I recently read an excellent blog by Arindam Bhattacharya a Senior Partner and Director at the Boston Consulting Group titled “How Digital is Redefining the Meaning of Products.” In his blog, Mr. Bhattacharya presents an interesting hypothesis that a “Product” in 2017 and beyond is no longer
something companies manufacture and sell, but rather part of a system of interconnected goods and services. He writes that today, what once was a simple air conditioner that you would use in a home to keep it cool is now an integrated system of hardware and software that monitors rooms, optimizes energy, and provides unpresented data analytics that can be used for marketing and other purposes. This “service” prompts the question an interesting question; what is the company that makes the air conditioner really selling? A piece of equipment or a temperature controlling service?
Around the same time I was reading this blog, I was also designing a new Business Acumen training program in the area of Marketing called creating a Market-Driven Organization. A Market-Driven Organization is a company that has a strong capability to understand the dynamics of a market, the size of the market, the customer needs of that market, and then build the products and services the market wants at value-pricing to generate strong revenues and profitability.
I was astounded by the interesting juxtapositions of Mr. Bhattacharya’s blog and my client assignment. I suddenly realized that based on these new insights, I had to re-work all of the Business Acumen content because I – like most others – was missing the fact that what we once thought of as “just products” are really part of a more sophisticated digital ecosystem. It took me several days to re-work the content. My big “aha” is that most business professionals don’t understand this new digital phenomenon and because of this lack of Business Acumen skills could be missing the great disruption of their industry.
In an effort to share some of my new work, I present three new Business Acumen skills that all Business Professionals need so they can recognize the impacts of how the digital age is creating services from products:
1) Identify the complete Product Business Ecosystem
Organizations must have a long-term roadmap of their products and services. It’s no longer acceptable to just have a chart of your “value chain” which typically includes suppliers and customer segments. A product business ecosystem is a “systems dynamics” map of every entity in the entire cycle of creating, developing, building, and selling products (and services) to customers.
Example of the Search Industry Ecosystem
2) Determine the adjacent services of all products in the ecosystem
Once you’ve mapped the complete business ecosystem, the next step is determining the adjacent services in that market. For example, my car now sends me a monthly “health report” on the status of my vehicle including tire wear, fluids (oil, washer fluid, etc.), and brake pads. Soon after, I get emails from local service providers who seem to “know” if my car needs something like a wash or the tires rotated. Determining the service connectors is hard and takes a lot of time and skills. For example, the TAM (Total Available Market), SAM (Serviceable Available Market), SOM (Serviceable Obtainable Market) of each market is something that is critical to know.
3) Track who owns the data and what mining can be accomplished
If we are moving away from a pure “products play”, then the owner of the business ecosystem data controls the future. The third and most important step is tacking and identifying who owns the data. Does the manufacturer of my car own all of that data, or do I? After all, I bought the car, right?
Having the Business Acumen skills to understand these changing paradigms will be important. Having the Business Acumen skills to know what to do with the data and how to present a new digital value propositions will mean the difference between survival and becoming disrupted.
