AUTHOR ARCHIVES: Nick Frank

It can make or break your service business growth strategy, yet it’s surprising how many service leaders do not appreciate the impact a separate service P&L can have on changing the mind-set of their people.

Many just focus on what they believe is the best way to maximise their corporate value. Yes it’s important to ensure we have the systems to manage the value of our enterprise, but we also need to consider the impact of measures on the performance of our people.

Take Textron Fastening Systems who were a $1.8bn global manufacturer of nuts, bolts, rivets, screws and plastic clips. Their European business became the sole supplier of fasteners to the Ford Fiesta, providing an integrated solution consisting of manufacturing, purchasing, logistics and engineering services. As far from their manufacturing core, it was set up with it’s own P&L and dedicated team. They succeeded due to their focus and separation from the main manufacturing business.

But once this $30million service business was stable, we decided to re-integrate it back into the core business. So a dedicated team, was re-deployed back into the operational silo’s of Engineering, Logistics, Purchasing , IT and Sales. What a disaster and I say that as this case study is from my own experiences. We lost focus, drive, energy and sales. Our biggest competitor, who set up a separate service business, grew to 5 times our revenue, from exactly the same starting point in time and experience. 15 years on the Textron Fastening Systems no longer exists, having been bought by Private Equity and then broken up. Ironically the remains of the service business have survived but without growth.

For me this was a very salutatory lesson about the importance of focus. But its not so simple as saying that for an industrial company to succeed you must have a separate P&L or Business Unit.

It depends on the strategic goals of the business and also where it is in the transformation process. For example companies such as Rolls Royce & BAE with over 50% of their revenues from services see it as such an integral part of their business model, they do not have a stand alone services division.

So if you are pondering how best to manage your corporate value and looking to make the profit/cost centre call, you might ask yourself 2 questions:

1. In your future business model how integrated will be your products and services offering.
2. Is organisational focus the key challenge facing your service transformation programme.

Having a sound service strategy is key to make the transformation to a sustainable high growth profitable service business. If you want to read  more about how real companies achieve this goal, you can look at the Bobst case study on www.noventum.eu

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

Read Part Three of this series, Finding nuggets of customer gold here

When talking about service, we often hear senior managers asking the question, ’But where do you start?’

It would be lovely to call out, ‘At the beginning!’, but most of us know that is a bit simplistic. The thing is that successful service companies align all aspects of their business to their goal. But business is complex and to address change on a wide front is costly and risky.  Instead business leaders understand where their priorities are, address these first and then move on to the next part of the puzzle. Effective decision making means defining priorities within the context of an overall vision or blue print of how their services business should operate.

We thought it would be worthwhile sharing a series of blog articles based on real life experiences to help paint this picture. The blogs will illustrate 4 key areas to get right![ordered_list style="decimal"]

1. Understand the Value you can deliver to the customer and your own business
   
2. An effective GO-TO Market strategy that defines what service offerings you need to develop and how to sell them
3. Efficient  Service Delivery to ensure profitability
4. Have a Plan

Lets first look at a good way to improve your understanding of Value by analysing your Customer’s Journey to your services. We are not just talking about how they came to choose your product. We start way before that activity and move all the way through to the touch points of the service delivery model.

Many of you will recognise the customer journey map below as being similar for the lifecycle of your equipment.  It is a high level summary of just one part of a customer journey scenario that was mapped out for the premier manufacturer of injection moulding systems, Husky SA. It shows how a customer perceives the brand at different stages through the product life cycle within different touch-points and activities.

But why bother mapping out what seems intuitively obvious. In this case it allowed cross functional teams from Husky Service & Sales to understand what were the critical points in the products lifecycle at which they:

a)    Had to work together: For example in the selling process, especially where negotiations revolved around total cost of ownership commitments.

b)    Where the service organisation could have a significant impact on the customer satisfaction and loyalty. For example by reacting quickly to start up issues, a difficult situation for the customer could be turned around to be a positive experience, if solved quickly and professionally.

c)     Where the use of 3^rd party contractors for providing the service might be appropriate.

d)    To identify systems that could be targeted for different refurbishment and upgrades, so as to maximise revenues through the product lifecycle.

Detail can be added to this high level journey. For example Husky decided that all calls for all technologies should come into the same call centre. By drilling down into more detail at the call centre level and looking at how the customer journey through the organisation changed for different customers, the organisation was able to design a more effective process, to communicate appropriately with its customers and ensure the correct level of training for its employees.

From these examples we can see that being intimate with your customer’s journey is so important to understanding the value they might be seeking from us. Why not look at  www.noventum.eu for more ideas and discussions on the Customer Journey.

In our next blog in this series, we will look a how service change dramatically slows, when we make the wrong decisions in the profit centre / cost centre debate, because we have not understood how are business wants to make money.

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

Read part three of this series:  Finding nuggets of customer gold here