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Commodities to experiences

I recently read a book by Josehp Pine and James Gilmore. The book is already very old, a second hand book store finding. However the message is even more important at the time of e-commerce when tradional shopping and service companies see new challenges. Pine and Gilmore describe companies by their business idea, vision or strategy to dealing with extracting commodities, making goods, delivering services or staging experiences. This basic classification can be understood by the way companies put value into deliverables, their end products or services. Book has several examples like Disney's amusement parks or birthday party packages and a car company's customer group differentiation methods.

 

 

Experiences can be esthetic (passive partipation, immersion like visiting art gallery), entertainment (passive partipation, absorption like movie theaters), escapist (active partipation, immersion like joining a group exercise) and educational (active participation, absorption when studying university). All of these experiences can be enjoyed different ways and adapted to nearly any business. An airline company is able to offer entertaining and enjoyable flight experiences but also make the whole journey as an experience starting from smooth booking experience, taking the flight after spa experience in a lounge and ending after first class flight with private chauffer experience to the destination. Consultin company may ask customer for active participation in finding the problem or take it to the next level when offering options and story lines of consequences for different decisions. A traditional software delivery could also be a change journey while not only offering new solutions but put people in active role during the project. Customer team could use workshop sessions to imagine every day life of users for better user experience which will impact system user interface.

 

If we think about working environment of any company, we already realize that people have their roles while they do their part of in different phases. For any manager it can be useful to describe and tell the whole story like a director of a play, how each and every piece of work will relate to end users (audience experience). At the end of the delivery audience will surely know if some part is not correct or more is needed. If the thinking of each people participating into end product is realized well, people are involved and also know each others' value, making a big change in how we do our own jobs.

 

It can be difficult to make e-commerce experiences stage experiences but some companies really try it. Nearly every person have already tried shopping in Alibaba platforms and may have experienced how some shops just deliver the product to your designated address, but also some shopkeepers trying to involve at the very beginning of the purchase by offering answers through messaging each customer. However in this Alibaba experience it can be a bit annoying, since you just buy a few bucks product and expect fast delivery.

 

Some service companies still have no clue how much their personnel actually affect into end product, the experience, with their attitude and every day work. It's more than important to notice that your local noodle shop can make a big difference to others by simply making your waiting time enjoyable. Maybe you'll be offered a refreshing smoothie that time. Sometimes even a happy greeting really makes a difference compared to commodity product offering.

 

If your job is in marketing or you need to give different kind of presentations it is good to read from the book how you should prepare to each situation. Pine and Gilmore use four types: 1. platform theater, 2. street theater, 3. matching theater and 4. improvisation theater to classify these situation. Platfrom theater is simple, transcripted presentation which should follow the expectations. Street theater has several ways to end up into wanted conclusion while the way may change and have several paths. Matching theater is more thoughful based on different options, the surprise or situation when you can't be so sure which is expected before the presentation starts. The last improvisation theater happens typically unexpected, maybe in the corridor you meet your colleague and you're expected to react for the question or proposal.

 

Personally I believe strongly into new economy and even decide which service providers or goods I'm ready to buy based on earlier experiences or reviews from others. If it's a commodity product I may not need to think so much, but in a bigger decision like selecting a fitness center it really affects to my decision. A nice example from the book was differentiation of fitness clubs. Some clubs only offer cheap price, maybe expecting people would not use the service at the end so much while others can put their pricing based on the results customer wants to achieve in better health or body. Personal trainer service can for sure be the actual service or product for some clubs and they make the most of their income from them. Not simply offering nice facilities or classes can make an impact and some teachers keep members signing again and again. I have heard people even change a club when their favorite teacher gets a new position in other club.

 

We simply can't underestimate experiences. There will be new comers who want to change existing economy.

Business strategy and project strategy

It’s very common to think about business or company strategy and start projects which will develop or change current business processes or functions. As we have learned before, strategy is integral part of company culture and people’s way of doing. However less is understood about project management and its linkages to company strategy. It doesn’t mean that projects don’t have any strategies to end successfully or they are not part of change.

PMI’s strategic project management defines it ability to take project management into dealing with business aspects, not only traditional budget, scope and schedule. It means project managers need to know how to answer why, what and how question. Perspective (why) answers business background, objective and concept related questions. Position (what) is about product definition, competitive advantage or value and success or failure criteria. Guidelines (how) is about project definition and strategic focus in project implementation and execution.

To run successful strategic project management it’s important to concentrate in project definition phase. In the very start there are more links between strategic planning and project defining. If project doesn’t solve or link with business strategies, definition phase may even closed and project never started. Several iterations are usually needed to make project outcomes, results are carefully planned and decided. After project definition phase is ended and project planning started it will still have checks between business strategies. If they are not met, planning needs to be revised. Successful planning phase ends up in implementation and control planning which are normally done with PMO. After project lessons learned or other feedback session or report is important. That will possibly recognize gaps between project outcomes and business strategy goals which can be solved in new project.

However strategic project management isn’t only a link between business strategy and projects. When project manager has decided to do his job strategically it means he must have methodologies and tools. This normally means in execution more meetings or status reporting to C-level directors or business/concept owners. When the project includes new business processes it’s important to have enough specialists involved in definition phase because they know current situation and can give important feedback for planned solutions or task plans. Project manager should also create LRC and communication plan. This will ensure all stakeholders are recognized and taken part of execution. In IT projects it’s typical to have system users in project team and the way things look in realization phase or testing will later affect to acceptance of new system. Traditional waterfall methodology this may end into schedule delays, agile methodology will have more options to affect for example good communication of releases what is solved in each release or what will be added in next release.

 

In my opinion without a strategy there can’t be any project. That’s why it’s important to collect as much as possible information from project team and stakeholders before the project kick-off. It will be much more difficult to start communication between all parties in later phase if homework wasn’t done carefully. Project management division should never be a separate, isolated team inside any organization. It should be clue between all divisions. Project people are only servants who execute decisions made by business people.

Future battles

I spent last two weeks' free time to concentrate something what I studied and which made me excited during my university time. The previous post about Gary Hamel's and C. K. Prahalad's book Competing for the future was in question. Even if the book was written already over 20 years ago, it can still give some thoughts and ideas for today's business. My personal opinion to knowledge is that it will not easily get old, but need to be updated time to time. That's what I did.

 

Future can start even small things. The starting questions of the book are a good example. Does senior management spend more time in re-engineering core processes or regenerating core strategies? Is company more rule-taker or rule-changer? Is company's advantage-building efforts more catching up others or mostly new to the industry? Is senior management more working as a maintenance engineer or an architect designing the future? These are just a couple to mention. For sure if you focus on present, not inventing anything groundbreaking, your company will sure be just like others, not change-driven and future focused.

 

The same setting up of questions continues later when you're asked about current versus future. You should more focus on asking about the future, who are your future customers and which are your future battle winning products? Strategy could also be keeping up, staying where you are or making small changes. However it's usually called past winner: last year our market share was 25% in pencils. Companies can decide their focus.

 

For companies or persons one key competence is ability to forget. When you are changing your job, are you trying to define your position what it previously was or are you ready to put yourself outside the comfort zone? I admit it's not an easy task to learn new and forget the past. Also as a person, you will still need your core competences as a basis. Don't forget everything, just try to be brave enough to get into new, build your future.

 

The basic structures are needed for your future strategy. This topic is described as a strategic architecture, which relates to company or organizational culture. People, processes and structure should have a common viewpoint, capability to put senior managers to future commanders. For the future foresight, ability to see and think is needed. I would descibe this through intangible asset, something you can't at first see when you enter the office or meet new people but will soon recognize it when you work with others or see how they behave in new or surprising situations. Ability to see over the data (hard facts are also needed) and use instincts over the historical success. That's certainly needed.

 

What are your company's core competences? In my opinion most of us stuck into the obvious but don't see causal relationships between competences and core competences. If your company is selling mobile phones, is your core competence selling them or knowing more details of them? Or is your company's core competence to attract customers? Maybe your core competence is in marketing and finding good store locations? Or logistics? Your company is maybe able to bring new models first into the market. Then it can go as deep as building trust with suppliers. Normally competences are listed core competences if people think they should be, not because they are.

 

 

The book put me memorize the old learnings, but also think about new ways of thinking and learning. It can be helpful for IT project manager like me because our job is a lot of building bridges between future and past, developing new ways of work and bringing systems into live without exactly knowing the outcome when project starts.

Project management and the strategy

Last two years I’ve been working in Asia. Living in Taiwan, managing projects in Vietnam and Indonesia. It has been different than in Europe, but from the project point of view each country will always have also similarities. One week ago I visited a second hand bookstore and came to thinking about concluding some learnings, get back to what I studied and make a bit comparison of the recent experiences. Now that my first implementation is soon going to be finished, second one after that it’s a good time to reflect and write down lessons learned.

 

My major was knowledge management in university. I also took a lot of strategy courses; they were always interesting with anecdotes and real life experiences. In the bookstore I found Hamel and Prahalad’s book Competing for the future. It’s not the latest edition from them, but I thought it might be interesting to read through and take the lessons into this time and context. Like most of the strategy books, they are usually about old, big established companies compared to new, rivals. For me this can be similar to old vs. startups or previous success vs. future success. In Asia it’s definitely worth to think as well society or country perspective the differences, how development will be different or unique.

 

As a project manager work should not be only about issues, problems and risks. In the very beginning of each project you need to make many planning documents to decide the right way of doing, structures and schedule. Another thing is to know your team, customers and stakeholders. This is where the strategy comes into the picture. If you’re not aware of project goal, how it’s linked to company strategy and what kind of expectations there are from different people, I’m sure project will not be a success.

 

 

I just started the reading, but I’m sure I will find some key notes during my journey. I will then work a bit to write another post to conclude and structure my thinking.