Redbean - Back in “the valley” after a several year break it has been good tapping into the sort of hard intellectual thinking that Americans do so well. They think hard about things like politics, education and many other issues. (Sure, they could probably think harder about global warming.) But they think particularly hard about business, its benefits, its impact and downside and the many subtleties of how it works. Almost anyone in the Bay area around San Francisco can be engaged in a knowledgeable conversation about the latest business topics, trends and opportunities.
So it was great to attend a think tank on global learning with many feisty educators, economists, designers and technologists up in the Santa Cruz mountains (more on this later). Just as interesting has been my catching up with Apple colleagues for an injection of technology trends and futures. Yet it wasn’t their technology that impressed me. It was their business models.
Apple is on a roll. It has what every company, small or large, should desire in its revenue stream, diversity. In the iPod it has a winning product, doing sales of 40M per annum, while in iTunes it has a winning service with 2006 sales of 1,200M songs. That’s over five million songs a day at US99 cents each.
In addition the two winners are joined at the hip by an array of well designed and powerful computers and the most elegant and efficient operating system available, MacOSX.
Sure I have been a Macintosh user for twenty years and even an employee for several years. But my biases apart you can’t deny that what Apple has done is build a phenomenal business strategy that allows a “digital lifestyle” consumer a one-stop-shopping experience. This holistic view of the market place is almost unique in the digital world and possibly only matched by the product-services co-dependence of the automotive and fuel industries or newspapers and classifieds (which Google Ads modernised).
Now Apple has been around for a long time and this dominance has not occurred overnight. And I am sure Steve Jobs has read Geoffrey Moore’s classic “Crossing the Chasm” where just such a strategy was described in 1993.
Holistic product-service matchings are one of my primary design principles for a Smart Business. They are often hard to develop and hard to protect once established, since look-alikes will try to enter your market, but when done well they have a synergistic effect where sales in one area should increase usage in other areas. Most importantly they complete the offering to the consumer which increases yield and drives repeat business through rich relationships.
You can develop and offer synergies yourself (coffee and cakes/cafes), or use partnering and/or co-existence models (think airline, rental car). Look for complements that are either required or desired by the customer.
To not consider the complementary product-service pairings that your customers need is to put your standalone product or service at risk since if the gap is left unfulfilled a competitor will fill it or the customer will simply go elsewhere.
So whether you currently provide either product, services or both you should, like Apple, be thinking hard about all the possible connections and complementary offerings your customers and clients need and then working out both how to offer them and make some money at the same time. That is by thinking about your client’s success you will help deliver your own.