The Connected Company – Dave Gray Chapter 1 – 21
Ch. 1 The connected customer
Power shift from companies networks; they have more choices and knowledge than ever
before.
Networks; the mainstream media, readers, customers, employees, analysts etc.
Cascading effect can be initiated by customers, employees, enemies/competitors, senior
executives
Examples in the book:
-In February 2007, Starbucks chairman Howard Schultz sat down to write a difficult memo to
the CEO. He wanted to get back to the core (the passion for Starbuck coffee) to become
profitable again. The memo got leaked on the internet. It spread very fast and everyone was
talking about it. Starbucks was no longer getting credits for all the good actions they did. And
there was no way for Starbuck to speak up quickly to defend their name.
-In 2005, Dell learned a tough lesson when they shut down peer-to-peer customer forums.
Dell customer and blogger Jeff Jarvis commented ‘’Dell lies. Dell sucks’’ and within after
which ‘the news’ spread quickly in the networks. Dell’s sales and reputation shrunk
drastically. Dell learned from its mistake and introduced a ‘customer listening command
centre’ in 2010.
-In 2008 Dave Carroll released the song ‘’United breaks guitars’’ after the airline refused his
claim because it wasn’t within 24 hours.
-In 2009 two employees did Dominos dirty by doing disgusting stuff to the pizza’s they were
making, which they recorded.
-In 2011, a woman named Kristen Christian spread a strong message on Facebook after the
Bank of America decided to charge 5dollars per month to use the debit cards. She, with
many others shifted from this bank to non-profit credit unions. Bank of America dropped its
plan to charge additional fees.
The peer-to-peer conversations subvert (ondermijnen) the traditional marketing channels.
Customers trust each other more than they trust companies, who have a vested interest in
making themselves look good. Customers have always had the power to promote or demote
a company to their peers, but now they are connected to a global network, this linking
makes all the difference.
-In 2010 the non-profit organisation WikiLeaks caused the biggest leak of classified material
in the history of the world and the US government couldn’t do anything, because once
information is released to a network, it can’t be pulled back.
Some companies have figured out how to create direct useful relationships. Amazon, e.g.,
allows customers to write negative comments on their product to offer their customers a
better buying decision.
,Ch. 2 The service economy
There is a great shift from an economy based on marketing things to one that is powered by
knowledge, creativity and ideas. This leads to a whole new economic landscape.
Jeffrey Immelt, CEO of General Electric, says it is an emotional, raw social, economic reset.
The material abundance (overvloed) was made possible by an industrial economy that
focused primarily on mass-producing material goods. Right now, we stand on the verge of a
new era. The producer-driven economy is giving way to a new, customer-centred world in
which companies will prosper by developing relationships with customers – by listening to
them, adapting, and responding to their wants and needs.
It’s not only companies that need to change, because our entire society has been optimized
for production and consumption on a massive scale; school systems, the government,
suburbs (buitenwijken), the entertainment and advertising industry etc.
We live in a service economy, wherein new habits, behaviours and organizational structures
have to be developed.
Many companies which started in manufacturing (such as GE and IBM) made the transition
to services, because of three things: product saturation, information technology and
urbanization.
The products that companies sell do not only offer functionality, but intangible things like
status, pride, ownership and novelty.
The post-industrial revolution is delivering a new kind of abundance; an abundance of
information, along with networks and mobile devices for moving that information around
and much faster processing. This digital revolution is ushering in new ways to deliver,
combine and mix up services; e.g. renting strangers’ apartments, negotiating bargain prices
from airlines and 4-star hotels and much more.
In addition, there is an increasing trend toward urbanization; because in the cities there are
more jobs and they get paid (23%) more. For companies it is interesting, because that’s the
place where the most skilled workers are.
Because the city life is so crowded, people don’t have place for a lot of products, for which
they spend their money more on services (e.g. washing service, instead of washing machine,
taxi, instead of owning a car). Companies make more money because of the high density.
, Ch. 3 Everything is a service
In the industrial era, companies were designed to produce high volumes of consistent
standard output, with great efficiency and at low cost. Unlike products, services are often
designed or modified as they are delivered; they are co-created with customers. Services are
contextual; where, when and how they are delivered can make a big difference. The value of
a service lies in the interactions; it’s not the end product that matters the most, but the
experience new paradigm; service-dominant logic; services become the core value-
creation processes.
(Direct social interaction is not a requirement for co-creation, co-creation is when the
product/service is personalized for the customer. Think of Spotify and Netflix).
Products require a lot of investment financially and time-wise, while customers needs can
change in the meanwhile, on the other hand, services can be adapted easily.
A product can be considered to be a physical manifestation of a service; a service avatar.
The knowledge and services embedded in a product are what give the product its value.
The service-orientation leads to new business strategies, new sources of competitive
advantage, new ways of interacting with customers and new ways of organizing work.
A process are linked, linear chains of cause and effect that, when managed carefully, drive
predictable, reliable results. Processes are designed to be consistent and uniform, while
services are co-created with customers each and every time a service is rendered. A service
is at its core a relationship between server and served; service is work performed in support
of another person.
Customers want a ‘’full-package’’ that is convenient for them.
Ch. 4 Services are complex
Technology has a lot of effects; it reduces the friction of distance, it increases the variety of
options and possibilities, it increases the velocity of just about everything and it tends to also
increase complexity and interdependency as more and more technologies build on and
interoperate with each other.
Customers expect variety, better quality, personal and customized services and a quick
respond to their wants and needs. Companies need to optimize not for the line of
production, but for the line of interaction, the front line – where the people and systems
come into direct contact with customers.
Ch. 1 The connected customer
Power shift from companies networks; they have more choices and knowledge than ever
before.
Networks; the mainstream media, readers, customers, employees, analysts etc.
Cascading effect can be initiated by customers, employees, enemies/competitors, senior
executives
Examples in the book:
-In February 2007, Starbucks chairman Howard Schultz sat down to write a difficult memo to
the CEO. He wanted to get back to the core (the passion for Starbuck coffee) to become
profitable again. The memo got leaked on the internet. It spread very fast and everyone was
talking about it. Starbucks was no longer getting credits for all the good actions they did. And
there was no way for Starbuck to speak up quickly to defend their name.
-In 2005, Dell learned a tough lesson when they shut down peer-to-peer customer forums.
Dell customer and blogger Jeff Jarvis commented ‘’Dell lies. Dell sucks’’ and within after
which ‘the news’ spread quickly in the networks. Dell’s sales and reputation shrunk
drastically. Dell learned from its mistake and introduced a ‘customer listening command
centre’ in 2010.
-In 2008 Dave Carroll released the song ‘’United breaks guitars’’ after the airline refused his
claim because it wasn’t within 24 hours.
-In 2009 two employees did Dominos dirty by doing disgusting stuff to the pizza’s they were
making, which they recorded.
-In 2011, a woman named Kristen Christian spread a strong message on Facebook after the
Bank of America decided to charge 5dollars per month to use the debit cards. She, with
many others shifted from this bank to non-profit credit unions. Bank of America dropped its
plan to charge additional fees.
The peer-to-peer conversations subvert (ondermijnen) the traditional marketing channels.
Customers trust each other more than they trust companies, who have a vested interest in
making themselves look good. Customers have always had the power to promote or demote
a company to their peers, but now they are connected to a global network, this linking
makes all the difference.
-In 2010 the non-profit organisation WikiLeaks caused the biggest leak of classified material
in the history of the world and the US government couldn’t do anything, because once
information is released to a network, it can’t be pulled back.
Some companies have figured out how to create direct useful relationships. Amazon, e.g.,
allows customers to write negative comments on their product to offer their customers a
better buying decision.
,Ch. 2 The service economy
There is a great shift from an economy based on marketing things to one that is powered by
knowledge, creativity and ideas. This leads to a whole new economic landscape.
Jeffrey Immelt, CEO of General Electric, says it is an emotional, raw social, economic reset.
The material abundance (overvloed) was made possible by an industrial economy that
focused primarily on mass-producing material goods. Right now, we stand on the verge of a
new era. The producer-driven economy is giving way to a new, customer-centred world in
which companies will prosper by developing relationships with customers – by listening to
them, adapting, and responding to their wants and needs.
It’s not only companies that need to change, because our entire society has been optimized
for production and consumption on a massive scale; school systems, the government,
suburbs (buitenwijken), the entertainment and advertising industry etc.
We live in a service economy, wherein new habits, behaviours and organizational structures
have to be developed.
Many companies which started in manufacturing (such as GE and IBM) made the transition
to services, because of three things: product saturation, information technology and
urbanization.
The products that companies sell do not only offer functionality, but intangible things like
status, pride, ownership and novelty.
The post-industrial revolution is delivering a new kind of abundance; an abundance of
information, along with networks and mobile devices for moving that information around
and much faster processing. This digital revolution is ushering in new ways to deliver,
combine and mix up services; e.g. renting strangers’ apartments, negotiating bargain prices
from airlines and 4-star hotels and much more.
In addition, there is an increasing trend toward urbanization; because in the cities there are
more jobs and they get paid (23%) more. For companies it is interesting, because that’s the
place where the most skilled workers are.
Because the city life is so crowded, people don’t have place for a lot of products, for which
they spend their money more on services (e.g. washing service, instead of washing machine,
taxi, instead of owning a car). Companies make more money because of the high density.
, Ch. 3 Everything is a service
In the industrial era, companies were designed to produce high volumes of consistent
standard output, with great efficiency and at low cost. Unlike products, services are often
designed or modified as they are delivered; they are co-created with customers. Services are
contextual; where, when and how they are delivered can make a big difference. The value of
a service lies in the interactions; it’s not the end product that matters the most, but the
experience new paradigm; service-dominant logic; services become the core value-
creation processes.
(Direct social interaction is not a requirement for co-creation, co-creation is when the
product/service is personalized for the customer. Think of Spotify and Netflix).
Products require a lot of investment financially and time-wise, while customers needs can
change in the meanwhile, on the other hand, services can be adapted easily.
A product can be considered to be a physical manifestation of a service; a service avatar.
The knowledge and services embedded in a product are what give the product its value.
The service-orientation leads to new business strategies, new sources of competitive
advantage, new ways of interacting with customers and new ways of organizing work.
A process are linked, linear chains of cause and effect that, when managed carefully, drive
predictable, reliable results. Processes are designed to be consistent and uniform, while
services are co-created with customers each and every time a service is rendered. A service
is at its core a relationship between server and served; service is work performed in support
of another person.
Customers want a ‘’full-package’’ that is convenient for them.
Ch. 4 Services are complex
Technology has a lot of effects; it reduces the friction of distance, it increases the variety of
options and possibilities, it increases the velocity of just about everything and it tends to also
increase complexity and interdependency as more and more technologies build on and
interoperate with each other.
Customers expect variety, better quality, personal and customized services and a quick
respond to their wants and needs. Companies need to optimize not for the line of
production, but for the line of interaction, the front line – where the people and systems
come into direct contact with customers.
