Following from yesterday's start, here are three more of the 12 strategically important ideas from the first chapter of The New Age of Innovation. Tomorrow, we'll look at another trio of ideas: more breakouts of what must be transformed and why, and how to achieve scale in a world where speed is becoming preeminent.

4. "Note the three distinct transformations taking place: (1) The firm is moving from selling a product to selling a service. The product is an integral part of the service. But the value is based on the service. (2) The firm is moving from a transactional relationship with a customer to a service relationship with a customer. When strategy focuses on better fleet management -- including lower costs, improved safety and skills of drivers, and improved understanding of truck dynamics -- the core value proposition shifts from the physical product (tire) to services and solutions (better overall costs) to superior experiences (for individual drivers.) (3) When the manufacturer is selling a tire (just the physical product) to the fleet owners, this type of business would be described as a business-to-business (B2B) organization. However, when that company is providing feedback that improves individual driver safety and skills, it looks more like a business-to-consumer (B2C) organization. In the new competitive arena of one customer at a time and global networks of resources, B2B and B2C definitions converge." (Chapter 1, p. 16) How many times have we found ourselves wrangling over internal distinctions, such as "Who owns the customer?" or "How much do we allocate to service and how much to manufacturing?" Meanwhile, Prahalad and Krishnan are telling us those distinctions no longer carry relevant meaning and value -- they attempt to describe the company-centric view of yesterday, and prohibit us from building the models and processes of the customer-centric future. And, as shown above in the three transformations, the distinctions are not subtle -- they affect how we organize internally, how we engage with customers, what we expect and demand from suppliers, how we structure our financial systems, and how we go to market. Again: does this sound familiar? And if it does, have you started to act on it?

5. "ING, a global financial services company, was facing these problems. Its 5,000 agents worldwide had to wait 10 days for a policy to be processed and approved. In some exceptional cases, it took as long as 30 to 60 days. ING's internal business processes were embedded in legacy IT systems that were not integrated, and it was difficult to change these processes. To address the problem, the company worked with Unisys, a large IT services firm, to build a system that has allowed ING to bring down the processing time from 10 days to 30 seconds. The new system provides the agent with the flexibility needed to serve the concerns of customers." (Chapter 1, p. 19) Imagine that: slashing "processing time" (whatever that means or, pretty soon, whatever it used to mean) from 10 days to 30 seconds -- what better use can companies find for all the time and resources formerly sucked up in that 10 days of wasted time that allowed prospects to go elsewhere? In your own company, where are there opportunities for breakthrough thinking and processes that allow more time to be spent serving customers, and less time squandered in frustrating customers?

6. "If traditional industries such as tires, shoes, movies and entertainment, life and home insurance, and health insurance for those with long-term disabilities are moving in this direction, then as a manager you must pause and ask: Why is my business different? We suggest that your business is not different. From cement to jet engines, education and health care, from children's toys to delivery of parcels to your home or office by UPS, all industries are going through this transformation. If managers do not recognize this trend and get organized to compete in this new environment, they will be left behind. This transformation is not a choice." (Chapter 1, p. 24)

So if it's not a choice, then it's essential. Ready to get started? Coming tomorrow, three more ideas to help you scope out the challenge.