well and expertly as possible. That’s not what he wanted to hear. No, he wanted a new marketing campaign to define his business for him, from the outside in.

Rushkoff argues that firms can become more meaningfully innovative by gaining this deep understanding of what they do well, and getting better at that. This resonates quite a bit with the key theme in Different: Escaping the Competitive Herd by Youngme Moon. That book included this outstanding graphic:

In this figure, the five bars show how a product or service performs against an industry average (the dotted line) in different ways. The figure on the left shows how we naturally tend to respond to stats like this – we work on improving the area where we are performing most poorly. This leaves us with average scores across all five categories.

Moon and Rushkoff are both arguing that a better response would be to do what the is shown on the right side of the figure – ignore the weak area and improve the areas where we are already out ahead of the crowd. Find the areas in which we stand out, and build on those. This is the way to create something that is genuinely different.

One of the points that Rushkoff consistently makes in the book is that by focusing on this core area, firms will actually become more innovative. His argument is that the deep understanding that you gain by doing so will open up creative new ideas. I think that another factor here is that building a focus on your core point of difference introduces constraints, which also lead to greater creativity.

This is a pretty compelling argument. Instead of chasing trends, develop expertise that is impossible to duplicate. Instead of making trivial innovations driven by a broad but shallow set of skills, develop genuinely novel innovations driven by deep knowledge. Instead of being average at everything, be great at one thing.