How can Capgemini's Technivision support Innovation and Competetivness

In this post I will discuss two HBR articles from an Enterprise Architecture point-of-view and possible usages of Capgemini's Technovision from the conclusions made in the articles.

“Teaming Up to Crack Innovation and Enterprise Integration” – James Cash, Michael Earl and Robert Morison, HBR November 2008.

Innovation and Integration are two compelling sources for growth within organizations. Innovation is the process of creating new products and services that delivers a measurable value for customers including new generations of products and more importantly conceiving new business processes and methods. Integration is making disparate parts of the organization work better together and identifying opportunities for cross-functional improvements and collaboration that are only visible when you look across functions.

The article discusses how large corporations can move from a situation where IT is just a catalyst of business innovation and cross-functional integration to systematically leveraging technology. In a study of 24 US and European businesses it was revealed a method for systematically approaching innovation and integration efforts coordinating theses two critical processes. Through a distributed innovation group (DIG) that combines internal efforts with the best of external technology creating new business variations working across boundaries and organizations. An enterprise integration group (EIG) folds yesterdays new variations into the operating model of the enterprise aligning with and extending the platform for execution in use. The two groups works together enabling better identification, coordination and prioritization of the most promising projects as well as spreading technology, tools and best practices across the enterprise.

Through the article I learned a method where one can combine innovation and technology nicely to spur new innovations and at the same time plan, structure and integrate those new variations into the existing platform for execution possibly extending it if necessary. In Capgemini our Technovision serves as a great example in how technology can be used to inspire and drive innovation at ourselves and our customers. Through the article you will also gain new methods and approaches how to integrate that innovation in a systematic way driving cost-optimized execution platforms while fostering and driving innovation which in some organizations can be viewed as opposing ideas. Innovation injects novelty and variety; Integration battles against fragmentation. A company pursuing growth must excel at both.

“Investing in the IT That Makes a Competitive Difference” – Andrew MacAfee and Erik Brynjolfsson, HBR July-August 2008.

The authors have studied all publicly traded US companies in today’s economy from the 1960’s through 2005. They looked at relevant performance indicators and found some striking patterns. The competitive dynamics have changed dramatically from the mid 90’s about at the same time as IT investments sharply increased and the use of internet grew. This change is visible in the number of new companies that grow and the speed with which they grow. The difference between leaders and laggards have also increased showing the importance of being market leader in an industry. This has previously been mostly visible in markets for digitized products like music or software. Now IT is accelerating this change in the traditional industries as well. Why? It is not because more products are becoming digitized, but because more processes are. Through digitized processes an innovator with a better way of doing things can scale things up with unprecedented speed and dominating an industry.

In the article you will get a more thorough background to the change and how technology is linked to the increased levels of competition. You will get the tools and rationale on how to realize digitized business processes. Deploying a platform for execution, utilize the IT-enabled opportunities for innovation (see previous article on the relationship between Innovation and Integration) and finally propagate the innovation through the entire organization – top down or bottom up using collaboration and Web 2.0 tools. Capgemini Technovision with focus both on collaboration and interaction as well as digitized processes based on SOA principles enables automated and configurable business processes through BPM tools. It’s not easy – success is not guaranteed – but if you do you can expect outsize rewards – at least until someone else comes along and propagates business innovation that’s even better.

The Customer Journey in the Land of Free

Have you ever been thinking of how you also can twist your offerings into a free lunch where the wardrobe funds the meal and profits comes from the additional shoe shining service provided during dessert? In this post I will discuss the Customer Journey in the land of the Free. Where the drinks are on the house and the peanuts are on the guy in the bar, make sure you are ready to transform your own business models. Let's start!




There has been a lot of talk about things going free. Numerous attempts over the last couple of years have been trying to find ways of bringing out free products or services. For example Ryan Air have a clear goal of offering free flight service within a near future. Other examples are when operators are offering triple play services where one of the components comes for free if you sign up for all or for an extended contract time. Apple's iPod and iPhone provides an example where an integrated solution consisting of hardware, software and service makes a complete non-separable unit where the low-margin music service is sponsored by the high margin iPod and iPhone. Here Apple is actually doing the opposite - it acts as the ticket and entrance to the party with a hefty price opening the scene giving access to a dream of always available music and video for a favorable price. The value being a working playground of cheap music always available packaged in a must-have design. With iPhone you get always connected where you can interact with the world and install any application of your choice.


 

The idea of giving something away for free is of course not to out-compete Santa Claus, rather to sell more of something else, like periodic recurring subscriptions, shaving foam, hotel night, what-have-you. The organization offering the free service is trying to switch from something that is viewed as expensive in the eyes of the customer to something that is perceived as cheaper and that has a higher margin. Another reason could be to offer something for free that is needed in order to do the for-pay activity where you get the money back. A flight ticket for free increases the need for hotels, airport transportation, etc. A free mobile phone drives traffic and monthly fees.

 

Anyway, what I planned to discuss in this post is the value of a customer and how that can affect the entire customer journey. Inspiration is taken from many sources, one being Detective Marketing and the other an article in November's issue of Harvard Business Review titled "What Is a Free Customer Worth?". In the examples above organizations are giving things away for free in the hope of making up the loss later in the customer journey. In some cases they have full control of the customer like Ryan Air where they can see during the ordering process how much additional services they are buying. In other cases the business case is built upon statistics on customer behavior and how much they usually spend during the entire journey. In some cases a free customer is made good from how much other customers spend, in this case it is totally unknown from moment of attraction how much this customer is worth.

 

How will you then spend on attracting this customer? You have to consider direct and indirect network effects on the behavior of your others customers, the ones actually paying for your free customer. When designing  such a model there are several areas to relate to and address. These are:

1. When and how much for attracting free customers?
2. How much is such an enterprise worth consisting of free customers?
3. How should the organization be set-up to facilitate attraction of free customers?

 

Through-out the customer journey you have to see the effects the free customer have on your entire base of both other free customers and paying customers. How many other free customers will one more free customer attract? And more importantly, how many new paying customers will it attract? This is crucial to get right, since getting this wrong might jeopardize the entire business.

 

Setting up a compensation model that takes both free and paying customers into account and ensuring that the different departments that handle the different types of customers work well together avoiding sub-optimizing is an important first step.

Then setting up a good pricing strategy fostering a good balance between initial customer attraction and early revenue and the positive network effects of attracting many paying customers. Skimming strategy with high early price to milk the early adopters, Constant strategy with a constant price over time and Penetration strategy with initial low prices to attract many customers and then raising price to increase revenue.

Focus on the value for the free customers you try to attract. Why should they become a customer of yours? Even if they don't transform into a paying customer, what is their goal and value of continuing being a non-paying customer?

How will the entire portfolio of free and paying customers be valued by the market? By making the actual network of customers and their stages in the customer journey clear and well defined it is much easier making the case for Wall-street on what the company is actually worth. Knowing where you are and where you are going simplifies communication internally and externally.

 

To summarize the above: Free customers can provide a lot of value whether they are supposed to pay later in the journey themselves or attracting other paying customers. The key is to get the model right including direct and indirect customer networks and the compensation and organizational issues serving paying and free customers. By having a clear view on where you are and what you want to achieve it is much easier getting the right pricing strategy and valuation model in place. Good luck with your customer strategy and attraction model. 

Reflections on 2009 and Beyond

I’m writing these lines from a winter cold Lund, Sweden, where the snow and frost is holding its grip on everything from beautiful trees shaped in diamond-like dresses to frosty car-windows forcing me to freeze my hands-off while getting ready for a ride. Sipping on a cup of warm relaxing green tea while watching the fire magically turn oak and spruce into black carbonized remainings is soothing for once soul.

It is at moments like this you start to summarize the past year and plan the coming year’s opportunities. 

What will 2009 bring to us all? Based on my conversations with my customers I have the following focus:

• RFID and Near Field Communication
  

o   Supply chain and logistics within all kinds of industries are seeing an ever increased pressure to cut costs, stream-line inventories and improve visibility. Using RFID technologies will increasingly achieve all of this and more. Now it is ready for more general prime-time shows where focus is on the actual value created and not the technology as such.

o   On the longer horizon we’re seeing telecom operators looking into using RFID or NFC for large scale payments and ticketing solutions. 2009 is the year for trials and 2010 there might be deployments.

• Telecom Service Convergence
  

o   Telecom operators are finally embracing Service Convergence where services are independent of the underlying network. This includes WebService and JEE/.Net services that can be delivered on any network, TDM or IP. Also part of this is the roll-out of NGOSS based OSS systems that will enable seamless deployment and provisioning of subscribers on these services. The trend has been ongoing for some time and now we're beginning to see more widespread deployments. Both Convergin and Apptrigger got additional funding during the year and this points towards further market development.

• Cloud Computing
  

o   Hype yes, but is it mature enough? Yes, I believe so since both Google and Amazon have had their stuff out there for at least two years by now. The global down turn will force companies into the Cloud for the sake of saving money. However the most interesting opportunity with the cloud are the possibilities for innovation and interactions made available. Without any upfront investment a startup, a project or a large organization can get access to information and computing power never before imaginable. Customers are looking at the cloud as a way of saving some serious dollars where another customer sees the potential for increasing collaboration and information sharing within the projects. It is definitely here to stay and 2009 will be the year it takes off.

These areas could be summarized into 2 general conclusions:

·         Innovation

o   IT and support systems serves two purposes; first to automate and streamline processes and secondly to enable innovation and process flexibility. These two purposes are somewhat contrary yet indispensable for every organization that wants to grow and flourish. The key is to focus your IT investments in the areas that makes a competitive difference balancing innovation, process automation, process flexibility and streamlined operations. This is not easy, however the three areas outlined above all enables innovation and process flexibility while cutting costs.

·         Interaction

o   IT should enable a dialogue and collaboration within an organization and with customers and partners. Too much of today’s IT is focused on handling transactions where the real value and the real innovation is created in the interaction between people and the organizations they belong to. Thus 2009 and the down turn should laser-focus everyone on the importance of interactions and investing in IT that enables and strengthens a two-way communication between people. The solutions are different depending on the actual case and the three areas outlined above all enables interaction and collaboration knitting the ties closer between supplier, customers and partners.

May Your 2009 be a transformational experience where Innovation and Interaction marks a centerpiece of your achievements.

Honey, my sweet and sticky moonshine business

My sweet summer activity is organizing my bees in perfect order. Imagine getting 50000 bees to march on your order? That is quite a challenge ...

Handling bees is actually a very interesting activity. The main tasks include:

• Expansion during spring to prepare and scale each bee-hive for all flowers blossoming during early summer.
• Making sure they have enough space to store all honey.
• Counter all attempts to swarm.
• Remove honey to stimulate further collection
• Extracting the honey
• Tapping it on jars
• Preparing for the winter
• Rest

Seeing the small insects flying all day collecting honey, working for your wellbeing, is a true pleasure. As most of the work is done during the summer enables you to more carefully study nature and its changes. Will it be sunshine today, when will the raspberry blossom and most importantly: will my customers like my honey?

To help with all of these tasks me and a friend have started a project to automate as much as possible of the tasks and at least create a good foundation to make decisions on when to visit the bees to collect honey. We will create a system for weighing the bee-hive and tracking the weather. Thus we will be able to see when it is time to collect the honey and what the weather is like (can I open the hive today?). We will of course make all design available on the web.

Pilgrimage as the next big thing?

Pilgrimage has in history been a source for seeking redemption, healing or status. There was even a children pilgrimage to Jerusalem which never reached its goal, everyone died ... One can just wonder why they went on the journey. It was clearly not the children who had decided that they should embark on the trip.

Today many Moslem's go to Makkah, Christians to Santiago de Compostela and elsewhere. It has gained some attention and status having went on such a pilgrimage.

Why would anyone go on a pilgrimage today with our access to information, knowledge, and shortage of time? What can we learn from doing a pilgrimage? Knowledge, experience, insight, and most importantly of all freedom being in the step, here and now, are some of the things that could potentially be gained through a pilgrimage.

Yesterday I tried it out on a one day pilgrimage to S:t Ibbs Church on Ven. A beautifully situated church on a high cliff with a magnificent view on the northern Öresund strait between Denmark and Sweden. I volunteered partly because I wanted to get closer to myself, God and the nature. Did I get what I expected?

First of all we walked in silence, quite a different experience for a a guy that can speak words like a waterfall throws water across the cliff. Secondly the priest who walked first set the pace, also a challenge for a man used to control his own steps. Most importantly was the change in mental state that came after a short while. By focusing on here and now and on each step all thoughts just disappeared into the mental /dev/null. I could enjoy the undisturbed scent of roses, details of houses I've never seen before, and I could focus on what is most important to me. In a calm and relaxed mental environment I made decisions for days to come.

Finally I noted during the walk a fantastic garden, very much like paradise, with a beautiful gate. The next gate was very worn down by weather, rust and non-existent maintenance. The third gate was equally fantastic as the first one, but with signs everywhere saying: "Private".

I noticed all these gates, but did not make the connection that our Priest did. She said as a summary: Do you want to be an open and available garden like the first one, or worn down, empty non-refilled spirit like the second garden, or a beautiful but closed person? I still have some way to go ...

So why did I write this entry? I believe that people including myself are looking for ways to develop themselves. Pilgrimage is therefore the next big thing for people who have everything!

Will access to all your web traces lead to the marketeers wet dream, increase long tail or just create privacy problems?

One of the most important aspects of the future is to build a relation ship with each customer and thus build a loyalty based on always exceeding expectations and deepened relationship through permissions.
One such interesting initiative is AttenTV that collects the click-stream of people and sells it to marketeers. The purpose is to get an even closer look to the inner being and what they prefer.

This idea is good but could be improved with some small adjustments. First of all just selling the combined click-streams adds little value to the advertiser. First of all it is impossible to build a personally relationship, it just alienates the customer and creates a feeling of safety at the company. The feeling of safety is just imaginary since you will just be looking in the past, not what will happen in the future.

It also misses the notion of the long tail. Analyzing all the click-streams it would be possible to find patterns and based on my own historical click-streams it should be possible to find the strange and not expected conjunctions between different people. Creating such a long-tail of knowledge will enable both the advertiser and the distributor to offer better alternatives and keeping the storage of most popular lower. The biggest value however comes if you are using the click-stream to start building a long-lasting relationship. As additional value you can start advising of alternative services depending on the click-stream.

The biggest value from AttenTV comes from the ability to build long lasting relationships, offer a more complete offering since the long-tail will tell us what customer wants here and now. Finally this will preserve privacy since only companies that you have an established relationship will be able to make use of your click-stream. I would also suppose there will be some kind of reward for participating in this exercise.

An interesting idea with some potential if it is modified a bit.

The boomerang effect

There are several services we all buy that can be easily doubled if the company providing the service dare ask for the return. Stefan Engeseth points it out very clearly in his June issue newsletter. For example if you are going by taxi from A to B it would be smart by the taxi company to ask for the return trip directly. The same applies to restaurants which could offer a discount if the next similar meal is bought directly when the first is bought.

When leaving McDonalds I should be asked if I wanted the same meal the next time and when this time is. Using telecom services like location and SMS it would be easy to help retail to add the boomerang effect to their business. The good thing is that it also helps the company becoming more agile and closer to their customers, almost what Stefan would call ONE.

Use discounts to get the next order (at Arlanda Express you get 50% discount on the return ticket if you buy both at the same time). Use telecom services to confirm, collect permissions, and use telecom services to remind the user when it is getting closer. You can also start collecting information on who is buying what and what products they buy at retail stores. From the permissions and what they actually buy it is possible to create a big tail and good predictions for the future.

Let's through some boomerang!