Same same but different

Services are becoming increasingly important for Scandinavian product manufacturers, triggering a need for them to productify also their services. While these intangible products need investment and professional management just like physical ones, there are some clear differences that have to be addressed to succeed.

Having emphasized the importance of services in strategy statements for quite some years now, most large Scandinavian industrial firms have realized they also need a more structured approach to service development. In most cases, a corporate staff function is created with an objective to define and productify a portfolio of service concepts. The output of this work, like service portfolio descriptions found on corporate websites and in marketing brochures, often look great and appealing. In some cases, these service development efforts can also show undisputable success in terms of growth in service sales.

Still, our analysis indicates that industrial firms face some challenges as they try to turn services into products. Unlike a physical product, a service can be provided without any official “service product” being developed and launched. At the start of an initiative, the willingness and ability of front-end units to offer services often vary greatly, and those who do tend to use their own local approaches. Therefore, the objectives set for the central service productification efforts often include increased proactivity in service sales, improved efficiency in delivery, harmonized global service levels, higher customer satisfaction and faster build-up of capabilities to offer services worldwide.

Based on our experience from a large number of Scandinavian manufacturing firms, it is questionable if these goals are being met so far. The central development function is often frustrated with the slow adoption rate, and its lack of mandate to implement a global service portfolio. Front-end units, on the other hand, can be frustrated with what they perceive as “corporate clerks” far away from the front-line reality, adding limited value to their local business.

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The White Paper is written by Jonas Strömgård, Partner at Differ and responsible for the Industrial/B2B practice.

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