Servitization Competency 102 – Build a Service
The Service Design Group has driven servitization and as-a-service transformations for mid-market and enterprise B2Bs since 2011. This work is rewarding as it unlocks new revenue streams, growth potential, and enterprise value for our clients, ultimately resulting in impactful business model transformation. Today, the case for why a B2B organization should consider and begin a servitization journey is stronger than ever before. However, as we look across industries, very few companies have started servitization and those that have often struggle to build a service!
Build a Service
If you have service offering concepts and are about to start building a solution, make sure you have the competencies to be successful!
Of the few companies that manage to get started with servitization, most tend to quickly hit a brick wall when they attempt to actually build their first service innovation! Perhaps they think they can use their product development process. Maybe they think they can simply follow an agile handbook and just build some apps. Or – and perhaps the worst scenario – they think “it’s just a service, it can’t be that complicated!” Regardless the reason, what’s clear today is the servitization clock is ticking, pressure is mounting, and there is a growing sense of urgency to build and take relevant and impactful service innovations to market.
In our experience, most organizations do not hold many of the core competencies internally that are needed to build a service. If you’re at the point where you have service offering concepts and are about to start building your solution, take stock of these competencies and see if you have what it takes to be successful!
Agile Program Management
There’s an important distinction between agile development and agile program management. Program management is where we place emphasis.
The best ideation, co-creation, service design and business model design in the world won’t matter if you can’t build what you envision (or, worse, build something that isn’t at all what was envisioned!). There’s a lot of energy around agile development and we have seen its benefit deeply; but, there’s an important distinction between agile development and agile program management. The program management part is where we want to place emphasis. We see it as a core competency for building servitization or as-a-service transformations. There is necessary and deep coordination across teams, business groups and separate but interrelated efforts which is much more than just coding! That’s why you need agile program management as a core competency when building services, so you can span functions and teams, drive a workflow, time sprint cadences, and have meaningful stand up meetings and demo days.
Next up on our core competencies for building services and service-based business models is what we call Living Labs. It won’t matter what you design and then build (via agile program management, of course!) if you don’t deliver the services as designed and intended to at least one customer as soon as possible. Since this is new service innovation and business model delivery, it’s not as simple as just “handing it” to a customer or “just showing up as usual.” Instead, we have to design and manage this “launch” and that’s where Living Labs come in. Start with a small set of customers (we recommend 1 – 3 at a time) and use them as test beds to refine, iterate and learn. Iteratively repeat the process with more customers, looking for pivot points and hidden value along the way.
Data and Data Scientists
You could do an as-a-service transformation that doesn’t include data, but it’s highly unlikely!
The inclusion of data and data scientists as a core competency for servitization may strike some as peculiar, but we’ve seen this one play out enough times in recent years that we believe it’s firmly on the list! Yes, you could do a servitization or as-a-service play that doesn’t include data, but it’s highly unlikely. Let’s assume that you will include data, so therefore data and data scientists become core competencies. Data is a core competency because there’s a big difference between “data” and “data access.” There’s also a big difference between having data, having data that contains what you expect it will, and having data that has what you expect and actually being able to do something with it! That’s why the data core competency is paired with data scientists. Do not assume that an analytics program or some machine learning or AI is going to do what you need it to do. You will need data scientists with expertise and opinions on how to best access, merge, clean, store, augment, enhance, train and model data. Do not overlook this core competency!
Systems Engineering + Integration
Similar to the core competency of data and data scientists, this one may strike some as odd, but in our experience, the most exciting servitization and as-a-service options in today’s digitally fueled, data driven world inevitably will include hardware, software, process, mechanical, industrial and network systems. If you don’t have in-house systems engineering and integration expertise, you will be challenged to build what’s needed to servitize. Alternatively, this area could be an opportunity to partner or leverage an ecosystem, but beware of misaligned incentives. In our experience, this core competency is best done “in-house” if you want to maximize your potential success in building your new services and as-a-service innovations.
You must be able to package up and put a bow around the new service innovations you build.
For most service innovations, the first build will likely start to feel a bit messy, no matter how good the agile program management competency is! Teams will begin to lose sight of the end goal along the way as they roll up their sleeves and dive into the work. There will inevitably be more work streams than you initially imagined when you started building. This is why storytelling is the critical – and last – core competency at this phase of servitization. You must be able to package up and put a bow around what you built (or are still building). You must be able to tell and improve the story again and again. Effective storytelling iteration requires an ability to crosswalk value propositions, adequately cover technical details, and present a compelling business case to keep the momentum going and ensure that internal stakeholders have a clear picture of how you are pushing the business forward. Remember, to truly be successful, storytelling must be done at a level of professionalism and production quality that gives everything that has been built its time to shine!
Stay Tuned! Part Three will cover the core competencies for hitting your stride in your servitization journey!