This key podcast hears from key partners and authors of this new Executive Briefing – ‘Seven Critical Success Factors in the Shift to Services’. In compiling this executive briefing we have collaborated with our industry partners on research that aims to help firm’s to move forward in the shift to services. The report aims to enables organisations to work together in ecosystems in order to help diversify their portfolios, and explore different service-oriented strategies. In this podcast each partners discusses a different success factor covered in the report.
We hear an introduction by report author and senior research fellow at the Cambridge Service Alliance, Dr Veronica Martinez, who says, ‘Organisations are struggling to compete and to become leaders in their markets. Each one of the seven Critical Success Factors (CSFs), factors that drive success in the shift to services, has a specific action before moving to the next one. No other report or paper will tell you about these pointers or how to use them. If you are already on the journey to developing services, these factors tell you what things you are doing well and what you are missing out on, or those that may overlap in some way. It is very much a mapping tool. We have had access to senior people who make strategy at top levels in their organisations in compiling our report, they have already been living and solving these problems, which gives our CSFs report an edge.’
The first Critical Success Factor is Assessing your market and internal readiness: making the shift to services means that all parties involved must be ready to change and understand the value of doing so. Dav Bisessar, IBM says about this, ‘Mind-set change is a really key thing. Moving from a product mind-set to a service orientated one is a big one. It is a big change in culture and how you operate and what you do and what you need to become good at. Those things are about teams and people. Services are enhanced and made possible by technology but it is also about the process and the business outcome you are trying to deliver and it is about using those tools, to be able to deliver those things. The technology allows you to do different things, but you need smart people in the room to co-create great ideas and great services, this is what will make the difference.’
We hear from Stewart Leinster-Evans, BAE Systems, on Critical Success Factor 2: Creating the right strategic and cultural context: a service business is different to a product business and needs a completely new mind-set to be instilled throughout the whole service ecosystem. Stewart says ‘Leadership in the traditional manufacturing model is to set the agenda and to create the strategic context that is relevant. It directs the operation and the workforce to achieve the organisations aims. When we look at high performing service industries the role of leadership becomes quite different. It becomes one of actually supporting and enabling the true value creation at the service front line where that service is delivered. It is about setting the agenda, setting the context, and being able to tell the story so that people buy into it and all pull in the same direction. It is supportive and enabling in a service mind-set.’
Critical Success Factor 3 is about Building the structures and governance for services: firms need to make a clear commitment to services by creating properly empowered teams, structures, measurements and incentives. Monica Lund, Pearson North America discusses this in the podcast, saying, ‘Internal readiness and creating the strategic and market readiness definitely needs to come first before you dedicate resources or build a structure. In terms of it being a road map you need to complete the first couple of success factors before moving on to the others. At the end you might like to implement the CSFs concurrently but not at first.’
The forth Critical Success Factor is Getting the resources ready for service innovation and delivery: short and long-term budgets need to acknowledge that services are very resource intensive and change over time. Here we speak to Graham Pennington, Hawk Support Solution Architect, BAE Systems, who says ‘It needs a reasonable amount of internal investment and sheep dipping to get people all to share the same mind set. We all have to be sharper in terms of price and cost pressures. CSFs will help your business to change, but one of the underestimated factors is how slow and difficult it is to instigate change in a big organisation. The sooner you start the sooner you will finish.’
Next we look at Critical Success Factor 5, Proactively manage engagement and trust: services are co-created with customers who are active participants in the service journey. Neil Allison, Director of Business Model Innovation, Pearson North America says of this, ‘Managing engagement and trust sounds easy, but it is not that simple. What is useful about the CSFs is to identify some of the actions that drive success. One key action that we found was to have defined customer engagement plans, with objectives, targets and measures at each point along the way. It is very important to have open lines of communication with your customers and the different groups you are working with. You need to take their feed- back through those channels and track the actions that you are taking to address this and think about how you are using it. Finally, there will also be a gap between you and your client’s, you need to be conscious of what that gap is so that you are aware of what you can do in the future.’
In order to complete Success Factor 6: Develop and embed service processes: firms delivering services must experiment, adapt and learn to actively commercialise services. They need processes, which enable them to do that. Daniel Smith, Senior Director, Business Tech Group, Zoetis International says, ‘Tomorrow’s company is not going to be able to have the luxury of change by trial and error. The biggest learning that the organisations of tomorrow need to think about is having a clear understanding of how they are going to measure success and having a clear understanding of their commercial model and taking an inventory of their internal capability to absorb new services and actively recruit top down leadership to support that. Change is not going to come in a month you have to be in it for the long haul. This is an essential change to services because that is the way we will all be doing business. You will need to be able to measure the CSFs.’
Lastly we have Critical Success Factor 7: Optimise services and communicate best practices: services rely on continuous innovation and so require a ‘best-practice’ mind-set.
Andy Neely, Director of the Cambridge Service Alliance, also comments, ‘Firms are thinking through how they can make the shift to services and how to reinvent themselves and make that culture change in their organisation. Firms need to be organisationally ready and they also need to be market ready so they need to address the key questions of culture and mind-set in their organisation. Understanding the readiness of the market and then creating the right culture are two critical building blocks. It is what companies are doing today to make sure they survive tomorrow.’