What Product-Centric Firms Need to Know
guest article by Mary Jo Bitner
Moving from products to services for growth and strategic advantage is a huge trend across industries. And, as product-focused firms seek to grow and profit through services and solutions, they often learn the hard way that the transition is not easy. The vision and ambition may be clear, but the path to get there is uncharted for most companies, and fraught with challenges. The book, Profiting From Services and Solutions: What Product-Centric Firms Need to Know by Valarie A. Zeithaml, Stephen W. Brown, Mary Jo Bitner and Jim Salas, explains why service transitions pose such challenges and how managers can begin to overcome them. The service infusion continuum represents the book’s core, and it is used to distinguish types of services ranging from basic warranties and repair and maintenance services to sophisticated managed services, consulting-based services and uniquely tailored solutions. As companies move across the continuum, attempting to offer more sophisticated services and solutions for their customers, they encounter significant new challenges and an increasing need to customize their offerings and collaborate more directly with their customers.
In identifying the challenges companies face and the ways for companies to succeed, the authors’ rely on research with Fortune 100 companies, their years of experience as professors and consultants on this topic, and the insights of managers who have succeeded and those who are in the midst of this transition. Vivid examples from companies such as AT&T, DuPont, IBM, Rolls Royce, Sylvania, Caterpillar, GE, Ingersoll-Rand, Salesforce.com, VWR International, Cisco, Hewlett-Packard, Pearson Education, Siemens, and Xerox are incorporated throughout to build the case for the value of services and solutions and how to be successful at it.
The book is organized around the Service Infusion Continuum and 5 Cs, representing key areas that must be addressed and integrated into a successful strategy to transition from products to services and solutions. The types of services along the continuum are explained, providing a guide for firms that are seeking a common vocabulary and approach for describing what they do and what they hope to achieve through services. Then, chapter by chapter, the 5 Cs are discussed as a means to help companies as they begin their transition to services.
The first C is “Company Configuration” focusing on various organizational structures that businesses consider in the move to services and solutions, answering such questions as: Should services be isolated or incubated in their own business unit or integrated throughout the organization? The second C is “Capabilities” reflecting the significant problems companies face in hiring and developing people with service skills. It is clear that this is one of the most significant challenges companies face – there simply are not enough people trained or experienced in the selling and delivery of services and solutions. The next C is “Customization” where the focus is on the need to create a balance between providing a unique service or solution for every customer vs. providing standardized offerings. The temptation may be to customize, but the reality is there are both operational and financial limits to that strategy. The fourth C is “Collaboration with Customers” which is frequently a foreign practice for product or engineering-dominant firms. The final C captures key “Challenges” heard over and over from companies —challenges tied to pricing, metrics, and the tradeoffs in partnering with others and outsourcing. The book concludes with what is typically the biggest challenge that overrides all the other Cs – “Company Culture.” Indeed, the shift from products to services is often impeded by a very strong operations, engineering, or goods-focused culture that is resistant to the notion of placing customers, service, and solutions at the center.
Many of the transformative changes needed will require significant investments of time and resources. Yet, the firm’s highlighted in this book have demonstrated that the benefits of moving to services and solutions are clear. And, for most companies the question of whether to begin this service transition is not a matter of “if” but “when”.
This book is primarily written for leaders and managers in business-to-business companies in the manufacturing, technology, and distribution sectors. This is where we see the exploding interest in service infusion. However, we also see great potential for application of these strategies in service businesses that think like manufacturers such as insurance, financial services, education, and others. The book is also a useful resource for professors and other educators working in this research area and those teaching students who will find themselves working in the realm of service infusion.
This book is part of the Business Expert Press collection titled “Service Systems and Innovation in Business and Society,” edited by Haluk Demirkan and Jim Spohrer. Some of the books, including this one, are co-branded with the Center for Services Leadership at ASU. For more information on the book collection, or to inquire about publishing a book in the series, you can contact Haluk Demirkan (haluk.demirkan@gmail.com)
