Reinventing the Product

To thrive in the digital age, businesses must transform their products and services to offer experiences rather than just goods – welcome to the outcome economy.

1. The Outcome Economy: The Evolution from Goods to Experiences

For over two centuries, businesses focused on producing goods for sale, but today, selling products is just the starting point. We’ve entered the "outcome economy," where companies sell services and results, not just the objects that enable them. The shift is about solving customer problems rather than simply providing tools for customers to solve problems themselves.

Instead of selling drills, companies now sell art-hanging services. This approach provides value and efficient solutions while building stronger customer relationships. It highlights the need to understand end-user goals and preferences deeply, pivoting from product-focused strategies to customer outcome-oriented strategies.

What drives this evolution is the expectation of ongoing benefits and services. Businesses must now follow through after the point of sale, ensuring experiences that extend product value.

Examples

• Customers choose Uber for transportation, not just for access to cars.
• Tesla continuously updates its software, making older cars better over time.
• Companies offer monthly subscriptions for services like home security rather than selling just cameras.

2. Transform Every Layer of Your Business to Be Digitally Ready

To meet new demands, businesses must digitize every part of their operations. All layers, from engineering and manufacturing to customer support, need to seamlessly communicate and adapt across a digitally connected ecosystem.

A digital-ready workforce must exist to rapidly update and enhance products. Businesses use technology for quick prototyping, reducing time-to-market. Functionality like instant software updates after launch also ensures continuous improvement.

Moreover, companies need to be adaptable. With markets evolving at an unprecedented pace, the ability to pivot – redesigning products or processes – is more important than ever.

Examples

• Amazon’s product lifecycle includes prototyping, customer feedback, and rapid design alterations.
• Boeing leverages real-time aircraft engine data for immediate updates to performance algorithms.
• Microsoft moves beyond products like Office by constantly evolving Office 365 through the cloud.

3. Customer Experience Outranks Product Features

Traditional methods of adding flashy product features are no longer sufficient. It’s the journey through customer experience that now defines success. Companies must consider how customers interact with products before and after the sale.

This process begins with making purchase decisions easier for customers. Experiences such as unboxing or initial product setup should delight, while post-purchase services like upgrades and support extend value.

Tesla exemplifies this, proving that cars are more than a mode of transport. Features like self-driving updates or optimized navigation systems reaffirm that every touchpoint matters.

Examples

• A camera company improves its online platform to simplify field comparisons for buyers.
• Apple creates an "unboxing experience" that excites customers with vibrant packaging.
• IKEA enhances post-purchase setup by introducing in-app augmented reality instructions.

4. Products Are Becoming Services

Today, the distinction between buying a product and subscribing to a service is diminishing. Companies increasingly package products with services to maintain customer relationships and engagement.

This shift often requires revising organizational strategies, particularly in research and development (R&D). Businesses must constantly evolve their offerings to cater to an ever-changing market.

Platforms are another game-changer for delivering services. Whether companies join existing platforms or create new ones, platforms help sustain customer connections and enable regular updates.

Examples

• Netflix started as a DVD rental service and transformed into a streaming platform.
• Car brands like Toyota explore ride-sharing services rather than selling vehicles.
• Google revolutionized navigation by offering map-based services continually improving through data.

5. Digital Platforms Are the Core of Modern Business Success

Building or joining platforms is now integral to staying relevant in today’s connected economy. Platforms aren’t just sales channels – they amplify collaboration, drive innovation, and unlock multi-dimensional customer touchpoints.

Platforms let companies integrate with complementary services from external partners. Many car firms, for instance, partner with entertainment, navigation, and artificial intelligence companies to create enhanced driving experiences via a single interface.

Examples further illustrate how cross-platform collaborations generate value by combining technologies that customers already love.

Examples

• Spotify integrates with Facebook for social sharing of music playlists.
• BMW partners with AI firms for in-car assistants.
• Amazon’s ecosystem connects Prime Video, Alexa, and e-commerce on a unified customer platform.

6. The Power and Versatility of Artificial Intelligence (AI)

AI is redefining industries by enabling products to sense, understand, act, and adapt to user needs. Companies adopting AI become more competitive, as it allows them to personalize services and predict trends intelligently.

One area revolutionized by AI is automating repetitive tasks, freeing humans to focus on creativity. Machines learning from user behavior provide businesses with valuable insights about customer preferences.

Even legacy businesses are finding opportunities through AI integration, proving it’s no longer an option but a business necessity.

Examples

• Smart home developers use AI to anticipate residents’ energy-saving habits.
• Amazon’s recommendation engine drives its e-commerce success.
• AI-powered chatbots improve service satisfaction while reducing customer wait times.

7. Agile Teams Deliver Faster Results

Agility in business requires breaking free from hierarchical constraints. Small, empowered teams with shared goals thrive in today’s environment. They experiment, adjust, and launch new solutions much faster than rigid structures allow.

Amazon’s "two-pizza" team principle exemplifies this agile model. Teams large enough to need more food find themselves too bloated to act decisively, highlighting the importance of nimble collaboration.

This approach hinges on collaboration and real-time decision-making, driven by shared access to key data.

Examples

• Startups embrace agile methods like Scrum to bring ideas to market within weeks instead of years.
• Google’s self-organizing teams produced rapid iterations of their Search offering.
• Spotify organizes teams ("squads") around clear goals such as enhancing audio streaming services.

8. Cost Control Meets Digital Transformation

Digital transformations may appear expensive, but they often result in reduced costs and greater business efficiency over time. Investing in infrastructure ensures smoother workflows, better data handling, and long-term cost savings.

Digitally-enabled businesses communicate and operate better, avoiding redundant processes and errors. Plus, automated systems reduce reliance on manual oversight for repetitive tasks.

A progressive mindset makes businesses flexible and resource-efficient as operational scales evolve.

Examples

• Banks reduce branch costs by shifting services online.
• Factories like Tesla automate production, lowering overhead expenses.
• Cloud computing cuts server maintenance costs for startups such as Slack.

9. Faurecia: A Real-Life Success Story of Digital Reinvention

Faurecia represents how a company can pivot successfully by going all-in on digital transformation. By leveraging data-driven tech and partnerships, its smart car cockpits redefine automotive experiences.

Its intelligent product range enhances driving safety and convenience through biometric recognition and adaptive interfaces. The resulting value boost mirrored Faurecia’s market growth.

Pioneering future-ready models, Faurecia embodies proactive adoption over reactive resistance.

Examples

• Parrot amplified Faurecia’s multimedia car ecosystem.
• Joint ventures brought high-tech talents to traditional sectors.
• Connected cockpits established Faurecia as a leader in tomorrow’s €35 billion market.

Takeaways

1. Start Small But Meaningful: Redefine one existing product as a connected experience instead of overhauling everything immediately.
2. Build Cross-Functional Teams: Empower compact teams to develop, test, and deploy ideas quickly using shared resources.
3. Embrace Constant Learning: Track and analyze customer interactions with your offerings to consistently refine and improve value propositions.