Product Generator (3 of 3)

In the earlier posts we covered what a product/service/business model innovation might look like and how to generate ideas. Here we summarise general guidelines we can leverage when contemplating product and service options:

• Does it provide a recognisable and desired transformation?

• Does it offer exceptional client value?

• Is it easy and convenient to find, evaluate, acquire, migrate to, use, integrate, upgrade?

• Does it generate an emotional response in the client?

• Is it a blue ocean play that will encounter minimum competition and still attract a premium price?

• Can it be sustainably and profitably offered at scale?

• Have we used all options to reduce capital dependency, to minimise physical components, increase intelligence/utility and to streamline production, duplication, delivery and servicing?

• Is it a win for the customer, us, suppliers and society at large?

• Have we contemplated constraints and risks and ameliorated these as much as possible?

• Have we created unique benefits which will be difficult to replicate?

• Is there a “unique selling proposition” / “purple cow” - i.e. will it stand out as something different and worth consideration?

• Have we formulated metrics to track performance and improve benefits through the lifecycle?

Getting there may not be a linear path. We may have to ideate, evaluate, prototype, iterate, pivot, etc. until we get it right.

Summary: Provide more value to customers, more conveniently, quickly, cheaply, sustainably and repeatedly (while ensuring we can sustain delivery, margin and ameliorate risks). The associated canvas may help to consider all the dimensions.

#Product #Service #Strategy #Innovation #BusinessArchitecture #EnterpriseArchitecture #Canvas

Product Generator (2 of 3)

So how do we find great product and service ideas? By thinking in the box, at the boundaries, out of the box and beyond!

Explore the idea of the “adjacent possible”, looking for opportunities enabled by emerging technologies, services, social and other changes, that are now just possible and satisfy an existing need in a new way. Examples were the miniaturisation of disk drives facilitating the idea of mobile digital music players and of pervasive internet and mobile technology facilitating music streaming. Also Software as a Service (SaaS) offerings exploiting the availability of networks, cloud platforms and subscription models. Machine Learning is opening up opportunities in medical analysis. Speech assistants are enabling new kinds of interfaces to electronic products.

Seek “blue ocean” opportunities. Instead of competing fiercely in saturated, highly competitive spaces (the “red ocean”), we look for opportunities which satisfy a need in a new and novel way, where there is currently no or very little competition. An example would be early products delivering voice telephony over digital channels (voice over IP or VOIP). Tesla has famously exploited this kind of approach in bringing fully electric cars to consumers.

Exploit digital. Make products “softer”, replacing expensive hardware with software or data: replacing atoms with bits. Make copies electronically rather than through manufacturing. Hold inventory as patterns of bits which can be duplicated and distributed with almost zero cost. Automate processes, so they can scale without extra staff or effort.

Consider the portfolio view of products and services and where they are in their lifecycle and adoption. Ensure balance across the stages.

Try to launch and get feedback as quickly as possible. Build prototypes and get rapid feedback. Explore Design Thinking to really understand the customer requirements. Build a Minimum Viable Product (MVP) and get customer feedback. Pivot where necessary.

Look for platform plays or intermediary roles. Own the customer and transaction and make a margin, without needing to own the assets or physically deliver the service. Most of the exponential businesses that have exploded in the last decade exploited these ideas. Consider Facebook which facilitates messaging, but produces no content; Youtube which is a major entertainment provider, but owns and creates no content. Amazon is a platform and an aggregator, selling millions of products from thousands of suppliers.

Consider innovative business models that satisfy the same need in a different and better way. A customer may really want personal mobility, not necessarily a car, or ambient music delivered on demand, rather than a sound system. Here it is often useful to “abstract up” asking the questions: What does this achieve for the customer? Why does the customer buy this product/service?

#Strategy #Product #EnterpriseArchitecture #BusinessArchitecture #Innovation

Product Generator (1 of 3)

What does a great product look like in 2022? Actually, it’s not a product, but a service or a platform or a model! Or maybe even a feeling...

Whaaat? Yep.

The truth is that people don’t buy products. They buy some transformation that they want. I want my feet to stop hurting, I buy shoes. I want my children to have a better life, I buy an education annuity. I want to satisfy my craving, I buy chocolate. I want to impress my partner, I buy a great outfit.

Transformations are as easily satisfied by a service, platform, model, algorithm or design as by an actual product. My desire might be to enjoy a particular genre of music. This could be satisfied by (a) buying a CD (b) buying a track on iTunes (c) streaming audio from Spotify. If I need holiday accommodation, I can use a hotel, Booking.com or AirBnB. Interestingly, iTunes, Spotify, Booking.com and AirBnB are all platforms. They do not own the assets or services on sale, but they facilitate the client’s access to them while also acting as channels for the sellers. In the case of iTunes and Spotify, notice too that the product has also become digital - morphing from physical media to digital streams. These models allow taking advantage of the “long tail” phenomenon whereby the cost of inventory and distribution becomes near zero and the platform can offer essentially infinite variety and choice.

Client experience and emotion also play a large role. When you buy a property (a major financial, long term commitment), you will probably make a very logical checklist of requirements before going to view any properties. But you will buy one which doesn’t meet the requirements, because it “felt right” or “smelt right” or “had great light”. We will then go back to the list and adjust and reprioritise until it fits our choice… Brands like Apple and Nike know this all too well. They invest huge effort in building the lifestyle image, client experience and emotional highs their clients will experience from using their products and services.

New value today is potentially delivered “out of thin air” - think of a virtual product such as Bitcoin, which is essentially an algorithm for calculating a number. Yet it has become a major asset class with serious investment houses putting 5% of their assets into it and similar offerings in 2022. Other examples are an algorithm that improves fuel consumption in transportation, or a model for how to organise components on a semiconductor die.

Modern consumers are also used to instant gratification, based on experience of mobile technology, apps and streaming. We need to ensure that our product/service is very easy to find, evaluate, try out, purchase and use. This should be as friction- and noiseless as possible.

In the second part of this post, we will explore how to come up with and evaluate product/service ideas.

#Product #Innovation #Strategy #BusinessArchitecture #Service

A Contrary View on Capability

Capabilities are fashionable. Everyone is modelling them, but not always well… And just what is a capability?

Popular business and EA methods use it more or less interchangeably with a “Business Function”, i.e. something we do. I differ.

Capabilities are often listed below a value chain/network to support the delivery of the value adding steps. This is all well and good. Often stated in simple phrases such as “Attract Talent”, “Create Desirable Products”. In this form they are equal to business functions. Less usefully, they will sometimes be stated as nouns, e.g. “Human Resources” or “Accounting”. These are vague at best and equate more to organisational units or departments.

Other methods include goal, process and service modelling. How do we make sense of all these? Are they competing or complementary?

One technique useful for all of them is decomposition - breaking down higher level goals / concepts / requirements to more detail or more concrete ones.

We can decompose Mission into Goals and Objectives; Mission into Functions; Processes into sub-processes and activities; Services into service components, etc. Can they be integrated? Fortunately, yes! Mission, Goals and Objectives are about what we want to achieve, independent of what needs to be done or how. They can provide a starting point for our decomposition. One mission breaks down into goals (broad directions) which break down into objectives (specific, measurable, achievable, realistic, time bounded). Mission (or objectives) can also be decomposed into functions: what must we do to achieve the goals? Functions should have a verb (doing something), an object (to what?) and qualifying clauses (how, with what constraints).

Functions can be sequenced on dependencies to form end to end business processes. Functions and processes can be packaged as services, with providers (who does it?), consumers (who uses it?), inputs (what is necessary to do it?), outputs (what is expected as a result?) and service levels. We need a catalogue of available services, and a designated way to invoke them.

Ah, but what of capabilities? Well, functions, processes, services can all deliver capabilities. A capability implies the ability to do something (function) for someone/thing (consumer) producing a desired result (service/product) at a particular location, with a certain service level (e.g. volume, efficiency, accuracy, etc. ) and potentially other requirements (e.g. in a particular language). To deliver a capability will typically require resources, such as skill, information, application support, infrastructure and physical presence.

There is nothing wrong with defining business functions (proto-capabilities) at a high level below the value chain. We should ensure, however, that they are expanded into full capabilities during later design to deliver all the dimensions required.

#Capability #EnterpriseModelling #BusinessModelling #EnterpriseArchitecture