DISRUPTION
Create your customers’
future.
What does your customers’
future look like? Think about meeting their needs in a more fundamental way, so
that they continually want more contact with your company and its offerings.
Your mission, as Steve Jobs told his biographer Walter Isaacson, “is to figure
out what they’re going to want before they do.” This will require imagination
and insight; they won’t be able to articulate it if you ask them. Creating your
customers’ future may require an obsessive focus on them. Make their problems
go away. Remove the friction in their lives. Make things easier and less
complex, while reducing the price they have to pay.
Customers
respond more powerfully to cost reduction than to other types of increases in
value. When you set your prices low, you attract customers, scale up your new
business model, and force changes that make it more difficult for rivals to
compete.
Sometimes, as with Amazon
and Uber, it involves pricing at a loss for the sake of long-term scalability
and market share.
A notable example is IKEA,
which builds a 1.5 to 2 percent product price reduction into its budget
planning every year, as a forcing function. This requires its planners to
figure out how to reduce costs significantly, and it has created the kind of
customer loyalty that no disruptor can dislodge.
the Aravind Eye Hospital
in India is one of the most effective cataract treatment centers in the world.
It treats professional expertise as a specialized asset. Each surgeon treats 10
times as many cataract patients per day, on average, as a similar surgeon would
in the United States. The hospital, whose processes were modeled after those of
McDonald’s, uses every means possible to focus a skilled surgeon’s time where
it matters most: on the cataract operation. Everything else, including
administrative work and referrals of complex cases, is handled by someone else.
Overlooked assets don’t
have to be physical. They can include proprietary information, continually
gathered data, or specialized expertise.
Just as it’s vital to know
what your company is best at, it’s critical to know where you can rely on
others’ technology and solutions.
But if you carve out a
distinctive identity and role within other companies’ ecosystems, you can still
draw value to you. You can be like Corning, manufacturing the Gorilla Glass
used in the iPhone, along with many other kinds of specialty glass used for
automobiles and other smartphones;
Apple, famously, is in
music and video streaming, information technology hardware and software,
Internet services, telephony, time pieces, digital photography, and retail. It
is number one in most of those businesses. It doesn’t matter anymore what
sector you think it is in; Apple is number one at being Apple. It has consolidated
its market around one distinct identity.
Instead of quarantining
your digital efforts, embed them throughout your organization.
Tailor them to make use of your existing strengths. Ensure that
both the prototype and the main enterprise continually interact, learning from
each other.
GE has instilled this type of approach in all its new ventures.
When it designs a prototype of seaport infrastructure embedded with sensors and
analytics, for example, it conducts exercises that simulate activities at existing
seaports. Truckers pick up shipments, trains stop to unload and load cargo, and
employees move goods around the yard or into containers. Even regulators are
simulated, querying the reports. Because of this, when it’s time to bring that
complex new technology to scale, the company is ready.
Apple defined itself as
the creator of a digital hub in 1999, and everything the company introduced
after that, from the iTunes online store to the iPhone and iPad, followed from
that identity.
Amazon defined itself as a
store that connected with customers online, with a new and innovative interface
that allowed people to exchange views about the value of its products.
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