Lüftenegger, E.R., Grefen, P.W.P.J. & Weisleder, C.A. (2012). The service dominant strategy canvas : defining and visualizing a service dominant strategy through the traditional strategic lens.BETA publicatie : working papers No. 383, Eindhoven: Technische Universiteit Eindhoven, 50 pp.
Abstract: Service orientation, customer focus and collaboration between firms are changing the way of doing business. Marketing scholars are the first academics to conceptualize these changes under a new mindset, known as the service dominant logic. We observe a direct relationship between the service dominant logic and cross-organizational information systems. However, the service dominant logic is difficult to communicate and operationalize. Man- agement constructs are needed to apply the service dominant logic to the busi- ness environment. Strategy is the first management construct that we need for the business development of the service dominant logic. Currently, there are few works on the service dominant logic at strategic level. In this report, we present a structured definition of a service dominant strategy by taking these emerging works and confronting them with the traditional strategies taught at business schools. We make a projection of the identified strategic statements of the service dominant logic to organize them and make some conclusions. We contribute to the development of the service science at strategic level, by presenting a management tool that facilitates the design of service dominant strategies.
Companies that are in a predominant position in the marketplace, usually look at new entrants as non-dangerous. For instance, Steve Ballemer laughed about a new phone in the market called the iPhone because was too expensive. However, nowadays the iPhone is the best-selling smartphone displacing incumbents like Nokia. Sometimes, the dominant logic of a company do not let see other opportunities that are emerging. Moreover, they may seen as ridiculous by incumbent companies as we can see in the following video:
An interesting quote of Jim Sphorer and Paul Maglio on PhDs, service and business models:
“Q: what new types of PhDs might be needed to build a world-class, corporate services research organization?
A quick survey of the PhDs within IBM’s services division revealed a three-way split among technology, business-related, and social science PhDs.
Also, it was clear that the existing research organization was dominated by technology PhDs. For a research organization focused on technology systems, the shift to services would require a shift toward innovation aimed at improving sociotechnical business systems.
For example, nowadays clients rarely buy an IT system simply because of its technical capabilities (faster, more capacity, etc.) but instead require a business model (return on investment) and an organizational change model (reengineered processes and job roles) that will make the technology an effective solution to their business problems.” Jim Sphorer and Paul Maglio
Starbucks is co-creating with customers through My-Starbucks-Idea. A 2.0 Web-site that let customers share their ideas (Fig. 1). The users enable the company to get an outside-in view to innovate in products, experiences and the relationship between the company with the world.
Fig-1 : My-Starbucks-idea
People can support current ideas or propose new ones. The process is very transparent, you can even see implemented ideas like a mobile payment card as an iPhone application (Fig.2).
Fig-2 : My cards
Starbucks is involving customers in their social responsibility with the environment. They are giving away 10,000 US dollars to the winner of a “more recyclable coffee cup” (Video : Betacup from the betacup on Vimeo).
More companies are using social tools to interact directly with the customer. This is the first step to get a customer view inside the company. Companies not only need to listen the customer, but take actions on the popular ideas, like the iPhone application. As Tom Davenport complains about the lack of lemon slices in Starbucks. They should not only listen, but also implement the new ideas to avoid unsatisfied customers.
Title : The state of the art of innovation-driven business models in the financial services industry
Authors : E. Lüftenegger, S. Angelov, E. van der Linden and P. Grefen
BETA Working Paper Series WP 310, Eindhoven University of Technology, March 2010.
ISBN : 978-90-386-2226-2
Emerging innovation-driven business models are changing the financial services landscape. Most companies are using innovation to sustain their business models. However, new entrants into the financial services market innovate in a way that disrupts the industry. Typically, directions for innovation initiatives in financial services are absent.
In this report, we present a structured method to analyze innovation initiatives and their impact on the financial services in dustry. Our method is based on innovation and business model frameworks that let us analyze business models driven by different kinds of innovations.
We apply our method to emerging innovation-driven business models providing an overview of the financial services industry. Companies in financial services can use this report as an overview of the state of the art and as a guiding tool for their innovation initiatives. We contribute to the innovation and business models research fields, presenting a unified method to analyze business models driven by innovation in financial services.
Almost everybody in the blogosphere is talking about the death of Kindle. They forgot that Kindle is not a product, it’s a service. Kindle is the e-book service that is already in many platforms including iPhone and iPod touch, Blackberry and PC (Figure 1).
Figure 1 : Kindle e-book service for multiple platforms
The iPad will be another platform that pushes the kindle service that carries the biggest selection of e-books on the earth. This service strategy already saved Amazon from the disruption of the market with the arrival of new devices. The kindle e-reader device its a niche device for e-books lovers who spend lot of their time reading, for them the kindle and the e-ink still provide to them a better customer experience since the measure of the value is related with the low strain in the eyes of the readers thanks to the e-ink technology.
“The future of the music is not only in the production and selling music, the artists must take care about the fan experience engaging their customers (fans) to co-create content like Trent Reznor did with remixes and video”- Egon Lüftenegger
I’ve been a Nine Inch Nails (NIN) fan for more than ten years, giving me the opportunity to follow Trent Rezonr’s evolution. Trent is pushing the innovation in the music industry. He left Interescope Records to become fully in charge of the NIN trademark, letting him to control the whole customer (fan) experience. He owns his songs, letting him to do whatever he thinks is appropriate. Owning the content and the distribution channel is like to having control of hardware and software just like Apple does.
Trent Reznor launched viral marketing in 2007. Reznor used private torrent sites to distribute videos, raw song materials and resulting remixes from the album Year Zero. Trent, also distributed free USB drives containing unreleased songs and pictures from Year Zero, these USB drives were hidden in the bathrooms of concert venues where the fans found them and then shared the content through the Internet (see Figure 1) .
Figure 1. USB stick found in Spain.
Trent did many innovations to enhance the experience of his fans. We can summarize some Nine Inch Nails innovations as follows:
Free Albums : Ghosts I and The Slip.
Digital formats: Though Reznor had apparently been contemplating ditching his label for years, Nine Inch Nails’ Ghosts I-IV came second, causing reporters to describe the no-label release as Radiohead-style. The disc was priced $5 for better-sounding 320 Kbps MP3, FLAC lossless or Apple Lossless (all DRM-free). First eight songs are free.
Nine Inch Nails left Interscope/Universal Music Group and blew off traditional retailers, distributing the CD version of Ghosts I-IV only through the band’s website.
Advised Australian fans to steal his music after Universal priced it at AU$30. Praised Oink file sharing network.
Remixing policy : One of the reasons Reznor hated being signed to a label was that Universal wouldn’t let his fans remix his songs. Now that he’s on his own, Nine Inch Nails’ remix policy involves making raw materials available for use with Pro Tools or other audio programs. Bonus points if Reznor releases fan remixes on BitTorrent like last time.
Premium Tickets at NIN.com : NIN offered premium tickets in some tours, these tickets were personalized with your own name letting you to access to the stadium earlier than regular tickets and enjoy the band testing their instruments before the concerts.
Iphone application : NIN.com, Nine Inch Nails website, is also available on the iPhone, where the fans can interact and access to music, videos, pictures and news about the band (see Figure 2).
Ultimate Concert Experience: In 2008, Trent offered the Lights in the Sky tour using the state of the art in LED screens and sensors to provide an ultimate user experience for his fans.
Figure 2. NIN’s iPhone application.
The latest innovation experiment driven by Nine Inch Nails was the release of 450GB of raw High Definition footage. The fans co-created a professional release of the film using the official and fan made footage that is freely available on youtube, PS3 and DVD as well. A full HD Bluray version of the concert with 5.1 surround sound will be available to download (see Video 1).