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Competitive products and delighted customersPart one

March 2, 2014

Juhani AnttilaInternational Academy for Quality (IAQ)Helsinki, Finlandjuhani.anttila@telecon.fi ,ww.QualityIntegration.biz

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under the Creative Commons 3.0 License http://creativecommons.org/licenses/by/3.0

(Mention the origin)

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xxxx/20.6.2012/jan

Main parts and themes of the presentation:

Part one

1. Extended product concept

2. Product characteristics and quality

3. Needs and expectations and customer satisfaction

Part two

1. Striving for customer satisfaction

2. Technological challenges

3. Product and corporate brands

Aiming at competitive products and delightedcustomers in the time of recession

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Understanding the concept “product”

Product:”result of a process”

Normally many processes are involved in producing a product,and processes may be in different organizations.

A product includes always service, and may also include goods.

Service (= product)”result of processes performed at the interface between the supplier and the customer”

Service is the essential part of all products, or factually all products are compositeproducts consisting of goods and services.

There is no justification to use a phraseology ”products and services” or ”productsor services” that factually means “goods and services”.

Value of goods may only be achieved through using the goods. Hence, also goodsmay be seen as service providers.

Services dominate in all products. The value of a product is co-created by both thesupplier and the customer.

4023/12.2.2014/jan (Ref.: ISO 9000)

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Service is result of processes, Examples

• Tourist service

– Memorable experience

• Restaurant service

– Well-nourished, fullness

• Entertainment service

– Emotional response

• Design service

– Product specifications, prototype

• Training /education service

– Skills, competence

• Financial service

– Loan

• Health care service

– Health, well-being

• Telecom service

– Completed phone call

• Transport service

– Material, people transported

• Maintenance service

– Equipment repaired

• Lawyer service

– Trial supported

• Consulting service

– Development supported

0817/13.2.2013/jan

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A product consists of goods and services

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Goodsvalue to

customer

Servicevalue tocustomer

Pure goods

Pure service

100%

100%0%

0%Product = Result of processes = Goods + Services

Value provided for the customer is based onboth goods and services. The role of service is dominant, and especially today increasing.

The goods value may be achieved only by usingthe goods. Hence, also goods may be seen as atype of service provider.

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Three elements of a composite product producing value to the customer

The product is composed of three elements that create value to the customer (“Valueadding channels”):

- G: Goods service: Value from using the goods element- H: Human service: Value from human services- A: Automatic service: Value from automatic or mechanical services

H A

G

P

v

u

w

The composite product and itselements co-create added-value Pto the user with his/her process(es):

P = uH + vA + wGu, v, and w are contributory portions ofdifferent product elements to the value

Tendency

Each point within the triangle represents a particular product.

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Historical development in product value creation

Product elements:- G: Goods service: Value from using the goodselement- H: Human service: Value from human services- A: Automatic / mechanical service: Value fromautomatic or mechanical services

H A

G

?

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A product of a software business connection,A case example

3980/5.1.2013/jan

Business connections and products in the case:

(1) SW developing company => Service developing company- software engineering service

(2) Service developing company => Net service provider- software integrating service

(3) Net service provider => A company using the net service- software e-Business service

G

H A

Value positioningthe products:

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3

SW developerService

developerNet service

providerNet service

user

(1) (2) (3)

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Processes and product in a business connection

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Supplier (Product producer)Customer (Product recipient)

Supplier’s business processesand structures

Customer’s business processesand structures

Business interface(business interactions and

co-value creation)

Product(Goods + Service)

Organizations in business connection:

PartnerOrganization = person or group of people that has its own functions withresponsibilities, authorities and relationships to achieve its objectivesProcess is activity and product its result. Structures support the processes.Use and perception of product reveal value and satisfaction.

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What is the product,and what are the processes involved? (1)

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Essential questions:

1. What is the product, incl.a) The service, andb) The goods?

2. How the customer valueis being created, througha) The value creating

processes, andb) The structures

supporting theprocesses?

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What is the product,and what are the processes involved? (2)

4279/12.2.2014/jan

Essential questions:

1. What is the product, incl.a) The service, andb) The goods?

2. How the customer value isbeing created, througha) The value creating

processes, andb) The structures

supporting theprocesses?

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4280/20.1.2014/jan

Obtaining a servicethrough the cycle of service processes

Start:Service enquiry

End:Service obtained

Customer(process) <=>Service provider(process)

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A Win-Win human interaction in customerconnection of business processes

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Rational, non-rational (emotional), and irrational human-to-human interactions withcustomers are essential for creating mutually net value.

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Customer-responsiveness

Satisfaction

Demanding

Receptive

Irrita

tedIndecisive

Immediateaction

Appreciation

Accep

tance

Assurance

clarification

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A customer-centered organization

Research

Development

ProductionMaintenance and support

Marketing

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Market place And customers

ManagementBusiness supportSales

The customer-centeredness is implemented trough business processes, products andcustomer interactivities

Delivery

From customer focus or orientation to customer-centeredness.

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1180/28.10.2008/jan

A system approach for product concept- a product as a system

Sub-system

Components

A “core” system

ServiceSoftwareHardware

Inter-mediator (interface)• Hardware• Software• Services

Environment system,stakeholders:- People, organizations- Technical systems- Nature, structures

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All products contain strongly knowledge & information

4284/15.1.2014/jan

Knowledge / information is the major element in all products (both in goods andservices) as well as in the business units and business processes.

Knowledge / information can never exist only as such but it has always some kind ofcarrier:

- Fact: phenomenon, activity, process- Data: measurement or data acquisition device- Information (explicit knowledge): information file or data base, report, procedure document, publication, book- Tacit (implicit) knowledge: person, expert, consultant, expert network or system- Wisdom: community, mankind

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Life cycle phases of a product

Specification phase

Development phase

Manufacturing phase

Operation phase

Disposal phase

Product development andconfiguration managementshould cover the wholelife cycle of the product.

Customer-relationships

?

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Life cycle management of products

Developmentsystem

Ver. 1

Ver. 2

Genericproducttype

Terminationmanagement

Instantiation of product individuals

# 1 # 2a

# 2b

# 3

# n

3598/27.12.2008/jan

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Quantitativesufficiency

Dependability

Environmentalcompatibility

ReliabilityperformanceMaintainabilityperformance

Maintenance supportperformance

Ergo-nomics

Serve-ability(*) Security Esthetic Ethics

Effective-ness &

EfficiencyEconomy

(*) accessibility + retainability

EcologySocial per- formance

General systematic grouping of inherent characteristicsof any product (7E+3S)

The product performancecharacteristics may be

designed systematically andobjectively by the product

developer but they are alwaysperceived comprehensively

and subjectively by theproduct user.

All product characteristicsare interlinked with each others

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0017/30.1.2014/jan

quality (of a product)- degree to which a set of inherent characteristics (of the product) fulfils requirements

grade (of requirements)- category or rank given to the different requirements for the products having the samefunctional use

customer satisfaction- customer's perception of the degree to which the customer's requirements have beenfulfilled

Note:- requirement (generated by an interested party): need or expectation that isstated, generally implied or obligatory- interested party: person or group having an interest in the performance orsuccess of an organization (a product)

(Ref.: ISO 9000)

Quality Grade (of a product) and satisfaction

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Performance: the capabilities of an item with its inherent features when observed underparticular conditions

• Quality: degree to which the set of inherent characteristics of the item fulfills therequirements. Requirements are from interested parties (especially of the customers).Requirements consist of needs or expectations that are stated, generally implied, orobligatory. Quality is based on the item user’s/owner’s subjective perception.• Grade: Grade implies the chosen category or rank of performance relevant to the needsrelevant to the requirements. The grade is closely linked with the realization costs.• Service level: certain specified performance level of the item. Service level agreement (SLA)may be a part of contractual agreement.• Excellence: performance that excels certain challenging references, e.g. being among thebest in the market place.

In addition to quality related concepts, we also have a need for concepts of non-quality,particularly in the context of product quality:• Defect – non-fulfillment of the needs and expectations (ref. quality)• Nonconformity – non-fulfillment of the stated requirement specifications (ref. grade andservice level)

Conceptualizing performance (in a business context)

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Safety / Security

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The Maslow hierarchy of needs- human individuals (and organizations)

Survival

Growth needs

Belonging / Social

Esteem / Ego

Self-actualization

Basic needs

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Market / quality strategies (“value disciplines”)and the technology life cycle of a product

1. The early market

2. The chasm 6. End of the life

Product leadership&

Customer intimacy

Product leadership&

Operational excellence Operational excellence&

Customer intimacy

Excellent product performance only

3. The bowling

alley

4. The tornado

5. The main stream market

The quality approach should be adapted to the appropriate market strategies.

1969/2.1.2014/jan (Ref.: G. Moore)