I’ve just spent a week in China, visiting
the Southern China University of Technology (Guangzhou) and Ceibs, the
international business school in Shanghai. While at Ceibs I participated in the
first seminar on “Servitization and Service Innovation”. Attended by around 100
people, industrial speakers at the seminar included eCoal (an online coal
purchasing platform), HP, Sevalo (a construction and mining equipment services business)
and SKF. While Professors Marjorie Lyles (Indiana University), Chris Voss (Warwick
Business School), Xiande Zhao (Ceibs) and I delivered academic presentations.
It was a great trip, fascinating in so many ways, but I thought I might write a
short blog about some of the themes that came out for me at the seminar. These include:
1.
The importance of technology to
China - all the speakers talked about the way technology is changing China’s
approach to business. They talked about all the traditional topics - cloud
computing, big data, mobile, the need for better security. But they also talked
about internet plus, China’s equivalent to Germany’s industrie 4.0 and the rest
of the world’s internet of things. They recognise that as more and more devices
are connected to the net, ever greater volumes of data will be created and
these data can potentially deliver new and valuable business insights if
analysed and interpreted correctly.
2.
Platforms were also a major
theme - many of the firms that spoke, including many of those in the audience, were
looking to create platforms, often to combine buying power and/or to utilize
spare capacity. eCoal, for example, has created a coal buying platform which
allows it to drive significant cost savings by pooling purchasing across
multiple organisations. HP claimed to be the world’s biggest retailer of paper.
With their print on demand services, where you pay per page rather than for the
printer, HP is forced to buy large volumes of paper. But with large volumes
comes the opportunity to negotiate discounts for bulk purchasing.
3.
One reason so many firms were interested
in platforms was the massive success of China’s three stars of eBusiness - Baidu,
Alibaba and Tencent (the Chinese refer to them as BAT). These three firms
dominate China’s discussion of eBusiness and have all successfully created
platforms, which in turn create multi-sided markets. Tencent, for example,
offers users access to free online games, sells the eyeballs to advertisers,
but also sells the players of games equipment upgrades. A dominant question
underlying many of the comments at the forum, was how do we create platforms
that will allows us to capture multiple, complementary sources of revenue for
our businesses.
4.
We also talked about challenges
of servitizing - the fact that having a strong product heritage or brand
sometimes makes it more difficult to offer services. Interestingly a number of
the speakers referred back to the roots of their organisations, obviously
product of their firm’s history, but I wondered whether history also
constrained their thinking about the future. SKF asked some fantastic questions
about servitization. How do we persuade our customers to buy solutions from us
before we have proved their value? Who buys services and solutions? Procurement
is typically not structured that way. It thinks about products and categories,
yet services and solutions often cross multiple products and categories.
5.
And finally we talked about
enablers of servitization - what would make the transition to services easier.
Through the course of the seminar I heard five key themes: (i) get inside the
mind of your customer’s customer. Understand what is value to them, so you can
better help your customer create value for their customer; (ii) to understand
you need deep relationships - ask yourself are we really close enough to our
customers; (iii) seek to balance control and collaboration in the ecosystem -
not everyone needs to control or create a ecosystem. Sometimes you have to
accept you are part of one and the best you can do is seek to influence it.
Think about creating win-win-win across the ecosystem to drive change; (iv)
learn from your experience, codify it and share it; and (v) think about
solutions - SKF has created solutions factories where they can work with
customers to solve their problems. Using your own ideas and technology
collaboratively with the customer is a great way of getting inside their minds
and building a deep relationship with them.
One of the great privileges of life as an
academic is the opportunity to travel, to experience different countries and
cultures. I never fail to be inspired when I go somewhere different and meet
someone new. My latest trip to China was no exception.
