As smart, connected products become more ubiquitous, we’re seeing the demise of the traditional value chain, in which there’s a clear beginning (when a product is designed) and an end (when it is sold to consumers). In our book, "Reinventing the Product," Eric Schaeffer and I offer insight into how organizations must adapt to stay relevant and competitive in today’s fast-changing, connected new world.
In this new reality, traditional hardware-centric products are becoming “containers” for software and AI features. Companies, in turn, are shifting their focus to become more responsive, adaptive, and collaborative while creating and continually updating a compelling user experience. Here are a few examples:
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Caterpillar’s new generation of industrial equipment is being integrated with Cat Connect, a platform that allows the company to offer its customers telematics-driven services such as remote troubleshooting or performance optimization.
Tesla’s sophisticated software platform for its cars allows the continuous release of new features and functionality via remote updates. An example is the updates to enable self-driving technology, which relies heavily on advanced AI technologies.
Signify (formerly Philips Lighting) and its Hue lighting platform lets users control their lighting systems via smartphone, transforming everyday lighting into a personalized experience. Users can play with colors, sync lights with music, TV, and games, and more. The platform also enables hundreds of third-party developers to create lighting applications.
While smart technology unlocks new value for today and future generations of products, it also puts new demands on CIOs and IT professionals because more products are constantly in flux. Hardware is no longer the differentiator – software-driven products are creating the value proposition, and dashboards are becoming highly customizable digital interfaces that can be updated remotely.
Five industry shifts
Here are five trends that are shaping the path forward for many businesses:
- The traditional features that have historically served to differentiate devices have become less important to users, who are more focused on comprehensive experiences and outcomes.
- Formerly insular products are transforming into connected platforms, complemented by other technology components or services.
- The fundamental business model is shifting from transactional product sales to a recurring, “as-a-service” model.
- The behavior and inner workings of products have shifted from mechanical functions to software and AI control.
- Production of smart, connected products has changed from a linear value chain to looped iterations in agile and manufacturing processes.
Building a customer experience strategy: 6 tips
As a result, leading companies are creating customer experience roadmaps along with traditional product feature roadmaps to plot the evolution and improvement of the customer experience over time. Consider these six tips:
1. Participate in open source communities to spur new applications and software development.
2. Transition products into platforms to increase the number of users and interactions throughout your ecosystem.
3. Keep a focus on great hardware engineering. While differentiation puts more ownership on software, successful hardware engineers will use new and adaptive high-tech materials and fabrics, learn newer skills using 3D printing, and have a deeper understanding and appreciation of data for both hardware and software.
4. Think through the customers’ point of view and endpoint and deploy as-a-service models that give users more control over their outcomes, and companies more predictable revenue streams.
5. Implement data privacy and security protection by partnering to gain the expertise you need.
6. Enable a remote workforce to manage constant change. Apple and other companies, for example, have seen great success in their remote collaboration and product development.
Are you ready for forever beta-mode?
Industries are in constant change and the companies that survive and thrive will be the ones that can adapt their products and business models to meet the new demands. While always-on connected functionality was once considered a nice-to-have feature, products are now in forever beta-mode. Consumers have high expectations, and organizations must respond to changing customer demands and expectations in real-time.
[ Culture change is the hardest part of digital transformation. Get the digital transformation eBook: Teaching an elephant to dance. ]
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