Smart Business Networks
(RSMME009 – Spring 2015)

Case questions Routemobiel
Note: this is a case where there’s not as many analytical frameworks to fall back on (although some can still be useful and should be used where applicable), it revolves around being creative with new business models, so by all means come up with fresh ideas!

If you were in the position of Edward Reinderts,
1) How would you design Routemobiel’s business network? What position would you have Routemobiel take in that network? What new partners would you need to find to fit the new strategy?
2) How should you manage your new business network such that partners are aligned with the network strategy?
3) What new value-added services could you develop to improve Routemobiel’s customer service or strengthen its product leadership? How would you position yourself towards the customer?
4) Which technical innovations could accelerate or threaten the benefits of the Route Mobiel business network, and why?

ABSTRACT
Started in 2005 as a player in the Dutch road assistance market, Route Mobile challenged the only player (ANWB) in this market by organizationally operating as an intermediary, orchestrating a network of business partners. Its strategy of being a cost-leadership while at the same time increasing awareness among public and transparency in the market seemed to be successful. The Dutch road assistance market attracted new entrants with even lower prices than RM. These new price-fighter entrants caused a misfit for RM with its price fighter image. RM’s service level was satisfactory but the market remained very much price-driven, with little opportunity for differentiation on service type and quality. Because of these competitive forces, in 2011, RM chose for a different strategy centered around product leadership and customer intimacy to improve the value added of its products, making them rather an insurance provider instead of a roadside assistance company. This report tries to explain the consequences that this change in strategy can entail in terms of every business aspect including business network. 3

1 Mapping the new business network environment
Now that RM with its new strategy has become an insurance provider instead of a road side assistance company the first logical step is to reconsider the business model and map out what business processes and relationships might change in this new setting. Expanding the portfolio of services offered can affect the value chain of the core business within the network. It is important to define who the affected stakeholders are and how they will react to the change and what does this mean for RM.

1.1 Route Mobiel 4.0: 2015 – future (network design)

Expanding the portfolio of products offered should change RM’s business model not significantly, at least not in the way that the whole business network needs to be completely redefined. Some business aspects, processes and relationships changes due to entering new markets and competing with new players but this is not a sign of turning-point in the strategic levels. RM has now decided to enter the full mobility insurance industry without having extensive knowledge in this field. The logic behind this move is to win market share from competitors in the saturated mobility insurance industry, by bundling insurance products and competing on the base of comfort and value added of the one-stop-shop. This strategy is enforced by providing a healthy balance of price/quality products and trying to provide IT-value added services to its customers. From the customer point of view RM’s core business products expanded in that it includes now also the travel and car insurance contracts but internally RM redirects these contracts to Proteq. Despite offering full package mobility insurance services we suggest RM to focus on its core product road side assistance but leverage on the synergies that come with working together with Proteq. RM’s business network should be clearly structured in way that allows the division of final responsibilities for the different insurance products by different parties. Although RM offers all the insurance products under their own name to the customers, the travel and car insurance products should be clearly devoted to Proteq. They should take the final responsibility for all the incoming calls, claims and settling issues. One way to do that is by redirecting incoming calls for car and insurance requests at SOS international directly to Proteq call centers. The logic behind this division of tasks or responsibilities between RM and Proteq is that RM can achieve its initial goal of winning market share by expanding into new markets while not having to incur al the costs for this expansion strategy, because Proteq takes over the role of service provider after an incoming call at SOS international for the car and travel insurance products. This is a win-win strategy as this means also for Proteq more customers. So basically RM orchestrates the network by leveraging on the synergies that come free with collaboration between partners. Here RM takes the role of a network developer (Hinterhuber 2002) by enabling partner members to leverage on each other’s knowledge and resources, developing the networks’ intellectual and physical assets.

Expanding the portfolio of products offered by RM changes some aspects of their business model. First of all the value chain of the core business of RM changes in that customers can now choose of two more insurance products instead of the stand-alone road side assistance product. This requires changes in many business processes and changes in partner relationship management of RM. We suggest RM to redirect customers calls related to travel or car insurance products to the customer service call center of Proteq ,because RM has not enough market knowledge about the complex insurance world. Also this can save them a lot of call center capacity at SOS international, considering that RM does not have much financial buffer this is a logical choice. The customers (external) benefit of the one phone number for all their services but internally the customer requests separate into road assistance service provided by SOS international and other insurance services provided by Proteq. This division of different parties providing services to incoming calls is important.

Marketing, emergency call center capacity and marked knowledge
First of all the process of road side assistance (value chain) does not hold anymore

2) How should you manage your new business network such that partners are aligned with the network strategy?

The biggest change in partner relationship in this new business model is between RM and Proteq. RM now offers the car and travel insurance products to the customers under its own brand name, while the products and related after sale service come actually from Proteq. RM should somehow ensure that the products delivered by Proteq including the after sale service and customer handling processes are of the same quality that currently RM customers enjoy. Otherwise RM will feel the consequences and because of selling under the same brand name, its core business “road side assistance” will suffer as well. The current network strategy relies on the promise of the comfort and value added of the on-stop-shop while simultaneously providing customers with a healthy balance of price/quality products that competes on the base of fast and satisfactory customer service. To ensure that all network partners follow the same network strategy the orchestrator (RM) should focus on an alignment mechanism that enables each partners’ core business to be delivered under the same value proposition to the customers. As mentioned before, in this case the value proposition of the network is centered around the comfort and value added of the on-stop-shop and the delivery of good priced products by fast and satisfactory customer service. The alignment mechanism can consist of providing KPI figures that all partners must meet in terms of customer service level and sending RM employees to train partners in difficulty. Here RM should also take the role of the Network judge- defining and defending the expected performance standards for member companies (Hinterhuber 2002). An even more important mechanism to align partners is by providing them IT- value added resources where they can see, track and benchmark their performance compared to other network partners. Monetary awarding and punishments can be designed accordingly. Because of the cross-value chain collaboration within the network the information flow within the network must be transparent and easy to transfer. Standardizing intranet settings within the network is recommended.

The relationship between other business partners within the network did not change completely but only become more stronger or stay the same. In this new network model the relationship between RM and SOS international become stronger in that the capacity at SOS international must be increased because of more calls for different products. As discussed before SOS international redirects calls for car and travel insurance products to Proteq’s call centers, so they don’t need to increase knowledge in the car and travel policy, though they may possess this knowledge already. For the 120 independent repair shops it means more work as Proteq might also use their services for car insurance claims of customers. If Proteq want to make use of their services, then here a new relationship comes into live that before didn’t exist between Proteq and the independent repair shops. Proteq should ask RM for advice as they have already good relationship with these independent shops.

3. What new value-added services could you develop to improve Routemobiel’s customer service or strengthen its product leadership? How would you position yourself towards the customer?

IT value added service should enhance the service experience of RM customers. One IT service that lays at the heart of their core business is to connect the independent car repairers to the customers who just called and need road side assistance. Nothing is more annoying than not knowing when the service comes while you as a customer are waiting with a broken car. One way to do that is to connect the mobile phone of the repairer with the website of RM (GPS functionalities) so that customers can see and track where the location of their repairer is and at the same time connect to them if needed. At the same time SOS international should try to provide guidance and assistance to customers to check their own car so when the repairer comes he knows already a lot, shortening the checking process time for the repairer and time goes faster for customers when they are busy. Another functionality to improve RM’s customer service is to provide the customers short video’s about the most common car failures that results into roadside assistance, on their website. In case their phone does not work or connection to emergency call center fails they still can access to these short movies and this could help them. Furthermore, reliability and trust are crucial points that customers take into consideration when they need help. RM should be as transparent in cost and services provided as much as possible. Ones customer’s cars cannot be helped on spot and need repair services they really should know this in advance, be informed about the cost and consequences of getting currently another replacement vehicle. All of this information can be transparently and clearly communicated to the customers through a good website that lets IT do the work.
Advancements in communication technology allows these days even communication without having access to the internet on your phone (offline messaging). RM should make use of these cheap but experience enhancing technologies. Beside that the interaction of the repairer toward the customer should be excellent all these other IT enabled functionalities increases the quality of RM’s products. To increase even more the service experience during road side assistance events the RM can even experiment with providing the customers with a cup of coffee/thee or some fresh. They will not forgot this and might indirectly influence the sale of other products. Most of all it is important that RM can position itself in the mind of their customers as a reliable and trustful provider of services. Because RM is operating in an network model all the parties need to believe and follow the values of transparency, honesty and quality.

4. Which technical innovations could accelerate or threaten the benefits of the Route Mobiel business network, and why?

Threats
One of the biggest threat could potentially be the fact that car manufacturers try to bind the car owners to themselves. They can do this in different ways ranging from making the cars technically challenging (coding for keys but also other critical components) to enforcing their dealers to make contractual agreements with clients that only manufacturer accredited repair shops can serve them. With the “internet of things era” ahead this could be a near future reality. These strategic moves from car manufacturer side can hit RM at the heart of its core business. RM definitely needs to consider this and probably this can be seen as a sign to build relationships with can manufacturers as well. Another threat that can hurt RM is the battle of the emergency call service providers about their pursue to become that standard platform that connects all the parties in the road side assistance business. If the standard platform wins that is a close partner of the competitor of RM than this can hurt them in several ways, including the possibility that they will reject to serve RM at all. Finally the real threat of the future is smart cars. Cars that are able to drive by them self (making less mistakes) and are able to identify in case of emergency what is wrong and report this automatically to dealer authorized service centers around the country. Imagine a case where each car manufacturer has its own big service center in the middle of the country (Utrecht) and when these smart cars need service they automatically report their problem to this distribution/service center and by means of drones help will arrive within minutes. These future trends can totally change the rules of the road side assistance game. Making some of the partners (emergency call centers) redundant while increasing the power of others (insurance providers). What if the car manufacturer decides to sell their cars but then tied with a full insurance provider of their choice or their own insurance services. RM should definitely follow the trends and continually analyze how these trends affect them and response appropriately.

Benefit
The near future reality of internet connection possibility of devices to the internet can also accelerate RM’s business network. The connection of cars to the internet can enable RM to significantly increase their processing time. Imagine a situation where the location of the customers and car repairers are connected to the internet platform of RM. An automatic software then calls automatically the nearest repairer and in the meantime the repairer gets real-time information about the position and car damage of the customer. Decreasing service time significantly. (2 other benefits to write about)

1. RM started in 2005 as a player in the Dutch road assistance market, then dominated by ANWB. 2. Organizationally RM operated as an intermediary, orchestrating a network of business partners. RM worked together with independent towing and repair companies. RM outsourced its emergency call center to SOS international. RM offered roadside assistance as an insurance product open to all. Its insurance products were underwritten by its parent company Proteq which had an insurance license. RM roadside contracts were 30% cheaper than ANWB. 3. To increase awareness among public and transparency in the market RM conducted an aggressive comparative advertising. 4. The price fighter strategy downside: adverse selection> no large customer base to buffer this loss. 5. RM success in the roadside assistance market attracts new entrants, some of which offer lower prices than RM. 6. These new price fighter entrants cause a misfit for RM with its price fighter image. RM service level was satisfactory but the market remained very much price-driven, with little opportunity for differentiation on service type and quality. 7. In 2011, RM chose for a different strategy centered around product leadership and customer intimacy to improve the value added of its products. a. The product leadership aspect consisted of offering a full mobility insurance package organized around a modular design of which customers could buy any module they want. The modular design prevented customers of having double or triple coverage and expanded RM’s value proposition to other business partners as well. b. The customer intimacy part reflected itself in RM’s offer of a single point of contact for all mobility insurance products. Shifting the value for the customer from having the lowest price to the reliability, comfort and value added of the one-stop-shop.

Facts given by the commercial director of RM as of 20-04-2015 * RM is in the process of being acquired by a Chinese company: enabling financial investment opportunities. * RM is at the moment not big enough to take over the role of a platform provider for the roadside assistance market. * RM has not much experience in the insurance business, insurance products are underwritten by the parent company Proteq (as they have the insurance license and not RM) * Not all the partners are equally aware of the eco-system business model. Much of the partners are quite independent. * It is hard to control an exclusivity contract with independent towing & repair shops. Also their service quality may differ from shop to shop.
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Info case
1. RM started in 2005 as a player in the Dutch road assistance market, then dominated by ANWB.
2. Organizationally RM operated as an intermediary, orchestrating a network of business partners. RM worked together with independent towing and repair companies. RM outsourced its emergency call center to SOS international. RM offered roadside assistance as an insurance product open to all. Its insurance products were underwritten by its parent company Proteq which had an insurance license. RM roadside contracts were 30% cheaper than ANWB.
3. To increase awareness among public and transparency in the market RM conducted an aggressive comparative advertising.
4. The price fighter strategy downside: adverse selection> no large customer base to buffer this loss.
5. RM success in the roadside assistance market attracts new entrants, some of which offer lower prices than RM.
6. These new price fighter entrants cause a misfit for RM with its price fighter image. RM service level was satisfactory but the market remained very much price-driven, with little opportunity for differentiation on service type and quality.
7. In 2011, RM chose for a different strategy centered around product leadership and customer intimacy to improve the value added of its products.
a. The product leadership aspect consisted of offering a full mobility insurance package organized around a modular design of which customers could buy any module they want. The modular design prevented customers of having double or triple coverage and expanded RM’s value proposition to other business partners as well.
b. The customer intimacy part reflected itself in RM’s offer of a single point of contact for all mobility insurance products. Shifting the value for the customer from having the lowest price to the reliability, comfort and value added of the one-stop-shop.
Facts given by the commercial director of RM as of 20-04-2015
· RM is in the process of being acquired by a Chinese company: enabling financial investment opportunities.
· RM is at the moment not big enough to take over the role of a platform provider for the roadside assistance market.
· RM has not much experience in the insurance business, insurance products are underwritten by the parent company Proteq (as they have the insurance license and not RM)
· Not all the partners are equally aware of the eco-system business model. Much of the partners are quite independent.
· It is hard to control an exclusivity contract with independent towing & repair shops. Also their service quality may differ from shop to shop.

ABSTRACT
Started in 2005 as a player in the Dutch road assistance market, Route Mobile (RM) challenged the only player (ANWB) in this market by organizationally operating as an intermediary, orchestrating a network of business partners. Its strategy of being a cost-leader while increasing the awareness among public and transparency in the market seemed to be successful. The Dutch road assistance market attracted new entrants with even lower prices than RM. These new price-fighter entrants caused a misfit for RM with its price fighter image. RM service level was satisfactory but the market remained very much price-driven, with little opportunity for differentiation on service type and quality. Because of these competitive forces, in 2011, RM chose for a different strategy centered around product leadership and customer intimacy to improve the value added of its products, becoming an insurance provider instead of a roadside assistance company. This report tries to explain the consequences that this change in strategy can entail in terms of every business aspect including business network. And recommends how the new business model should designed.

1) How would you design Routemobiel’s business network? What position would you have Routemobiel take in that network? What new partners would you need to find to fit the new strategy?

1 Mapping the new business network environment
Now, RM with its new strategy has become an insurance provider instead of a road side assistance company. The first logical step is to reconsider the business model and map out what business processes and relationships might change in this new setting. Expanding the portfolio of services offered can affect the value chain of the core business within the network. It is important to define who the affected stakeholders are and how they will react to the change and what does this mean for RM.
1.1 Route Mobiel 4.0: 2015 – future (network design)
Expanding the portfolio of products offered should change RM’s business model not significantly, at least not in the way that the whole business network needs to be completely redefined. Some business aspects, processes and relationships changes due to entering new markets and competing with new players but this is not a sign of turning-point in the strategic levels. RM has now decided to enter the full mobility insurance industry without having extensive knowledge in this field. The logic behind this move is to win market share from competitors in the saturated mobility insurance industry, by bundling insurance products and competing on the base of comfort and value added of the one-stop-shop. This strategy is enforced by providing a healthy balance of price/quality products and trying to provide IT-value added services to its customers. From the customer point of view RM’s core business products expanded in that it includes now also the travel and car insurance contracts but internally RM redirects these contracts to Proteq. Despite offering full package mobility insurance services we suggest RM to focus on its core product road side assistance but leverage on the synergies that come with working together with Proteq. RM’s business network should be clearly structured in way that allows the division of final responsibilities for the different insurance products by different parties. Although RM offers all the insurance products under their own name to the customers, the travel and car insurance products should be clearly devoted to Proteq. They should take the final responsibility for all the incoming calls, claims and settling issues. One way to do that is by redirecting incoming calls for car and insurance requests at SOS international directly to Proteq call centers. The logic behind this division of tasks or responsibilities between RM and Proteq is that RM can achieve its initial goal of winning market share by expanding into new markets while not having to burden all costs for this expansion strategy, because Proteq takes over the role of service provider after an incoming call at SOS international for the car and travel insurance products. This is a win-win strategy as this also means more customers for Proteq. So basically RM orchestrates the network by leveraging on the synergies that come free with collaboration between partners. Here RM takes the role of a network developer (Hinterhuber 2002) by enabling partner members to leverage on each other’s knowledge and resources, developing the networks’ intellectual and physical assets.

2) How should you manage your new business network such that partners are aligned with the network strategy?

Aligning partners with the network strategy

The biggest change in partner relationship in this new business model is between RM and Proteq. RM now offers the car and travel insurance products to the customers under its own brand name, while the products and related after sale service come actually from Proteq. RM should somehow ensure that the products delivered by Proteq including the after sale service and customer handling processes are of the same quality that currently RM customers enjoy. Otherwise RM will feel the consequences and because of selling under the same brand name, its core business “road side assistance” will suffer as well. The current network strategy relies on the promise of the comfort and value added of the on-stop-shop while simultaneously providing customers with a healthy balance of price/quality products that competes on the base of fast and satisfactory customer service. To ensure that all network partners follow the same network strategy the orchestrator (RM) should focus on an alignment mechanism that enables each partners’ core business to be delivered under the same value proposition to the customers. As mentioned earlier, in this case the value proposition of the network is centered around the comfort and value added of the on-stop-shop and the delivery of good priced products by fast and satisfactory customer service. The alignment mechanism can consist of providing KPI figures that all partners must meet in terms of customer service level and sending RM employees to train partners in difficulty. Here RM should also take the role of the Network judge- defining and defending the expected performance standards for member companies (Hinterhuber 2002). An even more important mechanism to align partners is by providing them IT- value added resources where they can see, track and benchmark their performance compared to other network partners. Monetary awarding and punishments can be designed accordingly. Because of the cross-value chain collaboration within the network the information flow within the network must be transparent and easy to transfer. Standardizing intranet settings within the network is recommended.
The relationship between other business partners within the network did not change completely but only become more stronger or stay the same. In this new network model the relationship between RM and SOS international become stronger in that the capacity at SOS international must be increased because of more calls for different products and due to an increased customer base. As discussed before SOS international redirects calls for car and travel insurance products to Proteq’s call centers, so besides some basic information they don’t need to increase knowledge in the car and travel policy, though they may possess this knowledge already. For the 120 independent repair shops it means more work as Proteq might also use their services for car insurance claims of customers. If Proteq want to make use of their services, then here a new relationship comes into live that before didn’t exist between Proteq and the independent repair shops. Proteq should ask RM for advice as they have already good relationship with these independent shops. SOS internationals should redirect customers automatically to Proteq’s call center service, so that the usual standard of calling customers getting a answers stays within the limits of 30 seconds on average. Finally, if Proteq wants to make use of the independent car repairers for its car insurance services, then RM should ensure that customers receiving service for their cars are of the same level that they get for their road assistance product. Because RM is the face toward the cusotmers for all the products, it does not matter which party delivers them, customers will keep RM accountable. If there is a complain RM should take care for this by themselves and not redirect this to Proteq or any other party.

3) What new value-added services could you develop to improve Routemobiel’s customer service or strengthen its product leadership? How would you position yourself towards the customer?

Value added services and positioning

IT value added service should enhance the service experience of RM customers. One IT service that lays at the heart of their core business is to connect the independent car repairers to the customers who just called and need road side assistance. Nothing is more annoying than not knowing when the service comes while you as a customer are waiting with a broken car. One way to do that is to connect the mobile phone of the repairer with the website of RM (GPS functionalities) so that customers can see and track where the location of their repairer is and at the same time connect to them if needed. At the same time SOS international should try to provide guidance and assistance to customers to check their own car so when the repairer comes he knows already a lot, shortening the checking process time for the repairer and time goes faster for customers when they are busy. Another functionality to improve RM’s customer service is to provide the customers short video’s about the most common car failures that results into roadside assistance, on their website. In case their phone does not work or connection to emergency call center fails they still can access to these short movies and this could help them. Furthermore, reliability and trust are crucial points that customers take into consideration when they need help. RM should be as transparent in cost and services provided as much as possible. Ones customer’s cars cannot be helped on spot and need repair services they really should know this in advance, be informed about the cost and consequences of getting currently another replacement vehicle. All of this information can be transparently and clearly communicated to the customers through a good website that lets IT do the work.
Advancements in communication technology allows these days even communication without having access to the internet on your phone (offline messaging). RM should make use of these cheap but experience enhancing technologies. Beside that the interaction of the repairer toward the customer should be excellent all these other IT enabled functionalities increases the quality of RM’s products. To increase even more cusomters’ service experience during road side assistance events RM (or car repairers) can even experiment with providing the customers with a cup of coffee or thee. They will not forget this and this might indirectly influence the sale of other products. Most of all it is important that RM should position itself in the mind of their customers as a reliable and trustful provider of services. Because RM is operating in an network model all the parties need to believe and follow the values of transparency, honesty and quality. If any party does not believe these values, RM is the party that will feel the consequences, as they are the face toward the customers. RM should enable self control mechanisms for all the parties in terms of customers satisfaction and service level. Contineous customers satisfaction feedback surveys, network benchmarking, IT enabled warning signs in case of decreasing customers satisfaction, and training on code of conduct and business values should increase the service quality deleiverd by the network.

4) Which technical innovations could accelerate or threaten the benefits of the Route Mobiel business network, and why?

Technical innovations which threaten Route Mobile’s network
-

Technical innovations which benefit Route Mobile’s network
-

Threats for the RM business network
One of the biggest threat could potentially be the fact that car manufacturers try to bind the car owners to themselves. They can do this in different ways ranging from making the cars technically challenging (coding for keys but also other critical components) to enforcing their dealers to make contractual agreements with clients that only manufacturer accredited repair shops can serve them. With the “internet of things era” ahead this could be a near future reality. These strategic moves from car manufacturer side can hit RM at the heart of its core business. RM definitely needs to consider this and probably this can be seen as a sign to build relationships with car manufacturers as well. Another threat that can hurt RM is the battle of the emergency call service providers about their pursue to become that standard platform that connects all the parties in the road side assistance business. If the standard platform wins that is a close partner of the competitor of RM than this can hurt them in several ways, including the possibility that they will reject to serve RM at all. Finally the real threat of the future is smart cars. Cars that are able to drive by themselves (making less mistakes) and are able to identify in case of emergency what is wrong and report this automatically to dealer authorized service centers around the country. Imagine a case where each car manufacturer has its own big service center in the middle of the country (Utrecht) and when these smart cars need service they automatically report their problem to this distribution/service center and by means of drones help will arrive within minutes. These future trends can totally change the rules of the road side assistance game. Making some of the partners (emergency call centers) redundant while increasing the power of others (insurance providers). What if the car manufacturer decides to sell their cars but then tied with a full insurance provider of their choice or their own insurance services. RM should definitely follow the trends and continually analyze how these trends affect them and respond appropriately.
Benefit
The near future reality of internet connection possibility of devices to the internet can also accelerate RM’s business network. The connection of cars to the internet can enable RM to significantly increase their processing time. Imagine a situation where the location of the customers and car repairers are connected to the internet platform of RM. An automatic software then calls automatically the nearest repairer and in the meantime the repairer gets real-time information about the position and car damage of the customer. Decreasing service time significantly. Another technical innovations that can benefit RM is if RM decides to be big data analyzer of all the data produced by these future smart cars. Smart cars produce a lot of data about for exmaple: driver behavior, most common accident causes, traffic congestion etc. These data is not useful unless it is analyzed and transformed into meaningful numbers and figures for decision makers. Rm can invest in this capability and by being a first mover one day it may be the standard platform for big data produced by smart cars. Of course the data produced by these smart cars can be used by millions of players, from insurance providers that want to charge each indivudual on their driving behavior, to govermentment agencies to reduce traffic congestion. RM becomes the data seller of the future.