Putting Products Into Services

Putting Products Into Services: A revenue-growth playbook for consultants and law-firms

HBR September 2016, p82

By Mohanbir Sawhney

Any article that mentions re-engineering, as this one does, is a good one in my book. Sadly, re-engineering was only a fad and quickly died out so it is nice to find that the concept of taking a rational approach to the design of an organization is still alive in the world of management.

The idea behind re-engineering was to model current organizational processes, design a new one that worked better and implement it with the help of computers and software to mechanize the repetitive functions in the process and provide decision support to the people responsible for the work. Essentially, this is manufacturing engineering applied to knowledge work and this article does a good job of showing how this concept can be utilized by service firms. The author says this:

“I describe three key stages of the process: discovering potential products by identifying opportunities for automation; developing the products and enabling them to process, analyze, and learn from data; and monetizing them by building a revenue model that captures benefits from automation and the application of analytics.”

Automation algorithms are good at high-volume repetitive tasks. Sophisticated tasks require strategic decision making and do not automate well.

Implementing this within the organization requires a change to the organization design. People and processes must change. The article recommends creating a dedicated productization team, using a cross-functional approach, and using different metrics for the change.

 

Make the Other Side Play Fair

How to Make the Other Side Play Fair: The final-offer arbitration challenge gives negotiators a valuable new tool.

HBR September 2016, p76

By Max H. Bazerman and Daniel Kahneman

This lovely little article discusses a new trick to try and break the outrageous claims mentality that currently infests negotiations. Simply put, the challenge is for each side to put their best case forward and an arbitrator chooses one or the other. No mixing and matching by the arbitrator. The result is that since each side has only one shot, the shot has to be reasonable and backed up with rational arguments. This won’t work everywhere and there are limits on its effectiveness. The article delineates four conditions needed to use this technique:

  • “You have made a reasonable offer that has been countered with an unreasonable one.”
  • “You are confident of what a fair resolution would be.”
  • “Escalating the dispute into litigation would be costly.”
  • “Neither side can easily walk away.”

The article also points out that using this technique builds your reputation for fairness and that will stand you in good stead with future negotiations.

 

Building an Insights Engine

Building an Insights Engine: How Unilever got to know its customers.

HBR September, 2016, p64

By Frank Van Den Driest, Stan Sthanunathan, and Keith Weed

It isn’t a bad idea, really. Pull together a few people from your organization to figure out what customers really want and call it an Insights Engine instead of a market research group. Unilever apparently did this and is used as an example throughout the article. Their Consumer and Market Insights group seems to have done good things for them. But how did they do it? There is a large body of knowledge called Design Thinking that is dedicated to discovering what customers really want and how to meet those needs effectively. It covers what Unilever’s CMI group has done and more. If you like the story that the article tells and want to implement it, you might do well to begin with a look at design thinking.

As you read the CMI story you might also give some thought to the caliber of people needed to understand what data to gather, how to analyze the data, and how to derive insights from the analysis. This is not covered in the article.

The management culture that is required to support an insights engine, such as Unilever’s CMI, is only touched upon at the end of the article. It is crucial to the success of any such group as an insights engine, that it must have an internal culture that is different from the rest of the organization to be successful.

 

Know Your Customers

Know Your Customers’ “Jobs to Be Done”: Is innovation inherently a hit-or-miss endeavor? Not if you understand why customers make the choices they do.

HBR September 2016, p54

By Clayton M. Christensen, Taddy Hall, Karen Dillon, and David S. Duncan

Innovation is not happening at most companies, according to the authors, and they think they know why: People use products to perform jobs they want done. Sounds earth-shattering, doesn’t it? The authors seem to believe quite deeply in their premise since, as they say in their conclusion, if you do not adopt their approach “You are doomed to hit-or-miss innovation.” This is an excerpt from a forthcoming book and I do hope that there is more relevant and supportive information presented in the book.

The whole “jobs to be done” premise sounds very much like Design Thinking which comes from the Illinois Institute of Design as well as other places and has a significant body of knowledge that extends far beyond what is presented in the article. If you need to discover your customer’s jobs to be done then Design Thinking might be a productive place to start your search for ways to do that. If this type of inquiry is new to you then you may find this article worthwhile.