Are We Ready for Competitive Advantage as a Service?


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Today, I was inspired by the Pizza as a Service model that made its rounds last year, and decided to rip the concept off to further my own agenda. My agenda is fairly transparent…

  1. I want companies to better understand customer-centric analysis and operating models so they aren’t confused by customer-centric sounding models
  2. I want companies to realize that there is more to competing successfully over the long haul than having the latest and greatest software features
  3. I want companies to understand that software vendors don’t understand innovation any better than they do
  4. I want companies to embrace the notion that they hire CRM to help them compete; and to that end the next generation of CRM may not look anything like what we’ve grown accustomed to over the past 25 years.

We are being bombarded with new terms that describe old things.

  • The Experience Economy (commodities to products to services to experiences). There is nothing new here folks. The story here is that our grandmothers used to take commodities (the ingredients) and make a birthday cake from scratch – costing them mere cents + skill + time. Then the need for skill was reduced when pre-packaged ingredients became available (just add water – and an egg). Eventually, we no longer had time even to do that, so we began hiring our local grocery chain to create custom cakes on demand; which we would simply pick up on the way home from work. But about 10 years ago, apparently we had moved to the experience economy where now we no longer wanted to be bothered throwing the party – we outsourced that too!

The problem with this story is reflected in the next economy…

  • The Transformation Economy (this is where people get bored with your experiences and you need to reinvent them). Apparently, a single experience is an entire economy and all experiences expire at the same time. In this case, it was pointed out that the Hard Rock Café was 40 years old and that it needed to re-invent itself. Hmm, 40 years would put it back when people were getting introduced to Betty Crocker; so somehow its experience model preceded the productization of cakes.

We could have a look at the transportation industry to see if we had an experience economy at the turn of the last century. We used to be responsible for maintaining the components of transportation (commodities) such as a horse, a stall for the horse, the feeding of the horse, the buggy, and let’s not forget the whip. There were special skills required to bring all of these things together and turn them into a transportation mode that got you were you needed to be. Then along comes Henry Ford who bundles everything up (including the horse power and the whip) and turns personal transportation into a product. Soon, we had services as we didn’t always want to drive ourselves, so limos and taxis came onto the scene, using these products. My God, do we need to wait all the way to self-driving cars to get to the experience economy for automobiles? I don’t think so; have you ever seen some of the experiences groups have been able to get in a limo for the past 30 years?

We’re simply describing the natural lifecycle of products and markets to various degrees. It’s been happening since people stopped growing all of their own food and used grocery stores I would think. Companies have always had to continually evolve their products or services or risk becoming irrelevant – this does not describe some new kind of economy!

The list goes on with Collaborative Economy, Sharing Economy and Future of Work which again, seem to be more about the person presenting the idea than anything really (and broadly) new and actionable for any particular business owner.

Now that we’ve gotten past the alignment of narcissism and emerging concepts, let’s get one thing straight – or, two things straight…

  1. Customers seek help in getting things done and they measure how well you help them do that functionally, emotionally and socially. When competing solutions come along (products and/or services) that they value more when measured at particular steps, or when measured cumulatively when the job is completely done, they will migrate. During the various stages it could be for fairly simple things; but over the longer term the perceived value will migrate away from a product that is moving to commodity in favor of a higher order service (often built upon the commodity or standardized platform).
  2. Companies want to survive, and that translates to growth through a competitive advantage. An advantage must be continually reassessed, and the company must adapt over time; sometimes re-inventing itself completely. Is Apple a PC company, or is it an iPhone company? Of course, that’s a trick question because they don’t perceive themselves as either; which has worked to their advantage.

In the world of CRM, the easy path for companies was to migrate to the product phase. We get all the ingredients neatly pre-packaged in a software application so we don’t have to take all the ingredients and build it ourselves. But even then, we still had to bake the cake so to speak. There was still a lot of internal technology management that had to take place which was time consuming and resource intensive. So, we threw out the oven in favor of ordering out for our CRM application services. This didn’t really address our ability to understand customers any better. What we got was Big Data that we didn’t know what to do with.

In short, to date all we have done is deal with the cost and time dimensions of CRM. If companies want to grow, how will CRM assist with developing a competitive advantage? So far, the focus has been on optimizing the activities performed within functional groups operating inside companies. In order to compete over time, however, don’t we somehow need to align our thinking to continually assess what our customers are trying to get done and our success in helping them do so? Certainly, some companies understand this; but most do not.

Things begin to align differently when we contemplate the future. While we thought we were managing our resources better and more cost effectively, the Subscription Economy of CRM really didn’t do much to that end. There are now endless ways to spend money in the pursuit of cost effectiveness. What the CRM industry really has not addressed is the experience associated with truly understanding markets, customer needs (segments) and how to design customer experiences that make the experience of delivering experience an experience to behold! Our current set of vendors do not seem to have a clue how to grow profitably over time, so I’m not looking to them to figure this out. I’m just presenting the notion for people to noodle on.

Today, companies have to go out and hire the services of expensive consulting firms to help them understand how to do business. Unfortunately, since 90%+ of these companies can’t sustain a reasonable rate of growth for any meaningful period of time, these firms are either building the same table stake capabilities across all of these clients, or none of them know what they are doing either. In the meantime, there are always a handful of companies that seem to have no problem sustaining growth as an Enterprise over time. So, what do they know that we don’t, and can we bottle it?

Of course we can, but no one wants to disrupt their cash cow.

As a business owner or C-Suite executive, what incredible products, services and experiences can you imagine creating for your customers if you always knew exactly how well customers were getting things done and what they will value next? Imagine all the meetings where (likely to fail) ideas were discussed that could be eliminated and how quickly you could improve existing services or locate new products and services to drive your company down new organic growth paths? What if your primary metrics were no longer internal activity-based measures, but value-based measurements that your customer provides? What if they gave you a high degree of precision on targeting new opportunities for your company to grow? What if customers called you again?

Would this be a better CRM than what we have today? And would we need to call it something else, relegating the term CRM to the Universe of other products that have become commodities and died; or if their lucky, they have become utilities and survived as platforms, or eventually features of future platforms?

These are not rhetorical questions, folks J

Republished with author's permission from original post.


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