Customer focus and service orientation have evolved into a core competitive advantage. Daniel Delank, a Steinbeis University Berlin alumnus, looked closely at this topic as part of his Master of Science degree. On behalf of his project sponsor – T-Systems International in Saarbrücken – he identified significant factors influencing companies’ ability to achieve global competitive advantage.
According to a study published in Academy Management Review in 2009, services are more important in strategic terms than pure product business. Furthermore, the gap between the functional attributes of business-to-business products and technological aspects is diminishing. As a result, in many sectors of industry – especially B2B markets – competition is cut-throat. For several years, producers of tangible goods have been focusing on the delivery of supplementary services, frequently involving complex customer solutions. Previously, they simply developed and marketed products – then waited to see what happened.
This points to an increasing tendency for customers to seek solutions to their business “pains” and not just the product itself. The traditional marketing strategy maintained by goods manufacturers – typically revolving around the product – must shift away from the product itself as the primary item in the exchange of goods. There are already examples of “hidden champions” like IBM and UPS undergoing a transformation into solution providers and achieving significant growth – with corresponding financial rewards – by delivering end-to-end customer solutions.
Similar trends are being witnessed in German B2B markets. Companies are offering integrated service packages – a combination of tangible goods and services aimed at solving specific customer pains – and, thus, making it difficult to compare (conventional) services. This shift in focus toward customer- specific solutions also marks a paradigm shift among producers of tangible goods (who primarily focus on the product), as well as their servicing and maintenance units.
Although customer interest is rising continuously, when it comes to adapting their service policies most product-based service providers are still dragging their feet, all the more so when it comes to re-engineering their business processes. As far as the executive managers of customer services are concerned, terms like “service” and “customer services” primarily relate to sales instruments for differentiating themselves from the competition.
Many managers are now considering what prerequisites need fulfilling in this area and asking themselves if there are catch-all ways to tackle the problem, or if indeed things can be learned from different areas. They know it’s time to do justice to the paradigm shift, but how? What can we learn from business theory? To address these issues, Daniel Delank joined forces with Prof. Dr. Karsten Hadwich and Walter Duschek to found the “Service Circle,” a network that looks primarily at the key issues of service management. Meetings are held regularly to discuss key topics and shed light on these topics, primarily with case studies. Even during his studies, Daniel Delank was able to apply what he learned to his place of work. The Service Circle’s members come from science, politics and, to a large extent, business.
One thing the group has learned is that it makes sense to transform product-focused service organizations step by step, gradu ally restructuring the business while at the same time expanding the portfolio of services. This means service units must have a solid command of service delivery (Phase 1). After this more value-added services can be offered to answer customer demands (Phase 2). Then it is essential to dovetail processes with the customer organization in Phase 3, by which time services must be matched to customer requirements and reengineered/ modified such that service providers can take responsibility for entire business processes and even client systems. One example: outsourcing. With such services, in the form of service packages, the benefits should exceed the value of the sum of each individual service.
Changes in company cultural take time, as Daniel Delank has discovered, not just through his studies. But now he’s more convinced than ever that the continuous and sustainable development of skills and business competences are crucial to every business.
T-Systems International GmbH