From Products to Services: How Medellín, Colombia is Overcoming the Commodity Trap

By • on March 25, 2011

I was just reminded of the importance of thinking of a product business as a service.  I am just returning from an event in Medellín, Colombia, along with Ken Morse and Carter Williams, formerly from MIT and Boeing, respectively.  There, the three of us discussed innovation, with the goal of helping Medellín transcend its ugly past with the drug trade and become an innovation hotspot for South America and the world.  This is more promising than it sounds, as the city is already well on the way to recovering, and has a thriving business and civic community.

While in Colombia, I gave a talk about my new book, “Open Services Innovation.”  In this book I make the argument that a product-focused approach to innovation was incomplete at best, and doomed to failure at worst.  Why? The product approach faces the daunting challenge of needing to continually differentiate the resulting produce from a growing list of competitors that are arising in the global economy.  These new entrants from China, India, Brazil and elsewhere are offering “frugal innovations” that have much lower costs.  For product companies, the result is a commodity trap, where you have to run faster to keep up, while watching your differentiation erode.

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