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© Jim Lichtenberg 2008 Service innovation Service innovation: the path to success in the Internet age - Jim Lichtenberg - Jim Lichtenberg OReilly Tools.

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Presentation on theme: "© Jim Lichtenberg 2008 Service innovation Service innovation: the path to success in the Internet age - Jim Lichtenberg - Jim Lichtenberg OReilly Tools."— Presentation transcript:

1 © Jim Lichtenberg 2008 Service innovation Service innovation: the path to success in the Internet age - Jim Lichtenberg - Jim Lichtenberg OReilly Tools of Change, 2008 New York, NY February Gozanoishi Shrine, on the north shore of Lake Tazawa

2 © Jim Lichtenberg 2008 Many mountains to climb -- no matter what part of the book publishing industry you are involved with -- to reach the peak of successful and profitable publishing.

3 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008 Originally: graphically-rendered thoughts were a rare or privileged communications for specific purposes.

4 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008 After Gutenberg: Textual content as a popular commodity…...created and (eventually) owned by rightsholders.

5 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008 In the age of the Internet: content is a free for all, {which is not the same as free for all…} for no single player controls it. In the age of the Internet: content is a free for all, {which is not the same as free for all…} for no single player controls it.

6 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008 What is a book publisher? …an editorial board with a bank. P. Jovanovich What is the publishing value chain? Companies to which publishers have outsourced many of the original publishers functions: - printers - manufacturers - distributor/wholesalers - retailers (new, used, online)

7 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008 Who serves the customer? Traditionally the bookstore (independent or chain) Now, who serves the customer? - bookstore - online retailer - off-shore retailer - sidewalk retailer - publishers website - authors website - special-interest sites - widgets - search (!)

8 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008 The solution, Google says, is to give users the ability to search and browse their own content, and receive an electronic or hard copy version of the final product. And that final product will (could?) include advertisements highly relevant to the user.

9 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008 Is this a product or a service? An automobile is actually art, entertainment and mobile sculpture, which, coincidently, also happens to provide transportation. Robert Lutz, Chairman, GM

10 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008 Is this a product or a service? The Kindle's real breakthrough springs from a feature that its predecessors never offered: wireless connectivity... As a result, says Bezos: "This isn't a device, it's a service As a result, says Bezos: "This isn't a device, it's a service."

11 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008 So... is this a product or a service?

12 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008 Moving from a PRODUCT to a SERVICE Orientation Represents a change in BUSINESS MODEL. The drastically changing landscape of book publishing is driving the emergence of new business models. The drastically changing landscape of book publishing is driving the emergence of new business models. This is not a bad thing because: This is not a bad thing because: Business Model Innovation improves margins The right strategy and execution are key The right strategy and execution are key Companies should start by understanding their current position, the industry and competition, and by defining and selecting opportunities. Companies should start by understanding their current position, the industry and competition, and by defining and selecting opportunities. Experimentation (some failure) is the name of the game. Experimentation (some failure) is the name of the game.

13 © Jim Lichtenberg 2008 Department of nothing new under the sun Publishing Models for Internet Commerce Tim OReilly 6/19/1995 Same technology available to everyone Same technology available to everyone Rich ecology of successful players Rich ecology of successful players Niches abound Niches abound A key part of what we established with Global Network Navigator was a brand and a subscriber list. The actual content is valuable -- but far more valuable is the relationship with the people… A key part of what we established with Global Network Navigator was a brand and a subscriber list. The actual content is valuable -- but far more valuable is the relationship with the people… In an information glut … context is king. {…..context is itself a service.} {…..context is itself a service.}

14 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008

15 © Jim Lichtenberg 2008 InstallationDeployment During the deployment phase following technological advances, we see unprecedented opportunities and new business models Irruption The IndustrialRevolution Age of Steamand Railways Age of Steel, Electricityand Heavy Engineering Age of Oil, Automobilesand Mass Production Age of Information andTelecommunications Frenzy Synergy Maturity Panic 1797 Depression 1893 Crash 1929 Dot.com Collapse Institutional and Organizational Adjustment Panic Source: Perez, C., Technological Revolutions and Financial Capital, 2002Technological Revolutions and Financial Capital Crash

16 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008 Over the past several decades publishings focus has been product innovation hard coverhard cover paperbackpaperback trade paperbacktrade paperback mass market paperbackmass market paperback audio bookaudio book e-booke-book But the work flow processes have been But the work flow processes have been geared to an ink-on-paper product. From geared to an ink-on-paper product. From which other formats are spun. which other formats are spun.

17 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008 author creates work publisher designs physical product printer / manufacturer creates physical product publishers / distributor sends products to retail customers can only buy what is on the shelf. customers can only buy what is on the shelf. The legacy model is uni-directional and producer-centric and this is breaking down due to the Internet.

18 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008 The days of yesteryear.. The T-Word CD-R, CD-ROM, CD-RW, SVCD, CD+G, CD-Text, CD-ROM XA, CD-i Bridge, CD-i CD-R, CD-ROM, CD-RW, SVCD, CD+G, CD-Text, CD-ROM XA, CD-i Bridge, CD-iCD-ROM, CD, CTextOM Xi BridgCD-ROM, CD, CTextOM Xi Bridg

19 © Jim Lichtenberg 2008 The future is curled up in the past as a hidden dimension. - scientific breakthroughs are fundamentally intuitive artistic leaps (Einstein: time is variable, the speed of light is a constant) - innovation requires: attraction to complexity, intuition, aesthetic sensitivity and toleration of ambiguity - Apple, Google: sensing what customers want before they know they want it.

20 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008 The digital model is customer-centric multi- directional, and interactive,... author creates work - (if desired with customer feed back via web 2.0 exchanges blogs, wikis etc.) publisher designs product in a variety of physical and digital formats publisher / printer create product (physical or digital file) customer informs publisher of format(s), content elements, and delivery / business model desired publisher / distributor / retailer fulfills order... and remains flexible across formats and will continue to evolve.

21 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008(digital) Source File web press digital audio file (phone) e-book short run pod-cast chapter (chunk) PODsearch result POD search result + citizen content blogreviewannotation play list + new flexible business models (ads?)

22 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008

23 Digital prototyping: create, integrate, collaborate. This approach gives manufacturers the ability to explore a complete product before it is built so they can create, validate, optimize, and manage so they can create, validate, optimize, and manage designs from concept through manufacturing. designs from concept through manufacturing. Digital prototyping: create, integrate, collaborate. This approach gives manufacturers the ability to explore a complete product before it is built so they can create, validate, optimize, and manage so they can create, validate, optimize, and manage designs from concept through manufacturing. designs from concept through manufacturing. The digital prototype is shared among designers, engineers, and even customers so the (product) can be refined earlier in the process. Why not publishers content? A service transformation in design and manufacturing...

24 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008 Since IBM first started experimenting with virtual worlds almost a year ago, progress has been rapid… These experimentations are part of an IBM-led initiative to collaborate with clients and partners on both conducting business inside virtual worlds and connecting the virtual world with the real world to create a richer, more immersive Web environment - thereby solving business problems in a new way.

25 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008 Context and motivations Services becoming the new hub of most modern economies Services becoming the new hub of most modern economies Services dominating current economic activities Services dominating current economic activities (U.S. Department of Commerce, 1995, p. 417)

26 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008 Over the past 45 years, the US economy has doubled from 65 million workers in 1960 to more than 140 million in 2005

27 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008 Service dominant view Three primary elements of service 1. Co-creation of value 2. Relationships 3. Service provisioning

28 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008

29

30

31 Components of a work as service (formerly a product, i.e. a book): - authors original manuscript, - authors comments, - parts of other related works, - customer content, - social media content (added by publisher, author, customer), author, customer), - urls, - audio/visual content - advertising, - ??? Created via: web press, short run, POD, purely digital (internet, wireless, audio)

32 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008 We are aiming to integrate author-generated content with the author's own"book" content--through our Author Assistant and our Browse Inside applications available on harpercollins.com. We think it makes the most sense for readers to have an integrated experience of book and author--why should they have to go to one site to look at the book, and many others to hear the author's voice?

33 © Jim Lichtenberg 2008 Steps for service success… Be clear about your own business. What do you want to do in the marketplace? Be clear about your own business. What do you want to do in the marketplace? Put all that aside, forget it, and listen as attentively as possible to your customers (consumers not bookstores!) Put all that aside, forget it, and listen as attentively as possible to your customers (consumers not bookstores!) Analyze what they appear to be saying, and what they may really be saying. Analyze what they appear to be saying, and what they may really be saying. Return to who you are, and what you do, and rigorously, (not slavishly) change may be required to create what customers want. Return to who you are, and what you do, and rigorously, (not slavishly) change may be required to create what customers want.

34 © Jim Lichtenberg 2008 The image of the antisocial, sunlight- deprived game geek is enshrined in the popular consciousness as deeply as any stereotype of recent decades. Thats changing. Online PC games in which thousands of players gab and explore together are attracting tens of millions of subscribers

35 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008 Getting at the customer value proposition Start with the Job Customer is looking for a quarter inch hole, not a quarter inch drill Close observation and deep interactions with custo- mers can be key way to find target jobs The customer rarely buys what the company thinks it is selling him thinks it is selling him - Peter Drucker - Kill small snippets of time productively Make sure I dont run out of cash

36 © Jim Lichtenberg 2008 © 2008 Innosight LLC 36 The ones that succeed have enough money left over to follow new approaches On average, successful new ventures change business models four times before finding success More than 90% of successful new ventures start off following the wrong strategy Success in any uncertain market requires testing, experimenting & adapting Flawed Strategy Successful Strategy Point of Learning and Adjustment

37 © Jim Lichtenberg 2008 © 2008 Innosight LLC 37 Transformation requires changing the game; game changers often breaker internal rules. Established companies that master disruption break internal rules Established companies that struggle with disruption let their rules overwhelm the opportunity We dont introduce products on Windows platforms We must fit into our parents route structure New printers must produce higher- quality output Our products have to compete with the quality of images on silver halide film

38 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008 …AND IN CONCLUSION We are witnesses and midwives at the birth of new business models for our industry. We are witnesses and midwives at the birth of new business models for our industry. Just as the economy as a whole is moving from a manufacturing to a service model, book publishing is moving from bringing physical commodities to market, to offering services that delivers content in a variety of modalities based on consumer choice...

39 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008 And as in the context of the broader economy, the older business model -- producer creates (and owns) product and determines the terms of sale, via distributors and retailers, to the end user, take it or leave it -- is breaking down. And as in the context of the broader economy, the older business model -- producer creates (and owns) product and determines the terms of sale, via distributors and retailers, to the end user, take it or leave it -- is breaking down. Taking its place, as we are seeing, is a more flexible, if still incomplete (incoherent?) model in which all parts of the supply chain, including the customer, work together to optimize benefits.

40 © Jim Lichtenberg 2008 © 2008 Innosight LLC 40 Assumptions Knowledge Transformative opportunities are high-assumption, low-knowledge areas Core (Incremental) Core (Discontinuous) Reach New Customer Create New Market Extensions/DerivativesAdjacenciesUncharted Territory

41 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008 Moving from a PRODUCT to a SERVICE Orientation Represents a change in BUSINESS MODEL. The drastically changing landscape of book publishing is driving the emergence of new business models. The drastically changing landscape of book publishing is driving the emergence of new business models. This is not a bad thing because: This is not a bad thing because: Business Model Innovation improves margins The right strategy and execution are key The right strategy and execution are key Companies should start by understanding their current position, the industry and competition, and by defining and selecting opportunities. Companies should start by understanding their current position, the industry and competition, and by defining and selecting opportunities. Experimentation (some failure) is the name of the game. Experimentation (some failure) is the name of the game.

42 © Jim Lichtenberg 2008 © Jim Lichtenberg 2008 Thank you.


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