Against the tide of commoditization

In Selling Professional Services to the Fortune 500, Gary Luefschuetz warns against mix and match people and rates of various service tiers, which will compromise the rate structure. In short, swim against the tide. IBM got it. Cisco follows suit. And HP is moving in that direction.

The Economist takes an in-depth look at IT future. One dominant theme is ” smart” infra-structure e.g. buildings,water, electricity, appliances… even cows). First, we were glad to get our white bread sandwich neatly cut and refrigerated. Then we want it toasted. Finally, we want the toaster to beep like our microwave oven.

The key to all this is inter-connectedness. From blue-tooth to Blu-ray, RF to RFID, we are moving up the value chain.

Years ago I remember watching a demonstration of hologram at Penn State. Professor Roy Rustum was there among the observers. He later was quoted as saying “I felt the chill in my spine” when his crew at Material Sciences Lab discovered electricity conductivity in water. Now we got 3-D hologram to watch the re-release of Star Wars.

At the high-end of the OSI model is the application layer. This is where our imagination pays dividend.

The physical layer move their facilities off-shored to accommodate better rate structure.

Samsung is slated to be a strong contender in the tablet space against the I-pad with huge facility in North of Vietnam.

I also remember watching the young CNN news gathering crew (in black T-shirts) back in the early 80’s. CNN manages to stay above the fold in the cable news business. That business gets commoditized as well since we can now access hundreds of them.

For CNN, the secret sauce has been their first move advantage, and continuing risk-taking (Gulf war). David Brook of the NYT puts it simply “branding is an effort to decommoditize commodities”.

While companies are in a race to produce “smart” applications, schools and companies should retrain people. Smart people created smart appliances. And smart people take calculated risks. Leaders of India and Ireland saw the hand writing on the wall. They moved swiftly to retrofit their nations for the  21st century, not only in IT, but with new ways to solve existing problems e.g. micro lending, mobile banking, cheap automobiles etc…(see The Miracle).  I read the review of Chevy’s latest small car, the Cruz. It took GM, once the largest corporation under Alfred Sloan, 40 years to reduce its automobile size. May the best car win.

The temptation to compromise and mix the different tiers of services led to the downfall of many sectors, especially telecom.

(South Asian agents and resellers first question was normally, “what’s the rate”).

So I wasn’t surprised to read in Fortune magazine about Verizon’s soon-to-be-rolled out Android perfect phone. Can you hear me now.The old GTE has swam hard against the tide, to become the premier wireless company.

Choose your battle, pick your turf, and retrench at the highest service level.  Who wants to stand next to those robots who don’t get sweat or take smoking break.  And I am sure, after the next round of cost cutting, they still stay until robot 2.0 version displaces them.  At Twitter, those guys didn’t even use up the allotted 140 characters. They tweet simply “Be helpful”. I take that to mean swim against the tide, to offer relevant and helpful service to a market gluttered with commoditized services.


One thought on “Against the tide of commoditization

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s