“When Pigs fly…” is the usual response when you try and get giant corporations to take on new business innovation. However, it now seems like winglets are developing on the swine. GM recently announced a new business venture call Maven. http://media.gm.com/media/us/en/gm/news.detail.html/content/Pages/news/us/en/2016/Jan/0121-maven.html
“GM President Dan Ammann said while more customers than ever are buying vehicles, there is “an emerging group of customers who want to use cars and mobility in a very different way.” GM’s response is Maven, a service that began operating Wednesday in Ann Arbor, Mich., with plans to expand to an unspecified number of cities later this year. GM didn’t disclose its investment in Maven.”
So, why is this interesting? Our core motto at ServTrans around business innovation is: ‘Ask a different question, and you 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. If you ask a company like GM, ‘What do you do?’, they would likely say that they manufacture automobiles. However if you ask them what are the reasons customers use cars and how could you make their life better, you might get a very different answer and create different solutions. Back in 2009 I had the chance to talk to several Detroit automakers, GM being one of them. We asked, ‘…what if you were a transportation services company?’, and ‘Would that change the way you thought about your business and the value you deliver to customers?’ We further specifically pointed out that with the technology already built into GM cars in terms of telematics and the ON-Star infrastructure they could dominate the car sharing marketplace while still building cars for direct ownership. We talked about “Cars As A Service” (CAAS ) and they talked about flying pigs… (See our blog back in 2009 https://servtrans.com/mobility-services-a-new-model-automobile-companies/ )
Fast forward to 2016 and GM announces MAVEN. Clearly they have started to ask the different questions. GM purchased Sidecar Technologies and is investing in Lyft Inc. so mobility services is in their plans. Julia Steyn, GM’s vice president for Urban Mobility Programs, said: “… the Maven program was not about maximizing the number of vehicles on the ground, but rather the number of customer interactions with those vehicles. She said the relevant metric would be GM’s share of overall miles driven.”
I am not trying to claim credit for the ‘Cars As A Service’ concept but it could, and should have, arrived much sooner at GM. It is interesting on how the value of customers is rising and is starting to create the ability for pigs to fly after all. Suddenly more companies are acting on what once seemed like farfetched ideas. Most important to the concept that we spoke about in 2009, and the Maven type concept, was exactly the ability for GM, et al, to be more involved in the direct consumer value streams via unique access to data. In the U.S., and most of the world, the car’s owner is a customer of the dealer that sold the car and not the manufacturer. Yet the manufacture, GM in this case, was getting all the consumer data directly from the end customer’s telematics and infotainment systems. The data was only being used for less than 10 % of its potential benefit in our opinion. In 2009 we referred to the new business innovation as the Service Oriented Enterprise and we have since revised the concept to being called ‘Powered by Customers’ because that is the potential that comes from close relationships with customers and the data that they can provide to drive future innovation.
Why does it take so long for the old economy companies to change their focus from just efficient manufacturing of widgets to that of making their customer’s lives better by focusing on customer outcomes? There is no short answer or even shortcuts to success. Even when companies like IBM figured out customers wanted business outcomes and not just computers, or John Deere figured out their value was about making farmers successful via greater crop yields or when Rolls Royce and GE jet engines figured out that the value of jet engines was only when they produced thrust to move planes, it still took years to change the people (culture) process and technology to make it viable financially to change what they did and how they did it. It is made even more difficult when investors and Wall Street strive to maximize quarterly profit goals and not long term returns. It requires new vision and different leadership to ask why CAN’T pigs be made to fly? You may never turn pigs into drones but asking the questions about why not, and what would be the value of doing so, might create a new innovation like having Amazon deliver a package to your door step via personal airborne deliveries.
On the opposite side, companies like Kodak, never asked why people wanted photos. Very simply, people took and developed photos to save and share memories. Kodak believed that they were in the imaging business and not the memory sharing business. If they had asked the different question about how to save and share memories better, faster and cheaper they might have leveraged their invention of digital cameras more and realized the power of social media instead of film media and still be dominate today. Cut into highly profitable film production? Only when pigs fly! That slogan must be etched on the walls of their many empty buildings of the now defunct business. The short sighted financial community helped push them right off the cliff and that did not fly well either.
So what’s the answer? Here is what my firm has seen in case after case. First, a number of the older companies that have successfully made the changes to a customer driven business innovation strategy vs. producing hard goods did so under financial duress. The incentive to create the ‘flying pig’ came only as result of near business death experiences. Only then did those companies start to ask different questions about what their real value might be moving forward even if it was contrary to traditional financial wisdom from investors. Call it innovation or survival, it did not come naturally. Based on our research, the real key was that the firms that survived did so because they had a great relationship with their customer base giving them unique market place knowledge about what could make their customers more successful. Once they understood their value from a customer perspective they figured out what unique resources or capabilities they had that would create new value for those customers and then they changed everything. They were willing and able to cut through old paradigms and organizational obstacles because if they did not change, they would be out of business. Using the unique customer lens helped to cut through the old ways of thinking.
We know how to make pigs fly, it is easy, just put them on an airplane. We also know how to make what is hard much easier like creating business innovation and driving the transformations required to maximize the value of that innovation. If GM had payed attention to us in 2009 it would not have taken them 6 years to announce Maven.
That is my observation, what is yours?