Making Servitization Work
Understanding the why of servitization is on the surface a relatively easy task. However, get a firm grip on the how is something that is of use for a far more select few organisations…
As we’ve seen so far within the series of features from this particular Field Service News Think Tank session, servitization is challenging and complex. Yet, it is also an exceptionally profitable path to follow if we get it right. Similarly, we are living in an age of disruption, and many organisations are facing a ‘do or die’ moment – evolve or become a historical footnote in the history of your industry.
Given the stakes – it is essential to make such innovation work, so the question we should be asking is no longer if we should we introduce advanced services into our portfolio – we now need to be asking how?
“I think servitization is an area that needs the senior management support and must be a top-down initiative if you want it to be successful,” comments Christo Roux, Director, Field & Workshop Services, Outotec
“When it comes to outcome-based services I think this is very industry specific and it also depends on the maturity of the industry and the maturity of your customers. There are some generalisations and some shared approaches that are applicable to service across verticals but also there are some challenges with-in individual sectors will face that can be vertically specific and this needs to be understood when exploring whether such an approach could work for your organisation.”
“To play this game, then it is about having a vision, it is about having the space to be working on it,” Jan van Veen, Founder, moreMomentum states.
If we expect some kind of disruption, the winners are now preparing themselves for when that disruption becomes more significant
– Jan van Veen, Founder, moreMomentum
“This would require some top-line management support to give you the freedom and the budget to keep working on it, and quite often that means, that you have to find your early adopter clients that may not be your mainstream market clients because they are not interested yet.
“However, if you find a niche somewhere which is ready, which may even partner with you to start partnering and developing your solution until it is ready for the mainstream market. “If we talk about do or die, if we expect some kind of disruption, the winners are now preparing themselves for when that disruption becomes more significant.”
Often it is the case as we have seen in the majority of poster boy cases for servitization such as Rolls Royce, Alstom, MAN Trucks (UK) etc. that it was either a customer or market push that drove the innovation, not the service organisation.
Perhaps, the real question in terms of how we make servitization work on a broader scale is how do we flip the balance in that so we can go to our customers and essentially convince them that we as service providers, do actually know their business better than they do, which although we often don’t like to admit it openly, can indeed be the case.
But how exactly do we approach servitization as a provider push?
Incentives are very important, they have immediate impacts and things start happening,
– Maarten Wijnheijmer, Global Aftermarket Sales Director, Howden
“Incentives are very important,” comments Maarten Wijnheijmer, Global Aftermarket Sales Director, Howden “They have immediate impacts and things start happening,” he adds.
“Making things simple is making objectives specific and small enough to consume. Making things practical is knowing how to make this happen and that centres around understanding our customer value.
“I have a rule internally that if you cannot monetize it, it may not be worth developing. This is where my focus is currently, in that we’re trying to define what is the offering that we can bring to the table. We are not the first ones in our market to develop such offerings, so what we do develop has to be very, very good and if we cannot put a dollar value on where we differentiate, it then it is simply not going to fly,” Wijnheijmer concludes.
Coen Jeukens, VP Global Customer Transformation, ServiceMax, often the critical challenge is driving the initial internal conversation.
“However, I think the first thing that is required internally is to get attention to it, and there are a couple of ways of doing this. We can use a message of hope by outlining what a great value promise it contains. You can use a message of fear, is it a matter of do or die in your industry? Or is it a matter of pragmatic reality – we might be comfortable with our current revenue streams, but we also must take care of a ‘what if’ scenario and we must be realistic in this.
“These are the three core scenarios that have proven to capture the attention of the board in terms of servitization. However, we should also remember that getting this attention has to be geared not only at the executive level, but also as Martijn outlined across the various deeper levels of the organisation as well.”
All members of the Field Service Think Tanks are speaking from their own personal opinions which are not necessarily reflective of the organisations they work for.
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