OPEN SERVICES INNOVATION FOR VIEWRUNAlex Timberman, J.D. Department of EconomicsHannam University

Motorola Razor

Nokia • Global Distribution and Cost Leader • Strong position in emerging markets• But phone becomes more than communication because of services and applications

• No platform or services developed from Motorola or Nokia

Apple and Google • Apple and Google created service business models and platforms to takeover

• Nokia sold handset division to Microsoft in 2013 with 99% shareholder approval

• Will Samsung have to change from product into a services oriented model to continue record profits?

Service Innovation Principles • Wrap services around products (Geek Squad) • Turn products into solutions (Outsourcing Servers)

• Co-create innovations with customers (Threadless.com)

• Use openness to get more from solutions (Wikipedia)

• Build a platform, that allows even rivals and 3rd parties to add value (Apple iTunes)

Threadless

A Different Perspective

“ What the customer buys and considers value is never a product. It is always utility – that is, what a product does for him.” Peter Drucker • Product Based – customer is consumer, quality means zero defects, value from exchange, or buy and bye

• Service Based – Quality is customer satisfaction, focus is on process, customer is co-creator, or always keeping in touch

Difference in Products and Services • Grocery store – wide selection, quality, price (Product)

• Grocery store makes revenue by small markup over cost, very high volume, and rapid inventory turns.

• Chef – provides dining experience using same ingredients (Services)

• Chef makes revenue by high markups over cost, low volume, alcohol, and tips

Utility in Product and Service • A car is driven on average 12,000 miles or only 400 hours. Your product utilization is only 4.6%

• But a taxi used as a service gets driven on average for over 8,000 hours a year

• In Seoul, new businesses are arising, providing the service of a car to customer, around a service-based business model.

• Can you and customer get more utility out of product, if looked at as a service?

Some Business Models • IBM manages company data on its servers and not on yours (Sold PC division long time ago and makes significant revenue from services)

• Xerox charges per copy, while providing all of the after service and customer support (sustainable business model)

More Business Models

•UPS is not only the shipper but manages inventory of customer in their warehouse, becoming the shipping department

•Apple sells great products iPhone, iPad, iPod, because of its great iTunes service (Able to cross-sell)

More Business Models • Best Buy makes margin selling big TVs (Main business)

• Best Buy Geek Quad makes much more margin by delivering TV, hooking up the cable, programming the TV, taking away the old TV, and selling a warranty

• By doing this over and over, they become better at it than anyone else. (Retailor incorporating service)

Geek Squad

Why Incorporate Services ?

•Services can become a source of revenue

•Leads to higher customer satisfaction and loyalty

•Develops tacit knowledge, which can be used to better serve other customers, providing an edge against competition

Opportunities for Service Innovation • Providing a service to a larger firm, utilizing large firm’s resources. (Specialization)

• Stay ready to become a potential supplier, partner, or customer for large firms.

• How can you provide a better experience for Viewrun clients and at critical stage points? (Initial view on website, phone call, facility visit, follow up, comparing cameras)

Building a Platform for Services

• How can you build a platform for competitors to be able to build on? Partners will complement your services, making yours more valuable.

• Microsoft created a Microsoft-certification program and allowed vendors to teach classes. This created a nice business for Microsoft, business for vendors, and greater loyalty to Microsoft. (Eco-system)

Building a Platform for Services • Could Viewrun create some platform for IP or MV solutions?

• Any opportunities for co-creation with customers? For example, book reviews by readers allows Amazon to help the buyer choose what to buy. What about for Cameras?

• Share detailed case studies and solutions of past projects, even allowing competitors to share their knowledge? (Key is in presentation and delivery and execution)

Incorporating Service • How can you incorporate service revenue models into your business?

• FedEx introduced a package tracking system, allowing customer to track it anywhere, providing service to create higher satisfaction and greater customer loyalty.

• Any wild ideas on incorporating services into the business model?

Summary • Services account for 80% of economic activity in the USA (Always growing)

• Diversifying revenue to services can lead to competitive advantage and escape from commodity trap

• Use tacit knowledge to co-create with customers

• How can we serve resellers to help them serve their clients?

Summary • Identify your service, associated with the product

• Turn your “freebies” into bundled options on a price menu

• Everything has a life cycle: us, business, industries, products, countries, and even religion. Key is in revival

• Revival can come from new product, new target market, and even a new business model

Action Plan • Think more about the importance of services • Improve the value and utility of what you can offer to customers (What do your customers really want?)

• Search for underutilized assets or tacit knowledge within Viewrun (Like cars versus taxi)

• Create a platform that connects your product with a service, bringing people back over and over again

• Invite others to participate in your platform