To Err Is To Provide Mere Product …
“To Forgive – i.e. To Provide Unprecedented, Valuable Services – Divine.”
Alexander Pope, the renowned 18th century English poet, never could have imagined that his famous quote would still resonate in the third millennium. Demand creation that drives sustainable, profitable growth certainly requires innovation, however it must forge “unprecedented value” or risk commoditization, the kissing cousin to the rampant business disease known as sameness.
Relevant examples of “the shift” are everywhere:
Apple. The company’s services suite – App Store, iTunes and Cloud services – generates enough revenue to be considered a Fortune 100 company, and is forecasting 30% growth over the next five years. Hardware sales, on the other hand – phones, computers – are forecasting an increase of just 2.4%.
Amazon, Microsoft and IBM. Somewhat similar to Apple, Amazon Web Services (AWS) public cloud division reported a 42% revenue increase in July 2017, bringing its haul to $4.10 billion. And the competition’s fierce. Microsoft’s Azure offering is right on Amazon’s heels with a 97% growth rate, while IBM’s shift away from product and more toward “cognitive solutions” is nothing short of stunning.
Nest. In May 2010, Tony Fadell, a former Senior Vice President of Apple’s iPod division, founded this consumer products company after becoming frustrated with the lack of features for household thermostats – and the valuable data it could provide. Why couldn’t a thermostat, and subsequently other household appliances, provide information that help improve our quality of life? Creating a “conscious home” that could both improve efficiency and empower people became the team’s quest. How valuable was this “new truth?” Google acquired Next in January 2014 for $3.2 billion.
UPS. Beyond small package delivery service, the 110 year-old company dove into logistics a few years back. In fact, you may remember plucky commercials like this one. Performance, you ask? In Q2 of 2017, revenue for the Supply Chain (logistics) segment was up 12% to $2.84 billion.
Indeed, customers will beat a path to your door if you offer them new truths that improve lives (which is why purpose should drive growth). Sadly, I have worked with a plethora of companies that possess treasure troves of data, not knowing how to access, assess or leverage it. Since the best new ideas are born from either oppression or frustration (or both), begin with asking customers what types of data they currently have, how they’re using it to help customers succeed, and what type of data is missing that they would love to have.
- Which of your “scouts” pay attention to how iconic, traditionally product-driven companies are shifting to service-oriented business models?
- What types of unprecedented services are being designed, developed and delivered within your organization as a result? (Remember: Profit margins on services are often much higher than the product variety, therefore your EBIDTA is begging you to get moving)
- What is the value you currently provide independent of your core product? (If none, you now know what to do)
- How much money is your organization leaving on the table by not taking the customer value proposition to an elite level – an unprecedented services level?
NOTE: If you’d like to learn more on this topic, please refer to Chapters 13 and 14 in Clean Slate, available now.
Why leadership should trash their current business model, reject popular sales advice, operate like a startup, and leverage the new rules for prosperity to achieve explosive profitable revenue growth (PRG).