Digital Innovation and the Bear Experience

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Everyone is talking about innovation and digital. The words are getting washed up completely and it’s fair to ask if this is a hype that will pass. I’d argue that it won’t. I’d argue that this is the new norm and it will be commoditized just like having a “home page” or an “app” have.

The driver behind this is our expectation of experiences. We do not want to exchange money for things anymore, we expect that for what we pay, companies should give us an experience.

Build a Bear

Build a bear is a prime example where a simple product becomes an experience. They have turned the cuddly bear from a toy you buy and play with to a toy and a service.

As a customer you start by going to their store and build your bear. You go through the experience of selecting body, head and accessories. You pay more for fancy stuff of course.

Image from careers.buildabear.com

What is unique is that the bear then get’s a virtual persona where you can play with your bear online, send it to the north pole and you will receive post cards from it’s trip.

Build a bear has been innovative around the cuddly bear. They’ve turned a toy product into a service they can charge a premium for.

Moving from products and services to experiences.

We expect experiences with what we buy. No matter if it is a product or a service. This can range from your café experience to buying a car.

A business that wants to stay relevant and not get into a price war needs to start building these experiences for their customers. They need to shift from product innovation to service innovation.

Build a bear does this beautifully. They are not throwing themselves into a price war where the only increase in margin can come from lowering their cost of manufacturing. They create experiences that are unique. Experiences they can charge a premium for. By adding more services to the experience they make it hard for a competitor to copy their service chain without a huge investment up front.

At Avanade we see this shift in most of our consumer goods clients. They are all trying to figure out how add to the experience and turn their products into services. In our services clients we see a push to chaining services together to make their unique experience hard to copy. Banks are investing heavily in this now. Moving deeper into your household economy with apps and online services.

This is only logical. We as consumers, or buyers, are lazy. We want our experiences to be easy. If my travel agency takes care of everything for me, I’ll pay for that service. If my coffee machine maker calls me when I need to cleanse my machine, I’ll pay a premium for the machine. If my phone gives me all the services I need. I’ll never switch.

Same old, same old?

We have of course always loved it when the customer service is great. We gladly tip our waiter if we had good service. In that sense, turning products into services and chaining them together is nothing new. What is new is that companies that aren’t pure service companies are investing into this. They are switching from gaining value in the exchange of goods to gaining value in creating experiences.

There is an opportunity for you here.

One of the most important enablers of this is technology. As developers, architects and technology leaders we play a huge role in creating these services. Build a bear wouldn’t be successful without the technology component, nor would the banks.

The shift from product dominance to service dominance is a huge opportunity for us as technologists to truly disrupt and create unique values. Most businesses do not understand technology as well as you and have a hard time to turn technical advancements into innovation for their market.

There is a huge amount of cool work to be done. Go fetch.

Read more:
Service Dominant Logic (wikipedia)
Service Innovation – A Service – Dominant Logic Perspective (research paper)
Competing in a service economy (eBook)
From Software as product to Software as a Service (blog post)

Developers: Innovate or get outsourced

“Nothing endures but change”

The phrase is accredited to the philosopher Heraclitus on of Plato’s influences. In our industry, the quote is o’ so true and there is a new change at the horizon we need to embrace.

You have probably heard that to be a successful solution developer you need to understand the business. This is true; to deliver a solution you need to understand more then just technology. However, in a very near future this will not be enough. In a very near future you will need innovate solutions not only develop them. In the same very near future you will need to understand how to innovate business using technology not only apply the technology to the business.

In that future, to stay relevant in your on-shore locations, you need to turn into a solution innovator and move away from being a solution developer. If you can’t take on this shift; you WILL be outsourced.

The outsourcing paradigm has really evolved the last couple of years. It is moving away from being “IT on tap” into strategic partnership. I only need to go as far as the company I work for, Avanade, to see how we build centers that are client specific. Centers that capture knowledge of our clients business and already today deliver the solutions and value they need with very little or no on-shore assistance.

While I am looking back at the last 12-13 years that I have been developing solutions for clients, I see a pattern. It used to be enough to be a skilled programmer, then that got moved into outsourcing factories. It used to be enough to be skilled at designing solutions, then that got moved into outsourcing factories. At the moment it might be enough to understand the business, but I am certain that will move into outsourcing factories as well. Following this path we need to take that next step to be significant.

Deploying that last bits of code into production and seeing your client silently nodding and agreeing that you delivered as promised; creates a rewarding feeling that I am sure we all have felt.

Deploying the last bits of code on a solution that delivers business innovation which you brought to the client; rewarding is not a big enough of a word to describe what you will be feeling.

Of course the difference in time zones and cultures as well as the distance between countries is making this transition a bit slower, but it will come. Services like Lync, Skype and other collaboration tools is closing the gaps and gives us unique insight in each others cultures.

After working a couple of years in a truly global company, I really feel I can understand and collaborate with people across the globe a lot easier then before and I have peers in other locations I feel as close to as the colleague sitting at the desk next to me.

The transition will come.

Understanding the business will very soon not be enough. You will need to start innovating, you will need to be proactive to your clients needs, being reactive won’t cut it. Personally I turned to “Innovation: The Five Disciplines for Creating What Customers wants” to start my transition and am really looking forward to reading “Where Good Ideas Come From: The Natural History of Innovation” and “Democratizing Innovation” during my summer vacation.

I suggest you do too, and fast before your job has moved to another shore.

Some useful links:
TED Talks: Charles Leadbeter on Innovation
Slide Share: Thinking about innovation