Industrial companies are considering ambitions to re-position themselves towards service companies. We live in a service economy, thus the direction is evident. Consumers having great service experiences in e.g. retail, banking, and entertainment start having bigger expectations towards business interactions as well. A big consideration is profitability – how a service generates more value than a product, which may have attractive margins – but even bigger consideration may be how to maintain customer loyalty and remain competitive – since customer needs evolve.
An industrial transformation towards a
service company will most likely not be a fast turnaround, but depending on the
industry, customer base and scope of business a gradual change. From
engineering towards technology provider, from integrated solutions towards
services provider. There are a number of elements to be considered a part of this
transformation.
Ø How do customer requirements change?
o
Customers understand increasing
opportunities of online, data and analytics. Learning from consumer services,
they expect a smooth customer service in various channels. Customer needs may shift
from single transactions towards efficiency improvements, performance
guarantees and consultancy. Some customers still want individual products, but delivery
or installation requirements may change, and they may be willing to pay for
them.
Ø What is a positioning that provides a competitive edge?
o
Once the company understands
its customers business requirements, it is time to decide what positioning to
take. How to differentiate from competition? How to not just respond to
customers basic requirements, but help them improve their operations, and even
help them grow. Price, value, service, speed, sustainability, safety, peace of
mind?
Ø How to develop the footprint?
o
A company may own a number of
locations ranging from offices, production or service facilities and research
and development. Based on the positioning, what are the key factors? What are
the operations that support company positioning and increase profitability in
the long term and require more investments? Instead of own production, would
joint ventures, partnerships, or leasing make sense?
Ø What competence shift is needed?
o
A transformation towards a
service company requires new kind of competences. These are wider set of
various competences. Engineering and technology skills will be complemented by
powerful supply management, partnerhsips, integration capabilities, business planning
and advisory skills. Customer understanding is prerequisite for a successful
service company.
Ø What kind of offering sells?
o
What does the company sell?
What is in the catalogue that transforms into money? What responds to customer needs
and how can the portfolio be planned that it is modular and meaningful for
volume and value selling? A company needs solutions that can be commercialized and
promoted to its customers, not only tailor made upon request, which may become
too expensive.
Ø Importance of company culture and internal communications?
o
What are the employee
processes, measures and rewarding systems that support the transformation? Is
induction for newcomers still in own facilities or would it be time to get the
employees closer to customers business? How to reward for value creation?
o
In cultural context, it is
never too much to emphasise importance of internal communications. Employees
need and deserve to know about the company´s vision and business, and be able
to discuss and contribute to it. Next to customers, employees know best of the customer
business.
Recommended article European Journal of
Innovation Management Volume 7 · Number 3 · 2004 · pp. 218-228
