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With the topic of Servitization gaining more and more traction both in manufacturing circles and beyond a new industry book that provides a roadmap to making the shift towards advanced, outcome based services could well be of vital use for service executives across the globe. One such book Service Strategy in Action has just been published and Kris Oldland spoke exclusively to co-author Christian Kowalkowski...

I’ve met with Kowalkowski a number of times over the last few years.

More often than not it is at the Spring Servitization Conference, arranged by the Aston Centre for Servitization, (who themselves are part of Aston University,) which in itself is an interesting few days as it brings the universes of industry and academia together and there seem to be more and more people in attendance from both sides of the table each year.

Indeed, this should come as little surprise to anyone who has attended any field service oriented conference across the last few years. Servitization, arguably driven by the growing maturity of IoT, has become a mainstream topic within our industry and academics such as Aston’s own Professor Tim Baines, or Cambridge University’s Andy Neely - are both highly sought after for speaking engagements on the topic.

So given the rise in interest in Servitization, it is perhaps something of an anomaly that there are so few books dedicated to the topic. There is Baines’ own offering written with Cranfield’s Howard Lightfoot, 'Made to Serve' that is generally regarded as the go to book on the topic. Then there is Dr. Michael Provost’s excellent work ‘Everything Work’s Wonderfully’ but there is not a huge amount else.

At least until now.

Kowalkowski's new book Service Strategy in Action, co-written by Wolfgang Ulaga , is in many ways perhaps a natural sequel to Baines’ & Lightfoot’s Made to Serve, which although still superbly relevant to anyone wanting to understand the topic of servitization - is now approaching it’s fifth birthday.

And while the philosophy and concept remains the same, the conversation has evolved considerably within that period.

So how does Kowalkowski view the book?

“It is really written with executives in mind,” he explains “for business managers as well as service development consultants who are focussing on these issues. What we wanted to do was come up with a really simple road map for service strategy in action, divided into twelve distinct steps - so dependent on how mature the company is when they start, they can pick up the roadmap at the right point for their organisation.”

 

Indeed, the book certainly has the well ordered structure of a manual or how-to-guide. However, given the heavy weight nature of the content this not only makes absolute sense but is probably essential for it to be easily digested as a whole.

Kowalkowski himself, is a softly spoken and quietly intense academic with a clear passion and dedication to his topic and this also flows into his written work. Without, the roadmap structure, there could have been a danger that this book could’ve become a book for academics, that lay-folk like myself (and much of it’s intended audience) may have found hard to navigate through.

As it is however, it provides a perfect reference tool for companies making their way through the maze of moving from a traditional break-fix/SLA based business model to an outcome based services model, where uptime and CSAT are the new golden KPIS.

So how does the book plot out your path towards a truly servitized business?

Actually, the path laid out by Kowalkowski and Ulaga is a fairly straightforward one, based on their work with a number of differing organisations. As with all good ideas this journey starts at the beginning by establishing a clear understanding of why companies should be taking this path in the first place.

And of course not all companies are created equal, and very few scenarios are ever the same. So the opening section of the book deals with understanding your organisations position.

“First of all the service imperative, why at all move into service in the first place,” Kowalkowski comments.

“Is such a move a defensive stance to defend a product business? Or is it more offensive to gain additional revenue streams? What internal and external drivers towards advanced services exist within your organisation? Are you perhaps already on a burning platform - in which case maybe you better move a lot faster?”

“It [Understanding your position] also enables you to access the low hanging fruit, but then if you want to make more profound changes then you need to transform your business model more extensively and different elements of it.”

“What are B2B services – what are the key challenges? Products, are of course very heterogeneous but services are even more so - so, you really need to understand that it is a very different animal selling spare parts to promising up-gain sharing – it’s different worlds.”

 

The book also focuses on the cultural elements of such activities which typically are overlooked in a lot of the other academic literature on servitization which do not touch much upon the softer issues.

Yet the cultural aspect is really important and a key inclusion the book as Kowalkowski explains.

“We have a framework, key characteristics of what becomes important when building a service culture,” he begins.

“It’s all about the starting points – you often start in a service desert, a very myopic perspective where service is a necessary evil. Then the journey is through a dark tunnel before you the see the first glimpse of the promising light where service becomes a key growth engine - and that should be the aim.”

Then this framework can also be used for analysing and diagnosing the internal organisation – where are you today and what do you need to do to get to where you need to be.

Do we have some people who are really strong and supportive within the service business and if so are they in the right place?

“It’s not enough to have a service enthusiast in middle management level.” Kowalkowski asserts.

“You might need to have some service evangelist on the top level and you need the service promoters on the front office. Then you need to convince enough people who are fairly indifferent towards this, you can’t convince those that are the outright obstructers, but to form a guiding coalition large and powerful enough to make it stick – this is something that is important and we focus on this in the chapter on division and leadership.”

 

“We explore how can you do this using established change management framework and how to apply that to a servitization context – so forming a strong guiding and coalition and then empowering others to act upon that vision,” he adds.

In fact, the approach outlined in the book utilises the well established Kotter’s eight step framework which we then applied to this context.

“We said what are the service specific traits of change management here and provide some examples of that instead of re-inventing the wheel,” Kowalkowski comments.

“You have these proven frameworks already and this is very much a change management effort. It is not necessarily the hard things that fail, you might have the technology in place but maybe a company may focus to much on what is technically possible.”

“It becomes this double edge sword - do too much and you just rely on your technological features, investing in technology is of course OK, but ask what can the end customer do with it? You need someone who can analyse the data and suggest improvements for your client’s business, and provide them with insight that they don’t necessarily have the time and resources to do themselves perhaps?”

 

In fact, the questions around how, when and why customers should be engaged within the process of moving to a servitized business model are also covered extensively within the book.

“We focus on the customer and the job to be done in really understanding and outlining how service innovation and development is different from product innovation. We look at strategy and how it is aligned to corporate thoughts?”

“Are you really prepared to cannibalise your business – is that even really necessary?” It may that it is not - depending on what your goal is for the service growth initiative is.”

Again the emphasis is very much about establishing a firm understanding of your own current position before proceeding further. “We offer a diagnostic  test that asks are you are you fit for services, do you have the right resource for what it takes? We look at this in a very straight forward manner but it can be a good starting point for many companies.”

“Then we also look at how to move from free to fee, that is how to capture more value from your existing services – which again is a good starting point for moving towards advanced services, but is also useful for maximising revenue from and getting the most mileage out of your existing services.”

Finally, there is then a focus on building a service factory, which is also about improving existing services.

“We include an example of service blueprinting and how it can be used to improve the efficiency and productivity of the service business," Kowalkowski states.

“It’s all about managing efficiency, effectiveness and capacity utilisation. Again depending on the type of service business, then what productivity aspects are important can be defined.”

Whilst the change management and cultural question are in the main handled by Kowalkowski, the discussion around the transition from selling items, to selling services is a complex one and this part of the equation is handled predominantly by Ulaga.

“Transforming sales is of course a big thing as well and Wolfgang has been working a lot with the sales management - so this part of the book is all based on his extensive work in that area,” explains Kowalkowski.

There is, of course, a very different mindset between a service sales team and a product sales team. But should companies who move to advance services be focussed on retraining their existing staff or replacing them with a specialist sales team that understands and gets service sales?

“Obviously with the magnitude of change, understanding how important it is to get this right is key,” replies Kowalkowski when I put this question to him.

“We dedicate time to looking at the key aspects; what is the difference between industrial sales and service sales? The differences in learning orientation? Customer service orientation?”

“Sometimes, they [service sales professionals] have to be more introverted - which is interesting as you generally look at sales professionals as extroverted people.”

 

‘But look at those who sell service, and who does so well and there is often a much more introverted personality amongst those who are successful.”

It is of course all about the organisation and how to fit service into your organisation.

You will never have a one size fits all solution as different companies work in different ways but Kowalkowski points out that they have noted some “different development patterns over time, such as breaking up the silo mentality, how to foster the collaboration of central and local units and so on,” insight into which would pay for the price of the book itself.

Similarly, understanding if Servitization is right for your business is just a first step on that journey, having a road-map like this book is useful in terms of knowing where you are heading and how to get there. However, it’s also good to know how fast you should be going on various elements of the journey as well.

And this has been embedded into Kowalkowski and Ulaga work also. “In terms of what comes first, strategy or structure - for us it is about having enough in place to be able to initiate the change and execute it,” Kowalkowski comments.

“Maybe you can quite easily identify things that are currently lacking – e.g ‘we are not strong in risk management’. Obviously if a company is about to offer output based services they need to improve that before they can move forward.”

“Yet, whilst that is quite concrete and you could still grab some further low hanging fruit by reviewing your current service pricing – can you start doing something about that?”

“Maybe you need to just start changing cultures and processes for certain things – or even leave some problem areas as they are - as in the long term it may encourages other service and product sales, having a delayed benefit that outweighs the problem it creates today.”

Indeed, the questions around servitization are often as complex as they are numerous, yet the long-term rewards are numerous and long lasting. For anyone going through the shift to servitization books like this are going to be of huge use.

 

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