Andy Neely, Director Cambridge Serivce Alliance in conversation with Yassi Moghaddam, Executive Director, ISSIP, Innovating Your Business Model for Service Success
Andy Neely, Director Cambridge Serivce Alliance in conversation with Yassi Moghaddam, Executive Director, ISSIP, Innovating Your Business Model for Service Success
Service Dominant Logic. Changing Perspective, Revising the Toolbox - Nicola M...
Semelhante a Andy Neely, Director Cambridge Serivce Alliance in conversation with Yassi Moghaddam, Executive Director, ISSIP, Innovating Your Business Model for Service Success
Semelhante a Andy Neely, Director Cambridge Serivce Alliance in conversation with Yassi Moghaddam, Executive Director, ISSIP, Innovating Your Business Model for Service Success (20)
Andy Neely, Director Cambridge Serivce Alliance in conversation with Yassi Moghaddam, Executive Director, ISSIP, Innovating Your Business Model for Service Success
1. Innovating Your Business
Model for Service Success
Professor Andy Neely
Director, Cambridge Service Alliance
9th October 2014
2. Services offer significant economic opportunities
Major proportion of GDP and employment in western world…
• Service sector accounts for over 70% of EU’s economic activity
• Nearly 70% of EU’s workforce are employed in service sectors
China and India are also assessing their role in the service economy
3. What about services in manufacturing?
The shift to service based competitive strategies is not new:
q Andersen and Narus – Capturing the Value of Supplementary Services, Harvard
Business Review, 1995.
q Wise and Baumgartner – Go Downstream: The New Imperative in Manufacturing,
Harvard Business Review, 1999.
But we may be at a technologically enabled tipping point…
§ Servitization/Servicization…
§ Product-Service Systems…
§ Service Science…
§ Remote Product Servicing…
§ Intelligent Vehicle Health Management…
4. Service business model innovation
John Deere iGuide system
Uses GPS technology to
automatically shift the steering
pattern of the tractor to
compensate for implement drift
Customers design and
complete market research
Exploiting the internet to
enable crowd sourcing
5. And the opportunities for service continue
Yesterday’s Technology…
Thomas Crapper (1836-1910)
Sanitary Pioneer
Footnote for Sir John Harington who is credited with inventing the first flush toilet in 1596!
6. Today’s toilet technology
The intelligent toilet…
Neorest toilets…
• Lid opens automatically as you walk up…
• The seat’s heated…
• There’s a catalytic air purifier to remove any “unwanted odours”…
• With a manual power override for those particularly unpleasant visits…
• There’s a warm-water massage spray and a hot air dryer…
• The temperature and intensity of both are controlled using a LCD panel…
• Once you’ve finished and left the “sensor zone” the toilet automatically closes the lid
and starts a three stage “Cyclone” flush…
• The strength of which depends on how long you’ve been busy on the toilet and
previous patterns of usage.
7. What about tomorrow’s toilet technology?
Put simply…
The servitization
of manufacturing
= adding
services to
products…
9. Why is manufacturing servitizing?
Economic
rationale
Strategic
rationale
Environmental
rationale
1. Manufacturing firms in developed economies cannot
compete on the basis of cost (technological
developments are enabling them to add innovative
services)…
2. The installed base argument (e.g. for every new car
sold there are already 13 in operation, 15 to 1 for civil
aircraft and 22 to 1 for trains)…
3. Stability of revenues – services vs. products…
1. Lock in customers (sell the original equipment at cost,
make money on spares & suppliers - razor, printers)…
2. Lock out competitors…
3. Increase the level of differentiation (e.g. equipment
provider offers to take customer’s risk and give
predictable maintenance costs)…
4. Customers demand it (e.g. contracting for capability)…
5. Service as a pre-sale activity…
10. Service as Outstand ain pg rsee-rsvailcee ascattiivsiftayc tion pays off
Based on 130 000 service customer replies World Wide in CfL (Customer for Life)
80%
70%
60%
50%
40%
30%
20%
10%
0%
Very Poor Poor Good Very Good Outstanding
Service satisfaction
Definitely Repurchase Volvo
Car - Outstanding
Car - Very Good
Car - Good
Car - Poor
Car - Very Poor
(Data from Volvo Cars, 2013)
11. Why is manufacturing servitizing?
Economic
rationale
Strategic
rationale
Environmental
rationale
1. Manufacturing firms in developed economies cannot
compete on the basis of cost (technological
developments are enabling them to add innovative
services)…
2. The installed base argument (e.g. for every new car
sold there are already 13 in operation, 15 to 1 for civil
aircraft and 22 to 1 for trains)…
3. Stability of revenues – services vs. products…
1. Lock in customers (sell the original equipment at cost,
make money on spares & suppliers - razor, printers)…
2. Lock out competitors…
3. Increase the level of differentiation (e.g. equipment
provider offers to take customer’s risk and give
predictable maintenance costs)…
4. Customers demand it (e.g. contracting for capability)…
5. Service as a pre-sale activity…
1. Environmental rationale (change notions of ownership
and resource use – e.g. Mobility cars)…
12. The overarching trends
From a world of… To a world including…
Products
Outputs
Transactions
Suppliers
Elements
Solutions
Outcomes
Relationships
Network partners
Ecosystems
The shift to
services requires
business model
innovation
13. Creating value through service and support
Outcome
focused
Advisory
focused
Aftermarket
focused
Product
focused
Product & parts Solution
At point of sale Through life
When is value realised?
Where does the value lie?
14. Creating value through service and support
www.caterpillar.com www.vestas.com
Product
focused
www.ibm.com
Product & parts Solution
At point of sale Through life
When is value realised?
Where does the value lie?
15. Understanding business model innovation
Diversity across ecosystems/
sectors
Comparable companies within
ecosystems/sectors
Rail ecosystem • 2 train solution providers
Defense ecosystem • 2 defense solution providers
Utility ecosystem • Water service provider
• Energy service provider
Local public ecosystem (councils*) • 2 support service providers
IT sector (multiple ecosystems**) • 2 IT solutions provider
Professional service (multiple ecosystems) • Supply chain consultancy
• Open innovation consultancy
Our study sought to understand how a diverse set of
organisations innovated their service business models.
16. ECOSYSTEM
STAKEHOLDERS/ SYSTEM OF CLIENT(S)
VALUE PROPOSITION
ACCOUNTABILITY SPREAD
VALUE DELIVERY
PARTNERS
What did we learn?
18. Theodore Levitt was wrong…
Customers don’t even want ¼ inch holes…
…service
providers have
to understand
the underlying
customer need
and provide a
solution
21. The nine capabilities that underlie business
model innovation
ECOSYSTEM
VALUE PROPOSITION
Demonstrate
value
Understand
client’s BM
Demonstrate
delivery skills
ACCOUNTABILITY SPREAD
Understand sources
of risk associated
with BMI
Collect data to
quantify risk
(data resources)
Price risk to client
and manage risk
with partners
Identify partners
and design
governance**
Design value
content and
structure*
Coordinate multi-party
value
delivery
VALUE DELIVERY
PERFORMANCE
(PROFITS &
GROWTH)
SUSTAINABILITY
* Value delivery content are the service activities provided; structure determines ‘who does what’
** Value delivery governance determines organizational arrangements (e.g. contracts among partners)
22. Adding an ecosystem perspective
VALUE PROPOSITION
Demonstrate
value
Understand
client’s BM
Demonstrate
delivery skills
ACCOUNTABILITY SPREAD
Understand sources
of risk associated
with BMI
Collect data to
quantify risk
(data resources)
Price risk to client
and manage risk
with partners
Identify partners
and design
governance
Design value
content and
structure
Coordinate multi-party
value
delivery
VALUE DELIVERY
ECOSYSTEM
Identifying all the
members in the
ecosystem
Understand
economics in the
ecosystem
Understand
dynamics in the
ecosystem
23. For more information…
Cambridge*Service*Alliance
From Processes to Promise:
How complex service providers use business model innovation to
deliver sustainable growth
Ivanka Visnjic
Business Models Research Lead, Cambridge Service Alliance
Assistant Professor, ESADE Business School
Andy Neely
Director, Cambridge Service Alliance
Founder members:
Professor Andy Neely
Director, Cambridge Service Alliance
University of Cambridge
17 Charles Babbage Road
Cambridge, CB3 0FS
adn1000@cam.ac.uk
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