We need to start approaching business in a different way. No longer are we in the era of just selling products. The expectations of consumers have shifted with increasing convenience delivered by digital proliferation and adoption. In their book, "Reinventing the Product," Eric and Schaeffer and David Sovie share some of the digital imperatives businesses should heed to survive and flourish in today's marketplace.
Quick Notes:
The traditional product-centric approach is becoming less effective due to changing customer preferences, technological advancements, and increasing competition. Companies can no longer rely solely on product features to differentiate themselves, as customers are increasingly looking for personalised experiences and solutions that address their unique needs. Moreover, technological advancements have made it easier for new players to enter the market, increasing competition and lowering barriers to entry.
Companies need to shift their focus from solely producing and selling products to creating value for their customers by understanding their needs and delivering customised solutions. In other words, rather than just selling products, companies need to sell outcomes. This requires a deep understanding of customer preferences and behaviours, as well as the ability to deliver tailored solutions that address their unique needs. For example, Nike has shifted from selling shoes to providing a personalised fitness experience through its Nike Training Club app, which offers customised workouts, nutrition plans, and expert advice.
To implement a customer-centric approach, companies need to adopt a product-as-a-service (PaaS) business model, which involves delivering products as a service instead of selling them outright. This allows companies to build long-lasting relationships with customers by providing personalised, continuous service that addresses their changing needs over time. By providing ongoing service and support, companies can deepen their relationship with customers and improve customer loyalty. For example, Tesla offers over-the-air software updates that improve the performance and functionality of its cars, keeping customers engaged and satisfied.
Another area that requires a shift is platforms. Most top companies today are platform-based, either self-created or integrated into an existing one. Platforms enable companies to offer personalised solutions and create new revenue streams through complementary products and services. For example, many car companies like BMW, Nissan and Renault are creating platforms for their vehicles that integrate multiple services from various tech companies such as virtual assistants, weather services and streaming entertainment.
Successful implementation of a customer-centric approach requires a significant cultural shift within the organisation, with emphasis on collaboration, continuous improvement, and agility. This agile operating model involves breaking down silos between departments, empowering employees to make decisions, and fostering a culture of experimentation and learning. For example, Amazon encourages its employees to experiment with new ideas through its "two-pizza team" approach, where teams are limited to a size that can be fed by just two pizzas to encourage collaboration and agility.
The key to success in PaaS business model is leveraging data analytics to gain insights into customer behaviour and preferences, which can be used to deliver personalised solutions and drive continuous innovation. This involves collecting and analysing customer data to understand their needs and preferences, and using that data to inform product development and service delivery. For example, Netflix uses data analytics to personalise its recommendations and content offerings, keeping customers engaged and satisfied. This can be further bolstered with the use of AI which uses machine learning algorithms to automate the delivery of personalised solutions.
The digitisation of your core business should be a key focus in your roadmap. The authors emphasise that companies need to adopt digital technologies that can collect and analyse customer data, enable personalised solutions, and support agile development processes. This involves a shift in mindset from product-centric to customer-centric, and requires a culture of experimentation and innovation. An example of a company that has successfully digitised its core business is GE, which has invested in digital technologies to transform its industrial products into connected, data-driven solutions.
Comments