This comes from a new blog about a new book on high technology product management. The post addresses differentiation as a phenomenon instead of a concept. The difference seemed subtle to me at first, but I think Raj explains his point well.
A data processing unit at its heart is a concept. It has a deterministic, fixed definition for it. It also has a corresponding reality in the silicon. Very few of us have seen this data processing unit but we know it is there. We don't have to experience this data processing unit to believe that it is there, residing in the computer chip.
The efficacy of this data processing unit has nothing to do with the human experience of it. We are all quite happy even if the idea of the data processing unit were to be an abstract one, outside of the human experience, as long as it does the job and keeps processing those bits at the breakneck speed that it does.
Differentiation, on the other hand, is the exact opposite.
It lies entirely within the realm of an individual's experience. In this sense, differentiation is a phenomenon. It is so intricately tied to the subjective experience of an individual that to grasp the essence of it, we need a different approach. Differentiation requires us to comprehend it not from the finished-product concept of it, but from a much earlier stage where the raw materials of an individual's subjective experience start to come together to form the essence of differentiation.
This raises an interesting question. Is differentiation more about perception and marketing than design and function? I don't think Raj would say yes to that, but with all the debate about marketing and "lying," I can't help but frame it that way.