The challenge for companies in the US and Europe is to stay ahead of the competition from emerging economies such as China, which are increasingly capable of putting on the market high quality products comparable to those made by well established Western manufacturers.
As a consequence, it is becoming crucial for Western companies to find new ways to differentiate themselves. “This is where services come in,” said Prof. Jos Lemmink, Dean of the Maastricht University School of Business and Economics (UMSBE) and founder of the Service Science Factory. “Services offer companies unique opportunities for innovations.”
What does this mean concretely?
“A service company does not only sell a machine but a complete package of services around that machine,” explained Lisa Brüggen, programme development manager of the new Executive Master in Business Services at UMSBE. “Think for example of regular maintenance or up time agreements. This means that a service oriented company would actually be responsible for everything related to this machine.”
The provision of such services comes with additional benefits for companies. Maintenance agreements bring a stable additional cash flow and a valuable opportunity to build customer loyalty.
Viewing a company from a service perspective can bring interesting opportunities for innovation.
“Companies often focus on what they do and what they produce,” Lemmink said. “But customers will only buy a product if the product will help them to solve a problem. When companies undergo this mind shift and put themselves in their customers’ shoes, they often find new ways to better serve their customers’ needs”.
However, the shift from a purely manufacturing model to a service oriented culture is easier said than done. “In the manufacturing mindset engineers are typically thinking in terms of making the production quicker, cheaper or more efficient,” explained Brüggen. “In such an environment, it is not that simple to announce: ‘Now we’re also going to make services.’”
Companies realise that a culture transformation of this type may be a complex process to manage. In some cases, it might require a different style of leadership and perhaps even different or new staff profiles.
There are also other important but intricate issues to consider, such as: What are the possible innovations that can be implemented on existing services within a company? And how can companies assess the profitability of the change?
Companies as service providers
The development of the service industry is a movement that started some ten years ago in the US when manufacturing firms started to recognise not only the potential but also the growing necessity for companies to become service providers.
The Netherlands is one of the countries in Europe that quickly picked up on the idea. Currently, services make up for 70 per cent of the Dutch GDP and the Advisory Council for Science and Technology Policy (AWT) encourages the further growth of the service industry by investing in the development of innovative services.
In this fertile context, three large Dutch companies – Océ/Canon, Philips and Vanderlande – approached SBE and the Rotterdam School of Management at Erasmus University (RSM) with the request to create specialised courses on business services.
“Nowadays, companies are starting to understand that success is linked less to the quality of a product than to the service that comes with it,” explained Lemmink, who also holds an endowed chair in business service innovation sponsored by Oce/Canon.
“At SBE’s Executive Education department, Maurice Olivers and his team built up a great experience in in-house trainings and courses on Business Services,” Lemmink added. “We are able to use this expertise in our challenging mission together with RSM to co-create business services programmes with direct impact. We developed Business Services modules in close collaboration not only with academic experts but also with industry stakeholders.”
SBE Dean Prof. Jos Lemmink and Business Services Programme Manager Lisa Brüggen
Expertise in services
UMSBE and RSM carried out an extensive brainstorm trajectory with over 200 people from academia, businesses and the three main stakeholders, Océ/Canon, Philips and Vanderlande. During a series of one-day master classes, the various parties gave their input on questions such as ‘Which learning environment will best help a company to undergo the transition from a product-oriented to a service-oriented mindset?’ or ‘How can the spirit of service best be captured in a company?’
Lemmink stressed that the SBE and RSM teams had been keen to look beyond the scope of “usual suspects” and to involve a broad range of individuals in designing the Business Services courses.
Lemmink and Brüggen said they were pleased with the collaboration with Erasmus University in the context of Business Services: “Our institutions both have triple crown accreditations and are complementary in expertise. The Rotterdam School of Management is very strong in information management and it is known as one of the best business schools in the world. Maastricht enjoys a very solid reputation in business services. Our Service Science Factory ranks among the top five worldwide centers of expertise in the service industry. Focusing on Business Services allows our respective institutions to tap into our network of experts and combine each other’s strengths.”
The joint Business Services activities will set forth in September, October, and November with several master classes and in-house trainings. “Our goal is to offer courses on a regular basis in the future,” said Lemmink.
How long can it take a company to adopt and implement such a service oriented business model and how many of its employees should participate in the courses?
“This obviously depends on a variety of factors and can differ a lot per company,” said Brüggen. “We are planning to offer courses on a regular basis and hope that companies will send us participants on a regular basis so that the newly acquired knowledge seeds through the organisation.”
“But if it’s the CEO,” Lemmink noted with a smile, “one person can be enough to make the change!”
By Sueli Brodin