Is the concept of warranty still relevant in our modern organisations? Let’s start with a Dilbert comic: Dilbert strip 1999-02-12.
The comic starts with a customer phoning the Dogbert technical helpline looking for advice about a device that’s not working. Dogbert starts by saying, ‘could you unscrew the panel on the back of the device, please?’, at which point the customer says, ‘the label here says that this will invalidate the warranty’. Dogbert just replies with, ‘OK, call me if anything changes’. This example gives a metaphor about how we tend to see warranty in organisations, where it is manipulated by organisations as a lack of commitment beyond some minimal requirement. Too many organisations too often try to get out of the warranty expectations.
But what do we mean by warranty? We tend to interpret it as some sort of stipulation or assurance of some aspect of performance that relates to a contract of sale. In terms of relevance to technology, when new or emergent technology is embedded into a product or service, it gives comfort to customers that the technology is going to work in a certain way. But with reference to the character of some of the products and services that are emerging these days, is this notion of warranty still relevant? Or perhaps it is becoming obsolete as customers and consumers become involved in the production of products and services, as they assemble the products they buy.
This can have a profound impact on the performance levels that we might consider traditionally to be covered by a warranty. In other words, if we think about purchasing a tablet, we may be buying the hardware from organisation A. We install applications from X, Y, and Z. Moreover, as we start to develop our understanding of the product through using it, we learn how to apply this product into some larger system where we once again have the hardware from one vendor, the software from a range of vendors, and we bring the wet-ware (our practise, our minds) to the mix. So how does the utility we gain from this overall system relate to the old-fashioned idea of warranty? If the product stops performing as we’d hoped, is it to do with the hardware or the software or us? Have we broken it? An even better bigger question is, who is responsible for fixing it? When the product-system fails, we find that warranty tends to be minimal in what it offers. It seems that the use in practice is not covered.
Let’s consider open innovation as a concept that challenges warranty. Traditionally, we have considered innovation to be the product of some vertically integrated activity within organisations. In contrast, open innovation, as described by Henry Chesbrough and others (see e.g. CK Prahalad’s concept of co-creation), paints a picture of innovation being the product of a collaborative endeavour between a range of individuals and organisations which is quite systematic and beyond the efforts of one organisation. This approach is simply the way that technological innovation occurs in our globally connected world. And whilst it delivers benefits and efficiencies and produces bigger and more complex outputs, there are dangers to this as well.
Another twist to consider is the role of the customer in product systems. Think of IKEA, perhaps, as a pioneer of involving customers as key actors in the production of product systems, where the deal with IKEA is, in return for lower prices, you, as consumer, own the logistics and the assembly of the product. But what does IKEA do if a piece of furniture fails? Many of us have been in that situation where, after three hours of knee crushing, hand shredding construction, we are left with a handful of screws. And we always draw the same conclusion: these were probably spares. But what if they were not? What if the product fails? Do IKEA turn around and say, well, that’s your problem. Or do they say, we’re really sorry about this, our warranty covers our manufacturing processes as well as the efforts of the enthusiastic amateur we’ve asked to build this thing.
If we think about our output as some sort of solution to a customer problem rather than just a fixed product, then our ideas around warranty should perhaps change. What is the ‘new way of thinking’ about warranty? “Of course, we accept that it did not work when you assembled it. Here’s a replacement. Can you tell us what went wrong so we can fix it again so it doesn’t happen in future?” The customer does not need to worry about the costs, although they may not know who is paying for it. Something like this could be expected if we change our thinking from a warranty guaranteeing some minimum-level performance, to warranty applying to the whole customer experience i.e. guarantee a minimum-level customer experience as they engage in our product system.
So, we might say that whilst warranty is losing its traditional worth and meaning and seems to be less relevant, its meaning is perhaps just being transformed by incorporating the emerging customer experience component. It would seem quite strategic for those charged with managing technology in organisations to embrace this change wholeheartedly. But this is not the end of the story – we will refine this view as we progress with this week’s material.
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