Efficient Factory

It seems those business models are moving in opposite directions these days. The destabilizing force of unlimited information and data is wreaking havoc with business inertia.

 Inertia; because a company set on a course tends to want to stay on that course. Once it chooses to solve a customer problem in one way it channels its resources into it, and there is cost with reengineering the chosen approach.

 In engineering circles, productizing your service makes it easier to buy. Customers have a better idea on what they are buying; a product that has more easily defined goals and functionality. Engineering services are sometimes more difficult to grasp as they are deployed as a one-off solution. For many applications, there is no way around it. The issue with engineering companies it that it leads to difficulty in growing the scale of the business.  The level of professional expertise is finite in the number of experts employed.

 Engineering talent is often the limiting factor. If your company can take that know-how and package it into a product, scalability is easier.

 Once you have a product, adding services makes it more valuable. Sometimes so much so that the product is given away at a loss or even free. Look at the costs of phones. Since its introduction in 2007 the iPhone’s price has dropped like a rock, the service however is the business model for Apple.

The introduction of the iPad last week is a good example of a company exploiting a proven platform to squeeze more hardware sales, and open up new service possibilities. The reviews are coming in fast and furoius but I’m reading that it’s just a really big iPhone. The key here is that it really is more than that. Because of the iPhones’s size, many applications didn’t work well on the small sceen.

Now that they have an updated platform, with the iPad, more services will be created to take advantage of the size. Apple is taking another run at the service-product-service cycle.

The dilemma today is the rapidly accelerating rate of change. By the time you get your project off the ground the market, it’s quite likely that the worlds has moved on.

 Along comes a disruptive innovation open source to change the game your company’s committed to; proprietary Windows to Linux, MS office to Open Office, Servers to Cloud Computing. It is an increasingly clear fact that whatever strategy chosen, a business needs to keep an eye out for competitive threats to a business model. Apple’s new iPad is a complemenmtary product that extends the brand and the base technology from the iPhone.

Business-wise, it should be a winner.