What would a service-centric solution look like in your industry? KnowledgeBrief clients were joined this month by Dr. Ali Bigdeli, Aston Business School, to explore what we can learn from those that have successfully transformed their capabilities from product-production to product-service, and the pathways they have taken to achieve this transformation.
Servitization – What is it?
Servitization is about adding services to products. When seeking customer satisfaction, competitiveness and sustainable revenue, simply making and selling physical products is no longer enough. In the drive to build and protect customer bases and profit lines, services now have a pivotal part to play.
There are different types of values that can be attached to the products for the end-user; for example, saving time, reducing cost and risk, simplifying and integrating operations, and avoiding hassle. It is not so much about what organisations can provide, but about making the life easier for the end-user.
Interest in service-based competitive strategies is not new. What is new, is the increasing focus manufacturing industries are giving to advanced services and delivering holistic costumer solutions. They are not looking to just sell a product anymore. For example, Rolls-Royce’s pioneering approach of ‘Power-by-the-Hour’ demonstrates how companies can provide cost-effective maintenance and support services to their products. They are focusing on the end-customer and end-consumer, honing in on what value means to them.
So what?
Servitization can impact on the whole value network. The fact that manufacturers are starting to develop the capabilities to design and deliver services can have the potential to affect the whole value network, disrupt business processes and push organisations to rethink their business model. Are we thinking enough about the business processes in all contexts? For example, in social care, do we truly consider a patient is part of a wider ecosystem, made up of business processes, all of which can have an effect on the range of organisational capabilities?
Who else is thinking about reducing cost and risk, reducing effort, avoiding hassle, simplifying and integrating operations? Some industries are already thinking about opportunities with advanced services; for example, using smart meters with boilers for social housing and poverty. A product can get a lot of extra value out of adding the service that the customers are actually interested in. The risk in not adopting advanced services is that if (or when) your competitors do, they will attract your customers.
Now what?
Stay ahead of the game by focusing on what the customer actually wants. One of the first steps is to work closely with customers to learn what they need. Start meeting with them, ask what keeps them up at night and find out how can you servitize around it.
Start mapping who is in your network. Look broadly at the whole value network from start to end-user. Identify the key-players. Consider if there are any potential disrupters in your area or any new partners that could strengthen your position in the value chain.
Start collaborating and find new ways to innovate in partnerships. The key is to spot the opportunities and build strategic relationships within the value network to support them. A new collaboration could potentially bring new opportunities and offerings for product-service improvement.
Frame the journey towards servitization to position yourself ahead of the curve. Create a transformation roadmap that captures the successful pathways for the systematic adoption of advanced services. Describe the key stages, activities, and actions for your organisation to consider or even to follow.
Next month, Innovation Programme clients – including BT, Home Office and Dimensions – will discover new strategies to enhance collaboration, aspiration, and innovation in everyday situations, by exploring the brain “behind” the people of their organisation. For more information, please view the Innovation Day page.