Q7: From an Execution Standpoint, how do service businesses differ from product based businesses?
March 1st, 2009
At a macro level. at 30,000 feet, a business is a business is a business. We develop stuff, we sell stuff and we support stuff. I think it was Peter Drucker who said something like, “95% of all businesses are the same”. Clearly, as we get down into the weeds of product businesses vs service businesseses (or businesses with more contemporary offerings, such as subscriptions, for instance) we have to deal with different detail complexities and dynamic complexities at a micro level. The overall architecture of the execution challenge remains the same, mastering detail complexity and dynamic complexity at a macro level and a micro level. Indeed, that’s another “and” proposition - macro and micro (Mastering the challenge of the “and”).
Many businesses are a combination of products and services. Indeed, many “product” businesses have reframed their mental model to be a “service” business which has products. These days, many “service” businesses are reframing their mental model to be a “customer experience” business which has services and products. In many cases, our businesses are a mixed bag of all of the above and we need to manage the portfolio at a macro and micro level.
Every business has specific issues and that’s part of the process, to judge where the business is at in its specific journey and what the specific priority opportunities for improvement are in the next phase of that journey. Some of the specific issues I have encountered with service businesses are:
- Delivering a “Wow” Customer Experience and Value-Proposition
- Scaling the Service Delivery Model
- “Process-izing” and “Product-izing” Services for Quality, Efficiency and Consistency
- Developing Line Extensions and New Lines of Profitable Service Offerings
- Innovating New Pricing Models and Subscription Offerings/Annuity Income
I once was the product support and commercial/contracts manager for an Aerospace company. My responsibility was to lead and manage our limited resources to provide customer service to a diverse blue-chip customer base, including most of the big commercial and military aircraft manufacturers (Boeing, Airbus, Lockheed Martin etc) for new build equipment and many of the big airlines and military users for spares, repairs and technical support. This was an enormous challenge of detail complexity and dynamic complexity and could easily be constant white-water. Indeed it was when I first took over the position! Our service performance was hit and miss with many unhappy, if not upset, customers. Gradually I implanted an execution architecture, including many departments over which I didn’t have direct line responsibility and had to facilitate my peers, and we managed to get back in the driving seat of our service performance and customer experience. It was a long, hard slog, involving many of the specific issues and more which I mention above, of a breakthrough journey. Ultimately I got promoted to be the VP of Sales & Marketing, to which this customer service role reported, so I really got to understand the link between sales and service first hand at higher order level.
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