Shift to Services

The Cambridge Service Alliance has released another excellent report on the ‘Seven Critical Success factors in the Shift to Services‘. This report was based on research carried out by the CSA with s number of industrial organisations including Perason, BAE, Caterpillar and IBM. It is well worth a read by any leaders setting off on the journey shifting their business focus from products to services.

The research highlights 7 key factors:

Assess your market and internal readiness: making the shift to services means that all parties involved must be ready to change and understand the value of doing so.
Create the right strategic and cultural context: a service business is different to a product business and needs a completely new mind-set to be instilled throughout the whole service ecosystem
Build the structures and governance for services: firms need to make a clear commitment to services by creating properly empowered teams, structures, measurements and incentives.
Get the resources ready for service innovation and delivery: short and long-term budgets need to acknowledge that services are very resource intensive and change over time.
Proactively manage engagement and trust: services are co-created with customers who are active participants in the service journey.
Develop and embed service processes: firms delivering services must experiment, adapt and learn to actively commercialise services. They need processes, which enable them to do that.
Optimise services and communicate best practices: services rely on continuous innovation and so require a ‘best-practice’ mind-set.

The report points out that there is

‘is a logical progression to them and a relationship between them. The first thing you need to do is assess the readiness of both your external and internal environments. Only when you are confident that you, your delivery partners and your customers are all willing to embrace the changes that the shift to services demands can you create the strategic and cultural conditions in which successful services can be designed and delivered. ‘

All of this absolutely true, but from my own experiences there is a cautionary tale to be told! . That reality of driving transformation and change is not logical as it has people at its heart. So while this is an excellent set of guiding principals, in parallel leaders should be aware of the ‘Art of Transformation’. The fact is that unless there is a very convinced, strong minded person at the top of the organisation, change is unlikely to follow a logic. And even if this person is there, there are the layers of middle managers and then those at the coal face. My personal experience of driving change in an organisation is that while it is important to have a clear roadmap, it is also necessary to take advantage of chance and opportunity. A great example is when there is a major customer problem. Everyone up to the CEO is fully involved and this is an opportunity for gaining alignment on mindset. For many OEMs it is when the customer insists on a change. In my own career, Full Service Programmes for fasteners were only created in the late 90’s because the customer, Ford Motor Company insisted on a single supplier for a complete platform. Now that’s one way to get attention. But when the attention had gone, so the alignment went.

So the ‘Art of Change’ I describe is to understand the roadmap so well, that you know when you can get ahead of your self and take advantage of a situation, and when you have to have those difficult discussions. Unfortunately there is no process and little advice to prepare managers for this ‘Art’, except one. Change, people and customers are not logical. If you remember this and do your homework by really deeply understanding these 7 principals, then you have a chance to be successful.

Nick Frank is Co-Founder Managing Partner at Si2 Partners, a consultancy helping clients leverage services to win in industrial markets

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