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Brexit: An opportunity for Service Growth?

Nov 10 • Features, Management • 1235 Views • No Comments on Brexit: An opportunity for Service Growth?

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Service Executives across the world should see Brexit as an opportunity for increasing their influence on companies growth plans writes Nick Frank, Managing Partner, Si2 Partners…

We believe Service Executives across the world should see Brexit as an opportunity for increasing their influence on companies growth plans.

Most economic commentators believe that the medium term growth prospects for the UK and even the global economy have been severely dented, but these strengthening headwinds should also act as a wake up call for industry.

The more visionary businesses have redoubled their efforts to innovate and many are introducing Service Thinking into their growth plans. While digitization of products enables new ways of thinking and captured the imagination of many, there is nothing like the threat of hardship to accelerate change!

This is why the recent launch a UK National Strategy for Engineering Services by Chris White MP, Co-Chair of the All-Party Parliamentary Manufacturing group is both timely and needed.

Although a UK initiative, it is is very relevant to all globally developed economies.

Chris White recognizes that: “The developing trend of ‘servitised manufacturing’ is a specific example of UK innovation that has allowed early adopters to develop successful differentiated offerings in the global market.”

He goes on to describe a sense of urgency, which is very relevant to today’s situation!

The developing trend of ‘servitised manufacturing’ is a specific example of UK innovation that has allowed early adopters to develop successful differentiated offerings in the global market…

“The opportunity is one that we must seize. We need to better integrate capability development and innovation between manufacturing, engineering and technology, between engineering and business model innovation, and across sectors”

Policy makers recognise that within the context of a countries industrial strategy, many of the world’s leading companies have developed new service orientated business models in order to prosper.

Dave Benbow, Global Head of Engineering at Rolls-Royce PLC explains: “We have consistently delivered shareholder value through being market leaders in engineering services: ensuring that our engines are designed, manufactured and supported in-service to deliver power for our customer whenever required throughout their lifetime.”

But sustaining this success requires a back to back business philosophy with their supply base.

The fact of the matter is that mind-set change is not happening fast enough and needs to be accelerated!

To address this, a central theme to the National Strategy is the creation of an Industry Council to inspire UK companies to innovate new ways of delivering value through services.

The goal is to add 1.9% or £31.6bn to the UK economy. To put this in context this is more value added than the UK’s globally recognised legal industry. Industry leading companies will challenge their supply chain to reduce costs by 20% and increase asset availability by 20%: A 20/20 vision which they know has to be delivered to remain competitive.

As Managing Director at the global industrial services group Babcock recognises: “In numerous engineering and technology domains, we have found that by taking responsibility for ‘outputs’ – asset performance – we have been able to give our customers more value than the simple delivery of discrete products or programmes.”

This requires a massive shift in thinking, almost a re-invention of how we look at manufacturing and engineering. The new council will work in partnership with academia to develop skills and capability, from both a technology and business perspective.

It will interact with government to not only influence cross-industry thinking, but to flex it’s economic muscle to drive mind-set change in how the massive infrastructure projects such as the HS2 rail link will be engineered and delivered. It was after all Margret Thatcher in the 80’s who drove the Ministry of Defence to start the procurement of Outcome based availability contracts that has led to the UK’s commercial and academic leadership in this particular industry niche.

The strength of this approach is that the core team which includes Si2 Partners, is industry led.

The message for service organisations all round the world is that your role in value creation is being recognised.

Over 106 organisations were consulted in its development. The strategy is supported by some of the UK’s leading universities as well as key government departments such as the Ministry of Defence and the Department of Business, Innovation and Skills.

Indeed as when driving fundamental transformation, the importance of Industry, Academia and Government working together to effect sustainable change cannot be underestimated.

The message for service organisations all round the world is that your role in value creation is being recognised.

Indeed the major global industrial players are beginning to push the service orientated, outcome based business models deeper into their supply chains. To accelerate change, executives can seize the opportunity of economic uncertainty to show how services are one of the strategies that organisation can deploy to sustain long-term business growth.

You can download the UK National Strategy for Engineering services and the supporting market data that underpins the strategy at http://si2partners.com/uk-national-strategy-engineeringservices-now-available-download/.

If you would like to be involved in the next phase of this initiative, then you can sign up for more information from Cranfield’s Through-life Engineering Services Centre who have been a key player in facilitating this National approach.

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