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Innovating value for global markets – Institute of Export event

June 7th, 2017

Institute of Export logo

Alastair Ross, Director of Codexx, is presenting at the Institute of Export and International Trade event on Thursday 6th July 2017 – ‘Blueprint for Global Britain’ which is being held at the University of Plymouth.

The event is aimed at businesses in the South West of the UK that are working in international trade. The event will examine the issues and opportunities in accessing new markets and the debate will help to shape the future of international trade.

Alastair Ross will present on ‘Innovating product and service value for global markets‘. His presentation will show how businesses can optimise their product or service proposition for different international markets by assessing the value requirements of users and how they vary by market and geography and then tuning their offering – or providing suitable support services – accordingly. The presentation shares learning based on Codexx innovation projects and makes use of the Value Table model.

For more information on the event: Blueprint for a global Britain.

Why great products are not enough – the story of Psion

May 8th, 2017

Psion logo full

Businesses with great products have enthusiastic and loyal users who value the functionality and other benefits provided by these products. But for a product to be great – there needs to be something more: an ‘emotional connection’ made with users. This so-called ‘joy of use’ moves a product from being merely ‘good’ to ‘great’.

In the 1980s to 1990s Psion was  such a company, providing great products in the PDA (Personal Digital Assistant) market with an enthusiastic user base. For many years it was the market leader with products such as the Series 3 and Series 5 PDAs were best sellers. So why did it exit the PDA market in 2001 – to the disappointment of its customers? And what can businesses learn from their experience?

A new Codexx video tells the story.

 

 

New videos – value-based innovation & behavioural change

April 25th, 2017

Front page 5
New videos have been added to the our YouTube channel ‘Business Innovator’. The Business Innovator channel is our channel for sharing innovation approaches and our professional experience with a wide community of businesses, change agents and students.

Videos are intentionally short – to provide interest and insights within ‘bite-sized’ chunks.

Latest videos include:

Thinking about value and how to innovate it

The importance of behavioural change in business transformation

Why not take a look –  we hope you find them useful – and we welcome any comments!

 

The Brexit cost challenge – an effective services response

March 22nd, 2017

 Stock trading monitor (black and white)

Brexit challenges both UK and non-UK businesses

Over the next decade, with economic challenges and potential tariff barriers post Brexit, both UK-based businesses and also those businesses exporting into the UK, will be facing uncertainty, pricing challenges and competitive pressures.

The impact on business services

The inevitable response of businesses tightening their budgets will impact the professional service firms which supply them with research, legal, accounting, consulting, design and other business services.

Professional service firms will need to respond in two ways: 1. Enhance their business value proposition – through innovation – so that customers are less price-sensitive and 2. Reduce costs where possible. This article focuses on how service firms can reduce costs through the intelligent targeting of waste.

Use a magnifying glass – not an axe – for cost reduction

Conventional approaches to cost reduction in professional service firms – sweeping the ‘axe’ of redundancies – risk cutting away core value-adding activities in the business along with any ‘fat’. A better approach is to apply the ‘magnifying glass’ to seek out wastes in service delivery and then eliminate them using Lean principles.

By reducing the costs associated with waste activities, cost reduction goals can be met without impacting the service and value delivered to clients. Indeed the opposite is typically the case – with a more streamlined and systematic way of working delivering a more responsive and consistent service to clients.

In our work with professional service firms over the last decade
we’ve found that service re-engineering typically reduces the cost
of service delivery by between 25-50% whilst maintaining service quality.

There are three key steps required in achieving waste elimination in service delivery:

  • Find wastes.
  • Remove wastes.
  • Stop wastes returning!

Find wastes

Wastes are activities that do not add value – and so professional time spent performing such work can be eliminated without impacting the service to the client – whilst reducing the cost of delivery. The key approaches that are effective in doing this are:

  • Find a Champion – a Partner or Manager to lead the work
  • Engage fee earners – who know how work is actually performed today
  • Understand the client requirements – what’s important to them, today’s service experience
  • Map the service – create a picture of the end-to-end service as it is today
  • Apply Lean techniques – to identify waste and inefficiency

Waste elimination means that service costs
can be reduced without lowering quality.

Remove wastes

The key steps to be followed in removing waste from a service are:

  • Re-engineer the service using a TO-BE design that provides a more efficient and controlled service – making use of procedures, templates and workflow.
  • This reduces service delivery costs in two ways: (1) Reducing the fee earner time required to perform the service and (2) Performing the work using a lower cost blend of personnel (i.e. work pushed down to more junior and less expensive personnel) or automating it. Our work on service re-engineering over the past decade has shown that typically 25-50% of this cost can be removed.
  • Maintain service quality by placing work elements at the skill level at which it can be performed at least to the same level of quality as before (through use of codification into procedures and templates and then personnel trained to these methods). In our experience service quality and responsiveness is actually improved post re-engineering.
  • Use the freed up personnel to perform other work (thus yielding cost avoidance) or made redundant (yielding cost reduction).
  • Generate new revenue using experienced personnel who have been freed up by re-engineering, to work on more complex and higher margin work – if the firm had opportunities which would have needed new hires to meet.

Stop wastes returning!

It is important in a people-based business to ensure that costs don’t ‘drift back’, especially into the delivery of fee earning work. This is why new working methods need to be supported by standardisation of repetitive work elements, making use of procedures and templates. Case Management and workflow systems can help ‘lock in’ new procedures. New metrics should be put in place to monitor time spent on matters by work element and fee earner type – to both ensure that target times are being met and also to support continuous improvement.

Conclusions

A waste-focused approach to reducing service costs in professional service firms is powerful in enabling services to be delivered at a lower cost and at least equal quality and service as before. This is not the case with the more typical people-focused redundancy approach – which can significantly impact clients through reduced service quality.

Lean-based cost reduction is a powerful approach
that is seldom used effectively in professional service firms.

One key reason for this is that few of these firms have ‘process-thinking’ in place to enable process-based improvement. This is changing with the increasingly competitive landscape for services and the accelerating use of IT and the internet for digital services delivery.

Firms should seize this approach and make it part
of their ‘transformation toolbox’ to enable a successful
response to the business challenges of Brexit.

Value myopia – a business killer

March 15th, 2017

glasses for myopia

It all seems pretty straight forward. A business provides a product or a service that a customer values and in return receives payment for it. Those businesses that provide a higher level of perceived value to customers will gain over those that provide less. This is the foundation of our market-based economy. Businesses use Marketing to understand what customers want, R&D to develop it, Manufacturing to build it and Sales to sell it. Basic stuff taught on any elementary business course.

So why do so many businesses get it wrong? How do they lose sight of the value needs of their customers? In effect they have got lost, guided by ‘value maps’ that no longer match the reality of their customers’ environment. Even large, sophisticated businesses are not immune from this disease. Just think about Nokia, Blackberry and IBM.

 

Lessons from the past – Nokia and Blackberry

Nokia started life in 1865 as a forestry business. Over the next one hundred years its business moved from wellington boots to electronics and military equipment and then in 1982 to mobile phones. By 2005 Nokia dominated the global market for mobile phone handsets with more than one third of the market. Yet only nine years later, in 2014, Nokia exited the mobile phone handset business after losses nearly bankrupted the company.

How did this happen? A key reason was that Nokia failed to successfully respond to a new paradigm in mobile phone handsets created by Apple when it launched its iPhone in 2007. Underlying this was that Nokia’s customer value map no longer matched the reality in the market. Nokia’s mobile phones were effectively based on a ‘radio paradigm’, where signal strength, call quality and battery life were key. However customers increasingly valued internet-based services, multiple applications, a fun and slick user experience wrapped in a slim and well designed package and were prepared to trade battery life and call qualities for these value elements. The iPhone was built on a ‘computer paradigm’ that better matched customers’ new value requirements. Nokia could not adjust its mobile phone business model to meet these new requirements fast enough and ended up leaving the market.

Backberry’s fall from market dominance was as calamitous as Nokia’s – with 41% share of the US market in early 2010 dropping to 1% by mid-2015. Whilst Blackberry was successful in selling to corporate customers, consumers became increasingly frustrated at the devices’ limitations in internet access, lack of Apps and usability compared to the more user-focused smartphones provided by Apple, Samsung and HTC. Trends such as BYOD (Bring Your Own Device) and the success of Apple and Google in providing ‘business-level’ applications on their phones meant that it was the users that drove the move away from Blackberry phones. Despite the new Blackberry 10 operating system introduced in 2013 – arguably a superior operating system to IOS and Android – its lack of application support effectively killed it. Blackberry was unable to establish an App ecosystem with sufficient critical mass to provide the required functional value demanded by customers.

 

IBM’s transformation – realising a new map of customer value

IBM successfully managed to realign its value proposition and business model to the needs of its customers – after a serious misalignment became apparent in the early 1990s. Customers were abandoning it for faster, more nimble competitors. Between 1991 and 1993, IBM lost a massive $16 billion. The core reason for IBM’s difficulties was that the IT market was changing and IBM’s value proposition had not. New developments such as personal computing, mobile telephony, integrated software solutions and the internet were moving IT beyond its traditional focus of the IT Data Centre to a strategic business issue.

As a result decision-making for selection and investment in IT was evolving from IT Management to business functions such as Marketing and Operations. IBM’s sales force did not have relationships with these decision makers, Management Consulting firms did and provided strategic guidance on IT issues. Some of these consultants, such as CSC and Accenture were also IT outsourcing companies. Outsourcing of IT meant that other IT providers, such as IBM, would become commoditised as hardware and software suppliers to the outsourcer and their influence and profit margins significantly reduced.

Through a major transformation programme IBM was able to realign its business model to match the new value requirements of its customers. Those value requirements were for an integrated service-based offering that reduced the risks and cost of ownership of IT for customers through consulting and outsourcing offerings. Building the new business model to deliver this was a ten year journey and IBM’s business changed from one where services accounted for 9% of revenue in 1991 to one where services accounted for 40% of revenue in 2001.

So how can businesses avoid the onset of ‘value myopia’ and ensure that their ‘customer value map’ matches what is happening in reality in their customers’ environment?

 

An accurate map of customer value

Here are three key guidelines to help ensure an accurate map of customer value:

1.     Always consider value from the customer’s perspective. Particularly the relative weighting of value elements such as functionality, experience, cost and quality, which vary by customer and the situation that prevails at the point of purchase or use.

2.     Customer and User insight is critical in developing the customer value map.This requires deep understanding of customers and users, their wants and needs. Approaches such as Anthropology, Lead Users and Co-Development are powerful in enabling this insight.

3.     Use structured and responsive methods for developing new and enhanced value propositions to ensure that value innovation improves the fit with how customer and user needs are changing. Techniques such as QFD, Value Analysis and Conjoint Analysis allow a detailed and holistic map of customer value needs to be created. Approaches such as Lean Start-up allow new propositions to be quickly developed and tested – reducing the risk of value misalignment with customer needs. By identifying trends in how customer value requirements are changing, businesses can get early notice of required changes in their value proposition and business model

Businesses need to recognise the ease and danger of a disconnect developing between their value propositions and user wants and needs which are by nature dynamic. They need to continually review and update their ‘value maps’ to ensure they match customer reality.

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Front cover with border for LinkedIn - SMALLFurther information on value mapping can be found in Alastair Ross’s new book ‘Sowing the seeds of business transformation’ and available in paperback on Amazon.

(A version of this article was published on LinkedIn Pulse on February 21, 2017).

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New innovation videos

March 14th, 2017

Screen shot at beginningTwo new videos have been added to the our YouTube channel ‘Business Innovator’. The Business Innovator channel is our new channel for sharing innovation approaches and our professional experience with a wide community of businesses, change agents and students. Our videos will be intentionally short – to provide interest and insights within ‘bite-sized’ chunks.

The first new video introduces business innovation as a ‘journey to value’ and explains how innovation mastery comes from the application of an holistic and systematic approach to innovation within a business. Watch video here.

The second video looks at innovating service design and delivery in Professional Service firms and identifies 5 key success factors, based on Codexx project experience. Watch video here.

We hope you find them useful – and we look forward to your comments.

Let us know areas you would like us to cover in future videos.

New book – ‘Sowing the seeds of business transformation’

February 21st, 2017

Alastair Ross’s new book Sowing the seeds of business transformation was published on the 18th February and is available in paperback on Amazon. The book is aimed at change leaders who are seeking inspiration and guidance for transformation in their own businesses – in both industrial and knowledge intensive service sectors.

Cover with text for Codexx blog

It is a practical guide, based on project work and detailed case studies and is suitable for transformation projects in a single service or process, a function or department, business unit or firm wide.

Sowing the seeds of business transformation examines key transformation-enabling tools and methods such as Value Analysis, Systematic Innovation, Lean, User-Experience, Re-engineering, Continuous Improvement, Business Model Innovation and Digitisation.

Multiple case studies are used to illustrate the use of these methods including businesses such as Nokia, IBM, Blackberry, Apple, Allianz, British Airways, Amazon, Nintendo, AXA and Ryanair. The book also provides proven frameworks and effective approaches to enable a programme of business transformation.

For more information on the book, to read sample pages or order copies, go to Amazon.

 

Presenting Service Innovation at University of Exeter MBA

February 15th, 2017

Exeter University logo

Alastair Ross, Director of Codexx, presented the ‘Service Innovation’ module at the University of Exeter MBA programme on Friday 10th February 2017.

Alastair said “It is always great to share experience with experienced students, get useful feedback and better understand the innovation challenges they face in their businesses and sectors.”Alastair also lectures on Service Innovation at the University of Southampton MSc in Strategy and Innovation.

Redesigning legal services – lessons learned 2005-16

January 6th, 2017

Law firm re-engineering

Law firms are facing increasing business challenges due to the impact of globalisation, clients wanting ‘more for less’, deregulation and of course the impact of Information Technology and the Internet.

These challenges have driven progressive law firms to seek to improve their competitiveness by redesigning their services and support processes to improve the value delivered to clients and also the efficiency with which services are delivered.

Our new whitepaper explores the redesign of legal services – the reasons firms take this step, the approach used, the challenges faced and the benefits realised – using our experience gained in redesigning 20 legal services and processes for major English law firms between 2005-16.

Read it here: redesigning-legal-services-codexx-whitepaper-january-2017

 

 

Product development – are you good enough?

November 23rd, 2016

innovation-sign-free-image-shield-223326_1920

The challenges of managing R&D

Product development is a critical function for product-based businesses. The ability to develop new products with features and functionality that are valued by customers and users, to bring them to market quickly, cost effectively and at acceptable quality and then to support and enhance them during their lifetime has always been a complex undertaking.

Today’s additional requirements to serve a global market, to exploit new technologies to meet ever higher customer expectations, to consider the opportunities for complementary digital services and to compete against new low cost, but increasingly high value, rivals from China and other emerging economies simply add to the challenge.

To achieve business goals for profit and growth from new and existing products, there are major responsibilities placed on the Research & Development (R&D) function and its management team. The R&D function has two fundamental goals:

  • To develop, bring to market and support new value propositions
  • To do this in an effective and efficient way

In delivering new value propositions to the market, R&D management needs to be able to link research and technology possibilities with customer needs. It needs to have deep insight into the wants and needs of the users of its products and technologies. It needs to understand the unmet needs of users who are not yet its customers and where future growth can come from. It needs to be able to innovate to formulate technologies and product concepts that best meet these unmet needs, select the most promising and bring them to market.

 Effective and Efficient R&D

Being effective is a key requirement for R&D – to focus on the ‘right’ technologies, to select the ‘right’ product concepts and to get the ‘right’ balance between investment in new products with support and enhancements to existing products. But in addition, R&D efficiency is a key requirement. In developing new products there are critical resources which have to be efficiently used if the business is to realise the promise of its R&D potential:

  • Time – particularly time to market
  • People – particularly key research and development skills
  • Intellectual Property (IP) – how to exploit and protect it
  • Knowledge of the requirements of Customers and Users
  • Relationships with suppliers of technologies, components and services
  • Competitive analysis – of existing, as well as emerging and potential, rivals
  • The capabilities of internal functions – such as Marketing, Sales and Manufacturing – that provide the key resources across the value chain

Measuring R&D performance

To consider how well an R&D function is meeting these goals, there are some key outcomes that can be reviewed:

Is R&D creating value propositions that the market wants? 

A key measure here is the % of revenue from products launched in the last three years. If the % of revenue contributed by new products is low, then this indicates that the new product portfolio is not meeting user requirements in ways that are superior to the firm’s existing products – or rival products. This metric can be complemented by surveys among existing customers and also non-customers. In-depth understanding of user requirements (including unmet needs) and application knowledge are critical here. In meeting user needs, there is a balance to be struck between developing a new product and enhancing an existing one – or by providing a service-based solution. Increasingly digital services are playing a key role in meeting customer requirements. R&D operations now need to consider how to create ‘platforms’ that bring together hardware, software and service elements to meet user requirements in effective and reconfigurable ways that enable fast time to market.

Does R&D bring new products to market quickly? 

Key measures here are: How does the firm’s time to market compare to rivals? Has time to market reduced over the past 5 years? A fast time to market enables a company to met emerging customer needs before rivals – and thus achieve a higher profitability whilst there is less competition. A focus on getting a ‘core product’ to market fast – and then follow with enhancements is an effective approach. Lessons can be learned here from the ‘Lean Startup’ movement regarding the use of the ‘Minimum Viable Product’ (MVP) approach. With the increased in servitization, user needs may be met by a software/digital service solution that is ‘wrapped around’ an existing product platform. Service-based solutions can be brought to market much faster than product-based ones. R&D Management need to decide how this service element is provided – internally or through partners.

Is R&D on-time to market? 

Predictability is important – to fit with customer needs but also to align with the plans of internal support functions such as Manufacturing and Sales. Is R&D meeting defined project timescales? Failure to do so results in internal costs to replan and realign internal resources – with likely impacts on other products – and also can result in customer opportunities being missed.

 Is R&D delivering quality products?

How well are new products meetings their target performance? What is the level of their reliability, measured by field failures and returns? Trading quality for a fast time to market is a short-term solution. New technologies will have inherent risks which need to be identified and addressed – through rigorous trial and testing – prior to their use in new products.

Are products being developed by R&D within budget?

This is key to R&D delivering across its portfolio of planned and existing products. If new products overrun their development budget, the shortfall is typically met by reducing the planned budgets on other products or projects. R&D management need to consider how to get the best ‘bang for the buck’ from their budget – which requires a strategic view of their product portfolio and key decisions to be made on ‘make v buy’ policy, in-house development v external, new product v enhanced existing product and product v service solution.

Assessing your R&D operation

An effective way to ensure that your R&D operation is ‘fit for purpose’ is to assess it against best practices and also to determine how well defined practices are deployed in daily work (e.g. is FMEA applied effectively, is application expertise embedded in concept development,  are design reviews regularly held?).

An outside view can be powerful in such assessments – bringing an independent eye and experience from other businesses and sectors. Codexx has performed a number of assessments of R&D operations in Western and Eastern Europe, China and the USA, making use of our licensed PROBE benchmarking solution for R&D and our F4i (‘Foundations for innovation’) assessment for innovation practices.

We also worked with the Universities of Exeter and Aalborg between 2010-13 to study the ‘journey’ of new products from concept to market, covering 43 UK and Danish technology-based businesses, using a best practice model of the innovation journey. We have subsequently used this model to help companies assess their product development practices and performance.

 

The core of this article is an excerpt from the forthcoming book ‘Sowing the seeds of business transformation’ by Alastair Ross, to be published in 2017.

 

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