The Connected Company

Chapter 4. Services are complex

Most corporate systems were not built with customer delight in mind.

—Fred Reichheld

Services introduce customers into operations, which creates a lot of complexity and variability that is hard to plan for in advance. Companies must find ways to accommodate variety at the edge of the organization, where people and systems interact directly with customers, partners, and suppliers.

Demands on Companies are Increasing in Volume, Velocity, Variety

I have a friend who works at the U.S. Food and Drug Administration (FDA). One of the challenges the FDA is facing is that more and more drugs and devices are coming up for approval all the time, and the FDA has limited resources for evaluating and approving them. The more drugs and devices that come in to the system for approval, the fewer the FDA can actually look at in detail. In a world of limited budgets, this presents a major challenge that will only increase over time.

The same thing is happening in microchips. At one time, the chip business was focused primarily on chips for servers and PCs. Based on Moore’s Law, chipmakers could predict the price and performance that would be required in 18 months and work to achieve it. The production cycles were predictable. But today, the world of devices has fractured into devices that serve all kinds of purposes, with all kinds of production cycles. Chips are embedded in almost everything, from sneakers to smart phones.

Competitive intensity is rising all over the world. ...