The great shift: from product to service

I spoke to the Managing Director of Miele the Netherlands the other day, during which he shared the interesting challenge of a recent market development: the shift from product thinking towards service thinking. For Miele this challenge is as simple as it is complex. The MD of Miele summarised it thus: “People don’t want laundry machines anymore, people just want clean laundry.”

If you take a few minutes to really grasp the impact of this statement, you’ll start to understand the enormity of the transition that Miele is facing. To explore and be ready for the big change, they’ve now opened up an Experience Center in Amsterdam where you can get a clean laundry subscription. It’s a familiar enough model: some hipster bicycle courier will pick up your laundry in the morning and by the time you return home - exhausted from a hard day's work - you’ll find your clean and ironed clothes on your doorstep. There it is: the shift from owning a laundry machine to always having clean clothes. Simple, but radical.

And this made me think. If you take a closer look you will start to recognise a pattern: similar shifts are appearing everywhere.

There’s Airbnb for example. That turned the hotel-industry up-side-down. By stating that everybody who owns a room, apartment, loft, windmill or house is also a potential hotelier. The platform makes a reasonably complex request appear simple: marrying the request to spend the night somewhere with a range of available and suitable accommodation in the desired location.

Then there’s Uber. Here, everybody who owns a car could also set themselves up as a taxi. Again the platform makes the deal between requests for a ride and the availability of trustworthy chauffeurs with wheels. It’s simple, but oh-so disruptive.

It doesn’t stop there. The on-demand platforms are part of this bigger movement. Spotify, Netflix, HBO, Hulu. They all understand that people don’t want to own CDs, records or DVDs anymore - they just want to have access to all the films, series, documentaries and music that they can think of, whenever they want it.

Interesting and fascinating.

Many of these rely on a subscription model. The real money value is in the recurring payments people make for which they get access in return. All you can eat models are popping up like mushrooms in the digital landscape.

Another interesting disrupter was the Dollar Shave Club. These guys figured out that men don’t like to spend a lot of money on new razorblades and thus they invented a subscription model where users can get a monthly razor package for only 1 USD. The (financial) success of the Shave Club was all over the news when Unilever bought the company (and its subscribers) for 1 billion US dollars back in 2016.

Platform or plug-in

And since we at smartocto are working for news & media organisations I was wondering what their learnings for this industry should be if you look at all the disruptive innovations mentioned above.

The main product that these organisations are creating is content. Mostly in the form of an online news item, video, radio or tv-programme. They distribute this content via their own apps and websites and hope to attract a loyal and returning audience with that. And the big pink elephant in the room is about the question if all these news-apps and websites, radio shows, podcasts and tv-programmes are powerful and distinguished enough to stand out in the overcrowded landscape?

The million dollar question is: are you the platform or the plug in?

And precisely this question is dominating the content market at the moment.

For example the NPO (the national broadcaster in the Netherlands) is considering sharing their series and movies with Netflix and their podcasts with Spotify, although they have a large and well known platform of their own. They recognise that joining the global market leaders is probably a more sustainable strategy than investing in their own platform and not being able to compete with the technology and the UX standards these platforms impose. They consider it to become a plugin in the dominant platforms. And this does not stand on itself. There are multiple examples around.

And once you’ve opened your eyes for this development you’ll recognise it sooner in the market. And if you’re in the news industry yourself it’s always smart to ask yourself this confronting question as well: Am I strong enough to stand out in the crowded and competitive digital market or can I benefit from joining platforms as a plugin?

Subscription model

Back to the disruptive Dollar Shave Club. The product itself was not disruptive. On the contrary. Shaving is as old as the beard itself. The disruption was the cheap subscription model. Man (or their partner) massively subscribed to the model and that was the true disrupter. All of a sudden Dollar Shave Club not only earned 12 USD per year (recurring) but also they owned all the info about their clients (name, age, address) and thus had plenty of opportunity and targeted marketing efforts to upsell and invest in making them more loyal. Unilever who recognised the power of this model decided to buy the Shave Club - also to learn from their (content) marketing strategy and the subscription model. It’s actually from product to service again.

And my question to the news & media industry is: what’s your Dollar Shave Club solution? Is it the platform and plugin dilemma or is it the subscription disruption?

Or is it time for something new?

So, here’s something to think about… If Uber states that everyone with a car can be a cab, what about this one: everybody with a smartphone can be a reporter!