Multidimensional organizations need multidimensional approaches to succeed. Often firms focus their strategies on a few key themes, for instance, delivering cost leadership by providing the lowest cost manufacturing and distribution, yielding higher profit margins than their competitors. Other companies focus on differentiation by designing and developing new products that offer a unique customer value proposition. Yet, many will miss the role of services in corporate development.
In today’s globally competitive marketplace, services can make the difference between stellar success and “me-too” competition. In a classic Harvard Business Review article (Quinn, et al, Mar/Apr 1990), the elements of a service-based strategy are laid out concisely. Despite two plus decades of intervening time, a service-based strategy can still deliver growth and profit to the corporate bottom line. In fact, with technological advances, one could argue that services are even more important today.
For example, manufacturers of tangible goods should still consider the role of service in their operations. Services such as design and engineering allow for the production of the manufactured good. Technology services allow customers to identify the products and assist in selling goods in the internet economy. Market research, another service, helps the manufacturing firm identify product improvements and build relationships with customers.
Moreover, many companies rely solely on services for their business model. Consider insurance, web design, and health care, for instance. Each of these industries is driven by and growing from enhanced service delivery.
Corporations cannot ignore the role of services in their strategic growth plans. Yet, service development can be more complicated than product development. Services are evaluated immediately by customers and a bad experience can negatively impact the long-term relationship with that market segment.
On the other hand, service development is tested much easier than new products under development. For example, a new service that allows an automobile driver to file an insurance claim by mobile phone can be tested within a small, regional market. Improvements in the new service offering can then be quickly scaled and implemented for future roll-outs.
Corporate development relies upon a multifaceted approach, including strategic product and service development. For more information on strategic corporate growth, please contact us.