By Lawrence Lee
In the age of digital disruption, every company needs to think differently about their business – both to grow beyond their core markets, and to head off competition from new entrants. But often the exact skills that helped companies succeed in the past prevent them from finding success in the future. At Xerox we have reinvented the company multiple times as technologies and markets change over time.
While today’s chapter in our history is still being written, we have found several ways to think differently about our business. These six insights may be helpful to other companies with a similar need to transform and grow beyond their core business.
1) Focus on what your customers want, not what you make
Your customers buy from you for a variety of reasons, the most important is that you help them achieve the outcomes they want. But it’s all too easy to lose sight of that, and focus only on improving your product or service to keep up with competitors. This tunnel vision can prevent you from helping your customers achieve their outcomes in new and better ways, and exposes you to new entrants that have figured this out.
Access and print documents anywhere, at any time, on any device. https://t.co/4TL49puNYX
— Xerox (@Xerox) July 3, 2018
With this mindset, you focus on how to deliver your core value to your customers in new ways. For instance, auto manufacturers will still be around in the future, but they are starting to define themselves as “mobility services companies.” They will increasingly deliver transportation as a service that meets the needs of young people who have little interest in car ownership.
When you think about Xerox, it’s not wrong to think “Xerox makes printers.” But Xerox is not just a printer company. Fundamentally Xerox has always helped customers with work – using or inventing the best technologies of each age. Printing, scanning, and managing documents are key components of work, but only a subset of all the activities that define work.
It is critical for us to understand how our customers define work. Our office customers don’t just want to print; they want to automate workflows, and accelerate decisions and revenue. So we created ConnectKey® apps and workflow automation solutions that help our customers do exactly that. Similarly, we realized that our print provider customers aren’t just print shops; they are actually in the business of delivering marketing and communications services. With the emergence of digital media, we realized that they wanted help to deliver cross-media campaigns, so we created FreeFlow® ,a digital workflow solution. We also added personalized multichannel marketing software from XMPie,® A Xerox Company.
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2) Innovate in business models, not just technologies
It’s also important to create business models that make it easier for your customers to adopt new products faster. The original growth story of Xerox with the plain paper copier was as much a business model innovation as it was a new technology. Xerox launched the product with a leasing model to make it easier for customers to buy an expensive piece of office equipment that was unknown at the time. This is an especially important consideration with new technologies, because they are often expensive to produce until they can gain economies of scale.
— Xerox (@Xerox) June 25, 2018
In mature markets, a business model innovation can also change the value proposition, and competitive dynamics, in an industry that has shifted focus from features to outcomes. Xerox invented the managed print services business model that introduced printing as a service with pay-per-click pricing. It aligned Xerox’s incentives with our customers, and focused us on the outcomes our clients wanted while we managed the complexity for them.
Marketers like the pay-per-click models of digital media because they are more clearly tied to conversions and return on investment. For companies that produce physical goods, it is harder to track and close the conversion loop. But with QR codes, beacons, and new types of sensors, it will become easier in the future to understand when something has happened. Of course, you and your customer have to agree on what “an action” is, but it aligns your incentives on value creation, and changes the conversation from “cost-plus” to “value,” and from “products” to “services.”
3) Create a unifying vision of the future
All of your employees want your company to grow through innovation, and they all have ideas on how best to do it. It can be helpful to create a unifying and directional vision of the future to focus your employees’ ideas and energy.
Creating the future is what we do. Learn more about how our innovations shape modern technology. 💻
— Xerox (@Xerox) July 12, 2018
At Xerox, our unifying vision is that we help our customers work better at the intersection of the physical and digital worlds. This high-level vision helps us unify the roadmaps for the two different market segments of our business – intelligent work solutions, and graphic communications and industrial printing. Now our employees can think creatively about new growth opportunities at the intersection of the physical and digital, such as augmented reality applications, digital printing on objects, and even the combination of the two.
This unifying vision is also credible and exciting because it ties so well to our history of reinvention. Xerox has always innovated in how the world communicates, connects, and works. We have created entirely new industries from laser printing to digital publishing to managed print services. Today, we offer a range of digital printing, personalized cross-media communications, workflow apps, and content management solutions.
By defining a high-level but actionable vision that is aligned to your strategy, you can harness the creative energy of your employees with greater productivity.
4) Look both “inside out” and “outside in” for new opportunities
There are always many potential directions for innovation, and it can be difficult to evaluate and prioritize a large opportunity space. We have found that one effective approach is to look both “inside out” to apply your core capabilities in new adjacent markets, and “outside in” to identify new digital disruption opportunities sparked by new technologies.
— Xerox (@Xerox) April 20, 2018
For example, Xerox is known for printing. But our capabilities in printing are much broader. A better description would be that Xerox has deep expertise in precisely depositing a variety of materials on a variety of substrates at high speeds, and with high accuracy. By redefining Xerox’s core capabilities, our opportunity space is no longer limited to toner and ink on paper. It’s easier to see how we can apply these digital printing capabilities to address adjacent markets, such as digital packaging, printed electronics, and digital manufacturing.
Similarly, Xerox also has extensive experience in managing fleets of multi-function printers in our managed print services offering. We use predictive analytics to optimize device, parts, and supplies availability. If we redefine this core capability beyond printers, we can see new markets in managed services for connected workplaces.
Many companies stop here with this type of “inside out” analysis. But it’s also important to understand how the world is changing to identify emerging, non-obvious market opportunities from the “outside in.” In our analysis, we believe the next major technology revolution is the convergence of the physical and digital worlds. This creates massive opportunities to transform how work gets done.
Our world has reached a critical mass of connected devices, collectively known as “the Internet of Things (IoT).” Sensors and electronics allow machines to perceive the physical world. Now enter machine intelligence, or what some call “narrow AI”, in which machines can understand and make decisions in domains that we have modeled with a high level of fidelity. Now you have a feedback loop that enables real world, real-time optimization. Add to that loop the machine’s ability to work collaboratively with people in knowledge-intensive workflows and learn from us. This area will be a very fertile ground for innovation over the next decade.
5) Break traditional tradeoffs to deliver greater value
With the emergence of digitalization in the age of the Internet of Things and Machine Intelligence, our customers have grown accustomed to personalized experiences that are also low cost. Consider your experience with Amazon, Netflix, Uber or Lyft. Digital natives, who now make up a large percentage of our customers and employees, demand these types of experiences in their personal and work lives.
— Xerox (@Xerox) July 6, 2018
At Xerox, we are expected to deliver high quality managed print services and help our customers save money at the same time. When we analyze the data from our customers’ devices, we can optimize their supply level and their work processes. And when we analyze our customers’ printing activities, we can help them distinguish between “good” and “bad” printing, leading to opportunities to convert paper-based processes to digital workflows.
In every industry, companies have to rethink competitive strategy. Formerly, we were forced to think in binary terms of either high quality or low cost. Digitalization means these tradeoffs no longer exist, because digitization adds the “and” to our strategies, i.e. high quality AND low production costs; personalization AND efficiency. Researchers (and marketers) have to rethink how we deliver on the “and” promise.
6) Adopt agile and open innovation
Inherent in the act of pursuing new markets is a lack of historical data to plan for the future. Innovation for new markets requires a human-centered, agile process that focuses on rapid learning and iteration, with explicit hypotheses and experiments to create new business options.
Creating the future is what we do. Learn more about how our innovations shape modern technology. 💻
— Xerox (@Xerox) July 12, 2018
In addition, companies will likely not have all of the required technical expertise, so it’s important to look outside for innovation. However, when you pursue new markets, it’s a mistake to equate open innovation with technology sourcing. When there is high uncertainty, you can’t treat innovation partners like vendors. You need to share more information and manage intellectual property (IP) rights with a longer term strategic view. Focus on what you really need to protect. Allow your partners to have sufficient IP rights and opportunities that will generate the return they need. These focal points allow them to share the risk with you.
We are applying best practices in agile and open innovation within Xerox to write the next chapter of our history. We are defining and developing business experiments with commercial partners and lead customers in digital packaging, direct-to-object printing, and digital manufacturing to deliver a better customer experience and create operational efficiencies. In our research center at PARC, we are developing new technologies to improve knowledge worker productivity with artificial intelligence, such as collaborative content authoring, augmented reality, meeting analytics, and conversational assistants. And we are working in printed electronics that will give real-time data to optimize supply chains, retail operations, and smart packaging. In all of these areas, we are studying users and creating prototypes, both internally and with partners. This approach allows us to test solutions with users, and make iterative improvements that find the right product-market fit before we invest in commercialization to scale.
Growth is never “one size fits all.” These six ideas from Xerox will help you think differently about your business and innovation.
There is never a one-size-fits-all approach to growth, so these ideas are meant to be a starting point for you to think about ways you can mix and match to suit your specific situation and goals.
Expanding into new markets is hard because it requires investment trade-offs from your core business into new, uncertain opportunities. These practices can help you produce a greater volume of new growth opportunities that excite your employees, fit with your abilities to deliver them, and are aligned to important growth trends in the world.