HOW’S YOUR SERVE? - Abilafastcle.com/EdutechResources/resources/bytopicid/12838/... · 2019-12-10 · HOW’S YOUR SERVE? Learn how product-centric companies can grow profitably

HOW’S YOUR SERVE?Learn how product-centric companies can grow profitably through new service offerings

December 2009

2

Tim

Ogilvie

is

co‐Founder

and

CEO

of

Peer

Insight

and

a

recognized

leader in service innovation and business model design.

Tim

founded

and led

the

global

benchmarking

practice

at

Price

Waterhouse,

conducting

site

visits

in

13

countries.

He

was

the

founder

and

CEO

of

Brivo

Systems, a software company focused on security and access control. Prior to

his tenure at Brivo, Tim was a partner at Kaiser Associates, the global strategy

consultancy.

Tim

is

a

Visiting

Lecturer

at

the

Darden

School

of

Business

Administration,

where

he

teaches

customer‐centered

design. He

holds

a

Masters degree in Computer Integrated Manufacturing Systems from

Georgia

Tech and a BA in English from the University of Virginia.

Kimberly Campbell

is a Sr. Director of Consulting at Peer Insight and

a service innovation leader focused on designing new business models.

Prior to joining Peer Insight, Kimberly led corporate innovation

initiatives at

Johnson & Johnson and advised both Fortune 500 and new venture clients

with Accenture and the Wharton Small Business Development Center.

Kimberly has over 9 years of experience including client work in

the

pharmaceutical, medical device and cosmeceutical industries. Kimberly

earned an MBA from the Darden School of Business at the University of

Virginia and a BSBA in Business Management from the American University

in Washington, DC.

3

3

Peer Insight is an innovation strategy

consultancy with deep roots in service design and business model exploration.

Get to know Peer Insight

“We help our clients identify growth platforms, design new customer experiences and develop innovative strategies to address adjacent markets, audiences and opportunities.” - Tim Ogilvie, CEO

4

GE: From manufacturing jet engines to providing a service: “guaranteed thrust”

GE Aircraft P2S Transformation

•

1995: Highly sophisticated product …

but with

commodity

margins

•

1996: Jack Welch says, “We have become a socket

company to a fault.”

Focus shifts to services.

•

By 2000, GE Aircraft Power was a P2S success

•

Leasing engines from any

manufacturer

•

Providing MRO services for entire fleets

based on guaranteed up‐time (or GE pays)

•

Result: Market share rises from 23% to over 40%,

profitability in double‐digits

5

York: From manufacturing “big iron chillers”

to remote

services, turnkey services, guaranteed cost services, etc.

York P2S Transformation

•

2002: commodity pressures result in

unprofitable financial year

•

2003: York sets goal to double

the services

business in three years

•

Began to experiment aggressively with new,

services‐based business models

•

By mid‐2005, firm had nearly doubled services

revenues, increased overall top‐line by 20%,

and restored profitability

6

J&J: From pressing pills to supporting a smoking-free lifestyle

Nicorette

P2S Transformation

•

Poor sales performance and weak

customer outcomes in 2004‐05

•

Internal team formed to “partner with

smokers who want to quit”

•

Framed a product+services

experience

called (“Pavlov”) including

•

Nicorette

product

•

Phone‐based behavior modification

coaching

•

Online support network

•

By 2007, ActiveStop

service was launched

in over a dozen countries, restoring growth

and profitability

2005:Product

2007:Product + service

7

POLLHow would you describe your organization’s transition to services?

1.

Just getting started

2.

Process is underway, but we need to accelerate

3.

Process is stalled, need to restart

4.

Making great progress, want to stay on top

Key Findings From P2S Strategy Research

Recommendation for Developing Successful P2S Strategies

How‐to Tools for Applying the Best Practices

9

Key Findings From P2S Strategy Research

10

There are 10 types of innovation1

Customer experience

OfferingCore process

Process.Enabling process

Product/Service performance

Service system

CustomerService

Channel

DeliveryBrand

Note 1: “Ten types of Innovation”, by Larry Keeley/Doblin Inc. (1999)

Business model

FinanceValueNetwork

how the enterprise makes money

enterprise structure and value chain

Inside-out Outside-in

assembledcapabilities

proprietary processes that add value (including IT)

basic features, performance, and functionality

extended system that surrounds an offering

how you service your customers

how you connect your offerings to your customers

how you express your offering’s benefit to customers

how you create an overall experience for customers

11

Most competitive activityin the jet engine industry was focused here

Six Sigma5-axis

machining

Consider how the jet engine market engaged in “feature warfare”

during

the early 1990s

Minimal / none

Some activity

Moderate activity

Frequent activity

Non-stop activity

Business model

Finance

ValueNetwork

Channel

Delivery

Brand Customer experience

Offering

Core process

Process.

Enabling process


Product system

CustomerService

Source: Peer Insight analysis, Mar 2007

JIT deliveryDepot repair

Staged spares

Thrust-to- weight ratio

Modular design(LRUs)

12

Where is the “white space”?

Minimal / none

Some activity

Moderate activity

Frequent activity

Non-stop activity

Six Sigma


Staged spares

5-axis machining

Business model

Finance

ValueNetwork

Channel

Delivery


Offering

Core process

Process.

Enabling process


Product system

CustomerService




13

GE Power became #1 by leasing jet engines to airlines, getting paid only for uptime …

in effect, they sell “guaranteed thrust”

Minimal / none

Some activity

Moderate activity

Frequent activity

Non-stop activity

Six Sigma


Staged spares

5-axis machining

Business model

Finance

ValueNetwork

Channel

Delivery


Offering

Core process

Process.

Enabling process


Product system

CustomerService




Your most trusted

source for aircraft thrust

Procure and repair competitor

engines, too

Lease any jet engine

If engine is down, you don’t pay

14


Hi

Lo

good

s

goods

Volume of innovation efforts:

Business model

FinanceValueNetwork

Core process


Product/Svc performance

OfferingProduct/Svc system

CustomerService

Channel

DeliveryBrand Customer

experience

Product-centric innovation focuses on the offering, but results in feature warfare and …

… commoditization

15

In 2005, Peer Insight decided to study this area of white space

Hi

Lo

good

s

goods


Business model

FinanceValueNetwork

Core process




CustomerService

Channel


experienceBusiness model

FinanceValueNetwork

Core process




CustomerService

Channel


experience

Outside-in •

How do firms

innovate from

outside in?

•

How can product

firms transition to

compete through

service offerings?

1AARPADTAppleARCADISBank of AmericaBaxter HealthcareCEMEXChase CardsCrowe ChizekDieboldEnterpriseElsevierGE FinanceGE HealthcareGM OnStarGood SamaritanHallmark CardsHarrah'sHewlett‐PackardIntelJohnson ControlsLloyds TSBMayo Clinic

McDonald’sMedtronicMicrosoftMotorolaNASDAQNavistarNetFlixPfizerPitney BowesProcter & GambleProgressiveRIMServiceMasterSiemensStandard & Poor'sStarwood HotelsSun MicrosystemsSwisscomSyngentaThe HarfordTiVoUPSVirgin

2005

The Discipline of Service Innovation

Device -Enabled Services Initiative

March 2006Peer Insight

Device -Enabled Services Initiative

March 2006Peer Insight

2AARPADTAppleBaxterDieboldEatonGE MedicalGMIntelHPMedtronicMicrosoftMotorolaPfizerRIMSiemensSunStarbucksTiVOVirginYorkXM Radio

Device-

Enabled Services Initiative

2006

3

2007

American GirlBank of AmericaBrivo

SystemsCrowe ChizekIngram MicroLRA WorldwideMyBizHomePageNine SigmaServiceBenchSitoaThe HartfordTotal Quality Logistics

Innovative Service Concepts in the United States

Lessons from the Fast Lane

Insights about “Innovating with Speed,” acollaborative research program conducted

in partnership with the Batten Institute

October 2008

Peer Insight

4

2008

AARPAHRQCelesticaChase CardsCSCConvergysGood Samaritan SocietyHarris CorporationHewlett‐PackardKaiser PermanenteKelly ServicesMcDonald’sMicrosoftOPX GlobalPfizerSiemensStarwoodSwisscomThe HartfordUPSYork

Lessons from the Fast Lane

20

Recommendation for Developing Successful P2S Strategies

21

Note 2: From Peer Insight study of 45 global 500 firms (2005)

… services in back2

services average

serv

ices

services

goods in front1


goods average

Insight: …

Comparing the goods era to the services era

Hi

Lo

good

s

goods


Business model

FinanceValueNetwork

Core process




CustomerService

Channel


experience

22

Note 1: From Peer Insight study of 45 global 500 firms (2005)

services

serv

ices

Hi

Lo

Business model

FinanceValueNetwork

Core process




CustomerService

Channel


experience

Formula for success in the services era

create a compelling cX

and biz modelembed it

Using IT

Reframe customer needsto find the white space

23

P2S Transformation Model“Innovating the Demand-Chain”

P2S success is built upon four pillars

24

Brand Intent

Customer

Selection

Strategic

Boundaries

Top Priorities

Appetite for

risk

Business

Model

Possibilities

Open

Innovation

Business

Model

Exploration

Protocols

Learning

Design

Feedback to

strategic

opportunities

Rapid

prototyping

Affordable

loss learning

Ethnography

Unmet Needs

Journey

Mapping

Co‐creation


25

POLLWhich of these Four Pillars represents the biggest challenge for

your

organization?

1.

Determining your Strategic Intent

2.

Understanding new Business Model Designs

3.

Learning Customer-Centric Methods

4.

Embracing a Rapid Learning Design (overcome a culture of debate)

How‐to Tools for Applying the Best Practices

27

Brand

Intent

Customer

Selection

Strategic

Boundaries

Top

Priorities

Appetite

for risk

What types of

customer problems are

central to our identity?

Which customers are we

committed to serving

and growing with?

How much are we

willing to risk to capture

those opportunities?

Which P2S opportunity

areas are top priorities?

[see next three pages]

28

Clear strategic boundaries are the foundation for a successful P2S transformation

Adapted from McKinsey Quarterly (2006, Volume 1), Peer Insight analysis

How-To

IBM AS/400

servers (1990)

IBM network

configuration

services (1995)

IBM Data CenterOutsourcing (1999)

IBM Global ServicesSystems Integration(2004)

29

Few firms can choose all four

quadrants; Companies face a critical

decision point when they arrive at step 4


How-To

servicegive‐aways

fee‐based required

services

(installation, break/fix)

fee‐based non‐required

services

(e.g., financing, operator training)

1

2

3

add‐on services as true

adjacencies (e.g.,

configuration)4

customized value‐

added services 5

independent

customized

services7

6independent

transaction‐

based services

30

Different circumstances call for different strategies


How-To

J&JActiveStop

GEAircraft

York

York Source

YorkMSCS

separate

services P&L…………

……………………...separate

services P&L

31

Business

Model

possibilities

Open

Innovation

protocols

Business

Model

Exploration

Protocols

In which parts of the value

chain is there “stretch

potential”

for us?

How will we engage the IP

of others? What will we

build ourselves, what will

we merely access?

[see next three pages]

32

Unmet Needs

Control Points

Customer Experience

Offerings

Value Capture

CREATING VALUE (EXTERNAL)

GETTING PAID

(INTERNAL)

Our business model diamond provides a framework to think about the implications of embracing a services strategy

How-To

33

Unmet Needs

Control Points

Customer Experience

Offerings

Value Capture

We see 13 hallmarks for modern business models that must be considered when designing a product-to-services solution

How-To

2.

Target a psychographic

need

1.

Focus on the future

customer

…….

…….

6.

Invite customer to co‐create

5.

Easy on‐ramp

for tryout

7.

Leverage third party

capabilities

…….

…….

…….

10.

Defensible lock‐in

that

strengthens over time

8.

Use information

flows to

create value (esp. analytics)

…….

…….9.

Front‐line

workers empowered

by info + incentives

…….

3.

Compelling experience

that satisfies a latent need……

.

4.

Simple narrative element……

.

11.Monetize information

value

…….…….

…….

IT infrastructure

that scales profitably

Multi‐channel

delivery model

12.

13.

34

J&J smoking cessation solution addresses 11 of these 13 hallmark

attributes

The Hallmarks of Modern Business Models

How-To

1.

Focus on the future customer

2.

Target a psychographic need state

3.

Compelling customer experience

4.

Narrative element

5.

Affordable on‐ramp for tryout

6.

Configurable by the customer

7.

Leverages third party capabilities

8.

Uses information flows to create value

9.

Empowered front‐line workers

10.

Defensible lock‐in (control points)

11.

Monetizes information value

12.

Scales through IT platforms

13.

Multi‐channel delivery model

The self‐confident younger smoker

Sees smoking as lifestyle choice (not addiction)

End‐to‐end experience, with support cohort

Build your personal support network online

Uses a third party for behavior mod coaching

Online + mobile device support messages

Behavior modification coaches

Data shows which methods work best

Customers buy info‐based service (+ Nicorette)

Behavior modification hosted application

Pharmacy + online + phone‐based

35

Ethnography

Unmet

Needs

Journey

Mapping

Co‐creation

[see next four pages]

How do customers behave

in their day‐to‐day life?

What unmet, unarticulated

needs do we perceive?

How can we enroll them to co‐create a better experience?

36

In ethnography, you learn to walk a mile in the customer’s shoes …

even

when they have to take them off for work

How-To

37

Observe …

go deep, not broad …

use a beginner’s mind

How-To

38

a journey

a touch point

a moment

1 2 3 4 5 6 7

2

A journey map helps to isolate the unmet needs and moments of truth in the customer experience

How-To

39

Journey mapping can look like this

blind spotsmoments of truth

customer: backstage(what you don’t see)

customer quotes(positive/negative)

customer priorities(underlying business need)

you: backstage(what they don’t see)

shared touch points(what you both see)

[this map is created BEFORE we generate any ideas]

How-To

40

Feedback to

strategic

opportunities

Feedback to

P2S program

architecture

Rapid

prototyping

[see next five pages]

How can we establish an

“affordable loss”

mindset

to enable risk‐taking?

What elements must we

add to our architecture to

increase our success rate?

41

Why do successful P2S programs require a “rapid learning design”?How-To

Someone is already meeting many of

your customer’s services needs.

Product‐based firms start out with a

knowledge gap.

Option 1: Get stuck in a culture of

debate.

Option 2: A rapid learning design that

closes the gap by placing small bets fast.

42

Hardware/ Software Mock-ups

Service prototyping is a great learning method; There are different prototyping approaches for different contexts

How-To

43

Co-creation can occur using low-fidelity visual prototypes like these single-panel concept sketches

…

How-To

44

Or this scenario storyboard

…

How-To

45

Or this card-sort

interactive prototype …

How-To

Summary

Brand Intent

Customer

Selection

Strategic

Boundaries

Top Priorities

Appetite for

risk

Business

Model

Possibilities

Open

Innovation

Business

Model

Exploration

Protocols

Learning

Design

Feedback to

strategic

opportunities

Rapid

prototyping

Ethnography

Unmet Needs

Journey

Mapping

Co‐creation


Key tools for P2S Transformation

UnmetNeeds

ControlPoints

CustomerExperience

Offerings

ValueCapture

UnmetNeeds

ControlPoints

CustomerExperience

Offerings

ValueCapture

UnmetNeeds

ControlPoints

CustomerExperience

Offerings

ValueCapture

Hardware/ Software Mock-

ups


ups


upsCustomer experience




Service system

CustomerService

Channel

DeliveryBrand Business

model

FinanceValueNetwork



Inside-out Outside-in


proprietary processes that add value (including ICT)







Customer experience




Service system

CustomerService

Channel

DeliveryBrand Business

model

FinanceValueNetwork





Inside-outInside-out Outside-inOutside-in

















1 2 3 4 5 6 7

2

1 2 3 4 5 6 7

22

questions?

51

Thank You!

To contact us for more information:

Timothy Ogilvie: [email protected] Campbell: [email protected]

811 North Royal Street, Alexandria, Virginia 22314 | 703.778.5543 | www.peerinsight.com

mailto:[email protected]

Documents

HOW’S YOUR SERVE? - Abilafastcle.com/EdutechResources/resources/bytopicid/12838/... · 2019-12-10 · HOW’S YOUR SERVE? Learn how product-centric companies can grow profitably