Have you ever had a great business idea, and found yourself saying ‘Oh that’s just a bit beyond our capability’. Shame, as you have already talked yourself out of it before you have even started!
But if a project seems a little too big for your business, perhaps give it a second chance by exploring partners that can make up for your capabilities gap. Service Management expert Nick Frank, Principal at Frank Partners explains more…
Many businesses utilise local partners or agents to sell and service their products in regions outside their organisations reach. This arms length type relationship is OK until you start wanting to develop more advanced service offerings, which may require a far deeper integration between the product side of your company and the customer facing service operations.
Value propositions such as uptime guarantees, vendor managed inventory or outcome based services require far more interaction between the manufacturer the agent and potentially multiple partners.
Take the fastener manufacturing company that was asked by a major Automotive OEM to supply every single nut, bolt, rivet, screw and clip for a particular car platform. Rather than supplying 10 part numbers, they now had to supply 450 most of which they now had to buy-in! How do you go from manufacturer to a ‘just-in-time’ delivery partner with a global supply base in just 3 months?
Their solution was to use a 3rd party logistics provider to move parts from all over Europe to a point of fit in the factory, while they focussed on Application Engineering Services, Purchasing and Programme Management. They challenged their mind-set and built a supplier ecosystem that included many of their competitors.
As the business developed some competitors even became key customers and suddenly relationships were not quite as simple as before. It shows that with a bit of creativity, an advanced service offering can be delivered that goes beyond the initial core capabilities.
So how can an organisation provide solutions for complex customer business problems that at first sight appear to be beyond their capability?
Recently I worked with a small UK SME who embarked on creating an ecosystem to deliver an IoT technology platform that enables smaller equipment suppliers to deliver remote services such as diagnostics and upgrades. MAC Solutions is a £2M+ UK supplier of industrial router solutions.
This went beyond the router and cloud technologies it currently supplied and involved the integration of Historians, Alarm Management Analytics and other new data technologies.
As they brought the partners together, it became clear that inter-relationships became more complex and could not be managed as a traditional customer/supplier discussion. They developed a framework that helped them think clearly through the process of developing their service solution.
It essentially linked together standard business tools that enabled clearer business thinking through 4 key steps:
- Understand the Value Chain and the market: The basic business analysis that should be in gaining a deep insight into the markets, customer value and the current business context. This understanding becomes very important when it comes to agreeing pricing mechanisms with different partners
- Define the complex problem to be solved and the ecosystem solution: in other words the basic building blocks of the solution, so that a clear vision, mission and strategy can be articulated and actioned. This involves clearly defining the Business Opportunity, Value Proposition, Product Service Solution and the Roles & Responsibilities within the partner ecosystem.
- A clear plan of how to execute and develop the solution: For example develop a detailed business plan to drive the allocation of resources and actions. How will you use pilot projects to develop your solution? Develop the Value Delivery Model that defines the commercial interactions within the ecosystem. This would cover the sales model, delivery model, people and competencies, customer experience, organisation, partnerships and contracts, pricing, revenue sharing schemes and procurement
- Test for Resilience: Develop mechanisms for ensuring that the business plan is resilient in terms of business risk and partner/customer fit
The framework they developed, undoubtedly helped them move through the complex process of developing a network of partners that can deliver results. The result has been that MAC-Solutions were able to pilot their proposition with a supplier of washing systems for rail networks.
Their story shows how it is possible for even small organisations to develop service propositions that appear to be beyond their capability by developing an ecosystem of partners.
MAC-Solutions will be telling the story in more detail at the Spring Servitisation Conference to be held at Aston Business School in May 2015.