How a Service Tether Turns a Product into a Service

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The way that we think about products is changing. A product used to be the prize waiting inside its packaging. Now the product is the packaging and the prize is the service embedded within it.

The Mystery in Our Service History

CARPE DIEM Professor Mark J. Perry's Blog for Economics and FinanceProducts are being increasingly hollowed out by services.

At the macro level, you see this shift from products to services in the chart to the left where the blue line shows the steady growth of the service sector relative to manufacturing, which is represented in red.

On a more personal level, you can see this shift to services in the products we use everyday, and it’s somewhat analogous to the electrification of products our grandparents and great-grandparents went through a hundred years ago. Before that, products had value because we used them; a wooden spoon worked as long you supplied the stirring. But once our products whirred to life with electricity, their value came to rely upon a flowing current; a transistor radio was just a dead hunk of plastic and metal without it.

Today, the value of a product doesn’t just depend on the flow of an electric current. It now also depends upon a flow of information. Our iPods rely on that flow to play their music, just as our phones rely on it to distribute our photos on Facebook. Remove that flow, and these devices become just dead hunks of metal and plastic.

We now have electricity running through products that would have made earlier generations smile in wonderment. An electric toothbrush? Yes, it does sound stupid, but it also measurably improves your oral health. In fact, electricity is the key to some of our most useful products – and it’s these products that will soon be embedded with services.

I Dream of Jini

A Mysterious Force Dave Gray is a smart thinker on the future of firms. In his book, The Connected Company, Dave talks about products acting as “service avatars;” an idea I instantly loved, because it reminded me of something I’ve been calling the “service tether.”

I started thinking about service tethers in the late 90’s after hearing about Jini, the distributed computing architecture then being developed by Sun Microsystems. While Jini itself never really took off, its idea of enabling devices and software to easily connect via a shared network was inspiring.

When you buy a new piece of office computing equipment such as a desk lamp, or a new home computer appliance such as an alarm clock, it will not only carry out its “traditional” functions but will also join into a network of other computer devices and services. The desk lamp will turn itself off when you leave your desk, informed by sensors in your chair; the alarm clock will tell your coffee maker to switch on a few minutes before it wakes you up.
– Jan Newmarch’s Guide to Jini Technologies

What Is a Service Tether?

A “service tether” is software that connects a product to a cloud of software services. In other words, with a service tether, the alarm clock mentioned above wouldn’t just connect to your coffee maker, it would connect to your Google Calendar for a convenient forecast of what’s in store for you today.

tether is a cord, fixture, or signal that anchors something movable to a reference point which may be fixed or moving.  – Wikipedia

We’re all familiar with the idea of service tethers because we interact with them everyday – even if we don’t actually call it that. Today’s service tethers take many different forms:

  • The service tether of your phone includes a large User-Interface (UI) component to give you access to a huge range of cloud services. Smart phones give you such a broad range of services that their service tether functions a bit like a utility for accessing cloud services.
  • My old Rhapsody music player has a less sophisticated UI that’s well-suited for playing songs, kind of like an iPod. This is an example of an application-specific service tether. My little device hands off the more complex work of finding and syncing my music to to an actual desktop application.
  • My wife’s Fitbit wristband has a simple band of LED lights that show her where she is in her 10,000-step daily walking goal. This is another application-specific service tether, but one where the UI is extremely unobtrusive on the actual device. To get to her usage data, CJ uses an app on her Android phone.
  • Companies like Supermechanical also build simple, do-it-yourself tethers like Twine that you can attach to a variety of things to measure moisture, vibration, orientation and temperature.

You know you’re working with a service tether the instant your Internet access goes down and that useful little device you were just holding loses its animating force and turns into a lifeless hunk of metal and plastic.

Disconnect the tether, and the product dies. Just like a disconnected old iPhone.

Product Design with a Tether in Mind

Product designers for many categories of products now need to start thinking about service design. Their new task will be designing products and services that integrate into a seamless whole.

Service tethers allow products to change even after they’re sitting in the homes and offices of customers. This ongoing flexibility essentially creates a new “channel” through which companies can later roll out new features and even introduce new revenue streams.

DesignersUsing products as a channel for service delivery means designing service tethers in order to maximize their flexibility down-the-road. The hardware is fixed, so it needs to be stable and reliable as an ongoing channel for future services via software updates to the service tether – and that’s tricky. We’re all now used to upgrading the software and functionality of our phones, but ten years ago phones couldn’t do that – they just weren’t built for it. We’ll find a similar kind of product fluidity across a large swath of of a whole new range of products within the next five-to-ten years.

To get there though, product designers and business leaders will have to understand the deeper implications of their products not being 100% baked when they leave the company’s doors. Service tethers radically change a company’s cost structures, for example. They also make it possible for third parties to add complementary services that greatly increase the value of the product to customers. Good service tethers, in other words, can turn products into powerful platforms.

A Tether to Strengthen Our Ties

PageLines- box-mission-customer.jpgThere are many important implications of this transformation of products into services, but few are as important as how it will change a company’s relationships with its customers.

You see, a service tether isn’t just a pipeline for service delivery. It’s a two-way connection, and as such, it can also provide invaluable information about the customer’s interactions with the product. When a customer stops connecting with the service tether, that means they’re no longer using the product. A service tether can also provide useful feedback on whether a customer is using a product correctly, and to its fullest potential.

Service tethers will thus also prove to be valuable diagnostic tools for assessing how much value customers actually get from a product, which is obviously critical to building strong relationships with them. In this way, service tethers will become a critical extension of a firm’s relationship management systems.

Anchoring Tether to Mission

There’s an even more important way that service tethers could end up affecting customer relationships though, and it has to do with building deep partnerships to help customers succeed with a company’s products. Here, we are talking about a bigger trend: the shift from customer satisfaction to customer impact.

When a company has realtime product usage feedback, it gives them opportunities to intercede and work with customers to improve their use a product. This matters for two reasons.

First, customers who succeed with a company’s product are more likely to remain loyal to that company, which obviously has important implications for future earnings.

The other reason this service tether feedback matters is that it can help customers to actually succeed in whatever goals they had for using the product in the first place. In other words, the service tether helps to strengthen the collaboration between customer and company in achieving some shared goal.

ToothbrushTo illustrate, think back to that electric toothbrush and what would happen if its maker created a service tether? In it’s early iterations, that tether might just collect the customer’s daily usage data to help motivate more regular brushing, just like the Fitbit does for steps. But over time, future incarnations of the toothbrush hardware might include positioning sensors to track exactly which spots the customer is brushing and for how long. Maybe some day that’s even augmented with biofilm sensing technology to detect the presence of plaque formation in realtime.

Each of these advances would enable the company to not just stimulate more toothbrush sales or even just induce more brushing by customers; but actually help customers accomplish what they really wanted in the first place: better oral health.

As companies move further and further down the road of the service tether, they become better positioned to influence the actual outcomes that customers have with their products. And as firms gather better usage feedback, it will become increasingly clear just how dependent they are on customers for the impact they seek in the world. A state-of-the art toothbrush can’t stop gingivitis if the customer never uses it. But those who do, and who know how to use it well, form a partnership with the company around the shared goal of improving their health.

This is where business is going – a shared commitment to a mission between a company and its customers. And it’s part of a bigger evolution of business: the rise of mission-driven business.

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