The Service Design Group helps mid-market and enterprise B2Bs successfully start, progress and achieve servitization, digitalization and as-a-service transformation. We’ve been doing this since 2011 and one thing is crystal clear: servitization takes work!
To be successful, you need a plan of attack and a willingness to dive in, roll up your sleeves, and make it happen. While immediate and tangible impact is possible (i.e. in the first 3 months), going from a point of no service-derived revenue, to getting organized, generating ideas, building and putting new service offerings in market will take time. In our experience, you can start seeing real results as quickly as 9 months but we’d say the servitization journey is a minimum of 3 years.
Alright, let’s show you the path to servitization!
Get Organized
Before embarking on this journey you must first get organized. We recommend the following three steps, in order.
Assess
Start by assessing your current services reality. Do you have revenue generating services today? If not, could you? If not, do you have a viable path towards generating or acquiring capabilities that would? Is there an appetite for on-boarding the risk and ambiguity needed to start the servitization journey? Are there plausible and believable glimmers of exciting opportunities that your teams can rally around to make the work meaningful? Last, make sure you have a heart-to-heart about whether you have the brand permission to enter the servitization game.
Align
Next, tackle the all important question: why? Specifically, frame the question in three parts: why should we servitize + what must servitization produce for us + how will we do it (resource commitments). This sounds straightforward, but alignment is a critical step that is too often overlooked. Make sure you have a clear and compelling why statement, a singular business outcome (note: try to avoid the elusive “profitable growth” trap) and an understanding that this will be a multi-year journey requiring investment in new skills and capabilities.
Design
A competency in service design + a capacity to cover the multiple facets of services – people, process, content, technology and environments – is critical.
Now that you know your current reality, have assessed your capabilities, understand your brand permission to servitize, and have alignment on the mission and desired outcome, get to work designing services. Take note that this is an iterative process and practice that will require you to continually build a pipeline of ideas and programmatically develop and mature ideas into investable service solutions. A competency in service design (think “the service equivalent of an NPD process”) and capacity to cover the multiple facets of services – people, process, content, technology and environments – is critical. Fluency in business models, pricing strategies, operations and delivery are just as critical. Equally important is an understanding of how to purposefully understand and leverage ecosystems, new partners, and intellectual property to create barriers to entry, customer on-ramps and stickiness that are not easily replicated.
Go To Market
Getting organized, aligning teams and generating compelling ideas is worthless if you don’t launch. The next big stop on your servitization journey is releasing services to the wild and iteratively testing, refining and discovering new service improvements by involving your customers in a continuous use and improvement cycle. We recommend the following three steps.
Deliver
As soon as you have designed a service, deliver it to at least one customer. Services aren’t conducive to internal polishing, focus group testing and conjoint analysis (like products are). This is because services are relational and not transactional so you need to begin to understand how your customer is relating to your new service. You have to actively deliver to truly discover their potential and the areas for improvement. We advocate strongly for using a “Living Labs” approach. This means a customer receives a clear ask to become an innovation lab in exchange for the value of being a first adopter. Start with one to three customers and genuinely deliver the MVP service design as intended.
Iterate
Now that you’ve delivered the first version of your service, don’t stop! Keep delivering and improving. Continuously embed the voice of your customer, asking for honest and direct feedback on all aspects of the service. Do they feel they received a service from you? Did it work as expected? Is it generating the results and outcomes they thought it would? What isn’t working? Are there things the customer is looking for that you didn’t think of that create new opportunity for service innovation? Were there any surprise outcomes that point to untapped potential?
Evaluate
As you get a few iteration loops under your belt, take stock of what you’ve accomplished and what you now have in hand. Chances are, you have a number of assets that you aren’t fully appreciating which could be combined and assembled in new and exciting ways without significant rework and effort. We encourage approaching evaluation from a micro-services or component-architecture point of view. Don’t just look at what you built! Instead, look at the assets and capabilities you now possess and ask how might we maximize value and impact?
