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.

 

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.

Planned Opportunism

Planned Opportunism
HBR, May 2016, p54
By Vijay Govindarajan

Planned Opportunism, according to the article, accomplishes three “things for the enterprise: (1) It creates a circulatory system for new ideas; (2) it develops the capacity to prioritize, investigate, and act on those ideas; and (3) it builds an adaptive culture that embraces continual change.” This article has some good things to say but it is condensed from a book by Govindarajan so it is likely that the book is able to build a more cohesive case for planned opportunism achieving these three things.

What the article suggests is essentially a form of scenario planning: do a deep analysis of all the factors in the organization’s context that affect its operation; identify elusive weak signals that could have a major impact on the enterprise; develop hypotheses about the future; and test the hypotheses with relatively low cost experiments. Scenario planning is a very effective tool for making sense of the future and for providing direction to senior leaders to navigate the perils of the future.

It is not clear from the article that a modified scenario process will result in the three benefits claimed above for the enterprise. Again, this article is adapted from a book by Govindarajan so perhaps that information is in the book. The scenario planning process is worthwhile in and of itself for most organizations and the advice in the article cannot be faulted. Any good scenario planning practitioner can guide executives through the processes described in the article.