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Product Strategy: Smart Customization

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OCUMENT DESCRIPTION
The advantages of Smart Customization are a bit more discernible in the manufacturing industry—owing to fairly speedy cash recoveries when factory costs are aligned to customer value. However, services sector can also benefit from Smart Customization, but requires relatively closer interactions with customers and more flexible systems for providing offerings. Service sector is more complexity ridden, yet offers more opportunities.

However, success lies in balancing the cost of complexity against the value of variety, comparing the benefits of sales growth against the buildup of overhead and indirect costs.

This presentation talks about the benefits of enabling Smart Customization to survive and knock competition. To take full advantage of Smart Customization, organizations must focus on 3 sources of improved performance:

1. Understand the sources of Value from customization
2. Focus on the right customization
3. Tailor business streams to provide Value at minimal cost

Smart Customization involves a cross-functional management system to rationalize a company's operations by sharing common resources across divisions.

The slide deck also includes some slide templates for you to use in your own business presentations.

Publicado en: Empresariales
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Product Strategy: Smart Customization

  1. 1. This is an exclusive document to the FlevyPro community - http://flevy.com/pro Framework Primer Product Strategy: Smart Customization Presentation created by Understand the sources of Value from customization Focus on the right customization Tailor business streams to provide Value at minimal cost 1 2 3
  2. 2. 2This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Contents Overview Types of Customization Sources of Improved Performance Templates The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/product-strategy-smart-customization-3779
  3. 3. 3This document is an exclusive document available to FlevyPro members - http://flevy.com/pro This framework discusses the role of the Smart Customization of products and services in driving growth and optimizing costs Presentation Overview Smart Customization involves a cross-functional management system to rationalize a company’s operations by sharing common resources across divisions. The advantages of Smart Customization are a bit more discernible in the manufacturing industry—owing to fairly speedy cash recoveries when factory costs are aligned to customer value. However, services sector can also benefit from Smart Customization, but requires relatively closer interactions with customers and more flexible systems for providing offerings. Service sector is more complexity ridden, yet offers more opportunities. However, success lies in balancing the cost of complexity against the value of variety, comparing the benefits of sales growth against the buildup of overhead and indirect costs. This presentation talks about the benefits of enabling Smart Customization to survive and knock competition. To take full advantage of Smart Customization, organizations must focus on 3 sources of improved performance: The slide deck also includes some slide templates for you to use in your own business presentations. 1 Understand the sources of Value from customization 2 Focus on the right customization 3 Tailor business streams to provide Value at minimal cost The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/product-strategy-smart-customization-3779
  4. 4. 4This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Customer today have unlimited access to information and thus demand more personalized offerings Organizations that tailor their business models and organizational structures in line with bespoke customer needs can become industry leaders versus those that remain static. Multiple Points of Focus – Overview Most executives believe that a strong focus of attention is the key to keeping rivals at bay and realizing amazing revenues. However, the approach has its own shortcomings, as a focused market, geography, value proposition, or segment becomes replete after a while. Organizations need to aim for and harmonize multiple points of focus, since customers, today, demand highly customized products and services, targeted specifically to their needs. The customers justify their demand as they feel that the advancement in technology, increased access to information, and innovation in operational excellence, nowadays, has enabled them more opportunities to get customized service or product offerings from the suppliers. The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/product-strategy-smart-customization-3779
  5. 5. 5This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Contents Overview Types of Customization Sources of Improved Performance Templates The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/product-strategy-smart-customization-3779
  6. 6. 6This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Firms that don’t revisit their business models & operations in accordance with customers’ demands for customization lag behind their rivals Types of Customization – Overview Typically, there is often a two-to-one performance difference between “smart customizers” and “simple customizers.” With rising demands for customized offerings by the customers, organizations need to gauge the value that customization offers to their customers with the complexity costs they can charge them, in order to achieve higher growth and profit margins than their competition. Investigations have revealed remarkable dissimilarities between enterprises in terms of their approach towards customized client requirements: Simple customizers 1 Smart customizers 2 Those organizations that offer transient solutions to customer demands. The firms that trans- form and bring their customer strategies and implementation plans in line with the specific customers’ requirements. Source: Smart Customization: Profitable Growth Through Tailored Business Streams, Booz & Co, 2004 High Low High Low Deliveryalignedwithcost driversandaccountvalue Customer insights and value creation Smart Customizers (40% of companies) Twice as likely to have growth rate above industry average More likely to have profit margins above industry average Average Customizers (30% of companies) More likely to have growth and profit margins below industry averages Simple Customizers (30% of companies) Five times as likely to have growth below industry average More likely to have profit margins below industry average The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/product-strategy-smart-customization-3779
  7. 7. 7This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Improved focus on the specific needs of customer segments helps boost the market share Types of Customization – Smart Customization For low-end customer segments, smart customizers utilize automation to their benefit and reduce the costs of their sales, marketing, and customer service functions. Research on various large organizations reveals that smart customizers (high performing companies) have a consistent focus on 3 best practices: Smart customizers have a clear appreciation of the value that customization allows to their customers. They strive to constantly transform towards the point at which customization adds value to both their clients and their organization. They modify their business models based on their customers’ demands, to provide value at significantly lower costs. 01 02 03 The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/product-strategy-smart-customization-3779
  8. 8. 8This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Contents Overview Types of Customization Sources of Improved Performance Templates The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/product-strategy-smart-customization-3779
  9. 9. 9This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Organizations should initiate customization by having a comprehensive review of all the business streams—segments, demands, and servicing Customization entails reviewing all functions and channels, delivering more to clients who need the highest interaction—less to others—but maintain highest quality for all. Sources of Improved Performance – Overview The advantages of Smart Customization are a bit more discernible in manufacturing—owing to fairly speedy cash recoveries when factory costs are aligned to customer value. Source: Smart Customization: Profitable Growth through Tailored Business Streams, Booz & Co, 2004 The Service sector can also benefit from Smart Customization, but requires relatively closer interactions with customers and more flexible systems for providing offerings. The Service sector is more complexity ridden, yet offers more opportunities. However, success lies in balancing the cost of complexity against the value of variety, comparing the benefits of sales growth against the buildup of overhead and indirect costs. To fully capture the benefits of Smart Customization, organizations must focus on 3 sources of improved performance: Understand the sources of Value from customization Focus on the right customization Tailor business streams to provide Value at minimal cost 1 2 3 The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/product-strategy-smart-customization-3779
  10. 10. 10This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Finding the right balance between additional or fewer range can uplift growth, but it is inadequate to generate higher earnings Companies need to calculate the value that reflects the opportunities in the segments they serve and the potential for effective delivery. 1. Understand Sources of Value from Customization – Overview Competition forces the companies to increase customization, differentiation, and segmentation. To create additional value through more differentiation and more segmentation, organizations extend their existing offering range further, add new specifications to products, and create brand extensions. To differentiate, create additional demand, and to capture market share, sooner or later, rivals add more variety and segment the market further. Most firms want to accomplish this without essentially transforming the production and delivery system. • This adds to the problem of complexity and there comes a point where further customization efforts begin to raise costs and shrink margins, nullifying the value gained from differentiation. These actions initiate an unnecessary “customization competition” between companies, and they fail to keep both growth and costs in check, and eventually drain their performance engine. This is often done without comprehending the sources of value from customization, carefully planning, or contemplating the environmental and external forces in play. In the wake of intense competition, most organizations tend to take the following actions: Understand the sources of Value from customization The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/product-strategy-smart-customization-3779
  11. 11. 11This document is an exclusive document available to FlevyPro members - http://flevy.com/pro We often tend to provide similar service and support to transactional customers and those with deeper needs—thus adding unneeded costs Getting the customization right is critical to sustained competitiveness of an organization. 2. Focus on Right Customization – Overview A thorough interpretation of the requirements of different customer segments and identification of the unique requirements from the common requirements is essential to generate superior performance and customization revenue. ORDER QUALIFIERS The products and services that are not the real drivers of growth, but are, actually, the bare minimum offerings required by the firms to keep competing with the rivals. The order qualifiers must be standardized to reduce costs and outpace rivals. 1 ORDER WINNERS Products and services that meet a customer’s most critical needs. These offerings can differ across segments, yet some needs are shared across segments. Clear recognition of customers’ order winners allows a company to offer customized offerings to seize market share and develop strategic relations. 2 There is a need to differentiate between the 2 categories of products and services first: Focus on the right customization The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/product-strategy-smart-customization-3779
  12. 12. 12This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Companies need to focus not just on more customization, but on right customization Organizations must consciously balance the cost of complexity against the value of variety to implement Smart Customization. 2. Focus on Right Customization – Smart Customization Performance Curve Source: Smart Customization: Profitable Growth through Tailored Business Streams, Booz & Co, 2004 The sources of right customization are: Develop clear understanding of order winners across different customer segments. Introduce customized offerings that maximize market share and strengthen strategic partnerships. Revenuefromcustomization($) Operatingcost($) Revenue Cost curve with unmanaged complexity Max profit New Max profit Cost curve with complexity contained Low customization Optimal product/ service breadth Greater product/service breadth enabled High customization Customized value proposition and delivery Focus on the right customization The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/product-strategy-smart-customization-3779
  13. 13. 13This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Tailored business streams involve segmenting flows to satisfy different customer needs pertaining to cost, value, speed, and quality Market conditions and cost changes affect tailored business streams—this demands having proper policies and controls in place. 3. Tailor Business Streams to Provide Value at Minimal Cost – Overview To serve each segment profitably, smart customizers match their segmentation strategies with delivery mechanisms designed specifically to serve them—i.e. tailoring the business streams to provide the highest value at low costs. Streamline the complexities related to competitive economy. The businesses manage multiple flows to deliver differentiated services and products. • Easy operations do not necessitate expensive management and operational infrastructure that are needed to run more complicated activities. Keep the streams separate to reduce costs. The Tailored Business Streams (TBS) approach helps: TBS also get influenced by internal and external forces—e.g., market conditions and cost changes. These forces can hurt business models, necessitating the need to develop appropriate policies, guidelines, and controls. These guidelines and controls assist in constant value creation by each stream for the firm as well as the customers. Tailor business streams to provide Value at minimal cost The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/product-strategy-smart-customization-3779
  14. 14. 14This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Tailored business streams contain people, processes, and technologies needed to deliver parts of the product or services Tailored business streams flow together into a totally-integrated model that segregates complex and expensive segments of the business from the simpler, streamlined portions. 3. Tailor Business Streams to Provide Value at Minimal Cost – TBS Source: Smart Customization: Profitable Growth through Tailored Business Streams, Booz & Co, 2004 TBS functions include: Distinct, mini-operating models that contain multiple functions to deliver value from a company to its customers—e.g., demand generation, production, supply chain, and customer care. Each stream serves different client needs regarding cost, quality, speed, and innovation. Each stream possesses appropriate management tools and processes to deliver at the lowest cost with the greatest return. TBS help to create differentiation and the capability to align business streams with changes in customer value, providing meritorious solutions based on customer needs and finances. Understand value (Demand) Participation choices Understand cost-to- serve (Supply) Define best fit Realign the organization Manage change and execute − Drivers of cost-to-serve and complexity. − Performance improvement levers. − Identify and quantify opportunities to capture value. − Drivers of value and variety. − Trade off value for cost. − Deliver differentiated value proposition. − Ensure quality. − Reflect total infrastructure of supply. − Align people, processes, and organization. − Embed enabling systems and technology. − Define metrics. − Align leadership. − Agree on priorities. − Mobilize. Tailor business streams to provide Value at minimal cost The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/product-strategy-smart-customization-3779
  15. 15. 15This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Contents Overview Types of Customization Sources of Improved Performance Templates The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/product-strategy-smart-customization-3779
  16. 16. 16This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Insert headline Types of Customization – TEMPLATE Insert bumper. Source: Smart Customization: Profitable Growth Through Tailored Business Streams, Booz & Co, 2004 High Low High Low Deliveryalignedwithcost driversandaccountvalue Customer insights and value creation Smart Customizers Average Customizers Simple Customizers The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/product-strategy-smart-customization-3779
  17. 17. 17This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Insert headline Insert bumper. Sources of Improved Performance – TEMPLATE Source: Smart Customization: Profitable Growth through Tailored Business Streams, Booz & Co, 2004 Understand the sources of Value from customization Focus on the right customization Tailor business streams to provide Value at minimal cost 1 2 3 • Insert filler text, filler text, filler text, filler text, filler text, filler text. • Insert filler text, filler text, filler text, filler text, filler text, filler text. • Insert filler text, filler text, filler text, filler text, filler text, filler text. The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/product-strategy-smart-customization-3779
  18. 18. 18This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Insert headline Insert bumper. Sources of Improved Performance – TEMPLATE ALTERNATE Source: Smart Customization: Profitable Growth through Tailored Business Streams, Booz & Co, 2004 Tailor business streams to provide Value at minimal cost Focus on the right customization Understand the sources of Value from customization • Insert filler text, filler text, filler text, filler text, filler text, filler text. • Insert filler text, filler text, filler text, filler text, filler text, filler text. • Insert filler text, filler text, filler text, filler text, filler text, filler text. • Insert filler text, filler text, filler text, filler text, filler text, filler text. • Insert filler text, filler text, filler text, filler text, filler text, filler text. • Insert filler text, filler text, filler text, filler text, filler text, filler text. The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/product-strategy-smart-customization-3779
  19. 19. 19This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Insert headline Insert bumper. Sources of Improved Performance – TEMPLATE ALTERNATE Source: Smart Customization: Profitable Growth through Tailored Business Streams, Booz & Co, 2004 Tailor business streams to provide Value at minimal cost Understand the sources of Value from customization 1 3 Focus on the right customization 2 • Insert filler text, filler text, filler text, filler text, filler text, filler text. • Insert filler text, filler text, filler text, filler text, filler text, filler text. • Insert filler text, filler text, filler text, filler text, filler text, filler text. The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/product-strategy-smart-customization-3779
  20. 20. 20This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Insert headline Insert bumper. Tailor Business Streams (TBS) – TEMPLATE Source: Smart Customization: Profitable Growth through Tailored Business Streams, Booz & Co, 2004 Understand value (Demand) Participation choices Understand cost-to-serve (Supply) Define best fit Realign the organization Manage change and execute − Drivers of cost-to-serve and complexity. − Performance improvement levers. − Identify and quantify opportunities to capture value. − Drivers of value and variety. − Trade off value for cost. − Deliver differentiated value proposition. − Ensure quality. − Reflect total infrastructure of supply. − Align people, processes, and organization. − Embed enabling systems and technology. − Define metrics. − Align leadership. − Agree on priorities. − Mobilize. The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/product-strategy-smart-customization-3779
  21. 21. 21This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Download 100s of similar frameworks from the FlevyPro Library: https://flevy.com/pro/library/frameworks The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/product-strategy-smart-customization-3779
  22. 22. 22This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Need more frameworks? Download our Complete Business Frameworks Reference Guide, a 350+ slide compilation of 50+ frameworks, on Flevy The Complete Business Frameworks Reference Guide is a best selling document on Flevy. It is 350+ slides--covering 50+ common management consulting frameworks and methodologies. A summary is provided for each business framework. The frameworks in this deck span across Corporate Strategy, Sales, Marketing, Operations, Organization, Change Management, and Finance. This reference guide is great for those who need a refresher on common frameworks, as well as be introduced and learn new useful frameworks. You can find this document here: http://flevy.com/browse/business-document/complete- consulting-frameworks-toolkit-644 The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/product-strategy-smart-customization-3779
  23. 23. 23This document is an exclusive document available to FlevyPro members - http://flevy.com/pro Flevy (www.flevy.com) is the marketplace for premium documents. These documents can range from Business Frameworks to Financial Models to PowerPoint Templates. Flevy was founded under the principle that companies waste a lot of time and money recreating the same foundational business documents. Our vision is for Flevy to become a comprehensive knowledge base of business documents. All organizations, from startups to large enterprises, can use Flevy— whether it's to jumpstart projects, to find reference or comparison materials, or just to learn. Contact Us Please contact us with any questions you may have about our company. • General Inquiries support@flevy.com • Media/PR press@flevy.com • Billing billing@flevy.com The content on this page has been partially hidden. FlevyPro members can download the full document here: http://flevy.com/browse/flevypro/product-strategy-smart-customization-3779
  24. 24. 1 Flevy (www.flevy.com) is the marketplace for premium documents. These documents can range from Business Frameworks to Financial Models to PowerPoint Templates. Flevy was founded under the principle that companies waste a lot of time and money recreating the same foundational business documents. Our vision is for Flevy to become a comprehensive knowledge base of business documents. All organizations, from startups to large enterprises, can use Flevy— whether it's to jumpstart projects, to find reference or comparison materials, or just to learn. Contact Us Please contact us with any questions you may have about our company. • General Inquiries support@flevy.com • Media/PR press@flevy.com • Billing billing@flevy.com

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