Given the challenges in both implementing and selling servitization based strategies (both internally and externally), why is there such durable traction driving the concept forwards?
Largely this could be attributed to the fact that the companies that have got 'it' right have not just succeeded, they have become icons within their respective industries. But is this all that drives companies to servitization or is there more to consider.
As Coen Jeukens, VP Global Customer Transformation, ServiceMax explains, "I think that one of the elements for a lot of organisations is that we know the disruption is out there. Maybe the competition is not the competition you are currently aware of; maybe it is a start-up coming up with a solution completely different to what you are used to. If you are in a comfortable position, then, of course, the urgency to initiate change is very difficult.
"I once gave a presentation which was about what really killed the dinosaurs. It wasn't the meteorite; it was their incapability to adapt. I think that agility and the ability to adapt is one of the most important things within business," Jeukens adds.
"I think a lot of organisations, even if they are very comfortable with their current business models and revenue streams, would be wise to have within the organisation, a group of radical thinkers to have the ability to work in a confined area where they can explore what will happen to the organisation should something impact their current normal."
I think that servitization needs top-down leadership and if you have a CEO and leadership team who believe in servitization this changes everything...
- Maarten Wijnheijmer, Global Aftermarket Sales Director, Howden
One of the recurring themes within the conversation around servitization is the importance of executive buy-in when developing the strategic approach. As Maarten Wijnheijmer, Global Aftermarket Sales Director, Howden explains "I think that servitization needs top-down leadership and if you have a CEO and leadership team who believe in servitization this changes everything. Often it is the case that in a previous company, CEO's have already seen the impact and so they don't want to wait until a "do or die" scenario is evolving here."
Indeed, servitization requiring top-down leadership is such a crucial aspect that I have witnessed in every single company that has developed a successful servitization strategy.
One of the first people I interviewed around this topic was Des Evans, the former CEO of MAN Trucks UK. Des is a very humble man and explained the success of his organisation was very much the result of a collegiate approach.
I believe that, but I also think that Des is underplaying his role a tad here and doing himself something of a disservice. Knowing other people involved in the project and who worked in and around the success that MAN UK had via servitization, Des' passion and leadership were crucial. From what I understand, he most-ly brought an infectious drive to the organisation that, combined with his gravitas, pushed the strategy forward.
However, the thinking around these initial drivers is essentially two-fold. As Jan van Veen, Founder, moreMomentum puts it, "I think there are two things that need to be considered. One is the belief in the direction; the other is that you need to be able to innovate and try and explore and that you have resources available to do so.
"Often within companies everything can be so short term oriented, if that is the attitude of top and middle management then innovations will never flourish because such projects are just a disturbance of what is really important which is hitting your monthly and quarterly numbers."
From the OEM perspective, companies are looking at opportunities around servitization which could lead to an internal drive to move in this direction
- Coen Jeukens, VP Global Customer Transformation, ServiceMax
Another factor often overlooked is whether there is a market or customer pull, usually the key driver in a successful servitization project.
Coen Jeukens, VP Global Customer Transformation, ServiceMax “I think, from the OEM perspective, companies are looking at opportunities around servitization which could lead to an internal drive to move in this direction," comments Jeukens. "However, this is not always the case.
"With the famous example of Rolls Royce for instance, it was not so much the internal drive but the external pull.
"Also, when we look at servitization, we look at companies from a maturity scale perspective. As with everything, we first need to crawl before we can walk and then eventually we can run. So if your service capabilities are currently more in the reactive mode then while it is very nice to look at that dot on the horizon, to get there, there are many intermediate steps.
"However, in addition to looking at the development from your own organisations, I would also try to flip the coin to look at how mature are our customers in terms of appetite for buying these services if you had them available. Even if you had a fully servitized offering are you sure your customers are willing to buy it?"
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