I talk a lot to clients (and also in my book of-course) about what the shift from product orientation to experience really means. As software eats the world an ever increasing number of products are becoming services – even those that you might think are relatively distant from digital disruption like the unbundling of Procter & Gamble's product portfolio by a host of digitally-enabled startups.
A business like Dollar Shave Club for example has totally changed the male grooming market by shifting the way in which shaving (and then other grooming) products are sold. In a traditional 'pipeline' business model, value creation is typically characterised by a linear value chain. The way in which digital often disrupts is by changing one stage of that value chain to such an extent that it unbundles the whole thing. Dollar Shave Club have disrupted the route to market but in doing so this transforms the rest of the value chain as well including operations and logistics. And of-course having a direct to consumer model means that rather than being reliant on manufacturing and distribution efficiences and relationships with retailers, layers of services and experience can be added to what was a razor and some shaving foam.
The impact of this is quite profound. Not only does service design and innovation become way more important but the orientation of the business is more focused on continuous iterative improvement, and in the case of a platform business, externally-facing orchestration, and the flow of value around an ecosystem (including data through APIs). Experience is not limited to comms and marketing, but becomes fundamental to what the business is all about. And increasingly of-course, that means that service innovation is not limited to digital as a channel but digitally enabled physical hardware and real-world experiences. Just as businesses that started out with physical products are becoming more focused on software, so software-dirven businesses innovate into hardware. Google does Nest, Pixel and Home. Amazon does Kindle, Echo, and so on.
And now Citymapper does buses. It's (to me at least) a fascinating phenomenon that a startup that began as an app to help people get from A to B could well end up becoming a bus company. But it makes complete sense in a world where sluggish response to consumer need opens up the very real potential that someone else will come in at pace to fill the void (just look at what's happening with banking, with space created for great propositions like Atom and Monzo due to the glacial pace of mobile user experience innovation from most of the big players). In his recent shareholder's letter Jeff Bezos talks about how customer's are ‘beautifully, wonderfully dissatisfied, even when they report being happy and business is great’, and how a desire to delight customers will therefore drive continuous invention and progression. I'm quite sure Citymapper didn't envisage becoming a bus company when they started out, but the point is is that they are bold enough to think broadly in terms of capabilities not markets in order to innovate and evolve.
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