In our first post, we discussed the hurdles enterprises encounter in their efforts to address changing customer expectations and evolving technological paradigms. We introduced the 3R approach to digitization and how its three dimensions - rethinking products and services, reimagining the customer experience, and reengineering the value chain - the essential components to enable effective enterprise digital transformation.
In this article, we’ll be discussing the first step of the 3R approach - rethinking products and services.
Rethinking Products and Services
The world today, unlike a couple of decades ago, has dramatically transformed with the proliferation of the internet. A shift in consumption patterns has been witnessed. This has affected both businesses and customers in a fundamental way. Smart devices such as cellll phones allow them to interact anywhere and at any time. Several other technology advances are driving fundamental changes in these interactions.
Rethink to Adapt, Innovate to Survive
Under such circumstances, it is imperative for companies to rethink their products and services — not just for the imperceptible future, but for a present that’s already prevails.
There are several instances where enterprises have struggled to transform. Laggards like Blockbuster and Borders Books failed to rethink their value proposition beyond traditional models and were driven to oblivion.
Today, physical books and music are a waning commodity, and renting or buying has given way to newer models like subscription. This shift is a testament to the revolutionary impact of technology on business. Companies that were unable to adapt in a timely manner lost the battle of technological evolution to upstarts such as Netflix and Amazon. These modern day behemoths are working twice as hard not to repeat the mistakes of their predecessors. Each company spends millions of dollars annually in product innovation, research and development to ensure they keep pace with the new emerging trends.
Technology lies at the core of rethinking existing products, developing new ones, and facilitating services that can address market demands —even those that haven’t been realised yet. Case in point, the digitization of music on iPods by Apple. Rethinking products and services has the potential to create new markets and fresh opportunities. The challenge is not to simply adapt quickly but to proactively define the next wave of change.
Discovering the Business Case
Earlier, running on a treadmill at the gym meant having to frequently look at your wristwatch to measure your progress. Today’s treadmills are more sophisticated, can track the time, distance covered and offer estimates of the calories burnt and your prevailing heart rate.
But how will you measure these metrics when you’re off the treadmill?
With a technology-enabled wearable device such as Fitbit, you can easily access this information throughout the day. From heart rate to quality of sleep, and the number of steps climbed, it is all readily accessible on your wrist.
We can conclude that a business’ ability to predict customer needs and rethink product development from the perspective of customer experience is the key to future survival. Companies that can rethink an ideal business case for their existing or new products and services will continue to stay ahead of the competition.
Rethinking at Every Scale
This rethinking has to be enabled at each level. Small, incremental changes throughout the process workflow can yield significant productivity and efficiency gains for the business, while giving products and services an edge they didn’t possess before. Consider how IoT-enabled smart trackers on individual products and vehicles can transform various aspects of a business.
With access to real-time information, businesses can map and monitor the movement of goods across delivery routes. This helps them accurately estimate the exact delivery date and time for their products, and manage their inventory more efficiently while optimizing customer fulfilment operations.
Organizations can save on resources with accurate inventory and logistical management. These savings translate into significant contributions to the bottom line while increasing the speed to market (STM) and driving customer satisfaction.
Revenue-growth management (RGM) plays a critical role here. Companies are increasingly investing in Big Data, advanced analytics, and other RGM technologies to ensure they stay ahead of the curve. Exploring the use of such technologies throughout operations has to become an integral part of how companies expand their capabilities and rethink their products and services.
For large global enterprises, their vast size and scale of operations can be limiting factors to such initiatives. A simpler solution for them could be to acquire or merge with firms that offer existing capabilities that complement their core competencies. This has been a commonly observed trend among companies which focus on transformation. Examples include Disney’s merger with Pixar over a decade ago, and the AT&T and Time Warner merger that is currently underway.
The Next Step
Exceptional companies have woven this idea into their DNA. Apple is actively developing self-driving cars —an area beyond its traditional domain but powered by technology which is its core strength. Similarly, Amazon, along with JP Morgan Chase and Warren Buffett's Berkshire Hathaway, is planning to make inroads into healthcare— once again leveraging Amazon’s core expertise of technology.
The future of consumer-facing industries largely depends on how they innovate. Organizations need to keep track of minor changes in customer behavior because they often foretell major shifts in business.
The impetus to rethink products and services is driven by exploring methods of making products more efficient, engaging and ultimately, human-centric. The core of any business has always rested on how well they delight their customers. The only thing that has changed is the approach to realize this objective, owing to which rethinking products and services is essential to driving digitization in any company.
In the next part of this blog series, I will be focusing on how driving digitization calls on organizations to “Reimagine Customer Experiences”.