AUTHOR ARCHIVES: Nick Frank

While many IT experts are predicting further big things in IoT this year, Nick Frank suggests they are missing one more vital letter...

2014 saw an explosion in our societies understanding of the potential for connected devices.

Driven mainly by the SMARTphones and the ease of connection to the internet,just about everyone from your primary school kid to their grandmother is getting connected.

And is it my imagination, but utter the words Big Data, Analytics and IoT and they all seem to nod ‘sagely’? So with all this ‘wisdom’ in the world, it’s not surprising that in their struggle to differentiate, Service IT Solution providers have been falling over themselves to describe capabilities that manage knowledge, bring transparency and leverage big data.And in fairness this is not just talk.

The capabilities on offer are impressive, as Field Service, Parts Management, CRM technologies are increasingly integrated into seamless end to end solutions.

Indeed this trend is driving the next wave of consolidation in the industry. Led by PTC with their acquisition of Axeda and ThingWorx, solution providers are looking to develop the technology platforms to enable Remote Services.

Another example of the big bets being made is GE’s multi million dollar investment in their Predix platform for Machine to Machine (M2M) communications.The effect of this hype has been to dramatically raise the profile of the potential value connected technologies could have on industry.

But I am troubled by this jargon and thinking. In my mind these technologies and capabilities have no value if you do not do anything with the information they create. Yet we are all being told that if you don’t have an Internet of Things (IoT) strategy, you are dead!

But while working on a couple of projects in the area of Analytics and Remote Services, I had a Eureka moment.

It’s about the way we think!

Ok I admit, its probably blindingly obvious to the readers of FSN, but I believe that 2015 will increasingly become the

year of S.

And that is not because it’s now the ‘Chinese year of the Sheep’!

No, I believe we have it all wrong when we talk about IoT. It should be the iotS…

S for Service Thinking!

In simple terms ‘Service Thinking’ is the culture or even passionate belief that value is only created by applying your technical or business knowledge to improve whatever it is your customer is trying to achieve.

But to do this professionals will start to adopt new ways of thinking and I am afraid new jargon.

We will hear more of ‘Co- Creation’ & ‘Service Experience’. Metric will be biased towards outcomes rather than operational inputs. ‘Continuous improvement via learning’, which is a very much part of the service psyche, will enable companies to find new ways to ‘run, transform and innovate’ their business.

Indeed this type of thinking is not just limited to field service. Already most really profitable manufacturing companies have moved away from a product dominant focus to a Service Centric approach.

These companies focus on value creation in their customer’s business leveraging their technology and inherent know how to earn better than average margins.

Indeed this is a concept I will be promoting in 2015 together with the Servitisation guru Professor Tim Baines of Aston Business School, as part of the Manufacturing Services Thought Leadership network initiative to be launched later this year.

But it also dawned on me, that it is our imagination that is now the limiting factor.

Frankly the technology is out there to do more or less what ever you want. The big gap is our understanding of what these technologies can do for our business.

Indeed it is Service Thinking and Imagination, which companies must master if they are to reap the full rewards offered by these new technologies.

Already larger OEM’s are exploring these concepts in a very pragmatic way. We see them building infrastructure that sits between their Service Management System and their devices as they discover the benefits of remote services.

In the coming year, together with FSN, we will explore the progress they are making. So in 2015 if you want to stay ahead, don’t be a sheep…. Be a Service Thinker!

 

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You may or may not have spotted it  but over the course of the year in my series of features for Field Service News I have been writing a series of articles that describe and outline a framework of the critical attributes and understanding required to deliver a successful Service Business.

Why? Most managers find it hard to know where to start, because service transformation involves every single aspect of a business.

In other words it's a complex process, with many possible pathways to being able to deliver sustainable growth. So we created the service business model to provide managers with a holistic view of how to break the business challenges into smaller bite size chunks which they can action.

I wanted to illustrate these chunks through real case studies that I have experienced. This final article pulls it all together into a coherent story.

The 50,000ft Birds-Eye perspective

In our 1st article en-titled ‘Where to Start’ we described four key elements companies should understand in order to develop a service business.

1. VALUE: Do you know the value you can create for your customer, and what your own organisations strategy is for turning it into profit?
2. GO-TO MARKET: Can you innovate, design, develop, market and sell service propositions?
3. SERVICE DELIVERY: Can you deliver services consistently, profitably and to the level of customer experience you intended?
4. PLAN: Do you have a detailed explicit plan to drive change that is supported by your leadership and your people?

This is a good start, but how do you get into the detail? We went on to describe nine best practices case studies that provide some insights into how to achieve the balancing act required to develop a profitable service business.

1. Know your CUSTOMER’S JOURNEY(s)

We reviewed how Husky, a leading manufacturer of capital equipment mapped out their customer journey through the product lifecycle to understand the specific 'moments of sales' when the customer was open to the services being proposed.

This insight is often the 1^st step to truly understanding how your customer’s business operates, and where you can make a difference. Many companies have an intuitive feel for their customer. Many more would do well to bring some analysis to their ‘gut feeling’, to uncover the attractive target segments and quantify the value add of all the stakeholders in the value chain.

2. Define your strategy for CORPORATE VALUE MANAGEMENT

In ‘Ouch! Getting the profit/cost centre call wrong’ we highlighted the importance of understanding your own companies objectives. What is your business model to make money?

How does your strategy translate into organisational design? What are the systems and processes you need to manage value? It is not only about the numbers, but your culture and also your capabilities. In particular the ability to manage knowledge.

 

We illustrated this through looking at how different companies have tackled the question of service being a separate P&L and when this has successfully brought focus to their service transformation.

The point is ‘Know Yourself!’. This is the key to discovering how you will reach your goals.

3. CUSTOMER PERCEPTION OF VALUE

In our 3^rd article, ‘Finding nuggets of customer gold’, we discussed that there is no point understanding the customer journey and your own business strategy if you can not define the value you can deliver to your customer’s business.  This is probably the most basic building block for developing the service value proposition.

Through the case study of Yokogawa, we saw how good insight into this value does not always come through the sales team. Indeed using a number of different methodologies can lead to surprising results. In this example they found customers wanted much closer technical relationships to boost the OEE of their plant. On the face of it, this simple insight was the enabler to really innovate for customer value.

4. PROPOSITION DEVELOPMENT AND DEPLOYMENT

‘Services that speak to their customers’ moved us away from VALUE and onto the GOTO MARKET strategy. We discussed how leading companies nearly always have a formal stage-gate type process to design and deploy services.

But that services are different from products, in that the use of prototyping and agile design techniques is more prevalent, because the upfront investment is not so large. We looked at Yokogawa as an example of how by looking at your websites language you can discover for yourself, whether your corporate culture is more INSIDE-OUT and product orientated, or more OUTSIDE-IN and focused on customer value.

 

Studies such as Noventum’s ‘Drivers of Growth’ earlier this year show that the more driven a company is in seeking inputs from it’s customer’s, the more likely it is to achieve higher growth rates of 10% or more.

5. SERVICE SALES MODEL

The second important component of a GOTO MARKET strategy is the Service Sales model. Here we are using Sales in the broadest sense of the word, including not only the front line sales team, but also the sales support teams, all customer touching employees and marketing. They all contribute to selling service!

So in ‘Service Sales; How difficult can it be?’, we heard the experiences of a leading equipment manufacturer in the Packaging Industry, as they ramped up their Service Sales. The key lessons from the Head of Bobst’s Service Business Unit were:

1. Time: spend time with Product Sales explaining the contribution of services to their success.
2. Focus, Focus, Focus: through dedicated Service Sales and Marketing teams
3. Communicate, Communicate, Communicate: it’s a major cultural change
4. Patience: it takes time and commitment to develop the relationships in order to get results

An important message that becomes clear, is that there is no one Service Sales Model that guarantees success. It very much depends on the context of your industry, people and markets.

6. SERVICE DELIVERY MODEL

Having a clear view of VALUE and a GO-TO MARKET strategy is not enough to create a sustainable business. In our 6^th article ‘Don’t Lose your Service Shirts’ we began to explore SERVICE DELIVERY, often so critical to delivering profitability. First we looked at the five core components of the Service Delivery mode:

• End to End business processes
• Service management practices
• People competencies
• Performance management systems (KPI’s)
• IT Functional requirements and Master-data management

We described how Bobst were able to standardise seven different brands and sets of service processes into one global ’Book of Standard’s’ in only three months.

Their vision was to build a Standardised Back-Office, which could be customised for the different needs of their global customer base. This was achieved using a methodology that broke their business down into small standard, best practice components, and then rebuilt the processes with these standard components.

A bit like lego bricks. This methodology, which is used by leading technical service businesses such as Xerox and Siemens, allow the business to deeply understand & define the business needs. This is vitally important before deploying new technologies that automate the processes, bring transparency to data and help companies manage their knowledge.

7. PEOPLE MANAGEMENT

Successful service delivery is all about the your people. So in our 7th article ‘Why Dutch firm Hutten are happy to stand out from the Crowd’, we looked at a very innovative approach based on happiness.

They undertook a programme to promote the values of happiness, collaboration, transparency and sustainability across their organization, suppliers and stakeholders. The result was significantly improved productivity. An unusual approach , but it underlines the importance of people and communication in any business.

8. CUSTOMER EXPERIENCE

The final aspect of Service Delivery is to ensure the customer experience is what we intended when we designed our services. Ten years ago, this was usually an intuitive process within the B2B world.

A good example being how our people look or how they answer the phone. As our economies have become more Knowledge & Experience centric, customer experience has become a critical outcome to be designed, managed and improved. In ‘Is your service organisation looking inside out or outside in’ we explored different methods for gaining insights into Customer Experience. We looked at how one Medical equipment manufacturer went further than their standard Net-Promoter-Score survey’s and undertook in-depth interviews at different customer touch points.

The results were very uncomfortable. The challenge for the company was to, take the observations at face value and action them. Not easy for an organisation, if you have an internally focused technology culture.

 

The awareness of customer experience as an important element of fulfilling the Brand promise has led to leading companies introducing more formal Service Design processes and developing Service Design professionals.

9. PLAN

In our final article, ‘The Winning Plan’, we see how leading researchers have proved what most managers already know. Without an explicit documented plan, that is fully committed to by the leadership and the people, all the efforts on ensuring VALUE, having a robust GOTO MARKET strategy and an excellent SERVICE DELIVERY operation will go to waste. What needs to be done simply will not happen.

So if you have not guessed it yet, the value of this type of Service Business Model is to help managers see where are the priorities. Transformation and change is complex and not everything is possible at once. So to be able to see the wood from the trees and navigate the way to the destination is critical to success.

This Service Business Model is explored in more depth during Noventum’s Service Executive Leadership Courses. For more information use this link to our website www.noventum.eu

Last month myself and Field Service News Editor Kris Oldland were fortunate enough to interview Dave Gordon from Rolls Royce’s Defence business in Bristol, about their Services Journey and why it is so important to the future growth of the business.

Although Rolls Royce is a leading global manufacturing business, many people do not realise that over 50% of its revenues are now generated through Services. Initially Services became a strategic contributor to growth in their Civil business as they reacted to customer and market pressures.

In his own very engaging way, Dave Gordon describes about how the defence business has taken these processes and embedded them into its core offering. As VP of Service Strategy and currently LiftSystem Programme Director for the new vertical takeoff Lightening Fighter, he is uniquely positioned to talk about the transformation from time and materials support contracts to sophisticated advanced services.

Rolls Royce started their journey by understanding what being good at services really meant. They very much took an OUTSIDE-IN approach, not only looking at their own industry, but best practice companies in unrelated businesses. A major challenge was how to apply the undoubted technical and innovative capability of Rolls Royce, to the mountain of data collected on their products, and turn it into value for the customer.

 

Key to this journey has been changing people’s mind-set through the metric of ‘Customer Disruption Cost’. This measure calculated the direct and indirect costs to their customers if the engine was not available. The tangible benefit was that it enabled Rolls Royce to build a value based offer around the customers business needs. The hidden benefit was that it focused the people within the organisation on what was really important to the customer.

Dave explains the importance breaking down the innovation of services into bite size chunks.

Starting first with availability contracts on small modules, and gradually increasing the scope as their knowledge and infrastructure grew. Key was building a database of how the product was used, enabling engineers to model their equipment behaviour, so as to predict future performance. Then leveraging this knowledge and insight to develop new proposition and solutions.

As the service business has matured, the data capture and analysis has increasingly moved into customer located Service Delivery Centres, so making the value creation processes truly co-constructed.

But in this age of nervousness around cyber crime and intellectual property, he stresses that security and segregation of customer data is key to developing a trusting collaboration with the customer.

It is this collaboration that has been key to their success. So not only has it been a journey for Rolls Royce, but their customers as well. They have had to step back from describing ‘what they want’, to ‘where they want to be’.

Dave Gordon goes on to say ‘Creating the future’ is all about deepening relationships and harnessing innovation around customer value. Key is the willingness to listen but where necessary take risks and innovate ‘outside the box’ to make change happen.

This exclusive interview will be appearing on Field Service News across the next few weeks and you can find the first part of this series by clicking this link.

Field Service News regular Nick Frank returns to his series looking at various case studies from companies he has worked with both past and presesnt to help us better understand best practice in service. This time out Nick takes a closer look at customer satisfaction...

Do Satisfaction surveys or Net Promoter systems really tell you how your customer’s experience your company? When you are satisfied with your car, does it mean you will buy the same brand the next time round?  The reality is that tools such as these are better than no tools at all! They do bring a focus on the customer by employees. . But to really get insights in how customers currently experience your brand in terms of needs, expectation and value perception,  requires  more intimate forms of communication and most importantly a change in MIND-SET.

Industry leading companies tend to exhibit an OUTSIDE-IN approach. They actively search out their customer’s thoughts and act on them. They use more sophisticated methods to capture deeper customer insights. They are mature enough to take on-board comments, which might be negative or not fit their agenda, because listening and action are in their DNA.

The on-stage/back-stage model: 

Typically these companies recognise that customer experience is not just an outcome, but can be designed into the service delivery model. Key is identifying the key factors influencing the customer’s perception at each touch-point. The On-stage/Back-stage model is often a useful tool to do this.

These are easy ideas to accept, but a recent consulting experience really brought home to me that for many organisations it’s much harder to put into practice.

We were working with several very successful capital equipment suppliers with very similar situations:

• They want to gain deeper insights into how customers experience their service business.
• They desired to move to the next level as they moved through a period of service transformation.
• They want to go much deeper than their own Net Promoter Score / Customer Satisfaction programmes.[/unordered_list]

In one of these projects, we dealt with a division where a significant proportion of the revenue came from the consumables that supported the product. They decided to invest in a programme where they recorded their staff’s interactions at the touch-points and then interviewed various key stakeholders of their customers.

This brought some unexpected observations within the buying process. The buyers recognised and appreciated the company’s knowledge and professionalism.  But they felt frustrated that the Sales people did not bring any value to the table other than taking orders for consumables.  They actually felt let down, which significantly harmed their overall perception of the brand and encouraged them to look for new vendors.  They made explicit statement statements such as  ‘We want a leading Solution Provider and not merely a leading Product provider’.

Don't be defensive - all feedback is useful

The challenge for this organisations was to take the feedback at face value, not get defensive and take the actions needed for improvement. But this market leading organisation struggled to do this. Why?

Often organisations are structured in silo’s with very specific targets, which are not necessarily aligned with customer value. For example, sales people who meet their incentive plan from significant sales of consumables, are not enticed to walk the extra mile and deliver more value, as this could prevent them from meeting their individual targets

• A focus on short term financial targets stimulates attention on low hanging fruit which directly drives financial results
• Wanting to Stick to the product related values and competencies
• Not being able to accept another perspective on the world.

In truth it’s probably a mixture of the above. The moral of the story is that if you are not ‘truly’ open to what your customers need and say, or are not committed to acting on the feedback, you are probably stuck in an IN-SIDE OUT world. It’s hard to innovate for your customers and provide an excellent experience, when you are only focussed on internal issues such as the next quarters sales or your next product’s features.

And we know that the OUTSIDE-IN mind-set is more likely to lead to growth. Recent research shows that companies who push themselves to gain insights into customer experience from a wide number of sources, are more likely to achieve higher corporate growth. But its not surprising that those companies that make this effort have a better understanding of what is valuable to their customers and how to deliver a customer experience that will drive loyalty.

For more information on how to develop your MINDSET and Design Customer Experience into your Service Propositions, why not look at some of our courses on Service Leadership(23^rd Sept in the UK) and Service Design.

The question of how to grow profitably is high on the strategic agenda of most companies, yet only few are able to realise it. In today’s world, many businesses are struggling to maintain their existing revenue and profit margins, let alone achieve ambitious growth rates. But there are also many exceptions!

Given that significant variations appear in the growth strategies companies choose and the role services play within this strategy, Noventum set out to answer the following two questions:

1. What are today and tomorrow’s key drivers for profitable growth?

2. What role do services play in respect to growth?

The research comprised of in-depth interviews and a survey conducted amongst board members, service managers and directors, primarily from B2B product-orientated companies across a wide distribution of industry sectors and company turnovers.

It was quite clear that companies exhibiting higher growth rates saw ‘services’ as one of their strategic solutions to achieving growth and not as a challenge in its own right.

We found that these companies tended to exhibit 4 key capabilities:

1. Deployed a wide portfolio of growth strategies

In order to outperform competitors on revenue growth and margins, companies should pursue a broad portfolio of growth strategies and not just the traditional few of  (1) Product growth in mature markets; (2) Product growth in emerging markets; (3) Product Related Services. When these 3 strategies are broadened by Advanced Services focused on solving company’s business problems, or improving a customer’s processes, revenue growth was generally above 11%. In addition these companies were more likely to achieve gross margins across the whole business of greater than 40%.

2. Innovate for customer value

Key to growth and profit margins is a focus on innovation in order to optimise customer value. Successful companies do this by employing multiple tools to glean customer insights and maintain a balanced portfolio between incremental and ‘game changing’ innovations.

3. Demonstrate Organisational Agility

We defined agility as the capability, dedication and culture to rapidly innovate on a continuous basis. The companies that achieve high growth are innovative in nature which leads to change. But all this change creates internal friction and conflict . Hence successful high growth companies develop a culture that can move and change rapidly giving the oganisation an agility to adapt to new ideas

4. Strategic alignment between service- and corporate strategies

Companies need to develop a clear long-term vision as to how to develop their service business, ensuring each step delivers a tangible and credible contribution to the overall performance of the company. Focusing on the overall value of service for the company will secure corporate commitment and thereby further enable (service) business success.

The bottom line: Advanced services are a key differentiator in driving companywide revenue growth.

If you are interested in understanding more about how advanced services differentiate the winners from the losers, you can down load  a summary of the research finding using this link.  Or if you would like to participate in our follow up research, you can join Noventum’s Service Innovation Programme on LinkedIn. When people subscribe they will receive our newsletter including the events updates such as the Servitisation conference in May at Aston Business School.

I will be presenting the research findings at this event, as well as at the Service Management Expo at the ExCeL in June.

 

 

‘Congratulations! You grew your service business by 25% last year…but how much money did you make?!’

This is the dilemma we often hear when talking to disappointed and frustrated managers.

In our experience this is especially true for organisations undergoing rapid change or growth through acquisition. Their Service Delivery Processes have not been built on a solid foundation and they experience large variations in how services are delivered from the excellent to the appalling.

Increasingly there are many new service management and mobile solutions on the market that bring transparency to the operations. Although they are a critical ‘enabler’, they do not address the root cause of the problem. We know that for a company to successfully industrialise its back office and deliver a consistent customer experience, it is key to have a clear vision of the:-

 

• End to End business processes
• Service management practices
• People competencies
• Performance management systems
• IT requirements

 

These building blocks are not only the basis for ensuring the existing service delivery model can be profitable, they will also de-risk the introduction of new service offerings.

Take one of the company’s that has featured in this blog series, Bobst SA.

Stephan Maerz, Head of the Service Business Unit faced a classic post acquisition situation. Bobst were working with seven different brands globally, all functioning under different management models; services weren’t aligned, standards and pricing were disparate. If the answer to growth lay in their services, they needed a global plan.

In March 2012, the Bobst executive team decided to create a single One Bobst brand. In July 2012, they started to define and execute a global service transformation programme. The brand-driven strategy they developed required a globally consistent customer experience, and that meant standardisation.  But unifying operations however, wasn’t so simple. The solution? Create a Book of Service Standards, a global undertaking requiring agreement from every regional and functional head. Modes of working were so variable, the project could have taken years. But by working with a 3^rd party with access to proven models and best practice, it took only three months to agree on one model.

A lot of people said it couldn’t be done and that a global service strategy would not work on a local level. Bobst demonstrated that by using a component based service factory model, it is is possible to take a fragmented operation and build a common documented vision of how the business should operate. In this way Bobst has built the basis for a sustainable and profitable service business. The next challenge is to build a completely new IT architecture to make the book of standards an operational reality.

If you would like to know more about this case study or the Component Based Service Factory, use this link to go to the Noventum website at www.noventum.eu.

Or you can meet us in person in May at the Servitisation Conference at Aston Business School or the Service Management Expo at the the London ExCeL where we will be sharing more experiences on how to achieve business growth through services.

Nick Frank is a service specialist with Noventum Service Management

Nick Frank, Consultant with Novetnum Service Management continues his exclusive series looking at building revenue from services...

Selling services, how difficult can it be? Talk to a product sales person: ‘Piece of Cake, but…’.     Talk to the Services Sales specialist about their product colleagues; ’They don’t understand…. all they care about is the big deal’

In truth it’s not black and white, which is why it’s not so easy. Product Sales people can be very successful at selling services, if they are packaged as a product. For example I have seen great results for well defined service maintenance contracts, sold up front with the product. But I have also experienced complete frustration with some product sales people, as they struggle to sell managed services to more senior decision makers.  Generally this because they do not fully understand the strategic growth issues the boardroom faces and focus on service features.

To find the best path for your business requires an in depth knowledge of your customer’s buying processes, your own service propositions and your people. Get the answer right and it’s possible to create tremendous momentum, where you can start to see growth rates of between 20-40% per year in your services business.

Easy words, but what about the reality. Lets look at the experiences of a world leader in packaging equipment, Bobst SA based in Switzerland. The Head of the Service Business Unit, Stephan März saw the opportunity to transform the Services into a sustainable engine for long term growth. Two years in and Parts & Service is starting to push past 6% annual growth. This growth has been led by a focus on services where contract penetration has doubled. Although he is mid- journey, some of the lessons Stephan has learned about energising service sales are a good guide for anyone making this transition:

 

1. Technology leadership is not enough anymore: Spend time with the product sales force repeating this message. ‘Good Services are key to selling more Machines’. They will get it in the end, especially when you look at their incentives!
2. Focus, Focus, Focus: Creating a separate service team gave service an identity and motivation. Bobst had gone as far as creating a separate Business Unit, which allowed Stephan to demonstrate who was making the money…and it was not the products! Dedicated marketing, sales and supply chain allowed him to develop and implement very effective service proposition quickly. A focus on sales people skills; who were hunters or farmers. And often a successful approach for complex equipment manufacturers, leveraging  the customer perception of Regional Service Managers as trusted advisor’s, and using their skills to drive Service Sales.
3. Communicate, Communicate, Communicate: It’s a major cultural change, but change does not happen overnight. Even though Stephan had 100% commitment from the CEO and the Executive team, he still had to work through the silos issues, dealing with jealousy, finger pointing, remuneration, profit & cost allocation and yes, car policy. Bobst worked very hard on team work with their product Sales colleagues, making sure roles and responsibilities were clear; and its beginning to work!
4. Patience, Patience, Patience: Business is impatient for results, but service sales is in fact part of a long term transformation programme, where the business model, processes and people all need to be challenged. It takes time commitment and management skill to achieve the desired relationship and results.

If you are interested in how to sell service more effectively, why not look to attend Noventum’s next Service Sales Course or look at our article on ‘How to boost Service Sales at this link

 

 

As we come to the end of January, Nick Frank, consultant with Noventum Service Management looks a little further ahead at what the rest of the year may yield. 

At the backend of 2013, did you notice that the field services community was increasingly talking about the critical role of knowledge in creating a thriving and profitable services business. Solution providers were all telling us about analytics, transparency and the benefits of working in the connected world. Buzzwords such as ‘Big Data’ and ‘The Internet of Things’ were being bandied around as if we all should be experts.

Companies started talking openly about their development of remote solutions to improve their customers OEE and create new revenue streams. This ‘enlightenment’ I am sure will continue into 2014, but with it I believe will come the realisation that it’s NOT AS EASY as purchasing the latest IT system or implementing some workshop/training programmes.

No, I think that although companies will increasingly see the possibilities that future corporate growth will be in a large part enabled by new services, they will realise that to participate, they must do something different! More and more we will hear companies talking about the need for a step change or transformation.

This is because to gain the full value from these technologies, companies need a fundamental shift in their People, Culture and Processes!

Knowledge savvy People and Culture:

The bulk of the value to be won lies in the customer’s process and operations. Developing services that help the customer’s business be more effective requires a shift to an OUTSIDE-In culture. The customer’s processes and how they experience our Brand must be at the heart of our own product and service strategy. Easy words, but not so easy when you consider that most of us whose careers have grown through products, do rather have an INSIDE-Out view on technology, manufacturing and making things work.

But in developing this understanding we have to change our whole view of knowledge and how we manage it. The first step is to appreciate its importance to our own organisation and customers. What is important to protect, and what can be shared. I say this because to achieve change in an increasingly complex technological world, the concept of co-creation and partnering is becoming stronger. We are seeing companies and customers coming together to form eco-systems to solve complex problems. But this requires the management of knowledge and knowing what and how it can be shared; a capability that many businesses struggle to deal with.

Processes for a new paradigm:

Mind-set may start transformation, but it’s the execution of processes that will bring value. To really benefit from these emerging technologies, it’s logical that processes will be re-engineered for the new technology paradigm. And we are not just talking about the flow of activities. This must include the management rules that underpin the processes, the KPIs to manage performance, the competencies of the people, as well as defining the businesses functional requirements for it’s IT and support systems. Get this last factor wrong, and all the latest technologies and concepts will not help your business move forward.

Sounds complex and expensive. This is where some recent research findings from Noventum bring some interesting insight as to what is needed to move forward. Between April & December last year, we talked with over 150 business leaders and service professionals about which strategies were driving business growth and the role of services.

Two findings stood out in relation to this discussion:

1. Service is becoming recognised as a strategic solution to facilitating a company’s growth strategy.
2. Companies have an increasing desire to develop more advanced services that address their customer’s processes, but show a reluctance to move forward until Product related services are mastered.

We believe the insight these findings provide for 2014 is that, as companies recognise the role that Knowledge and Technology can play in their future profitability, they will get excited….

….and then there will be a sharp intake of breath as they start to evaluate the implications.

However, if they begin to see service as a strategic lever to support the company growth goals, then the investment implications actually becomes more manageable, and are probably smaller than for many product R&D projects.

Secondly by breaking down the transformation into smaller steps, and re-engineering their delivery process and functional requirements, they can harness the technology to achieve results today, but which are scalable to their future growth vision.

At the end of the day, time will tell if this view of the world will be true, but if you would like to get a head start and develop your own thoughts, Noventum will be running a series of events on this topic which can be found at http://www.noventum.eu/calendar

This is the 3^rd article in a series of case studies which examines how companies can improve their understanding of there own Value, create more effective GO-TO Market strategies and drive profitability through efficient Service Delivery models.

‘If you want customer insight to develop new services, go ask the sales force’….uh oh …probably not completely the right idea.  Sorry guys but customer’s talk to sales people in a different kind of way. So while sales input is essential, there are many factors that influence the accuracy of the feedback.

If you really want to understand what your customers value, probably its best to go direct to the customers themselves. That’s why many senior managers insist on visiting customer. But how many times have you heard the CEO call for a change of direction based on a recent visit to an unhappy customer.  A more balanced approach is needed to make informed decisions, if you do not want to fall into the trap of this frequently used quote, ’8% of companies think they deliver superior experience…….only 8% of their customers agree!’

The solution to a balanced & informed analysis is often to involve impartial 3^rd parties.

Take Yokogoawa,  an industrial leader in automation solutions for process industries. Back in 2010 they wanted to know what services their customers thought they should offer. They had talked to the sales force who came back with a pure price, price, price argument. To the Benelux service manager Ton van den Ham, this did not add up, and he felt that perhaps they were asking the wrong questions in the wrong way. So he engaged a 3^rd party to help structure a set of visits and interviews aimed at getting under underneath the skin of their customers. Why a 3^rd party. Well he wanted an impartial perspective that did not carry Yokogawa baggage.

The interviews were done jointly with the 3^rd party acting as a coach and sometime lead. To Yokogawa’s amazement they found that their customer’s really appreciated the technical competence of the application engineers. That the customer’s challenge, was not in fact lower prices, but to have more stable and predictable processes for their chemical plants. The customer’s wanted Yogokawa’s technical experts to be even more engaged at a much deeper level in their business to help keep their processes at the optimum performance.

Armed with this feedback Yokogawa, started to develop their services programme which has developed into what they refer to as ‘Vigiplant Services’

At a recent conference Ton described his his experience of this programme as:   ‘You don’t know what you don’t know. It’s worthwhile talking to your customers to get a different perspective’

So the moral of the story is that when you are developing your services business, forensically clean customer insight is key to truly understanding the value you offer. Don’t be afraid of getting outside people that you trust involved in this process as the results may be surprising. If you would like to learn more about this case study, you can see a video of Ton’s presentation at: http://smc.noventum.nl/smc2011/service-track-video-presentations-2011

Nick Frank is a service specialist with Noventum Service Management and can be contacted at nick.frank@noventum.eu

Read part one of this series, Creating value through services: Where to Start? here  

Read Part two of this series, Ouch! getting the profit/cost centre call wrong in your service business here