27 February 2017

Competitive innovation


Three steps to sustainable customer relationships based on innovation services

Your most valuable customers look to you for innovation. They hope that you can help them weather changes in their industry and markets and run a more profitable, competitive business. Those who prefer the status quo and shy away from innovation may be neither your most lasting nor most rewarding customers.

Evidence reduces the risk in R&D

For innovation to create value for everybody involved and avoid cost and resource drains that jeopardize its outcomes, you need to plan strategically and make the right decisions. Your R&D needs to pursue the most productive opportunities for designing better products. Those tasks require a deep understanding of your customers and their needs. For that, you need evidence – data.

When you provide your customers with complex products like machinery and equipment, the data can come directly from these assets when you connect them to the internet of things (IoT). When you apply analytics to that data and generate business insight based on it, you can direct your innovation so it positions you with a sharper competitive edge.

Step 1: products supported by proactive maintenance

Let’s imagine that your company makes food processing devices, such filling stations and large mixers used in industrial batch cooking. You install these machines at customer sites and maintain them under warranty or through extended contracts. Almost everybody in your industry does exactly that.

But what not all of your competitors do is connect the machines to the IoT and watch how they actually perform in your customers’ production environments under real-life workloads. You can see which are the weakest parts and components that might fail first, and replace them before they do. When you offer proactive maintenance services in addition to regularly scheduled maintenance, your customers can with your help avoid disrupted production resulting from unplanned downtime.

Step 2: close customer collaboration around product improvements

At this point, your customer relationships begin to change. You have proven that you can do more than simply provide and fix machines. You can make them run better. Customers may well see the value in that and trust you more than they used to, maybe even more than your competitors.

You can build on that trust, especially if you continue to use data evidence to substantiate your decisions. You can take a next step and use IoT data to highlight performance slowdowns and bottlenecks. You can, for instance, advise your customers and help them take the right steps to improve the throughput of their machines or ensure that they are always used to their full capacity. Taking a step further yet, you may also assist them in maintaining best possible quality and compliance standards, because machine IoT data alert you to any deviations. You can proactively ensure that the machinery always runs within acceptable tolerance limits.

Step 3: lifecycle innovation within customer service engagements

What is also changing in this process is your customers’ idea of what you deliver, as the focus of your value generation shifts from products to services. That gives you an opening to move toward full-fledged servitization and a more controlled, predictable revenue model, and it may also be an opportunity to pursue innovation at a higher level. If your customers are interested in exploring that, they could work with you to enhance the machines with new capabilities, for example, an automatic, accurate correcting functionality that would ensure production within desirable quality ranges. That innovation could become part of a service engagement that allows your customers and you to collaborate on new machine features that might eventually become part of your standard product.

We know companies that use IoT solutions like innius to gather data, and they rely on cloud-based, affordable, advanced analytics such as Microsoft Power BI or Azure Analysis Services to make sense of it. Manufacturers whose products are not a good fit for the IoT may gather the data differently. What they all have in common is that they overcome competitive challenges by transforming their customer relationships. They move away from one-time transaction to build collaborative engagements that can help them retain customers throughout the lifecycle of their businesses. Once these vital relationships are in place, they are almost impenetrable to competition.

If you have any plans or ambitions for competitive innovation, we can help you put them in practice and see them through successfully. To get started, send me a note.

Luciano Cunha
Luciano Cunha,
Luciano Cunha,
Chief Executive Officer (CEO)

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