Developing new services

Loading...

Flash Player 9 (or above) is needed to view presentations.
We have detected that you do not have it on your computer. To install it, go here.

5 comments

Comments 1 - 5 of 5 previous next Post a comment

  • + whatidiscover whatidiscover 10 months ago
    Glad the slides are of use to you, Inquirer. I am not from Peer Insight. I am a collector and sharer of slides of wisdom and beauty.
  • + inquirer inquirer 10 months ago
    I found this slide very useful to me. I am a marketing student and Im really having a hard time understanding about ’New Service Development’, but this slide made me comprehend the basic and most important points. Thanks Peer Insight!
  • + whatidiscover whatidiscover 2 years ago
    Glad that it helps to prove the point, Gal. Credit should go to Jeneanne Rae and Tim Ogilvie. What do you mean when you say 'can i go through it localy.'
  • + Galbi Galbi 2 years ago
    Hi,
    very intresting, its helps prove the point regarding new services. can i go through it localy.
    i do services business development - so it might be usefull.
    thanks,
    Gal
  • + zaidiutm dr zaidi 2 years ago
    Great presentation!
    Can I hv your slide? Tq
    zaidiutm[at]gmail.com
Post a comment
Embed Video
Edit your comment Cancel

38 Favorites & 2 Groups

Developing new services - Presentation Transcript

  1. PEER INSIGHT PEER INSIGHT Developing New Services: Are You Ready for the Challenge? Presented at SOCAL PDMA May 17, 2005 CONFIDENTIAL CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  2. PEER INSIGHT Thank you for joining us today The Peer Insight leadership team: Jeneanne M. Rae, Co-founder Tim Ogilvie, Co-founder & CEO (jrae@peerinsight.com) (tim@peerinsight.com) • 14 years experience in innovation, including seven • Four years as a Partner of Kaiser Associates on senior management team at IDEO • Founded and led the Price Waterhouse global • Spearheaded IDEO’s growth in service innovation benchmarking practice • Clients included Kodak, Ford, Intel, Pepsi • Provided consortia research services to over • Adjunct Professor of Marketing, Georgetown 60 of the Fortune 500 University McDonough School of Business • Founded a successful high-tech industrial • MBA, Harvard Business School services company • BS, University of Virginia • Masters in CIMS, Georgia Tech • BA, University of Virginia (703) 788-6577 (703) 788-6577 page i CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  3. PEER INSIGHT Products are cool Products are cool … right? • When we say “innovation,” we immediately think of products • The best business schools teach “new product development” and “service management” • Google shows a 99 ½ -to-1 dominance of products over services • “new product development” returns 427,000 hits • “new service development” returns 4,290 hits page 1 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  4. PEER INSIGHT Is GM a product company or a service company? GM page 2 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  5. PEER INSIGHT GM’s profitability and growth are driven by services Revenue $18,992 per Car GM Product $37.44 Profit Service $106.56 Profit Here’s where Here’s where the profit is: the growth is: 2003 Revenues: $29.7B 2003 Subscribers: 2.5 million Pct. of Total GM Revenues: 16% Annual revs/subscriber: $300 2003 Profits (Margin): $3.8B (13%) 2003 Revenues: $750M Pct. of Total GM Profits: 74% Growth rate: 33% CAGR page 3 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  6. PEER INSIGHT Services dominate the spending in many “product” categories page 4 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  7. PEER INSIGHT Customers don’t want products or services . . . “People don’t want a quarter-inch drill. They hire a quarter-inch drill because they want a quarter-inch hole.” – Theodore Levitt Harvard Business School . . . they want outcomes. page 5 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  8. PEER INSIGHT Furthermore, there are no pure goods or pure services Customers want outcomes, or “solutions” … and compelling solutions mix tangible and intangible elements1 Tangible- Intangible- (services) (goods) dominant dominant solutions solutions • Defined by their physical form • Fewer tangible components • Enables comparisons before purchase • Difficult to judge quality before purchase • Produced first, consumed later • Simultaneous production and consumption • Ownership changes from seller to buyer • Inability to inventory • Time-dependent • No transfer of ownership Note 1: Lynn Shostack, “Breaking Free From Product Marketing,” Journal of Marketing, 44 (April 1977). page 6 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  9. PEER INSIGHT Example: Personal transportation solutions services Intangible- Tangible- Automobile Automobile Taxi OnStar Auto Auto dominant Rental Car dominant (purchase) (lease) service Service Financing Insurance solutions solutions We know how But what tools and methods innovation works guide innovation here? for goods. page 7 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  10. PEER INSIGHT Many NPD tools are simply a poor fit for services Service innovation is amorphous. The science is just emerging, especially as compared to a mature discipline such as new product development. GM New Product Development vs. Service Innovation Product platform design IT platform design User interaction design Customer experience design Product prototyping Service prototyping Pricing models Business model development Production planning Service delivery robust tools and methods exist, these tools are just such as QFD and conjoint analysis beginning to be understood page 8 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  11. PEER INSIGHT Peer Insight has gathered input from 180+ service innovators at 44 Fortune 500 companies Members-only 7 Members of the Global Service Innovation Consortium Open forum: • Accenture • The Hartford • NCR • RR Donnelley • AOL • Hewlett-Packard • Nextel • Sprint 37 companies • Bank of America • Home Depot • Otis Elevator • T-Mobile • British Telecom • IBM Global Services • Otto Bock Healthcare • Time Warner Cable participating in • Citigroup • Kodak • Pfizer • Trammell Crow 1-day forums or • Comcast • Lloyd’s TSB • Pitney Bowes • UPS research • FedEx • MasterCard • Pratt & Whitney • Xerox • First Data • Medtronic • PriceWaterhouse Coopers interviews • GE Medical Systems • Microsoft • Progressive • General Mills • Morgan Stanley • Reuters page 9 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  12. PEER INSIGHT Some insights we will share tonight Nobody wants products (they want outcomes) Services are different from products Most companies are optimizing for the wrong thing New offerings (products and services) are only 1/10th of innovation page 10 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  13. PEER INSIGHT To innovate successfully, we need to grasp precisely how services are different Innovating services means addressing the “IHIP” challenge1 IHIP: The 4 unique characteristics of services For these reasons: 1. Intangibility: Services have no physical form. They cannot be seen before purchase or taken home after. “Developing marketing 2. Heterogeneity: Unlike tangible products, no two strategies based on service delivery experiences are alike. knowledge accumulated 3. Inseparability: The act of supplying a service is from goods marketing (is) inseparable from the customer’s act of consuming it. often insufficient and even inappropriate.”2 4. Perishability: Services cannot be inventoried. Note 1: Earl Sasser, et al, “Management of Service Operations,” Allyn & Bacon (1978). Note 2: Christopher Lovelock, “Whither Services Marketing?” Journal of Service Research, Volume 7, No. 1, August 2004. page 11 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  14. PEER INSIGHT For the Acela, all 10 points on the customer journey had to be mapped and designed … not just #8, Riding Case Example: Too much focus here ignores the totality of the Amtrak Acela customer experience Customer Journey 1 2 3 4 5 6 7 8 9 10 Riding Learning Planning Starting Entering Ticketing Waiting Boarding Arriving Continuing For example: There was no car rental facility at the Rt. 128 terminus, so Acela had to delay opening until it could be established. page 12 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  15. PEER INSIGHT page 13 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  16. PEER INSIGHT Amtrak Acela train galley page 14 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  17. PEER INSIGHT page 15 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  18. PEER INSIGHT Acela highlights the challenges for service innovators Key Differences Between Services and Products Implication for Service Innovators 1. Intangibility: Services have no physical form. They • Brand promise cannot be seen before purchase or taken home after. • Customer experience • Tangibles 2. Heterogeneity: Unlike tangible products, no two • Training of delivery personnel service delivery experiences are alike. • IT systems as platforms • Multiple touch points 3. Inseparability: The act of supplying a service is • Service prototyping inseparable from the customer’s act of consuming it. • Peak vs. off-peak 4. Perishability: Services cannot be inventoried. • 24/7 requirements • Internet page 16 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  19. PEER INSIGHT Some insights we will share tonight Nobody wants products (they want outcomes) Services are different from products (IHIP) Most companies are optimizing for the wrong thing New offerings (products and services) are only 1/10th of innovation page 17 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  20. PEER INSIGHT Quiz: What does Blockbuster appear to be optimizing for? Media Rental Customer Journey Exceptions Learning Planning Browsing Choosing Receiving Viewing Returning Paying (late fees) Positive B B Media Neutral Rental B Company B Negative B Neutral Customer B B B B Responsibility B Blockbuster page 18 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  21. PEER INSIGHT Answer: NetFlix found some cX gaps … and filled them Media Rental Customer Journey Exceptions Learning Planning Browsing Choosing Receiving Viewing Returning Paying (late fees) Positive N N N N B N N B Media Neutral N Rental N B Company B Negative B N Neutral Customer B B B B Responsibility B Blockbuster N page 19 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  22. PEER INSIGHT “Wow!” comes from choosing empathy over optimization NetFlix no late fees policy L. L. Bean lifetime guarantee These features are not optimal from an operations Starbucks stay-all-day lounge area perspective, yet they make a crucial contribution to the Westin Hotel white bed cover customer experience and, Amazon user recommendations (aka, therefore, the service brand. collaborative filtering) The key is to discover those few areas that strike an emotional chord within your target customers. page 20 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  23. PEER INSIGHT Some insights we will share tonight Nobody wants products (they want outcomes) Services are different from products (IHIP) Most companies are optimizing for the wrong thing New offerings (products and services) are only 1/10th of innovation page 21 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  24. PEER INSIGHT A broad set of innovation levers exist There are 10 types1: Process. Offering Delivery Finance Ten Types of Innovation1 Business Networking Enabling Core Product/Service Service Customer Channel Brand Customer model process process performance system Service experience how the enterprise basic features, makes money performance, and functionality how you connect enterprise structure your offerings to and value chain your customers extended system that surrounds an offering assembled capabilities how you express your offering’s proprietary processes how you service benefit to customers that add value your customers how you create an overall experience for customers Note 1: “Ten types of Innovation”, by Larry Keeley/Doblin Inc. (1999) page 22 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  25. PEER INSIGHT Consider how the rental car industry engages in “feature warfare” Most competitive activity in the rental car industry is focused here (turn the page) (feature warfare) Non-stop activity rapid pick-up, rapid return Frequent activity availability, cell phones, models Never-Lost Moderate activity web-based fleet travel agent optimization Some activity vouchers modeling travel business airport agents travelers shuttle bus Minimal / none Business Networking Enabling Core Product/Service Service Customer Channel Brand Customer model process process performance system Service experience Ten Types of Innovation Finance Process. Offering Delivery page 23 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  26. PEER INSIGHT Enterprise exploited the white space and became #1 Enterprise Rent-a-Car • Largest car rental company ($6.9B vs. $4.9 for Hertz, $2.5B for Avis) • Targets the occasional renter • Uses the insurance company channel • Brings the car to the renter; avoids cost structure of airport real estate Non-stop activity rapid pick-up, occasional brings car rapid return insurers renters to you Frequent activity charge availability, cell phones, insurers models Never-Lost Moderate activity web-based fleet travel agent optimization Some activity vouchers modeling travel business airport agents travelers shuttle bus Minimal / none Business Networking Enabling Core Product/Service Service Customer Channel Brand Customer model process process performance system Service experience Ten Types of Innovation Finance Process. Offering Delivery Source: Peer Insight analysis page 24 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  27. PEER INSIGHT Some insights we will share tonight Nobody wants products (they want outcomes) Services are different from products (IHIP) Most companies are optimizing for the wrong thing New offerings (products and services) are only 1/10th of innovation page 25 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  28. PEER INSIGHT Summary: Four tools we have touched upon • Expenditure analysis (automobiles, PCs) • Customer experience mapping (Acela) • Value gap analysis (Netflix vs. Blockbuster) • 10 types of innovation (Enterprise Rent-a-car) page 26 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  29. PEER INSIGHT A bonus tool (if we have time) • Expenditure analysis (automobiles, PCs) • Customer experience mapping (Acela) • Value gap analysis (Netflix vs. Blockbuster) • 10 types of innovation (Enterprise Rent-a-car) • Emotional value propositions; role of the cX vision (Starbucks and Progressive) page 27 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  30. PEER INSIGHT Most businesses eventually face the forces of commoditization CUSTOMER VALUE = FUNCTIONAL – FINANCIAL BENEFITS COSTS More features 6-sigma cost reductions Basis of Competition Faster, smarter Discounting, rebates and coupons Sustaining innovations Big channel incentives Feature Warfare! Price Competition! Typical Business Result COMMODITIZATION! page 28 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  31. PEER INSIGHT Emotional value propositions can change the equation CUSTOMER VALUE = FUNCTIONAL – FINANCIAL BENEFITS COSTS + EMOTIONAL – NON-FINANCIAL BENEFITS BURDEN Typical Business Result “Wow, I gotta have that!” (price insensitivity) page 29 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  32. PEER INSIGHT Product vision vs. cX vision What a product vision What a cX vision would sound like Value meter would sound like Value meter functional functional “Give a harried customer “Sell the best damn the 20 minutes each day emotional emotional coffee in the world” she will look forward to most.” “Give the customer the functional functional “Sell insurance exact protection he needs matched precisely to a from the risks of driving, emotional emotional customer’s risk profile” and be there for him when he needs us most.” page 30 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  33. PEER INSIGHT Crucial role of an explicit cX vision What a product vision What a cX vision would sound like Value meter would sound like Value meter • Identifies a specific person • Speaks to a need in her life • Evokes emotion functional functional “Give a harried customer • Inspires your internal teams “Sell the best damn the 20 minutes each day • Leaves room for world” coffee in the compromise emotional emotional she will look forward to on functionality most.” • Leaves the “how” vague • Unlocks brand equity “Give the customer the functional functional “Sell insurance exact protection he needs matched precisely to a from the risks of driving, emotional emotional customer’s risk profile” and be there for him when he needs us most.” • But it only works if your teams design and execute to this vision, and are measured and rewarded for it page 31 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  34. PEER INSIGHT Concluding thought: A fundamental shift has occurred … 1980s 1990s 2000s services US * economic output products * The tipping point was 1987 † The ratio in Q1 2005 is 82.5% services, 17.5% products page 32 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  35. PEER INSIGHT … and new tools are emerging to adapt to this shift 1980s 1990s 2000s † s service US * economic focus of 16 output months of products Peer Insight research nce perie er ex m custo ng eeri transformative ngin ree business disciplines ty quali page 33 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  36. PEER INSIGHT What are some of the implications of this shift? • Resources are realigned from verticals to horizontals • Processes shift to co-opt customer competence • Design comes to the fore • Emphasis on discovering latent needs • Innovation becomes more open, collaborative • IT platforms emerge to enable customized, repeatable outcomes page 34 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  37. PEER INSIGHT Q&A 1. Did we make our case? 2. What do you see as the key obstacles to designing and executing compelling cX? page 35 CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  38. PEER INSIGHT Thank you! CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved
  39. PEER INSIGHT To further discuss how Peer Insight can help your company create sustainable competitive advantage through services strategy, service innovation, and service design, please contact us: PEER INSIGHT LLC PEER INSIGHT LLC Jeneanne M. Rae Tim Ogilvie Co-founder & EVP Co-founder & CEO Peer Insight LLC (703) 788-6577 office Peer Insight LLC (703) 788-6577 office 1314 King Street (703) 535-8176 fax 1314 King Street (703) 535-8176 fax Alexandria, VA 22314 jrae@peerinsight.com Alexandria, VA 22314 tim@peerinsight.com CONFIDENTIAL Copyright 2005 Peer Insight LLC All rights reserved

+ whatidiscoverwhatidiscover, 3 years ago

custom

11292 views, 38 favs, 4 embeds more stats

Developing new services
Jeneanne Rae and Tim Ogilv more

More info about this document

© All Rights Reserved

Go to text version

  • Total Views 11292
    • 11285 on SlideShare
    • 7 from embeds
  • Comments 5
  • Favorites 38
  • Downloads 295
Most viewed embeds
  • 4 views on http://www.choosenick.com
  • 1 views on http://jisi.dreamblog.jp
  • 1 views on http://s3.amazonaws.com
  • 1 views on http://blog.choosenick.com

more

All embeds
  • 4 views on http://www.choosenick.com
  • 1 views on http://jisi.dreamblog.jp
  • 1 views on http://s3.amazonaws.com
  • 1 views on http://blog.choosenick.com

less

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate. If needed, use the feedback form to let us know more details.

Cancel
File a copyright complaint
Having problems? Go to our helpdesk?

Categories

Groups / Events