Superstructure

The value of a product for customers can be extended significantly by adding a “superstructure” of services on top of the physical device – like the Nest thermostat, which serves as the entry point for an additional layer of functionality in interaction with other devices on the net.

Or like tutorials and services for editing and sharing photos can increase the value of a camera to its users.

The physical product is still necessary. We will still use cameras, running shoes, bicycles and dishwashers – but the number of jobs and the revenue from delivering such basic mechanical functionality is shrinking. Instead, the value, which makes a difference for the end-users, and the experience they are willing to pay extra for, will emerge because the product can be connected to a superstructure.

This is where the growth in revenues, efforts and attention will be – and it’s where manufacturers can escape the trap of commoditization of the physical devices they make.

It’s not about the product but what you achieve with it
Conventionally, value was intrinsic to a product. The customer’s value from a device, say, a car, would depend on how well it was designed and built. The functionality and technical quality of the car – offering comfortable driving in style - is still important today.

But the value that matters to customers tends to reside less in the particular physical device or stand-alone product. Instead, customers seek more complex outcomes  - convenient and efficient mobility – that emerge when the specific car is connected, combined and coordinated with the many other products and services, which enable and affect mobility.

It’s less about the car – and more about the outcome: what it enables the customer to achieve.

This means that companies will increasingly compete on the processes they enable, rather than the products they provide. For many, this will require a very different set of skills to create.