07.27.09
Posted in Customer Experience, Net Promoter / Customer Satisfaction, Service Innovation at 10:34 pm by Doug Morse
Ok, I admit that I am torn. I do not know whether to be happy that two inventive and customer oriented companies might make each other better or sad that a great culture like Zappos might get corrupted. In truth, I can certainly understand the benefits to both organizations of joining forces and it could make sense if it works as described by Zappos CEO, Tony Hsieh in his letter to employees (see: http://blogs.zappos.com/ceoletter ) .
I have had the pleasure of meeting and listening to Tony Hsieh and hearing about how he and his partners built Zappos WITH his employees FOR customers. If you are interested in subjects like customer satisfaction, customer experience or even Net Promoter you should know the story of Zappos. The fact that they sell great products with great prices and service that can WOW customers is not the best part of the Zappos story. The best part of the story is that the culture and success of the company is built around a complete and fanatical devotion to a core set of values. These core values are what allow the company to build a great brand. The key is that this is not just a set of words used in the annual reports to describe the company vision. This is how they live. This is how they build hiring practices, business policies and operating processes. It is a holistic devotion to build a brand that will always strive to delight customers. I really think that Tony and his partners have brought us a great example of what a customer centric enterprise can be.
Amazon is another company that I admire especially if you think of them as a service provider rather than just an online retailer. Their strategy around customer centricity and innovation is to be admired, in my opinion. In particular, their move to elastic cloud computing as a service was a brilliant services strategy.
Can 1 + 1 eventually equal 3? Hopefully bringing these two companies together will take the best of both to create something even better. The trick in these marriages is in the integration and in respecting the different cultures and best practices. I wish these both Zappos and Amazon a great future and hope that they can create a WOW factor for all concerned.
For those service researchers and professionals who are reading this, I strong recommend that you look at these two organizations as great examples of what service can be in this new service economy. As we have always said in my organization: “ It is not about the PRICE, it is about the VALUE” and clearly they have figure out how to bring the value to customers.
That is my opinion, what’s yours?
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07.16.09
Posted in Service Innovation at 6:38 pm by Doug Morse
What if GM, a.k.a. “General Motors” was now called “Global Mobility” or even “General Mobility”, would that change what they do? A name change alone would not change things perhaps; but if the name was changed because of a new way of thinking about the value that they could bring to the world, it might. In our consulting business, which is focused on innovation and transformation of businesses, we have a key saying.
“If you ask a different question, you will get a different answer”.
What we mean by this is that evolution happens as we continue to improve the status quo but revolution happens when we start to think about improving the outcomes of what we do in new ways. The simple example would be to consider a quote associated with Henry Ford that said “If I had asked my customers what they ‘wanted’ they would have simply said, faster horses”. His customers knew they needed something that would be faster than a horse that could transport more over longer distance and could help them be more efficient. Henry looked at the larger issues around the attributes of transportation that people desired. Further, he knew that cars could not just be toys for the wealthy but needed to impact society at all levels. He thought about the problem differently and he had different answers. It was not about the automobile, it was about building something that was cheap, reliable and usable for the common man that would improve society as a whole. It was about raising the living wage so that people could afford the technology that would make their lives better. It was about social revolution and not about transportation evolution.
Back to the original question. I am picking on GM because of their recent history and spot in the current news. They want to reinvent themselves as they emerge from their bankruptcy. They want to be more “green” and produce products that meet a current paradigm that automobiles must be the symbol for saving the world as much as they have been vilified for polluting it in the past. At the end of the day GM goes from being a manufacturer of automobiles to a manufacturer of automobiles with a conscience. Of course this is more of a marketing ploy than a real change of culture. In essence cars, individually, are not the evil polluters or consumer of global resources they are made out to be by the eco-frauds. Building hybrids vehicles, ethanol powered cars, electric battery packs all consume resources greater than any that they may save. Ethanol, as an example, consumes thousands of gallons of water to make a few gallons of ethanol and uses lots of energy from coal fired power plants to produce less energy (BTU) equivalents. Therefore running ethanol in your vehicles only really helps the corn farmers but it sounds “green”. Thus far electric and hybrids follow much the same pattern. They consume more resources than they save. Nuclear powered power plants would not only make more of these car technologies work better( think Hydrogen Fuel cells etc ), it would be a 1000 times more impactful and green than forcing car companies to meet artificial environmental standards.
What does this have to do with services? Well, what if GM did not think of themselves as an ‘Automotive Manufacturer’ but rather as a provider of ‘ Mobility Services’? Let’s look at the challenges that an automobile manufacturer faces under today’s paradigm.
• They build hard goods whose profits come from selling to dealers and not consumers. Their profit is on the sale of the manufactured goods. They have little participation in the lifetime of services after the sales. The margins are thin at best and this drives them to create products not totally in line with the best interests of the consumers and the rest of the world.
• As citizens of the world, and the ranking villains in terms of environmental impacts, they want to be a part of the solution and not the problem. They will be forced to reduced their so called “carbon footprint” (thanks AL …. )
• In the history of the automobile, there have been over 5500 brands and companies, what differentiates an auto company in a mature commodity market that will allow a GM to thrive another 100 years?
In essence if GM asked “the different question” and looked at what the world really needs against their current challenges the answer would not be the not-so “New GM”. Let’s assume for the moment that most people buy cars to get them from place to place and not as status symbols or extensions of their egos. What if the car could be provided as a service and paid for only as it is used to provide the value associated with transportation? As a consumer the costs of automobile ownership go well beyond the purchase price and cost of gasoline. If you want to lower your personal “carbon footprint” giving up direct ownership would certainly be attractive, assuming that you could still get where you needed to go when needed.
Cutting to the chase, GM could easily dominate the “cars as a service” (CAAS ) market and while they were at it, payback the government loans, make the shareholder rich and provide huge and real positive environmental impact. ( Note to GM CEO: Fritz, call me, I’ll tell you how .. ) To keep this simple, let’s think about companies like Zipcar or City Car that already allow users to share and pay for cars based on incidental use. Need a car? Just go online, find the nearest car, get an access code, drive the car as needed and park it someplace when you are done for the next person to use. You simple pay a fee for the use. You simply pay for the value that the car creates. GM, like many makers, makes cars that are controlled by computers with tons of sensors that can transmits a ton of data. GM also happens to own the ON Star satellite systems and infrastructure that can provide two way communications to their vehicles, seamlessly. GM already has the resources to make this market work better.
GM could provide a fleet of vehicles ranging from urban econo-box to interstate luxury cruisers for shared usage. From someplace in the world GM could easily locate a fleet vehicle, know its fuel state, its overall condition, its consumption rate. They can start or stop the vehicle remotely and control its actions including enforcing safe operation of the vehicle. It is possible for them to provide an ideal platform for the ZIP car market. Taking a theme from IBM’s smarter planet initiative for example, let’s apply the concept to this ‘GM cars as a service’ idea. By having two-way information exchange already built into the vehicle, GM could participate in the life time value of the asset that they now build and sell. Margins could be several hundred percent better than their current business model. A consumer could simply sign up for a service. When they need a car or truck etc, they would go online and find what they need, where they need it. They could ask for and pre-download navigation or other location aware services including concierge services. It would be possible to even coordinate ride shares. Their transportation experience could be enhanced, their costs would be less than car ownership and the planet would benefit from having a few less environmental impacts. GM would be making money like crazy. Little of this scenario requires any new technology. Tie this into the “smart grids” being built for highways, public infrastructure etc and GM could be one of the largest “green” companies of the world reducing their own carbon foot print as well as those of the consumer.
I confess to being an incurable “car guy” and I would still want to see and own some cars for reasons other than basic transportation. Even given the desire to use cars as something other than transportation, I do not have a strong desire to have to own the physical asset. There will remain a market for unique products etc. but if solving for mobility services was the question, how that would be done would be different from what “automobile manufacturers” do today.
That is my opinion, what is yours?
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07.09.09
Posted in Customer Experience, Service Innovation, Service Science at 10:43 pm by Doug Morse
Those that are reading this blog are likely amongst the already converted that clearly understands the importance of service in the world economy. Service now accounts for the majority of the GDP and jobs. Service today is being somewhat redefined in eyes of businesses that used to think of themselves as a just producer of goods rather than a creator of customer value. More than ever companies now realize that service is becoming a larger part of their overall business success. Today, most of the top public technology companies now see more than 50% of their revenues and profits come from services and not just product sales
We, at the Services Transformation and Innovation Group LLC, have been talking about how businesses need to innovate to become more of what we call a “Service Oriented Enterprise”™. People and businesses buy things for the value that they create not just to own an asset. However, most businesses of today learned to operate under business models designed by the manufacturing sector and espoused by Adam Smith in the 1700’s. These outdated business models built highly specialized and independently operating silos within most companies. These silos tend to not have the customer in mind and do not collaborate well to create value for the customers. We think that these models need to change in this new services based economy in which we live today. Examples of what we think of as Service Oriented Enterprise models exist today where major manufacturers of hard goods like tractors and jet engines are selling these goods not as products WITH services but are selling products AS services. For example, an airline can buy “power by hour” and not have own the jet engines used on their airliners. They pay for a service that provides them needed propulsion as they consume it and only as it creates value for their business.
While we have written in a lot more detail about the Services Oriented Enterprise™, (for examples see www.servtrans.com ) the key success factor in making these business transformations work has been an integrated enterprise that effectively leverages technology, process and people to co-create value for, and with, their customers. We were partially inspired by ideas in a book by James Teboul of INSEAD who wrote “Service is Front Stage, Positioning services for value advantage”. In that book, Professor Teboul talks about how front end systems like CRM and back end systems like ERP need to become more interconnected and how much of the service experience comes from the whole enterprise and not just the front line people and systems.
The other day, I was invited to attend a “Enterprise Service Transformation Summit” ( http://www.opnevents.com/programs/transformation/ ) hosted by Oracle, IBM and Motorola in Chicago on July 15th. I was delighted to see the agenda and subject matter that fit so well into what I think represents the future of business. IBM has certainly been at the forefront of the service transformation movements and leading the world in creating thought leadership and research for Service Science. While Oracle and IBM have collaborated before on Service Science initiatives as founders of the Services Research and Innovation Initiatives (www.thesrii.org ), this summit is an entirely new and welcomed commercial collaboration. More importantly, I am seeing the message that service transformation from an Oracle perspective is not just about effective use of CRM systems but in fact the effective use of the entire enterprise technology and business process elements to deliver customer value. This holistic approach is something that we preach to our clients all the time. Oracle has been quietly ( and NOT so quietly ) filling in their portfolio to position themselves as perhaps the unique technology vendor that can best integrate the end to end enterprise that will facilitate the new approaches to the service economy. The subject matter of this summit and the case studies that will be presented were not possible even just a few years ago. I would recommend to any of my clients who want to see what is possible in transforming to a more service oriented business model that they should try to attend this event and encourage the organizers to do more. Yes, it will certainly be a commercial for sponsoring companies but it is also a good learning opportunity.
I have been in the services industry for over 30 years and service is just now getting some of the recognition from businesses, Wall Street and governments that it deserves. In the spirit of full disclosure here, I do have to tell you that I have worked for both IBM and Oracle in the past. I still participate with IBM research in promoting SSME (Service Science Management and Engineering) efforts in order to drive research and education in the service profession. Neither I nor my company is directly affiliated with this event. I am writing about it because I am delighted to see and hear about more companies that are getting the new services religion. Business today is not about producing better, faster and cheaper widgets. It is about producing value for both the shareholders and the customers for whom they serve. For me service is not the new religion. The new religion is being fanatical about driving and participating in customer success. The term “service” is just a good proxy for now.
That’s what I think, what is your opinion?
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