The Ends Game: How Smart Companies Stop Selling Products and Star

For the past few years there has been debate in pricing circles there has been a debate about future pricing models. The three most common proposals are behavioral-based pricing, dynamic pricing and outcomes-based pricing. This book makes a compelling case for the latter.I confess that I came to this biased. I have been advocating for and designing outcomes based pricing for several years, and try to apply this to my own firm's pricing. So I know how difficult this can be.I am also sceptical of those who argue for dynamic pricing (generally they mean pricing set by machine learning based on estimates of willingness to pay or WTP). The next time some vendor argues in favor of dynamic pricing with you ask them if that is how they price their own offers.I am even sceptical about behavioral pricing as a general discipline. Yes there are many things to learn, such as framing and anchoring effects or how risk aversion impacts pricing strategy and design, but I do not think it provides a broad enough framework for a general approach to pricing.Bertini and Koenigsberg provide the beginnings of a framework we can use to build outcomes based pricing on a solid foundation. They look at how revenue models can interfere with buyers access to, use of, and performance. (Performance-based pricing is another ways of saying outcomes based pricing.)As they look at each of these, they give fascinating case studies that generate the principles. My favourites were Flock, which provides on demand insurance for drones, and Orica, which has found value based metrics for blasting at mine sites.There is also a good light treatment of outcomes based pricing in healthcare. It is in healthcare that the most advanced examples of outcomes based pricing can be found and I would like to spend more time here. I have suggested elsewhere that the pricing and HEOR (health economics and outcomes research) functions need to be joined at the hip. Readers of this book will find a number of entry points. Bertini and Koenigsberg could do more to show how ideas and practices from healthcare could be more widely applied.Which brings me to Judea Pearl and his work on causality. Pearl's work on probabilistic Boolean networks and later on causality and the Do operator will be the mathematical foundation of outcomes based pricing and anyone seriously interested in the field needs to study Judea Pearl.The other discipline which is going to be important to outcomes based pricing is service design. Conventional approaches to product design will not take us deep enough into customer needs and how to solve them to really deliver on outcomes-based pricing. Over time, I think we will see service led growth supplant product led growth in the most valuable solutions.

‘People don’t want a quarter-inch drill, they want a quarter-inch hole’ said marketing guru Theodore Levitt. In their landmark classic ‘Blur : The speed of change in the connected economy’, Stan Davis and Chris Meyer (1998) predicted that (in the internet age), ‘The difference between buyers and sellers blurs to the point where both are in a web of economic, information an emotional exchange' (The six lane exchange highway). Yet, companies continue to sell drills and punch holes into people’s pockets and the economic highways are one-ways. No prizes for guessing which way!This book is a clarion call to bring about a paradigm shift in selling products and services in the new era of data acquisition, ubiquitous connectivity, and intelligence in computing. It advocates a revenue model based on customer outcomes as measured by impact data. In the conventional model, companies simply transfer ownership of products and services. There is a disconnect between promise and proof.When customers seek solutions to their needs and wants, Access, Consumption and Performance are natural checkpoints towards these solutions, explain the authors, through Fig 1.1, which is the core of this book. There are inefficiencies at every stage, and a chapter is devoted to each of these, to explain the issues and possible solutions.Access to buy cars for example, may be limited by affordability. Henry Ford would address this by producing a car ''so low in price, that no man will be unable to own one,'' If Ford denied choice other than black, Alfred Sloan of GM came up with a car ''for every purse and purpose''. Distribution and reach of millions of goods was solved by Sears mail order that ' taught us how to shop'. Advertising created powerful brands that were 'work of genius' in comparison to 'fools who put in deals' according to the advertising legend David Ogilvy.We pay full price for cars, their parking and insurance, though an average car is in use only 5 percent of its lifetime. Uber is an example of collaborative consumption. In a connected world, unbundling, metering, and sharing are new paradigms that enable delivery of the intended value to customers, in exact measure and charge them for the outcome or intended use. This brings in Transparency, Accountability, and Efficiency across the value chain. Possible savings are mind boggling. Breakthrough drug like Abilify MyCite containing an ingestible sensor that helps monitor medication, has potential to save billions of dollars. Music streaming and movies are easier examples and low hanging fruits that have been quickly adopted. The concept of XaaS enables this shift across industry verticals.The 'The Ends game' is not easy to implement overnight, admit the authors. But certainly not impossible. The gains are hard to ignore. The new game has just begun.

This is an excellent book. The erroneous focus of many managers on the product they produce instead of the value customers seek is the base for this book, which uses numerous examples from a variety of industries to highlight a more updated and profitable way to look at the market exchange. They describe how customer-focused thinking can reduce waste in the market, creating a win-win situation for firms and customers, and provide concrete guidance on how to take a step in this direction. Recommended reading for managers who want to ensure that their revenue model is indeed going to be a source of future profits in a fast-changing world.

This is an enjoyable read on the topic of money-making in contemporary markets. When we make money, what are we monetizing? Is it our skills and talents, or the impact we have in the life and business of our customers? Eye opening - a little bit like Simon Sinek’s "Start with Why," but much more practical.