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Larry Keeley: Finding the future first – Frontiers of sophisticated service innovation


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Larry Keeley: Finding the future first – Frontiers of sophisticated service innovation

  1. 1. Finding the future first: Frontiers of Sophisticated Service Design SDN Global Conference, Madrid November 2017
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  3. 3. 3 Successful innovators innovate beyond products and integrate 5+ types... TEN TYPES OF INNOVATION Network Connections with others to create value Process Signature or superior methods for doing your work Product System Complementary products and services Channel How your offerings are delivered to customers and users Customer Engagement Distinctive interactions you foster Profit Model The way in which you make money Structure Alignment of your talent and assets Product Performance Distinguishing features and functionality Service Support and enhancements that surround your offerings Brand Representation of your offerings and business BOLDER CONCEPTS EASIER TO IMPLEMENT HARDER TO COPY
  4. 4. INNOVATE ON THE RIGHT THINGS… Innovation is rarely bold or effective. Yours needs to be both.
  5. 5. 5 !All the important stuff now cuts across companies and markets Platforms matter… PLATFORMS ARE THE NEW MINIMUM VIABLE SOLUTION
  6. 6. 6 Platforms amplify innovation ROI MOST POPULAR CONSUMER PLATFORMS
  7. 7. 7 Platforms amplify innovation ROI MOST POPULAR B2B PLATFORMS scm
  8. 8. 8 Ecosystems build new value webs EXAMPLES OF EXISTING ECOSYSTEMS scm
  9. 9. 9 Bringing CRM systems to the cloud SALESFORCE INNOVATION ASSESSMENT 7TYPES:
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  11. 11. 11 INNOVATION EFFECTIVENESS Business model-centric innovation Configure assets differently to capture value Platform-centric innovation Reinvent or recombine capabilities to create value Experience-centric innovation Engage customers differently to deliver value Balanced breakthroughs use five or more types of innovation—and all three colors
  12. 12. 12 Inventing a breakthrough business model to foster loyalty AMAZON PRIME INNOVATION ASSESSMENT Here’s what you get: More members join steadily 2011 2012 2013 2017 25 10 members (in millions) 7 4 25M Members 6TYPES:
  13. 13. 13 The surprising benefits of being in the “club”—how Prime pays off AMAZON PRIME INNOVATION ASSESSMENT And get $90 worth of services Members pay a $79 Membership fee which suggests an $11 loss per member 150%more purchases annually, including many items that they would not otherwise buy from amazon… 2.4xand spend more than non-members do —$1,224 yearly vs. $505 But since members buy… Amazon makes $78 per member, per year—so the entire membership fee proves to be almost ‘pure’ profit… This is a key reason why Amazon stock price is up 296% in two years! The actual ROI is surprising…On the surface it’s a loser… 6TYPES:
  14. 14. 14 Several platforms now amplify value in both dependent and independent ways… AMAZON’S INNOVATION PREMIUM
  15. 15. 15 Several platforms now amplify value in both dependent and independent ways… AMAZON’S INNOVATION PREMIUM
  16. 16. 16 Several platforms now amplify value in both dependent and independent ways… AMAZON’S INNOVATION PREMIUM RETURNS FOR SHAREHOLDERS: Over 15-years Amazon delivers over 8,000% returns! $1,000 invested in July 2002 = $83,000+ today ($61,000 in inflation adjusted 2002 dollars) That same $1,000 invested elsewhere… • In S&P 500 = $4,100 • In Walmart = $2,250 • In Sears = $1,022 This makes Amazon the single best investment of all time, one of the 30 stocks that have generated 30% of ALL wealth creation globally over the past 90-years! WEALTH CREATION FOR JEFF BEZOS (HE OWNS 16.7%): In July, 2017 he briefly became the richest person in the world His stake in Amazon is worth more than $80 billion His net worth is more than $90 billion This ties him with his neighbor, Bill Gates And yes, he too now plans to reinvent philanthropy
  17. 17. INNOVATE IN THE RIGHT WAYS… Innovation is always tough. It gets much easier when you replace myths with methods.
  18. 18. 18 Modern innovation is more about elegant integration than invention… 21st Century Innovation Principle Asset light Fast Smart Connected Distributed Decentralized Shared Porous Rated Open
  19. 19. 19 “Deep learning” to foster anticipatory computing—now opened to anyone INNOVATION ASSESSMENT: GOOGLE TENSORFLOW 5TYPES:
  20. 20. 20 Making sense of large data sets in natural ways INNOVATION ASSESSMENT: FACEBOOK FASTTEXT 6TYPES: “Find me photos of friends of friends living near Brooklyn…”
  21. 21. 21 Capacity utilization meets peer-to-peer rentals INNOVATION ASSESSMENT: AIRBNB 5TYPES:
  22. 22. 22LEARNING FROM AIRBNB… Founded in 2008, in 2016, Airbnb passed 2.3 million rooms in inventory. This makes it larger than the three largest global hotel chains—Hilton, Marriott, and Intercontinental—combined.
  23. 23. 23 7 of 57apps are (slightly) proprietary! How to build the world’s largest “hotel” business, without any rooms! AIRBNB TECH STACK ANALYSIS 20 Application & Data 16 Dev Ops 13 Utilities 8 Business tools
  24. 24. 24 Uber innovates by integrating many things… simply and elegantly Learning from Uber UBER TECH STACK ANALYSIS
  25. 25. 25 We built our cloud architecture on open-source software, called OpenStack, so we can leverage the community…. …and we have a hundred thousand developers who don’t work for us – but what they can do in a week, we couldn’t do in a year. - Meg Whitman, HPE “ ” GitHub Web-based repository hosting service, distributed version control and source code management 14m users 35m repositories Largest host of source code in the world Extreme modularity radically streamlines robust software development Open source code ecosystem for distributed storage and processing of very large data sets
  26. 26. LEAD WITH YOUR DESIGN VALUES… Designers make stuff compelling. These days, you may also have to make it decent.
  27. 27. 27 Bedrock: some base skills of designers Skilled designers and design teams… ~ Conceive and make stuff ~ Make things, places & messages distinctive ~ Empathize with people in situations ~ Imagine ideal usage experiences ~ Sense and value what is new ~ Grapple with ambiguity more comfortably than most ~ Systematically test and iterate concepts till they get them right ~ Simplify and clarify information ~ Dramatically affect preference and value ROLE OF DESIGNERS IN INNOVATION
  28. 28. 28 New concerns about the “frightful five” SHIFTING TECH CULTURE
  29. 29. 29 There are some new burdens on good designers to be truly USER centered MODERN SERVICE DESIGN PRINCIPLES 1 JUST BECAUSE IT IS TECHNICALLY POSSIBLE DOESN’T MAKE IT RIGHT… Many things can now be done in our digitally native, always on, data-rich world. But beware of using data against users… 2 TEST YOUR PROTOTYPE: WITH YOUR HEAD AND YOUR HEART... Beyond basic usability testing is a much tougher, more important test: do you want to live in the world you’re helping to build? Will it truly make users better off? 3 IF YOUR CLIENT DOESN’T GET THIS, BUILD YOUR OWN SERVICE… It is the easiest time in history to build something new. Don’t wait for your client to ask for the best ideas. Act now! Service design is now vital. It will take great design to get to move beyond mere technical elegance…
  30. 30. 30SDN GLOBAL CONFERENCE, MADRID, NOVEMBER 2017 For access to today’s notes: Email: Refer to this Event: SDN Madrid Questions? A unit of Deloitte Consulting LLP Finding the future first: Frontiers of Sophisticated Service Design SDN Global Conference, Madrid November 2017