Would you rather pay for health care or for better health? For school or education? For groceries or nutrition? A car or transportation? A theater performance or entertainment? In "The Ends Game: How Smart Companies Stop Selling Products and Start Delivering Value" (on sale now, The MIT PRESS), Marco Bertini and Oded Koenigsberg describe how some firms are rewriting the rules of commerce: instead of selling the "means" (products and services), they adopt innovative revenue models to pursue the "ends" (actual outcomes). They show that paying by the pill, semester, food item, vehicle, or show does not necessarily reflect the value that customers actually derive from their purchases. Revenue models anchored on the ownership of products, they argue, are patently inferior.
Bertini and Koenigsberg explain that advances in technology have made it possible for firms to collect "impact data" that tells them when and how customers use their products and how those products perform, and that firms can draw on this data to turn products into seamless services. New revenue models will enable transparency, accountability, and efficiency.
The authors offer real-world examples of how companies in health care, transportation, education, and other sectors are already playing "the ends game," describing, among other things, the successes of Dollar Shave Club, Rent the Runway, and "pay as you fly" insurance for drone flights. Finally, they outline the challenges in adopting these new models, offering guidance on such issues as criteria for defining an outcome, concerns over data collection, and internal organizational obstacles.
Books in the "Management on the Cutting Edge" series present original research from leading lights in academia and industry, providing practical advice to business leaders on how to prepare for the exciting -- and challenging -- future that awaits us.
Marco Bertini is Associate Professor of Marketing at ESADE Business School, Barcelona.
Oded Koenigsberg is Professor of Marketing and Deputy Dean at London Business School.
"Digital technologies are transforming every business but the core principle of value creation endures: take care of the customer. But how? Bertini and Koenigsberg provide managers an insightful roadmap based on careful research and lively examples."
- Erik Brynjolfsson, Professor, Stanford University; coauthor of The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies
"In order for organizations to justify a 'forever transaction' with the customers they serve, they need to start by aligning their goals with those of the customer. Only by putting the customer at the center of everything they do can organizations maximize value creation. Before hopping on the bandwagon of the latest pricing scheme, read this book to understand the bigger picture."
- Robbie Kellman Baxter, Founder, Peninsula Strategies; author of The Membership Economy and The Forever Transaction
"The Ends Game elevates our current understanding of pricing to the next level. The book is simultaneously rigorous and practical, and belongs on any executive's shelf."
- Hermann Simon, Founder and Honorary Chairman, SimonKucher & Partners
"Consumers don't buy products, they buy solutions to their problems. Products are a means to an end. This book highlights this simple but powerful idea, and explains its implications for business practices. A timely and must-read book."
- Sunil Gupta, Edward W. Carter Professor of Business, Harvard Business School; author of Driving Digital Strategy