Am reading Catalyst Code, by David Evans and Richard Schmalensee. The book tries to shed light on the intermediary business - the panoply of companies that have cropped up taking advantage of inefficiencies in the marketplace. Catalysts are market makers that effectively bring together two groups that otherwise never would have been able to interact. They may facilitate transactions (think ebay, bringing together buyers and sellers, regardless of geography and creating a platform to enable trust - via the rating system), build audience (think broadcast and cable networks that assemble eyeballs, bringing together viewers and advertisers, by providing entertainment), and cost minimizers (think hardware manufacturers that share code so that more software providers can write for the platform). Catalysts are multi-sided: they serve (at least) two separate customer types and must balance their strategies, especially pricing, to maximize total profitability.

Today, playing the go-between is easy. In this day of customization and control, there are myriad opportunities to build a business by bringing together distant buyers and sellers, by aggregating demand, or by providing systematic efficiencies. Technology has created the ultimate platform. And continues to create new ones on a daily basis.

A great example - the ubiquitous iPod. The iPod itself is only part of the equation. Yes, it’s an elegant device, but what makes it work is iTunes - iTunes is the catalyst that brings together content, regardless of producer/distributor, and sales, available by the single, the album, the show, the series, etc. Apple recreated itself as a catalyst.

For the latest in catalyst creation, check out Microsoft’s acquisition of aQuantive. Microsoft wanted to act as a catalyst (as Google and Yahoo have done before it), marrying technology and eyeballs. They will be both buyer and seller.

It’s an interesting innovation exercise. How could your business act as a catalyst? Are there opportunities to intermediate? How could you twist your business model to open the door to another side? Are there ways to matchmake, build an audience, or minimize costs? Think about it. When in doubt, look for ways to put it together.

P&G struck gold with Swiffer, building a billion dollar mega-brand that capitalized on the insight that consumers want a better way to achieve a quick clean and a unique microfiber techology R&D discovered in Japan. Swiffer was quickly knocked off by many in the cleaning category, but none have been able to compete with Swiffer’s great branding, easy to remember name, and pipeline of innovations and extensions.

Not surprisingly, most of the competition came in with me-too carbon Swiffer-copies, offering little but a lower price point. Until now…

Finally, a company has looked for a weakness in the Swiffer product model and is offering an alternative with a real point of difference. The clever folks at Method have designed the oMop, an ergonomic (and slick looking) mop with a machine washable microfiber head - no need to dispose of the head means less waste goes into the environment (consistent with Method’s value proposition as an earth friendly brand) and less money is spent on the refill stream. It’s a dual benefit - for the consumer and the planet.

This is a perfect example of using a competitive entry as a jumping off point rather than simply fast following by cloning the product with little point of difference. Instead of jumping on board, why not be a 2.0 version?Don’t forget, the iPod wasn’t the first MP3 player. It was just the first one to get the product proposition right.

When it comes to new product development, being fast to market without a salient point of difference rarely wins the day. Spend time thinking about your brand, the gaps in the competitor’s offering, and find a way to add value on a new dimension. Don’t ape. Innovate!