Thanks to everyone who attended our service design workshop in New York City last night. We had over 100 CEOs of some of New York’s fastest growing companies attend the networking session and 90 minute workshop.

Based on the feedback we got afterward, the presentation of our "3X3 Process" jogged some good thinking about how to add value to existing services, as well as how to come up with ideas for new services that drive new sources of revenue. In this economy, it was refreshing to be in a room full of business people who see the glass as half full, versus half empty.

Thanks to Kate and Megan, and the entire the staff at Inc. Magazine and IncBizNet , as well as event sponsor, FedEx Office for putting this together. To all the attendees: Keep working that "thinking putty" and keep on talking with your customers!

We will posting a link to photos and video highlights soon.

Excerpts from an article in the Wall Street Journal…

For decades, Xerox and others built their businesses by pushing companies to buy more office machines and supplying pricey ink and toner. But increasingly these vendors are now advising big customers to reduce their number of machines and find ways to cut printing costs."That sounds like a strange way for a manufacturer to make money," concedes Stephen Cronin, president of Xerox’s global-services business, which reached $3.5 billion in sales last year.

The printing companies want to entice clients to sign up for exclusive contracts, allowing them to replace machines made by rivals and thus provide all printing supplies. In some cases, clients let a single supplier manage the whole system for a monthly fee. The business, known as managed-print services is expected to jump 36% this year to $15.7 billion. In Xerox’ case, more than half of the 1.5 million devices the company currently manages are from other vendors. "Total spending goes down, but my proportion goes up," Mr. Cronin says. Last year, services, including maintenance as well as managed print, contributed $3.5 billion of Xerox’s $17.6 billion in revenue.

Last month, Procter & Gamble Co. agreed to turn over to Xerox its vast fleet of printers and copiers in a multi-year contract valued at more than $100 million. Filippo Passerini, P&G’s chief information officer, says the decision is expected to cut paper usage 40% and costs 20% to 25%. He declined to disclose dollar figures.

Because of their push into services, the hardware makers are increasingly frank about the high costs of printing. Xerox says its research shows that companies spend between 3% and 4% of revenue on producing documents, or $3,400 per employee, so savings can be significant.

An article on the Design Week website discusses a new BBC reality TV show in which young designers compete to win a six month gig with designer, Philippe Starck. Entitled “Philippe Starck’s School of Design,” the show echoes the BBC’s “The Apprentice,” which echoes the original Donald Trump’s “The Apprentice” on NBC. (Talk about derivative!) But instead of overseeing the construction of casinos or golf courses for The Donald empire, the winner of this contest gets a six-month contract at Starck’s Paris studio.

Over 10 weeks, five female and seven male contestants live together in a house in the Paris suburbs. They range in age from 19 to 32 and most have product design backgrounds. In the first episode’s challenge, contestants search a hypermarket for products displaying good and bad design qualities. One designer contestent, Ilsa Parry, is a lecturer in 3D design at Liverpool Community College who has a design idea for a space-saving vertical coffin. Unknown as of yet is whether or not Starck has a catch-phrase similar to Trump’s, “you’re fired!”

In an era of rising unemployment, it’s interesting to see TV viewers continue to watch other people struggle to win jobs in a state of pre-packaged, well-lit reality. The good news is that big “D” designers and their craft are finally going prime-time, along with MBAs, fashion designers, cooks and folks who have dirty jobs.

Record Exec Says Music’s Future Is in the Clouds – WSJ.com – Mr. McBride is CEO of Vancouver-based Nettwerk Music Group, which manages Avril Lavigne, Barenaked Ladies and Sarah MacLachlan, among other artists. He said he anticipates that many music lovers will start to access smart-phone apps like Slacker.com’s subscription-radio service.If they can create their own playlist, he says, they are likely to stop buying downloads, since they know they will always be able to retrieve music they want to hear from the cloud, the computer industry term for content and applications stored remotely and accessed over the Internet. “There’s no need to own product,” he said.For $3.99 a month, Slacker subscribers pick favorite artists or songs that will then be played more frequently on a customized radio station. Mr. McBride predicted the smart phone will replace the PC as the control center for media. He said that artists need to “monetize their brands” by selling merchandise and concert tickets through the smart phones.

US Airways Reinstates Free Beverages – WSJ.com – This article points out that sometimes additional "a la carte" charges are just not worth it. In this case, charging passengers for water overshadowed US Airways advances in their on-time, going from last in on-time rankings among major carriers in 2007 to a close second last year. From the article….

Last August, US Airways began charging fliers $2 for bottled water and sodas and $1 for teas and coffees. The move came as airlines confronted sharp increases in fuel costs. Those costs prompted an industrywide shift toward so-called "a la carte" pricing models. But charging for water may have proved to be a step too far. Even as airlines assessed new fees and matched one another on increases last summer, no major carriers followed US Airways’ decision to charge for complimentary beverages.

Japanese Service Prices Point to Deflation – WSJ.com -  A gauge of prices that Japanese firms pay for services dropped to its lowest level in nearly 21 years in January, resurrecting fears that the nation has slipped back into deflation as energy prices fall and demand wanes. Data released Tuesday showed the Bank of Japan’s corporate service price index slid 2.2% from January last year to 92.0, a level unseen since March 1988. The fall came a month after the index fell 2.5% in December.

Can Free Content Boost Your Sales? Yes, It Can – Mashable.com – Interesting post about Monty Python putting up free, high quality content from their archives onto YouTube, and then seeing a 23,000 percent increase in sales of their DVDs and merchandise. When you have a huge body of work, this is a great way to "prime the pump." Unfortunately, it’s a tough way for new artists/producers/musicians to make a living.

Frontier Service Design Helps Avanceon Create New Revenue Channel:
24/7 Remote Monitoring Service Assures Factory Up-time and Productivity

Background : Since 1984, Avanceon, Inc. has designed and integrated factory automation systems for large manufacturers in both discrete and process industries. Essentially, Avanceon creates the “central nervous system” of a factory, connecting sensors to all components along the manufacturing line to monitor the health and well-being of the entire operation. As in most industries, downtime in a manufacturing plant dramatically impacts delivery deadlines and company profit margins. However in a process industry – such as petrochemicals or pharmaceuticals where each step depends on the next – time equals money and downtime is costly.

Over the past few years, organizations have implemented a series of strategic initiatives to reduce downtime associated with the growing complexity and interdependence of manufacturing processes. Where engineers once served as the “walking encyclopedias” on the factory floor, sophisticated automation processes have now taken their place, reducing the potential for human error and increasing the speed with which decisions can be made.

Challenge :  Originally positioned as a project-oriented service company Avanceon would do an outstanding job in helping their corporate manufacturing clients streamline their process. The typical engagement was anywhere from 3 – 12 months, and when the project was over Avanceon would move onto the next project. Inevitably, however, Avanceon would get a frantic call from clients informing them that something had gone wrong in the plant. In response, Avanceon would drop everything they were doing (often for a different client,) hop on a plane and go to the client site. Most of the time, the problem was a loose cable, a bad sensor or someone who had reset a switch.  Quickly, Avanceon engineers would resolve the problem, go home and send an invoice for a service call. However, this model of crisis/fix, crisis/fix was not efficient or effective for either Avanceon or its clients.
(more…)

Ethan Nicholas, developer of a tank artillery game called iShoot, told Wired.com he quit his job the day his app rose to No. 1 in the App Store, earning him $37,000 in a single day.

Until recently, there has been no realistic way for individual programmers to make serious money on their own. Most of the software market is dominated by big companies, and the traditional distribution method for independent developers — shareware — isn’t conducive to striking it rich. By contrast, Apple’s iTunes App Store provides a platform for marketing, selling and distributing software; all a developer needs to provide is a good idea and some working code. It wasn’t easy for Nicholas, either. After getting off his shift as an engineer at Sun Microsystems, he worked on iShoot eight hours a day, cradling his 1-year-old son in one hand and coding with the other. He didn’t have the money to buy books to learn how to write an iPhone app, so he taught himself by reading websites.

When iShoot launched in October, business was slow for a while. And then Nicholas found some spare time to code a free version of the app — iShoot Lite, which he released January. Here’s how that helped: Inside iShoot Lite he advertised the $3, full version of iShoot. Users downloaded the free version 2.4 million times. And that led 320,000 satisfied iShoot Lite players to pay for iShoot. The game soared to the No. 1 spot — and it stayed there for 26 days.

Full story here.

There was an interesting article in the Wall Street Journal entitled, “Saks Upends Luxury Market With Strategy to Slash Prices” …

“The luxury industry has to devise a new business model,” said Arnold Aronson, a consultant and former Saks chairman. More from the article:
Saks’s deep, mid-November markdowns were the first tug on a thread that’s now unraveling long-established rules of the luxury-goods industry. The changes are bankrupting some firms, toppling longstanding agreements on pricing and distribution, and destroying the very air of exclusivity that designers are trying to sell.

But Saks’s maneuver marked an open abandonment of the longstanding unwritten pact between retailers and designers over when, and to what extent, to cut prices. Those old rules boiled down to this: Leave the goods at full price at least two months, and don’t do markdowns until the very end of the season.

Part of the problem is the designers’ own fault. Over the past 15 years, their products have become so ubiquitous — Gucci is sold in airports, Hermes has mall shops — it’s undermining the image of exclusivity. In a January survey of rich shoppers by the Luxury Institute, a research firm, roughly half of high-net-worth consumers said luxury brands are becoming commoditized; 64% said they were overpriced.

You are invited to attend a free workshop that we will be presenting in conjunction with IncBizNet, the online business networking community created by Inc. magazine and their website, Inc.com. The workshop will be held at their New York City headquarters on February 26 from 5:30 to 8:00 pm. The program will also be videotaped and made available via IncBizNet.com, as well as the website of event sponsor, FedEx Office. More details and registration information can be found here but a summary is listed below…



Gold at Your Feet: How to identify new sources of revenue within your existing business

At the heart of entrepreneurship, there is a spirit of innovation, reinvention and thinking outside the box. Entrepreneurs and private companies are constantly striving to transform, reform, and reinvent the business landscape from the ground up in a positive, forward-thinking way. In support and celebration of that spirit, IncBizNet is hosting a complimentary, interactive executive meet up for private company CEOs around discovering new, innovative and easily accessible revenue streams within your existing business.

Inc.’s special guest Bob Cooper, national pioneer in the cutting-edge field of service design, leads New York’s fastest-growing private company leaders in identifying and realizing unseen, potential revenue streams within your current day to day business – using real-world examples and a proven step-by-step process. Bob will explore how to leverage your brand, knowledge, data, relationships and technology to drive new innovation and additional revenue without economic overhaul. The interactive event kicks off with a cocktail networking reception followed by a presentation, case studies, hands-on exercises, Q&A session.

Come join other New York area CEOs and business owners in our celebration and commitment to a successful 2009. Click HERE to RSVP. Space is limited and RSVP is required. CEOs may bring one executive guest.

Made possible by FedEx Office

First the bad news:

The Institute for Supply Management’s index of non-manufacturing activity showed that economic activity in U.S.-based service sectors contracted for the fourth-straight month.

Now the good news:

The rate of contraction has slowed for the past two months, which might be a sign that that service industries are close to a bottom.

If we’ve learned anything from past market gyrations it is this; very few things are ever as good or as bad as they first appear. Stay focused on the long view.

Great article in today’s Wall Street Journal about Procter & Gamble, one of the ultimate consumer product companies, is launching a new business model based on service : franchising car washes. Leveraging the decades-old "Mr. Clean " brand, P&G CTO Bruce Brown said, "We need to look for new opportunities to allow us to grow. That isn’t limited to things within our current business model."

Car wash services represent about $35 billion USD annually. According to Nathan Estruth of P&G’s the industry "lacks a dominant national chain, aging baby boomers are reluctant to wash cars themselves and more water-strapped communities are pushing professional car cleaning as a conservation measure."

Exactly the right mind set, and why P&G is a market leader.