Tarja Tuominen from the Confederation of Finnish Industries (EK) presented a study by EK explaining the general forces for change in service industries operative environment. She also elaborated on competences required in 2020 for international service organizations.
According to EK study, the key forces for change are
a) globalization - enhancing internationalization and multiculture of services, multinational companies, increased competition and new kind of businesses
b) technological development and digitalization, creating prerequisites for services
c) networking - creating business opportunities across service sectors
d) ageing - threat for a competent workforce, setting challenges for responding to customer needs.
The underlying theme within Tuominen´s presentation was customer needs. Tuominen emphasized how we face customers, how we evaluate their needs, how we fulfil the requirements and competences providing the services.
Another trend within the services evolution seemed to be convergence of service sectors. You can see integration of services within various branches, resulting in providing packages of services. In Finland an example of such are the combinations of social services, real estate, retail and IT services, which can be seen merging for eg senior citizens.
According to EK, the trends and change factors set requirements for new competences towards 2020. The common competences needed are social skills, international operations and utilization of technologies. This does not sound like a groundbreaking news - but in the current market environment service providers already face problems of operating in the global market, lacking needed skills. Although companies are not active in the international market, globalization will affect domestic operations as well. It is important to be able to anticipate changes.
I think we say we learn for life. But there has to be some thought and discipline in regards to what takes the Finnish industries - and service businesses - forward internationally. Thus, engines for change are needed in a planned, systematic way, including educational plans as well as companies HR and HR development strategies.
Saturday, January 7, 2012
Sunday, December 11, 2011
Competitive advantage - defining the sweetspot to complement your strategy
In strategy creation, there are two schools that bring benefits to strategy approach: planning and position school. The planning school is more traditional, providing a clear framework, tools and process for the strategy creation. The planning view includes a deliberate long term plan, carried out by top management. According to Kimmo Suominen from Perfecto, the position school for strategy creation is focusing on the analytics – how an organization positions itself to its environment with a most profitable way and thus finds a competitive advantage.
If you compare the two schools of planning and position, the planning school, through its formalization of the strategy, has traditionally a more visible role whereas position, through the analysis part, has not yet evolved to a systematic part of the strategy creation process.
Companies through their strategy creation approaches typically have defined vision, mission and values, but as Collis and Rukstad (HBR, 2008) point out, there are typically so many elements that people get confused to what is essential and what drives the implementation really forward.
In addition to the typical definitions, what would help companies is a clear definition of the competitive advantage. According to Collis and Rukstad, “your competitive advantage is the essence of your strategy: what your business will do differently from or better than others defines the all-important means by which you will achieve your stated objective. That advantage has complementary external and internal components: a value proposition that explains why the targeted customers should buy your product and a description of how internal activities must be aligned that only your firm can deliver that value proposition.” Therefore, clarifying the strategy in described form, in addition to the value and vision statements, would clarify the direction better for the employees and help set correct shorter term objectives.
What companies could do is use eg The Strategic Sweet Spot model in Collis and Rukstad (2008) ie finding the sweet spot that aligns the firm´s capabilities with customer needs in a way that competitors cannot match given the changing external context – factors such as technology, industry demographics and regulation.
Summarizing the competitive advantage would bring a welcome addition to the strategy elements, including a) objectives, ie ends of the strategy, b) scope, the domain of it and c) advantage, the means of achieving the end.
If you compare the two schools of planning and position, the planning school, through its formalization of the strategy, has traditionally a more visible role whereas position, through the analysis part, has not yet evolved to a systematic part of the strategy creation process.
Companies through their strategy creation approaches typically have defined vision, mission and values, but as Collis and Rukstad (HBR, 2008) point out, there are typically so many elements that people get confused to what is essential and what drives the implementation really forward.
In addition to the typical definitions, what would help companies is a clear definition of the competitive advantage. According to Collis and Rukstad, “your competitive advantage is the essence of your strategy: what your business will do differently from or better than others defines the all-important means by which you will achieve your stated objective. That advantage has complementary external and internal components: a value proposition that explains why the targeted customers should buy your product and a description of how internal activities must be aligned that only your firm can deliver that value proposition.” Therefore, clarifying the strategy in described form, in addition to the value and vision statements, would clarify the direction better for the employees and help set correct shorter term objectives.
What companies could do is use eg The Strategic Sweet Spot model in Collis and Rukstad (2008) ie finding the sweet spot that aligns the firm´s capabilities with customer needs in a way that competitors cannot match given the changing external context – factors such as technology, industry demographics and regulation.
Summarizing the competitive advantage would bring a welcome addition to the strategy elements, including a) objectives, ie ends of the strategy, b) scope, the domain of it and c) advantage, the means of achieving the end.
Sunday, November 20, 2011
Services value creation – the moment of truth
Jayawardhena (Journal of Business and Industrial Marketing, 25/5, 2010) in his study states that from the customer point of view, the most immediate evidence of service quality occurs in the service encounter. Therefore, this customer interaction with the firm is called the “moment of truth”.
Customers base their evaluations on their perceptions of the service encounter. Based on above, value creation of a business-to-business service concept should be defined as customer interaction during the service process. Next to standard services, value adding services should bring additional benefits to the customers´ business. The value is created through the implementation of the service process. Therefore it could be stated that customers´ ”moment of truth” happens during planning and implementation of the service creation process and analyzing its results, leading to improved business efficiency.
The implementation of a new service concept requires analyzing the customers´ business operations, identifying improvement areas and planning a solution that is tailor made for customer needs.
The most successful service organizations understand that the purpose of any business is to create value for customers, employees, and investors, and that the interests of these three groups are inextricably linked. Therefore, sustainable value cannot be created for one group unless it is created for all of them. The first focus should be on creating value for the customer, but this cannot be achieved unless the right employees are selected, developed, and rewarded, and unless investors receive consistently attractive returns (Paul O´Malley, 1998).
What O`Malley is suggesting is extremely relevant for service organizations since customers´ value creation does not take place unless the organization is internally geared towards the correct service level implementation and the correct mindset. An integral part of the value creation is the skills, knowledge and mindset of the personnel.
Saturday, October 8, 2011
Top service brands in Finland
The Finnish marketing and advertising magazine, Markkinointi & Mainonta published a list of most appreciated brands in Finland. The magazine highlighted the Finns now liking even more Finnish brands than before. The only foreign brand in top 10 was Google.
The respondents evaluated their appreciation, usage and awareness on brands and if they would recommend the brand to their peers. The study did not tell how many people participated in the survey.
Some interesting findings. Anni Helena and Riitan Herkku in top 200. These brands were higher in the list than Helsingin Sanomat and R-Kioski. I guess a national study influences a Helsinki area driven brand. Stockmann, the Finnish shopping flagship, in place 133 after Aino ice cream, Mustapekka cheese and Kivikylän kotipalvaamo? Even if Stockmann is present only in a number of cities, where and how do you actually find and see Kivikylän kotipalvaamo?
But what about service brands? As said, Google was the only foreign brand in top 10 - and the only service brand in top 10. The first Finnish service brand in place 14 is S-Etukortti. Most likely in most Finns´pocket. But that the service benefit is so much appreciated even after S-ryhmä stopped sending the annual bonus coupons, which I personally found the core benefit for my S-shopping behaviour?
The other kinds of service brands in top 100 were bookstores, banks (after all the discussion on banking services, one bank has managed to differentiate from others), radio and tv channels by YLE and travel brands Finnair and Aurinkomatkat.
Compared to the study made 10 years ago, biggest changes in service brands positions were first of all the drop by Finnair - then in position 8. Finnair (and Helsinki airport), having gotten all the prestigiuous service awards, has unfortunately been impacted by continuous problems in package handling and strikes by its own employees and partnering companies. Another loser is Silja Line, whose image worsened within the merger to Tallink and the lively management incidents. The bookstores still score high but Stockmann and Sokos fall behind.
The real big winners in the competition are symbols representing a new era: Finnishness, quality and ecology in general. Brands ranked in Top 30: Joutsenlippu, Joutsenmerkki, Avainlippu, Luomu.
Would this trend indicate that the Finnish consumption behaviour is moving towards specialized goods and services which clearly promote their company values and sustainability? Are service brands able to provide such an experience towards its customers? Matkahuolto, VR, Finnair, travel agencies, media companies, new emerging service brands that provide a unique Finnish, high quality, sustainable experience? Following this, I expect that the number of service brands on the list in 2021 has doubled.
The respondents evaluated their appreciation, usage and awareness on brands and if they would recommend the brand to their peers. The study did not tell how many people participated in the survey.
Some interesting findings. Anni Helena and Riitan Herkku in top 200. These brands were higher in the list than Helsingin Sanomat and R-Kioski. I guess a national study influences a Helsinki area driven brand. Stockmann, the Finnish shopping flagship, in place 133 after Aino ice cream, Mustapekka cheese and Kivikylän kotipalvaamo? Even if Stockmann is present only in a number of cities, where and how do you actually find and see Kivikylän kotipalvaamo?
But what about service brands? As said, Google was the only foreign brand in top 10 - and the only service brand in top 10. The first Finnish service brand in place 14 is S-Etukortti. Most likely in most Finns´pocket. But that the service benefit is so much appreciated even after S-ryhmä stopped sending the annual bonus coupons, which I personally found the core benefit for my S-shopping behaviour?
The other kinds of service brands in top 100 were bookstores, banks (after all the discussion on banking services, one bank has managed to differentiate from others), radio and tv channels by YLE and travel brands Finnair and Aurinkomatkat.
Compared to the study made 10 years ago, biggest changes in service brands positions were first of all the drop by Finnair - then in position 8. Finnair (and Helsinki airport), having gotten all the prestigiuous service awards, has unfortunately been impacted by continuous problems in package handling and strikes by its own employees and partnering companies. Another loser is Silja Line, whose image worsened within the merger to Tallink and the lively management incidents. The bookstores still score high but Stockmann and Sokos fall behind.
The real big winners in the competition are symbols representing a new era: Finnishness, quality and ecology in general. Brands ranked in Top 30: Joutsenlippu, Joutsenmerkki, Avainlippu, Luomu.
Would this trend indicate that the Finnish consumption behaviour is moving towards specialized goods and services which clearly promote their company values and sustainability? Are service brands able to provide such an experience towards its customers? Matkahuolto, VR, Finnair, travel agencies, media companies, new emerging service brands that provide a unique Finnish, high quality, sustainable experience? Following this, I expect that the number of service brands on the list in 2021 has doubled.
Sunday, September 25, 2011
Business relationships in service settings
Bo Edvardsson, Maria Holmlund, Tore Strandvik (Initiation of business relationships in service dominant settings, Industrial Marketing Management 37, 2008) have looked into conceptualization of a relationship initiation process in service organizations.
The key question of the authors was what it is about relationships that are crucial for business growth; how can companies initiate new relationships or transform current relationships in a service organization. Or when and why does a relationship end?
The authors were looking into manufacturing companies, operating in highly competitive enviornments, transforming their business from product based offering to a service business. The core success factor in this setting is to understand how to manage and restructure customer relationships and co-creation in order to provide a successful change and transformation.
Edvardsson, Holmlund and Strandvik´s core concept for understanding relationships was explained through a new model on relationship initiation process, which suggests “statuses” with increasing likelihood of leading to a business agreement. The transition from one status to another may lead to a business relationship eg through an agreement. Relationship initiation requires and involves a number of activities and the dynamics of the process may be to move between positions either forward or backward.
What for me was one of the key thoughts was the authors´ view on customers working through projects rather than a process and how similar the way of working is between professional b-to-b companies and transforming manufacturing companies. According to the authors the earlier lifecycle models seem less adequate. If talking about a customer lifecycle and providing lifecycle value, have b-to-b companies created agile enough environments to work with customer from one status to another?
Is lifecycle management too broad term for increased value for customers? If companies split lifecycle process to relevant and detailed entities - from customer perspective - does that differentiate them better from competition? Moving towards a project based service model seems to be the key success factor, after identifying the core service levels and service experience models. The customer moves from one status to another. Service organizations cannot rely on traditional lifecycle process anymore but rather need to integrate services between customer statuses to provide project type services based on customer needs.
The key question of the authors was what it is about relationships that are crucial for business growth; how can companies initiate new relationships or transform current relationships in a service organization. Or when and why does a relationship end?
The authors were looking into manufacturing companies, operating in highly competitive enviornments, transforming their business from product based offering to a service business. The core success factor in this setting is to understand how to manage and restructure customer relationships and co-creation in order to provide a successful change and transformation.
Edvardsson, Holmlund and Strandvik´s core concept for understanding relationships was explained through a new model on relationship initiation process, which suggests “statuses” with increasing likelihood of leading to a business agreement. The transition from one status to another may lead to a business relationship eg through an agreement. Relationship initiation requires and involves a number of activities and the dynamics of the process may be to move between positions either forward or backward.
What for me was one of the key thoughts was the authors´ view on customers working through projects rather than a process and how similar the way of working is between professional b-to-b companies and transforming manufacturing companies. According to the authors the earlier lifecycle models seem less adequate. If talking about a customer lifecycle and providing lifecycle value, have b-to-b companies created agile enough environments to work with customer from one status to another?
Is lifecycle management too broad term for increased value for customers? If companies split lifecycle process to relevant and detailed entities - from customer perspective - does that differentiate them better from competition? Moving towards a project based service model seems to be the key success factor, after identifying the core service levels and service experience models. The customer moves from one status to another. Service organizations cannot rely on traditional lifecycle process anymore but rather need to integrate services between customer statuses to provide project type services based on customer needs.
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