Some companies still cling to old-school practices, trying to sell products that were in vogue half a century ago and sticking to outdated methods from two generations past. But the world has moved beyond the traditional way of making and selling things. For centuries, it was all about gathering materials, managing labor, and crafting products for sale. However, in today’s business landscape, the transaction doesn’t end at the point of purchase. It’s time for businesses to step into the future by offering more than just products – they need to embrace Product X.0s, digitally-connected smart products that provide exceptional customer experiences.
Adapting to the digital age
For any business looking to succeed in today’s market, there are some important digital rules to follow. Think of it like this: Suppose you want to hang a painting in your living room. You could buy all the tools and do it yourself, but that might take a lot of time and money. A smarter choice is to hire a company that specializes in hanging paintings, as they already have the tools and promise a quick, perfect job. These companies focus on providing a service or a specific result instead of just selling tools.
Many traditional businesses, used to doing things the old way, are finding it hard to adapt to this new approach. To grow and succeed, they need to follow certain digital rules.
First, they must transform their core operations to fit the digital age. This means connecting all parts of the company digitally, from making products to selling and supporting them. It’s about having a workforce that’s tech-savvy, quick, and adaptable. Products can now be tested and updated faster than ever, and businesses must keep up.
Instead of just caring about selling products, companies need to focus on creating experiences and long-lasting relationships with customers. The point of sale is no longer the end; it’s just the beginning of a journey.
Being ready to change and adapt is crucial. Companies need to be flexible, able to pivot if needed. This means being built to make quick and smooth changes when necessary.
So, in today’s business world, it’s all about being digital, customer-focused, and ready to adapt at a moment’s notice.
Why businesses should focus on customer experience, not just products
In today’s world, for businesses to succeed, they must change their focus. Instead of just thinking about the features of their products, they need to pay more attention to the entire experience their customers have.
Imagine you make cameras. In the past, camera companies would mainly work on adding new features to make their product stand out. But now, that’s just one part of the equation.
The customer’s experience starts when they begin searching for the right camera. So, it’s crucial to understand what your customers are looking for, what types of cameras they want, and the reviews they read.
You should also think about how easy it is for customers to find and try your product in a store.
After a sale, there are more experiences to consider. How exciting is it to open the camera box? How is the experience of using the camera and sharing it with others? If you’re selling cameras, how easy is it for customers to share their photos or get advice on how to use the camera better?
Lastly, think about offering accessories and software updates to keep adding value to the customer’s purchase. This strengthens your relationship with them over time.
Becoming a platform-oriented business
Businesses should start seeing their products as services and focus on becoming platform-oriented. This is a growing trend, as companies like Netflix, Tesla, Uber, and Apple have shown success by selling products that essentially function as services. This shift helps in keeping customers engaged for the long term.
To transition into a product-as-a-service company, there are three important steps. First, create a clear strategy for your product and adapt to the digital environment. For instance, car manufacturers are now offering ride-sharing services, and medical device companies are switching to selling medical data analysis software.
Second, change how you approach research and development (R&D). In the experience economy, it’s more about the ongoing customer relationship than product ownership. Prioritize R&D to stay up-to-date with technological advancements, test new ideas, implement changes, and gather feedback for continuous improvement.
Third, embrace platforms. Many successful companies belong to or create their own platforms, such as app stores or tech-based systems like Amazon and Alibaba. Platforms enable seamless updates for subscribers and foster partnerships with other companies. For example, car manufacturers are developing platforms that integrate weather services, virtual assistants, and entertainment.
In summary, businesses should think of their products as services, adapt to the digital landscape, prioritize R&D, and consider joining or creating platforms to enhance their offerings and customer relationships.
Why every business needs to embrace AI today
Today’s businesses should pay attention to AI and adopt a flexible way of operating. AI isn’t just about virtual assistants like Siri or Alexa; it has human-like abilities: sensing, understanding, acting, and learning. These capabilities are being used in various industries, and companies that ignore AI risk falling behind.
About 70% of manufacturers worldwide see AI as vital for future growth, but only 19% have clear plans for using it. Companies that have embraced AI have seen increased value and faster growth. For instance, smart speakers, a non-existent product a few years ago, had 56 million sales in 2018. Voice assistants and smart home devices are expected to become even more common.
To thrive in this changing landscape, companies need to shift from traditional top-down structures to agile operating models. This means creating small, empowered teams that focus on experimentation. Amazon’s founder, Jeff Bezos, suggests that more experimentation leads to more innovative ideas. Amazon even follows a “two pizza” rule – if a team is too large to be fed by two pizzas, it’s too big. This agile approach allows companies to adapt quickly to the evolving market and technological developments.
7 simple steps for a digital transformation
Digitizing your core business is a crucial step toward achieving success. To become a successful product-as-a-service company, follow these seven steps.
- Define your vision: Clearly understand the value your product offers and the experience it provides. Be precise about what you’re selling.
- Digitize your core business: This involves making the necessary shifts and changes in your operations to embrace digital technology. Although it may seem costly for older, traditional businesses, implementing digital transformation often ends up saving money in the long run.
- Outline your product experience: Determine how your product is connected to your business operations. Collect and store data from customer interactions and ensure its security.
- Create a digitally-focused workplace culture: Encourage rapid testing, learning, and innovation. Think of your business as a “product and experience innovation center” and remove barriers that isolate teams.
- Build a workforce designed for success: Ensure your employees support your vision and can execute it smoothly. Align everyone with the same data and goals.
- Track and adapt: Continuously monitor your results and be willing to adjust your strategy. Smart connected products provide ongoing feedback, which should inform your decision-making.
- Start now: Don’t delay your transformation. Begin the process of becoming a product-as-a-service company today.
We’re currently witnessing a change in the way big companies do business. They’re making things that work more like services and are sold based on the experiences they offer. These are smart products that are connected to the digital world and provide entertainment, information, transportation, shopping, and AI-assisted services to make life easier. The good news is that any business can change the way they work and start making these smart connected products.
To sum it up, we should think about how smart and enjoyable our products are to keep up with this changing trend in the business world.
Inspired by a book “Reinventing the Product”; Eric Schaeffer & David Sovie”