How To Develop A Futureproof Service Business
By Alan Patching
The future of any services business will be a direct response to:
- The market opportunities that the business recognises or creates
- What the business does about them – and how it does it
The fact is many business people have difficulty recognising opportunity. Many of us would admit to have fallen into the rut of being a similar consultancy to others, doing similar things using similar people who have similar education and who produce similar ideas and similar work of similar quality and all for similar competitive fees!
It's called commoditisation, and it happens because we lose sight of the need to constantly reinvent ourselves in the constantly changing and reinventing world we live in. If we always win business by cutting our fees, the market will come to regard us as low cost providers unless and until we give them a reason to think otherwise. I say this in the context of having seen, in my role as development project owner's representative, numerous technical consultancy proposals on numerous projects at surprisingly low fees, usually right after some high flying self declared legal/finance/management 'guru' has walked off with a success fee of millions of dollars for input into getting a project up and running. To make matters worse, much of the 'guru' input is often at the same level the average cost engineer learns in projects 101.
Avoiding commoditisation
To avoid commoditisation we need to take a strategic approach to developing a distinctive and marketable advantage for our business. And we need to move beyond the old 'quality of our service' chestnut in doing so. Please note I didn't say forget or downplay quality service. It clearly still is essential to service business success, but as a part of operational excellence and not, seeing all our competitors can expect to be selling quality also (and therefore commoditising it as a value proposition in the service items mix) as a strategic competitive advantage or the main distinctive competence of our business.
Many service consultancies still sell quality as a competitive advantage of their business. A decade ago quality was something that could provide real competitive advantage. Today it's nothing more than a market entry ticket. It's an operational excellence pre-requisite which a business needs to stay in business. To consider quality a point of strategic competitive advantage is to live in the past and deny the business reality of the 21st century.
Many of us, in market and global opportunity terms, are old dogs, and if we want part of the global future we are going to have to learn new tricks.
Let's embark on a short journey into the world of possibility – the world of new tricks.
Let's first realise opportunity usually presents itself when we least expect it. If we are not constantly ready to embrace it, we lose. Perhaps the following story will illustrate this point better than further theory.
I once traveled on a scheduled commercial flight that was diverted due to bad weather at the terminal airport and, soon after that, was again diverted due to a storm at the diversion airport. We arrived at our intended destination five hours late after much more airtime than we expected, much of it flying around in holding patterns.
With no opportunity to use mobile phones to adjust business appointments etc, several people on board were a little titchy, to say the least. The situation got worse when there was a long delay in getting a gate after we landed. The flight attendant was receiving the brunt of most of the anger. 'Why did we even take off?'. 'Why couldn't we use our mobile phones?' 'I'll ever travel with this airline again.' were among the most common complaints, the latter being a tad crazy as the other airlines were exposed to exactly the same weather conditions.
The attendant handled the situation extremely well. As she walked up the aisle just before the aircraft door was opened, an impeccably dressed gentleman, whose accent defined him as British, stood and said in a loud and clear voice – as much for the other passengers as for the flight attendant, 'I say ma'am. About all that flying around in circles and diversions – hundreds of extra miles I expect. I do hope we'll be getting frequent flyer mileage points for those.' Here was a man who knew how to look for opportunity in adversity.
Identifying opportunity
Identifying opportunity is about looking at situations with a different mindset or 'filtration system' than others. It's about realising that adversity is a great producer of opportunity, but one needs to be more focused on the possibilities the adversity presents than on the adversity itself if one is to have any chance of seeing an opportunity to exploit. For most people and businesses, that will entail significant change of attitude.
If we're going to participate successfully in the global future, if we're going to play our part in shaping our world, the culture of our industry, our companies and our sections and divisions need to be of a culture that is always open to the preparedness and willingness to change that is necessary to exploit opportunity. This will usually be a lot different from the usual presumption that what we do and how we do it is the best thing to do and the best way to do it. This is presumption mentality and it inevitably leads to business blind spots. A business blind spot is a situation where we do not take the time to look outside of our own area of operation to see what others are doing and how they might be about to take over our market share. It reportedly happened to the dealers of a major European car brand in California USA when they refused to believe a Japanese car could possibly take some of their share of one of the most affluent markets in the world, even if the car's name was something catchy like 'Lexus'. They reportedly learned about business blind spots by losing some 18% of their market in a very short period of time.
It reportedly happened to a major pharmaceutical company when generics were permitted to compete with their successful anti-depressant, which had cost them over a billion dollars to research and develop and which had provided them with some 25 times this amount in revenue over the years. And it can most certainly happen to service providing businesses just as sure as it can to product providers.
So how do we avoid the presumption that can lead to deadly business blind spots?
I reiterate, even if we are 'old dogs' in our business environment, we need to remain open to learn new tricks, and we need to remain aware for the new tricks we need to learn. The new tricks we need to learn and adopt are the ones that will put us in full beam of the 'value provider' spotlight in the eyes of our clients.
Some suggestions:
- Recognise that no one owns any position or space. Today's business environment is like a chess game where the value of the pieces changes at random time intervals. If we keep recognising the previous value we will soon be dead.
- Realise that client service was long ago replaced by client satisfaction and that by client success. If we can't make a dramatic improvement to a client's business or life, we are irrelevant.
- Provide client experience. Harley Davidson declare they do not sell motor cycles. They sell the ability for a 50 year old cost engineer to experience dressing in black leather, riding through small towns and scaring the hell out of people. What experience are you selling?
- Be distinct or be extinct - the choice is ours. We must innovate solutions in order to achieve higher relevance for our clients and then continue to do it to lift our prospects of sustainability (through client loyalty) for our business. Cisco Systems got their 45,000 clients and customers communicating directly with each other to resolve technical problems, and they reduced their customer service costs by several hundred million dollars while increasing the level of customer satisfaction experience. Beat that type of innovation and 'distinction' creation, and you will be well on your way.
There is a lot more involved in developing a future proof service business. However, the pointers herein constitute a good place to start, and I wish you luck in their application to your service business.
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