Strategy & Leadership

Service Does Not Mean Failure

For product design- and engineering-minded people, the services revolution requires adopting a whole new mindset, explains the Advanced Services Group’s Eleanor Musson. From the forthcoming issue of Field Service, a quarterly print magazine from Field Service Digital and ServiceMax. Check out the next issue in early November 2016. 

We all like to take pride in our work and know that what we have produced is high quality and can be trusted to do the job for which it was designed and created.

Product design engineers and technicians are, of course, no different. Successful manufacturers have built their reputations on the performance and reliability of their products, and their engineers take great professional pride in this. They continue to innovate product features and capabilities, and find new ways to ensure reliability throughout a product’s lifecycle. In this way, they have held significant influence over the evolution and innovation of what the company offers to the market.

In today’s markets, however, manufacturers are increasingly recognizing that selling a product on a purely one-off transactional basis isn’t a sustainable strategy for growth. Markets become saturated, products become commoditized and competitors develop cheap substitutes.

Across a range of industries, more personalized services are increasingly in demand: these may be expressed as new payment models, new ways of sharing risk, or new types of contracts and outcome guarantees. Ultimately, the focus is on the customer — on understanding their needs, their ‘job to be done’ in much greater depth, and competing to be the provider that best satisfies these needs, by providing a combination of product and service.

Service-as-a-Response

So when the leadership of a company sets its sights on growing profitable revenue by moving towards delivering advanced services such as outcome-based contracts, what does this mean for its product design engineers?

Thinking about how service has traditionally been positioned and viewed within a product-led organization, it’s easy to see that such a shift might encounter reluctance. Engineers design products to last; having to perform a service on the product usually means that in some way (whether through its design, manufacture or use) something has gone wrong. An engineer recently expressed it to me like this: “It’s an emergency situation. Our commitment to the customer has been broken.” Viewed this way, the need for service can feel like a failure, and something that is a cost and inconvenience to the manufacturer.

Engineers design products to last; having to perform a service on the product usually means that in some way something has gone wrong.

To generate internal buy-in for services, it is important to make clear the difference between reactive service — dealing with an “emergency situation” — and proactive service — doing things for the customer that actively improve their operations, and ultimately their profitability on a daily basis.

Proactive services offer an opportunity to win more business and develop new profitable revenue streams by doing new things for the customer. In turn, they can generate new and different requirements for products. This in itself can be a challenge for product engineers because it fundamentally changes their position in the company’s innovation process.

Innovating Through Service (Not Just Design)

In product- or technology-led companies, the product design engineer is the originator of new ideas. They develop new products or new features and capabilities, around which the rest of the business then builds plans for pricing, marketing, sales and distribution.

Under a services-led strategy, innovation is fundamentally different. It doesn’t start with thinking about the product, its features and the new technologies that could be put into it. In a customer-oriented, services-led business, design of services and solutions cannot start with the technology.

Instead, the process of design starts with the customer, and the challenges the customer faces in doing business. The people in the organization who have the closest relationship with customers and the best knowledge about their needs probably aren’t the product design engineers. It is more likely they work in sales or service.

Under a services-led strategy, innovation is fundamentally different. It doesn’t start with thinking about the product, its features and the new technologies that could be put into it.

Recalibrating to Customer-Led Innovation

This puts the product engineer in a totally different place in the innovation process. Those designing the service now set the product requirements. They develop service offerings, contracts, charging models and price points, and they have certain needs from the product to be able to support this: to last a certain amount of time, with certain scheduled maintenance intervals and complete reliability outside of that to minimize disruption to the customer, and at a certain cost determined by the service designers. The engineer’s role is to design the product to meet the requirements of the service that is being delivered to the customer. Adjusting to this new order can take time and persuasion.

Mindset and cultural change is one of the biggest challenges in any strategic organizational transformation, and is often underestimated. Understanding the heritage of how the company has operated traditionally, and the legacy that has for how people view their roles within the organization, is important to changing its culture. Once you understand where people are coming from — and why — you have a good starting point to get them on board with the change.

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