The humus

The humus is the environment in which the business in question lives. The business must analyze this environment, understand it and master it in order to make the best and develop an offer that matches its market. An important example of this is Auchan, who, by actions centered on its staff and customers and the help of specialized startups, endeavors to sell products invented by staff or customers. Here, the business uses knowledge of the environment and takes advantage of open opportunities to condition its continuity.

The roots

The roots carry food to the tree, supporting its stability, which it needs to grow. Transposed to levels within the business, the roots refer to key competencies of a varying nature (human, financial, technological and organizational) that the business will rely on in order to develop an offer that is well adapted to market expectations and develop a stable competitive advantage over the competition. New “Web 3.0” technology, that facilitates an exchange of expertise, knowledge and competencies and allows projects to be realized over networks, is a boost that allows the business to find more appropriate internal or external resources to ensure its development.

The trunk

Relying on the humus (knowledge of the environment) and the roots (key competencies), the trunk represents the offer creation process, strictly speaking, and therefore the ability to transform the company’s expertise into marketable products or services. It is from this trunk that the branches extend and later bear fruit. It is imperative that the trunk is viable and sufficiently “strong”.

The branches

The branches correspond to potential segmentation in the global offer, according to the market segments where the business has positioned itself, and also, on a second level, to the various distribution channels that will allow each segment of offer to be delivered on the market. In the dynamic vision of the skill tree, if certain branches turn out to be unsustainable, the idea is that it is better to cut them off in a timely fashion (thus giving the tree the power to replace them with more promising branches) rather than cut the entire trunk later.

The fruit

The fruit is the finished product or the final proposal of a service on the market or in each segment of the market. At this stage, the business must listen to the market and constantly observe, following the product’s life cycle so that new offers can be introduced at the right moment. Digitization plays a particular role in that it is used to develop new functions and new services associated with the offer (customization, logistics, reputation, mobility, etc.) thanks to contributions from economic intelligence.

The atmosphere

The atmosphere consists of all outside agents that dictate constraints and offer opportunities. It is at this level that the actor’s trust is established, which is necessary for the offer’s full development. However, it is also at this level that slip-ups violate rules and destroy trust. The recent example of horse meat having a negative impact on the entire agro-food sector is striking.

Similar to how we cannot dissociate the different tree parts and hope that the tree will still prosper and produce good fruit, the different sections of offer governance are bound together with systemic logic.

The business will have to make the best of its humus (notably in the context of an economic crisis) and capitalize on resources and competencies (roots) at its disposal. Using these development processes (trunk), it will develop a product or service (fruit) that will be offered to the customer at the end of the chain. The customer’s reaction to this offer or the life cycle that the customer imposes on that offer will allow the business to learn lessons and adapt its strategy.

2.2.1. Innovation and start-up

Descartes himself, the champion of rational reasoning, had recognized the fundamental importance of imagination, complementing intelligence, in a search for the truth, the source of all creative action. Even though only intelligence is capable of conceiving truth, it must make use of imagination, of the senses and of memory, in order to leave no means unused.

Later, science would develop the heuristic approach, which, starting with experiments and relying on levers of intuition and reasoning, gives the mind the extraordinary ability to discover. As rational knowledge threatens to confine reality to determinist models, it is important not to allow it to act alone during decision-making processes if we want it to result in real innovations.

Actually, the trick is to harmoniously mix rational approaches based on methods to help thinking, such as “core-competence strategy”, “economic intelligence” and “strategic analysis”, among others, with a good dose of “creativity” which will play the role of an indispensable spark for putting the offer into a truly innovative orbit.

Figure 2.2 shows the key role of creativity, which not only must be encouraged through the formation of a creative ecosystem, but also must be connected to the world of research, ideas and discoveries, and finally, must be monitored by a good offer governance that the enterprise must put in place.

As we can see here, the business must act on a certain number of “soft skill” levers in order to create an ecosystem that is conducive to creativity. Soft competencies are human relational qualities that make up the personality of each individual. They complete acquired academic competencies which are naturally more technical, referred to as “hard competencies”. Among the soft competencies, the most appreciated of them within a company are: a sense of efficiency, communication, collaboration, and also flexibility and sense of initiative.

The business will encourage them thanks to a set of action plans whose consistency and convergence will create conditions necessary for outbreaks of creativity. As an example, we cite:

• – a program of human resources oriented towards innovation that favors openness to change;
• – encouraging talents and leadership;
• – improving competencies in staff and management;
• – a participative approach for all phases of innovative projects;
• – a curiosity of mind and a predisposition to watch for breaks in the environment, which may prove to be opportunities for the company,
• – the suggestion box (projects) among different teams in the business;
• – “agile” and opportunist management that allows non-planned innovations to emerge;
• – management that accept risks, under the condition that they are well calculated.

It is therefore by playing with these recruitment and managerial culture levers that the business will be able to create fertile ground for an innovative offer that creates value which can bloom. This fertile ground is the necessary condition for acquiring a decisive and defendable competitive advantage that will ensure sustainable development.

One of the key factors of innovation consists of combining internal R&D with “Open Innovation”, which consists of involving external stakeholders (customers, suppliers, partners, universities, public research laboratories or start-ups.) in the innovation process and the offer creation process in order to take advantage of the ecosystem’s collective intelligence.

Start-ups can be part of a group or simply share a co-creation with more or less mutualized means and a more or less integrated exchange of knowledge. They have the reactivity and agility that more mature structures often lack. The enterprise can therefore draw creativity from these start-up “hives”, thus speeding up innovation cycles.

They will have to pay attention to maintaining their creative tension, even in phases of growth or absorption, where they run the risk of being stifled in systems that are too large and rigid.

It is important for the enterprise to at all times conserve the possibility of stopping, pursuing or deviating its project, according to innovations that arise from start-ups and the ecosystem in which they evolve.

Combining the principles of Lean with those of “start-ups” has led to the emergence of “Lean start-up”, which aims to speed up the commercialization cycles of offers, regularly measure progress realized with a view to continuous improvement, all while taking user feedback into account and minimizing costs inherent to the offer’s delivery.

2.2.2. Economic intelligence

The goal of economic intelligence is to give the business a more balanced and realistic perception of its environment and capabilities; its ability to anticipate depends on it.

This perception is constructed thanks to a structured collection of information internal and external to the company. This mass of information must be handled appropriately.

On the one hand, these are syntheses communicated to General Management, allowing the company to decide on how the offer should evolve and on the internal correlative actions required in order to facilitate its realization. In this respect, these syntheses can be very sensitive for the company and must therefore be protected.

On the other hand, these are communication packages targeted for lobbying actions (or influence management) intended to facilitate the offer deployment (recommendations, ethical rules and behavioral norms).

Each organization, based on its ability to anticipate, seeks autonomy with regard to its environment. This autonomy can be defined as the extent of disturbances that an organization is able to correctly overcome and its ability to pursue objectives without being counteracted by others. This intelligence, which constitutes one of the guarantees of the company’s sustainability, must be protected according to the level of impact on the enterprise a potential disclosure would have, as shown in Figure 2.3.

Business economic intelligence feeds on:

• – all kinds of monitoring: research (literary research), technology (products and process), competition (products, patents), regulations (norms, legislation, certification, etc.);
• – surveys, studies, panels on local economic environments, social behaviors, market expectations, the tissue of activities and the infrastructures and services that holds them together;
• – evaluation of internal or easily accessible aptitudes, fair awareness of weaknesses and strengths.

Economic intelligence is concerned with internally maintaining an enterprise culture favorable to its development by ensuring the link and synergy among actors, and externally maintaining a positive image and expectations for renewals of the offer within the enterprise’s environment.

Economic intelligence is to be constructed, but it must also evolve and expand. The reasons for this are touched upon as examples hereafter:

• – new institutional environment with growing complexities, such as agreements and collective convention, legislation, professional insurances, decrees, municipal bylaws, etc.;
• – growing competition;
• – faster technological changes (e.g. digital tools);
• – quicker market cycles;
• – well-developed, faster information (email, SMS, subscriptions, etc.);
• – competition for accessing means and competences;
• – the arisal of misinformation (intended or not);
• – the arisal of threats and opportunities (intended or not);
• – control of access to internal/external information flows.

Fortunately, at the same time, the plethora of tools at our disposal to build this intelligence is constantly increasing. We must know how to use these tools.

2.2.3. Strategic marketing (or “upstream” marketing)

Apart from major setbacks that oblige the enterprise to “reduce sail”, the enterprise seeks growth, following the adage: “to stand still is to retreat”. Upstream, defining a strategy responds to this concern. As we tried to show in the publication “Guide for Good Enterprise Governance Practices”,¹ has tried to show, designing a strategy that takes the enterprise’s stakeholders’ expectations into consideration (customers, staff, suppliers/partners, shareholders, etc.) is the key to success in enterprise governance, under the condition that the enterprise knows how to translate this strategy into concrete objectives which can be allocated to the enterprise’s macro processes.

By nature, the strategy and its operational translation define middle- and long-term orientations that constitute the context of everyone’s day-to-day actions.

The offer creation process, declined according to the seven functions that compose it, must be accommodated in the same framework as that of the business’ other operational processes (“order to cash”, taking into account customer expectations, etc.) or support (finance, human resources, etc.).

Strategic Marketing means conceptualizing the offer that will best contribute to achieving defined strategic objectives. Thus, the offer is a specific translation of the strategy, aiming to respond to market expectations by relying on the identification of key competencies and knowledge within the business in order to create a competitive advantage that allows the business to differentiate itself from the competition (humus and roots).

This function is notably in charge of:

• – bringing life to the “taking into account customer expectations” process by activating all economic intelligence levers: competitive monitoring, awareness of competition, technology, regulations, economics or even geopolitics, and also monitoring the image perceived by customers, prospects or targets in new markets;
• – summarizing the entirety of elements gathered in order to imagine existing offer evolutions or new products/services developments. In order for this to happen, it will rely on market segmentation according to targeted client type, allowing us to pertinently analyze their expectations. The stronger of a technical evolution there is, the more it will be necessary to know the customer’s real expectations. Fortunately, this same technology will allow us to better understand them based on varied criteria such as social, environmental, or other aspects in addition to classical criteria of utility and cost. The progress of probes, sensory cameras, geotracking and instant processing of multiple, complex events allows us to follow the customer and propose “circumstantial” offers.

Generally, the offer’s design calls on two distinct types of processes according to whether you are dealing with novation or evolution. There are specific processes for projects (novation) and permanent processes for evolutions. The line between these two types is however porous.

The characteristic of creating a “novelty”, an offer originating from an invention, is that its development results from this innovation and thus cannot result solely from strategic reflection. As an example, we cite: the microwave oven, the laser, the chip card, the Internet in its primitive form, revolving credit, heart transplants, etc.

Inversely, the evolution of “renewal” or “improvement” offers will generally result from a strategic approach that links the market’s expectations with the analysis of the enterprise’s key competencies. Let us take a look at this category: vending machines, parking machines, washing machines, wine, dentures, dumpsters, vehicle leases, reservations of all kinds, gambling, etc. The majority of these improvements consist of taking advantage of newly emerging technology in order to enrich an existing product or service.

This “upstream” marketing, in contrast to operational marketing that can be qualified as “downstream”, relies on a certain number of tools, such as economic intelligence or strategic analysis in order to take advantage of main sources of inspiration for creating the offer, which are:

• – market studies and unsatisfied expectations;
• – research and technology watch;
• – knowledge of the competition and competitivity improvements;
• – exploitation of know-how and key competencies that capitalize on the experience gained by the business.

These tools are certainly necessary, but far from being enough. In fact, without a good dose of creativity, the offer will not take off, and all of these wonderful studies risk ending up vain.

Macro competences: the enterprise’s assets

The enterprise’s “key competencies” are characterized by:

• – a reproducible organizational ability, based on gained experience;
• – the time required for their construction and the difficulty to imitate and to maintain them;
• – a unique assembly of know-how and expertise;

“Key competencies” emphasize the long term. They are the roots and source of creativity for the future, under the condition that they are identified and managed.

Some examples of distinctive competencies that have allowed the company’s product offerings to evolve:

• – mail-order distributors: logistical and cataloging competencies from mail-order distributors combined with digital competencies have transformed their distribution model;
• – Caterpillar: civil engineering competencies combined with the competencies of Prêt A Porter in order to propose an all-terrain shoe offer;
• – Apple: integration of IT competencies with those of telecommunication and a convivial human/machine interface;
• – Wintek (subcontractor of Apple): competencies in manufacturing and assembly in very large volumes of electronic parts, but very limited competencies concerning the well-being of employees;
• – Canon: integration of optical, microelectronic and mechanical precision competencies;
• – Honda: competencies in motors and gears have led to a development in multiple markets: automobiles, motorcycles, lawn-mowers, outboard engines and generators;
• – Renault: automobile manufacturing competencies coupled with the reuse of products and manufacturing methods as well as using cheaper human resources have allowed Renault to develop vehicles such as the Dacia;
• – IBM: through its service competencies, it has been able to take a strategic turn towards consulting.

In contrast, examples of badly managed differentiating competencies that did not allow the offer to evolve:

• – Kodak, with competencies comparable to those of Canon, has not been able to manage them in a way that allows its offer to follow the markets at least, and also notably missed the widespread digitalization of photography;
• – IBM has provided Microsoft with key competencies in IT, while a good management of those competencies could have resulted in it becoming an incontestable leader in micro-IT, whereas it has now left the market.

2.3.1. Identification and evaluation of competencies and key assets: use a methodology

The approach based on resources and competencies will enrich the enterprise’s design process by considering it not only through its product/market activities but also through its ability to mobilize internal resources in order to innovate and create or maintain a competitive advantage. Thus, the strategy no longer appears solely as a rational exercise in adapting to the market’s expectations, but rather as a creative exercise that guides the development of the enterprise’s resources and competencies. From this perspective, it will first identify its resources and key competencies in order to assemble them in an original way that allows the enterprise to imagine an innovative offer. Once this operation has been carried out, this offer should be evaluated in the context of the competitive environment of the enterprise in order to decide whether or not to put it on the market.

In order to facilitate the identification of key competencies, the enterprise will take advantage of a map with six competency domains as identified by a certain number of internationally recognized authors such as M.A. Hitt and R.D. Ireland who detail 55 distinctive competencies:

1. 1) financial competencies: the available cash-flow is seen as a strategic asset for developing other internal competencies in the business, even acquiring new external competencies, etc.;
2. 2) human competencies: HR policy favors staff motivation, encouraging regular upgrades in individual competencies, rewarding performance and initiative, etc.;
3. 3) physical competencies: the production tool’s performance in terms of cost, quality, flexibility, geographic implantation relative to markets, respect for the environment, stock reduction, etc.;
4. 4) organization competencies: quality of the business’ governance and management, pertinent utilization of the information system, implementation of approaches to continuous improvement in performance such as quality, process, etc.;
5. 5) technological competencies: know-how patents, production and conception methods, etc. Some businesses sometimes develop very elaborate prototypes that allow them to test new technology and prospects’ reactions. This is the case for automobiles with car concepts, for aviation with model A380 so that customers can see the new aircraft’s interior space, etc.;
6. 6) finally, reputation, which is an “invisible asset” that is, however, essential for the business (brand image, fame and, e-reputation, for example, are invaluable in creating a competitive advantage).

With this in mind, the enterprise has a true inherited asset at its disposal that allows it to see itself as a portfolio of competencies. However, it is not always easy to note these resources, insofar as traditional information systems offer a fragmented and incomplete image. In fact, only the assets that can be isolated and easily measured (fields, factories, equipment, etc.) are accounted by traditional management tools.

What renders this identification even more difficult is that analyzing the enterprise’s resources, or even individual competencies in the HR sense of the term, is not sufficient, because when taken in isolation, they rarely constitute value-generating forces.

In fact, a core competency is always a combination of individual competencies and sufficiently structured resources to allow learning and self-development, which will be done through capitalizing on gained experience.

Due to its complexity and tacit dimension that relies on experience, it is difficult to codify the process of learning. Hence, it can be difficult to copy the resulting core competency, which creates a unique “asset” for the enterprise.

Among these key competencies, some are “differentiating” enough relative to competition to be qualified as “fundamental”. Here, we will refer to “core competencies” or “strategic competencies”, because they can give the enterprise a sustainable competitive advantage, most often by an original combination of several of them. But in order for this to happen, the enterprise must first be able to recognize them before thinking of a winning combination. Similarly, the enterprise’s human resource management must evolve more and more towards human asset management.

Once resources and competencies have been identified, they must be evaluated in the context of their competitive environment. This evaluation constitutes a delicate exercise, subjected to executive perception. The different criteria presented in the literature help in analyzing them. Drawing inspiration from several works, we propose a sequence of five tests that assess the strategic value of resources and competencies.

1. 1) The first test reflects on the pertinence of resources. If the resource allows the business to seize an opportunity in its environment or to escape a threat, then we can consider it pertinent. This pertinence results from a double concordance: between resources and the strategy and between the strategy and the environment.
2. 2) The second test is that of rarity. It separates trivialized resources from those owned by a small number of competitors. Consequently, the rarer the resource is, the more it will be considered strategic.
3. 3) The third test splits easily imitable resources from those that are much less easily imitable. Here, the aim is to determine the sustainability of the advantage procured by resources. Thus, the more intangible resources are, or the more tacit competencies are (non-codified), the less they are visible and therefore imitable. The possibility of reproducing the competency depends just as much on the time necessary for its constitution. Some competencies are long forging and cannot easily be imitated.
4. 4) The fourth has to do with the transferability of resources, in other words its specificity and the degree of control exerted by the enterprise that possesses it. An idiosyncratic resource (difficult to redeploy in another context) by definition renders its transfer to another entity problematic. Furthermore, a competency that is simply mobilized but not possessed by the enterprise (the case of individual competencies) is exposed to a higher degree of transferability.
5. 5) Finally, the fifth deals only with resources that have no substitute. This last test is interesting because even though a competency is neither imitable nor transferable, a competitor can manage to neutralize this source of competitive advantage by forging a substitute competency.

If the key competencies and their identification as presented above remain up-to-date, there is one resource whose strategic importance has recently made an appearance, and which is the product of technological competency and pertinence with regard to the environment: data.

2.3.2. The value of informational assets

With the rapid development of information technology, the digitization of information has gained an extremely significant position in businesses and administrations as well as in the daily lives of each and every one of us.

Since the turn of the millennium, the rhythm of technological innovations surrounding digitization has transformed in successive waves that make up a tsunami: the appearance and diffusion of smart phones in record time, with several innovations such as widespread mobile Internet access, geo-tracking, Big Data, cloud computing, MOOCs, etc.

Other digital innovations are already ready (artificial intelligence, Internet of Things, 3D printing, etc.) or still in a state of research (quantum computing, etc.) without being able to precisely predict their use and therefore their impact on businesses.

Today, the digital transformation has changed society as a whole, not just businesses. The importance of this phenomenon and its irreversible character justify talking of a digital revolution. This is one of the key ingredients for the third industrial revolution marked by the appearance of GAFAM² or their Asian equivalents BATX³ and their supranational power which surpasses that of some developed states.

In this digital revolution, the “data” has assumed a predominant and strategic position. In the past, a few years ago, the effort was to make information systems provide the business with value. It was data processing that had value. Today, it is the data itself that has value.

Should we have to convince ourselves of this? Consider the recent example of the Facebook and Cambridge Analytica case. The cases affected the very heart of Facebook’s activity: data collection for advertising purposes. This is most often done with a commercial goal in mind, but as we see in this case, the goal can also be political, starting from the misuse of collected data.

Specialized in strategic communication, Cambridge Analytica, created in 2013, analyzes mass data by cross-referencing in order to emphasize individual characteristics (or characteristics common to a group of individuals) in order to facilitate targeting these individuals in marketing.

In this instance, it has developed software that anticipates how voters will vote in order to tilt the balance in favor of the republican candidate thanks to targeted advertising. This software has gone so far as to create “ideological bubbles” from filters that allow an entirety of information to be cross-referenced, while the isolated data seems insignificant. This cross-referencing allows a behavioral analysis to be carried out and information to be presented from an angle that aims to reinforce certain user behaviors. Thus, the user finds themself “trapped” in a vicious cycle, without ideological debate, which then allows them to be easily influenced.

The data that served these analyses concerns 87 million Americans and has been obtained illegally via a false personality test developed by a sub-contracting company and a psychologist from the University of Cambridge. Facebook does not feel guilty, under the pretext that those concerned granted a right of access to their personal data on the platform as well as their hometown, first and last name, but also “likes” and even their “friends”. People are aware that they are providing this information. “No system was infiltrated, no password or sensitive data was stolen or pirated”, Facebook defended itself.

Taking into account the extremely high number of people who were made the object of such targeting, counted in tens of millions, in this situation there are grounds to accuse Cambridge Analytica, with the complicity of Facebook, of getting Donald Trump elected by decisively tilting the balance in his favor.

Other than shedding light on the dangers concerning personal data encountered when frequenting Internet sites, this scandal also illustrates the considerable, even strategic, stakes with data and the worldwide battle to possess them.

They also allow us to approach the issue of the value of data and even “calculate” it: since the stolen data concerns 87 million people and Facebook’s drop in value on the stock market following the scandal comes out to 93 billion dollars, we can deduce that, with a shortcut that has nothing to do with math, the value of personal data is about 1,000 dollars per person!

The agile process

The process of offer creation is incorporated in a structured approach. The different functions must be planned agilely by encouraging tasks in parallel. At all times, strategic marketing can introduce new elements that alter the process. If evaluations are inconsistent with expectations, one starts over entirely or with part of the preceding functions in order to obtain satisfaction. For example, one can introduce the notion of Jidoka (Toyota): GO, we continue; NOGO, we stop everything according to an evaluation of established characteristics (quality/industrial gate). These characteristics are not uniquely formulated in economic or financial terms nor in terms of quality, deadlines and technical restraints. New digital technologies (Product Lifecycle Management (PLM), 3D printers, etc.) introduce more agility in the offer creation process by reducing the duration of development steps and allowing novelties to be continually integrated without great difficulty. This new agility offers enterprises the possibility of placing truly “disruptive” innovations on the market.

The time factors

As we try to satisfy expectation for variety on the market (derivation of options, personalization), the enterprise comes under increasing pressure to meet deadlines. “Time to Market”, the delay that separates the identification of a product need from its launch on the market, becomes a determining factor in the construction of a competitive position. This factor considerably influences offer creation processes. We participate in a growing overlap of various phases of this creation (conception, industrialization, manufacturing, distribution). These techniques are grouped together in what is now called “concurrent engineering”, or simultaneous development, which is characterized by:

• – product renewal by successive “at the margin” developments;
• – reuse of manufacturing procedures which are progressively adapted;
• – permanent mobilization of all industrial and commercial information (capitalization of experience, data about the competition, the state of the art) at all stages of manufacturing;
• – “de-massification” of various processes for the benefit of a better proximity among markets and experimentations;
• – limitation of dependency on economies of scale.

The time factor has become considerably important in the modern economy. It is a criterion of competition among competing businesses. Today, improved or renewed offers proportionately surpass those of novation. Zara, as an example, attests to this phenomenon when it surpasses its competitors due to its aptitude to progressively and permanently renew its collections while others are still concerned with massive, seasonal renewals. In this case (and as many others will confirm), the analysis of speed shows a deep and permanent interaction among different processes, such as:

• – quantities produced strictly deriving from quantities sold;
• – conception quickly reacting to the lifecycle of articles;
• – permanent adaptations of industrialization to quantities;
• – quick design based on capitalization of experience.

Potentially dangerous offers

In offer creation processes, it is necessary to consider the potential dangers of an offer or its externalities. We cannot simply do whatever we want in the nuclear, aviation or drug industry. However, the risk of utter catastrophe is not always perceived. If we take aircraft construction, for example, the different steps to creation, conception being the one exception perhaps, are marked by multiple regulatory procedures that should be satisfied before pushing further on this creation processes. Thus, we can consider that the aircraft is never completely defined, insofar as at each moment a “service bulletin” could keep it grounded until modifications are applied. There are other activities where the dangers of an offer are not perceived. For example, benefitting from lax regulations, mortgage loans offered by American banks provoked a human financial catastrophe that has gained global significance through its externalities.

Strictly speaking, the process of offer creation is a macro process constituted of myriad elementary processes placed under the responsibility of seven larger functions. In order for this process to work well, we aim to make these seven functions work together as far “upstream” as possible, favoring their parallelization rather than sequencing.

2.4.1. Product design: defining the product offering

From ideas of desirable offer evolutions or from new offers imagined by the “strategic marketing”, the “conception” function relies on external sources of innovation and also on businesses’ macro competencies to give substance to these ideas, if possible defining products and services that are “disruptive” but realizable under good economic conditions.

Defining the offer consists of making concrete what marketing has conceptualized. Whatever the extent of the design process, the materialization of the offer remains to be built. The definition process will have to select among numerous solutions the one that presents the best advantages with regard to several criteria. These include:

• – feasibility which is analyzed from a technical point of view, as well as logistic (access to supplies) and economic;
• – compatibility between the definition and the strategy from a practical point of view. This concerns notably the later aspects of commercialization: distribution and after-sale service.

The offer definition will gradually freeze once the choices concerning models and prototypes have been made. A definition will be finally validated and will consist of plans, nomenclatures and, technical or contractual specifications, even for services.

This process of definition is of a general scope; a human being needs one way or another to materialize the offers, including those deemed “intangible”!

At this stage, the product is materialized, and a sales price can be set that is compatible with the business’ economic objectives. It should be noted that for the definition of an improvement offer, the price is often constrained by the market.

2.4.2. The business model

Once the product is defined, its “life” must be planned in terms of time. Attached to this plan are steps where financial means and technical competencies have to be planned, where future revenues are estimated, and where deadlines are to be respected.

Mundanely, the business’ interest in the project should be highlighted in terms of profitability by analyzing its anticipated impact on different revenues and charges.

Based on profit objectives, various scenarios for the offer’s deployment or industrialization will be studied and quantified, which will lead to several iterations of these steps.

The “business model” feeds on information all the way through the entire offer creation process, notably during choices pertaining to definition. It will influence choices pertaining to industrialization, all the way to commercialization. It is support for the decision to launch a new offer. It continues to live during later phases, allowing the offer to be refined and enriched.

The “business model” must also evaluate the project’s impact on the organization, human and technological competencies, as well as the environment. This step is indispensable for creating the link with the strategy.

The first role of the “business model” is to highlight benefits for stakeholders in the short, middle, and long term relative to existing offers. Throughout the entire process, it is important to measure necessary investments well and refocus them according to the value of the projected offer: which offer? For when? For what value? For which customers? On what markets (perspectives, regulations, etc.)? The value proposition and the analysis of its composition take on an increasingly crucial dimension.

From the very start of offer creation, implemented tools must be able to follow and monitor profitability while mitigating the risks of slippages with alerts to relevant managers, complying with the enterprise’s monitoring tools.

However, although it is indispensable to emphasize the value creation expected by the envisioned changes in the offer, this is not sufficient. In addition, the “business model” will have to question any of the offer’s inherent risks in the commercial, financial and social dimensions. The risks must be identified and relativized according to the process, at least those that the business can measure. Certain risks can in fact contradict or even stop an offer’s development.

One of the obstacles to be avoided during the set-up of a new offer has to do with rupture and discontinuity, which most often lead to drifts and losses. An example is the departure of a highly skilled employee, whose consequence is a loss of competence and expertise which can be very penalizing, even determining (death of Steve Jobs).

2.4.3. Industrialization

Development will be decided on the basis of the validated “business model”. Development will however be launched on the basis of nothing other than a prototype that is concrete enough to be able to verify production costs and delays, as well as risks for creating (or not creating) the new product.

It is necessary to consider the components that support the new offer: factories, information systems, processes, organization and so on. The more the offer fits into heavy industry, the more necessary it will be to consider infrastructures, those available internally and under a subcontracting agreement, and those that have not yet been acquired. But be careful, this does not concern traditional industry alone, for example, the software industry is just as much a heavy industry for those who want it to exist over time. In that respect, the notions of process and product must be correlated. Taking norms and standards into account must not, under a facade of simplicity, evade execution that could turn out complex and engaging in the long term. For example, in aeronautics, the lifespan of an aircraft often reaches 30 years. The resulting maintenance and service become dominant in the decision to invest. It is therefore critical to have an approach to industrialization that integrates sustainable development, oriented towards service, recovery and adaptation.

At this stage, and when it is possible, some advocate for the product’s premature exposure on the market. It is a matter of putting some demonstrative examples, although realized with a low cost, into the hands of several customers or chosen prospects in order to allow an opinion external to the business to confirm itself, temper or amend the vision of a project that was until then principally carried by the enthusiasm of internal developers. This can result in the project’s reorientation or even a reversal for the benefit of an alternative product definition.

Generally, development commits according to an arbitration between “Make or Buy”. Traditionally, this arbitration was done based on the consideration that the acquisition of means of production was justified solely by the volumes to be produced. In case of insufficiency, production is entrusted to others. This is sub-contracting or outsourcing.

Today, the “Make or Buy” arbitration must take more numerous criteria into account:

• – the multiplicity of technology and alternatives: rapid evolutions, particular expertise, optimization among costs and quantities;
• – the increase of cost in creating and renewing the offer: businesses must orient their investment capabilities towards offer creation at the expense of means of production, notably those concerning the manufacturing of detail parts. But separating from workshops in order to entrust production to sub-contractors can be an often-underestimated problem for planning, respect for deadlines and ten-year maintenance guarantees;
• – heavier regulatory constraints: ecological (painting, surface treatments), tracking (Séveso), etc. and related investments;
• – willingness to access know-how, or conversely, the responsiveness of certain know-how, which must be mastered in order to avoid their dispersion, regardless of the cost.

Thus, this customer–supplier relationship – notably that of sub-contracting – falls within the “supply chain” solidary structure, which is constructed on the foundation of an entirety of common rules and practices established in the long term.

This “extended enterprise” includes partners necessary to the offer’s development. The enterprise’s new frontiers include its partners. Managing partners implies a clear and precise definition of expected services which will be a serious help for defining the scope of partners by distinguishing partners and competitors. In fact, a partner can be a partner for some offers and a serious competitor for others. The partner relationship needs more and more legal support in order to ascertain each stakeholder’s commitments, limits and protections, as well as service level agreements (SLA) to which service contracts are added.

The “purchase” function intervenes here, both according to strategic orientations – supplier choices based on the expected level of collaboration, their proximity and reactivity, their ability to improve – and according to tactical objectives – reduction in the number of suppliers, audits and certifications, partnership contracts. This function implements the supply processes, the communication of forecasts and the rules on collaboration (exchanged information, meeting cycles). The “price” negotiation is very often about volumes, but it can be also about time according to the “learning curves”.

This collaboration will touch mainly on:

• – engineering, to specify component parts and render them more easily manufacturable (or sourceable);
• – production, to take into account production “upstream” of certain constraints (or opportunities for reuse) in order to optimize production conditions (quality, costs, deadlines);
• – supply logistics in order to harmonize and streamline the flow of “materials”.

For the parts and products whose manufacturing is left to the business, the “Methods” function will prepare for industrialization. Industrialization is an offer’s creation process, which is relatively unfamiliar to the general public.

In order to illustrate this, we will cite “concept cars” as a well-known example. It is surprising to see that they attract crowds at fairs but that curiously they are never included in the catalogues afterward. As the name implies, the concept car is the final result of the product conception process since it stands there, it drives and demonstrates its operational possibilities. However, this vehicle has reached neither the definition stage nor the industrialization one.

In general, the concept car represents a totally immature offer; it is not viable technologically or economically. And even if it were, it cannot be industrialized. This is the reason why, despite its success, we will never see it in a catalogue. However, it shows that the business has a command on the development process and allows us to validate certain structuring hypotheses related to the new offer. It also has an often-positive contribution to the brand and the execution of future offers.

At the stage of definition, the offer is a materialized solution. What remains is its realization in production with objectives regarding rhythm, deadlines, stability in technical characteristics and a quality guarantee.

Industrialization gives rise to a counter-meaning that probably partly explains why it is so unknown. One often opposes an industrial product with an artisanal product, the latter being proof of quality. However, the goal of a product’s industrialization is to attain a level of quality that the artisan cannot guarantee. This does not contradict the fact that the artisanal product is generally “better” than the industrial product.

Mortadella is a product that accurately and simply describes what industrialization is. The definition of mortadella, meaning its constituents and their proportions, how finely it is cut, the principle for cooking it, are all perfectly defined and familiar. However, a careful observer will note that if sausages turn out more or less the same, this cannot be said for mortadella. The more ambitions the grocer has in the quality of the products it distributes, the more the size of the mortadella matters, to the point where high quality traders have a special machine dedicated exclusively to cutting strangely bulky mortadella.

The explanation is found in the constraints of industrialization. The quality of mortadella depends on a very particular cooking cycle that is easy to realize (economically and technically,) especially since the mortadella’s dimension is important.

Using a copper basin for jam is another example of “industrialization”, insofar as it facilitates regularity in the result.

Industrialization consists of defining methods (hence the name Department of Methods being attributed to those in the business who assure industrialization) and means to be put to use in order to realize the offer in terms of kind, price, volume, deadlines and regularity. The modification of one of these criteria can lead to re-industrialization.

In order to do this, the offer process must benefit from intelligent, well-equipped inspections that track success and difficulty over the course of the creation or transformation. Tools for product management, process framework management and quality are the key to developing offers that are innovative and highly reliable at the same time. Combining methods and tools grants a certain assurance, reliability and transparency in the value creation of a new offer.

The process of industrialization is sanctioned and validated after the alpha and beta-tests on the basis of early production runs. The alpha-tests consist of verifying that the various offer functions are correctly assured. The beta-tests consist of verifying that the offer responds to how it can be used. These test respect for technical specifications and their robustness in regular service.

Industrialization additionally implicates defining involvement and means as part of after-sale services: the availability of spare parts, maintenance protocols, etc.

Thus, industrialization guarantees reproducibility and stability in the production processes, and therefore regularity in finished products, manifesting itself in the abandonment of a “product certificate” in order to make room for a “process certificate”.

2.4.4. Start of production

In the context of a new offer and after the alpha-tests, whose goal is to test functioning and compliance among functional subsets joining the product’s make-up, the business proceeds to manufacturing pre-series. At this stage, there is a phase of “experimental manufacturing” placed under the responsibility of the “production” function, which precedes normal operations in order to progressively adjust various production settings and work towards stabilized operations that allow customers to be supplied. The articles in the pre-series are generally destined for “chosen” customers that assure the beta-tests. These tests allow us to test products under normal operations. It is not rare for many problems to arise during this stage. Skipping over these tests can end catastrophically. The fact remains that the beta-tests can reveal that an offer was exposed on the market too late.

Computer modeling for the offer by means of digital technology such as PLM and 3D printing will contribute to stabilizing the offer, which can be subject to a certain decomposition for the purpose of reducing the system’s complexity all while maintaining innovation objectives at all levels of productions, deployment, support and maintenance, even recovery. This implies equipping ourselves with tools that surpass bureaucracy and documentary management in order to construct a framework of processes and consistent, operant and evolutionary documents. The EFQM approach is a good factor of success in that it assures traceability from start to end. This translation of tasks must be simple and accessible in order to be assimilable by those in charge of instantiating them at the operational level. The offer monitor must be able to transmit documented elements to the owner of the new production process so that they can assure its proper monitoring.

2.4.5. Launch on the market

This phase will need contribution from “operational marketing”, “commercial” and “logistics” functions to make sure the new product is launched on the market under conditions laid down in the “business model”. The difficulty of this phase lies in the ability to anticipate a situation in which we have little historical vision. We must find the right balance between advertising, logistical means and production capacity. The two obstacles in this case are both the success of a product that provokes a large rupture, and conversely, the production that cannot be sold by saturation, non-existence or unexpressed needs on the market. The flexibility procured by Lean management is a considerable asset in avoiding these obstacles.

The channels of communication and commercialization must make the offer known. They are an extension to the business and must be made part of the offer. The more we find ourselves in the general public, the more significant their impact becomes. These channels are sometimes very different in different regions and cultures. An offer that is not known will not be successful. It is necessary to make it known with good media. In certain offers, it is possible to guarantee success before delivery begins. For example, in the movies, the previews and their resulting rumor allow us to predict the success or failure of a movie. There are clear cases where high-technology and media-related products have seen successes before the offer was even delivered to the public. Other great offers remained in the shadows and will remain there indefinitely.

Placement on the market implies a good match with customer expectations and therefore the perception of feedback and reactions regarding the new offer. Today, tools for e-reputation and e-value more or less consciously controlled by consumers are essential to ensure this informational feedback. The consumer reacts more and more and wishes not to be manipulated and, if they realize that it is the case, it can result in very negative consequences that the enterprise cannot recover from if it becomes aware too late. We all know very well that it is difficult to build an image but very easy to degrade it, hence the necessity of quality and risk control on the new offer, relying on the well-known past and on the feedbacks collected from all kinds of sensors.

Field observations as well as “process intelligence” and “mobility” tools help us efficiently recognize needs expressed by the target or latent needs. Detecting stoppages, ruptures and bottlenecks is sometimes a source of precious and unexpected information on the quality of the relationship with the customer.

2.4.6. Appraisal

Appraisal concerns measuring results relative to the “business model” and learning lessons for future projects. The launch of a product is, for the business, a project’s culmination. At the moment of conception, a feasibility study was conducted, a “business model” was constructed, predicting objectives in terms of quantity, quality, costs and deadlines. When it comes to the time for assessment – and since nothing ever happens as predicted – it is worthwhile to answer these questions: were goals met? Were means allocated? Were deadlines held? This critical analysis of what was actually realized, the problems met along the way, resolved or unresolved, will help capitalize on the business’ experiences. A failure can enrich the business. However, this implies mature hierarchical relationships if we want to shed light on faults and not simply “brush it all under the table” to be soon forgotten.

2.4.7. Best practice in executing the process of creating product offerings

The offer creation process goes through the same definition phases as all processes under the control of enterprise governance process when this is implemented.

The enterprise is a coherent and integrated system. The processes support the enterprise’s dynamic. This coherence allows us to identify interrelationships that can influence the offer creation process according to the type of offer. Offer creation cannot be carried out without the help of already existing processes and in order for this creation to be efficient and effective, it must structure itself according to a process approach that connects clearly identified, measured and monitored tasks. For example, modifying an offer has to be done in a precise context that calls on various managers to give their agreement, suggestions or veto within an overseen time frame that can be measured and monitored.

The creation of an improvement or a rupture offer relies on internal competencies (sometimes more than 50%), patents and already existing products (sometimes more than 80%, for example, for Valeo-Ceisar). The rest comes from external innovations that are integrated into the process that constitutes the offer. An enterprise is never a lonesome entity, it is a part of its environment and has to confront the new potential offer with changes and ruptures on the enterprise’s market of interest.

The offer creation process will be different if it initiates a new offer ex nihilo or it turns out to be a transformation of another existing offer. However, in all of these cases, it will have to emphasize great agility and quick corrective decision-making according to the needs and expectations of customers, even though it is necessary to short circuit the processes.

The transformation can be analyzed and measured in a variety of ways, some rather classic such as cost, quality and deadline but others less classic like the product renewal cycles. Certain economic sectors, for example telecommunications, and also finance, can have extremely short cycles, whereas others in the industry have long cycles that cannot be reduced. It is important to recognize and manage them.

Knowledge, study and analysis of available key competencies will foster continuous creation, or at least the regular creation of new offers. In order to get ideas for change, some tools available today can be used for running analyses on the past and observing the present in order to ensure that the offer is in line with the customer’s expectations. The new offer having also to try to be disruptive on the market, this represents quite a challenge, especially if furthermore its return on investment has to be evaluated taking into account the expected revenue during its lifetime. Great innovations that come from someone’s great ideas must nevertheless take place through a process, all the more structured if the offer is complex.

The offer must guarantee the integration of processes from creation and concept definition to commercialization going through industrialization and production. Nothing can be left aside under penalty of jeopardizing the improvement or even the existing offer itself.

The more integrated the processes are, the more agility is possible because the measurement of impacts is anticipated and the offer becomes a transformation that is regularly managed according to endogenous or exogenous variables by avoiding brutal ruptures whose effects are less predictable.

The offer creation process must therefore be both structured and agile, while capitalizing on knowledge and its reuse. As Table 2.1 illustrates, the processes of offer creation and capitalizing on knowledge must be controlled by the enterprise governance process with clearly identified activities to assure the success of the enterprise.

Enterprise governance regularly follows critical components and verifies how accessible their management is in order to guarantee a structured and agile offer’s continuity. Each milestone must allow us to measure the results that we expect at this stage, verifying alignment with the business strategy and adjudicating on the GO/NOGO. A halt or a reorientation at the right moment can allow negative impacts to be reduced and potentially generate ideas for new offers.

2.5.1. Safran Group

The Safran Group agreed to test the questionnaire and evaluate its maturity in terms of sustainable development. The following rubric concerning the governance process was provided to illustrate the method.

The test was conducted by the authors in the form of discussions with representatives from the Group, who we thank sincerely. The maturity evaluations obtained in this way correspond to perceptions, which would, of course, need to be backed up with precise audits in order to be confirmed.

Safran is an international high-technology group operating in the aircraft propulsion and equipment, space and defense markets. Comprising a number of firms, Safran holds, alone or in partnership, world or European leadership positions in its markets. In order to keep pace with its fast-evolving markets, the group undertakes extensive R&D programs, including expenditures of 1.4 billion euros in 2017.

In February 2018, Safran took control of Zodiac Aerospace, significantly expanding its aircraft equipment activities. Together with Zodiac Aerospace, the group has more than 91,000 employees and would have approximately 21 billion euros in adjusted revenue (pro-forma 2016). Safran Group has been created by successive purchases of firms with diverse managerial cultures. In order to harmonize and simplify the management system of all of the group’s entities, Safran launched the enterprise’s project “One SAFRAN”, articulated around process optimization.

With regard to “offer creation”, the “Develop” and “Program” processes have been identified as having specific objectives. The “Program” process takes care of the customers and ensures operational excellence in terms of the evolutions they ask for, by keeping up with order contracts amendments and customer’s complaints, and also by respecting deadlines. For this to happen, it coordinates the actions of other processes like logistics, manufacturing and above all “Development”, which for its part is responsible for respecting norms, regulations and customer specifications, which are particularly strict in this profession.

Strategy and compliance

• – The offer’s coverage level with regard to customers’ expressed needs;
• – the number of decision-makers involved in the offer’s development (cultural evolutions, learning enterprises, etc.);
• – the number of control points before arriving on the market, the percentage of time dedicated to control;
• – the number of stakeholders and components involved in the offer’s development;
• – the ratio of necessary internal and external resources necessary to the offer’s realization;
• – the product’s compliance with standards, norms and regulations;
• – the offer’s projected user cost;
• – the offer’s projected market shares and potential impact on other offers;
• – “Design to Cost”: measure of gains in moving from one offer to another.

Deadlines

• – Time required to develop an offer;
• – time required to cover each step of the offer elaboration process from end to end;
• – share of the controllable versus incompressible delays (e.g. external validation).

Costs

• – Quantities and costs of resources and consumables necessary to the offer’s elaboration;
• – the number of material components in the product;
• – the share of purchasing costs in the offer;
• – the total cost for developing the offer;
• – the offer’s return on investment (ROI, VAN and PayBack): margin obtained on the offer and service or recycling agreements versus the total cost of development;
• – the development’s cost share in the total cost of the product.

Flexibility

• – Number of derived products resulting from the offer;
• – volume of projected products/services resulting from new offers;
• – minimal production quantity;
• – number of possible sub-contractors;
• – number of unique suppliers.