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Businesses are out of touch with their customers and overestimate the quality of the customer service they provide, according to new research from Pegasystems Inc. the software company empowering digital transformation at the world’s leading enterprises.
Research firm Savanta surveyed 12,500 global customers, businesses executives, and customer-facing employees for a one-of-a-kind, three-dimensional perspective on the state of customer service today. The research identified key customer service frustrations and revealed that many businesses don’t know their customers well enough to provide the level of service their customers want.
It also found that many organizations aren’t fully committed to providing the level of service they aspire to and run the risk of losing customers to competitors as a result. The good news? Customers, employees, and business leaders all agree on what matters most, so a clear roadmap exists.
Key findings of the study include:
• Business decision makers are out of touch:
Four times the percentage business leaders (40 percent) as customers (10 percent) rate the current standard of customer service as ‘excellent,’ while only 23 percent of customer-facing staff rate their organization’s service the same way. Similarly, an overwhelming 89 percent of decision makers and 73 percent of employees feel their organization provides an overall positive level of customer service, but only 54 percent of customers feel the same way. In addition, 71 percent of business leaders think they provide better customer service than their competitors – a number that is mathematically impossible to achieve.
• Are businesses really committed to providing good customer service?
While 81 percent of business decision makers consider customer service as either their main or key competitive differentiator, 33 percent of customer-facing employees say they face no consequences for providing bad customer service. Meanwhile, 48 percent of customer-facing employees say they face barriers to providing good service.
• Poor service is driving customers mad:
88 percent of customer-facing employees say that customer service is a priority within their business, but the customers tell a different story. Only 11 percent of consumers say contacting customer service is an enjoyable experience. Of those who are dissatisfied, 63 percent would rather clean the toilet than contact a customer service team. Only 10 percent say their typical customer service experience is ‘excellent.’
• Customers feel like organizations don’t know them well enough:
Despite 87 percent of business decision makers believing they know their customers well, the vast majority of consumers feel differently. Just 23 percent of consumers say businesses understand them as a person and their customer service preferences ‘extremely well,’ while 63 percent think organizations should make getting to know them better their top priority.
• Poor customer service can cost businesses customers:
Seventy-seven percent of customers agree the standard of customer service they receive is a major determining factor in their brand loyalty. In addition, 89 percent say receiving poor customer service from a business damages their impression of the brand. Significantly, 75 percent also say they have previously stopped doing business with an organization because of poor customer service. Forty-four percent report that if they receive a negative customer service experience, they immediately stop the purchase and move to another vendor. Despite this, only 35 percent of business decision makers say they lose customers ‘all the time’ or ‘fairly regularly’ as a result of providing poor customer service.
• Customers know what they want:
Consumers highlighted specific areas of frustration within customer service -- providing businesses with a clear roadmap for improvement. Their top three frustrations include taking too long to receive service (82 percent), having to repeat themselves when switching between channels or agents (76 percent), and not knowing the status of the query (64 percent). When asked what made for a positive customer service experience, 59 percent agree that a quick resolution of their issue or question mattered most, followed by a need for knowledgeable service agents (48 percent) and a fast response (47 percent).
“Good customer service can be the difference between success and failure. This study tells us that organizations still have a long way to go before they are able to fully meet the expectations of their customers,” said Tom Libretto, chief marketing officer, Pegasystems. “The good news is that there is overall agreement on what matters most. Solutions are available to help businesses understand and proactively address customer issues, while also arming customer-facing staff with the tools they need to provide more contextual, relevant, and knowledgeable service. Customers win, employees win, and positive business outcomes are delivered as a result.
Quite often, when talking with business leaders and clients, I hear the problem that the organization and its people are not that open to innovate and change as they already have good performance and there is no clear threat visible yet. They experience it as a lack of “sense of urgency”: there is no “burning platform” for innovation and change.
A common approach is to either wait until the situation gets worse or construct a (mini)crisis to increase and maintain a sense of urgency.
However, the question is:
• Do we really need a burning platform to innovate and change? And;
• What are the downsides to building change and innovation around a burning platform?
In this article I will share five reasons why a Burning Platform is bad for sustainable innovation and change.
Why a burning platform is bad for innovation?
1.You are too late
Typically, the trends which create threats or opportunities develop a long while before becoming an obvious burning platform. First, there are the first weak signals for a trend. At this time, it is still hard to accurately predict what will happen and when. Maybe different way signals are contradictory.
So often, these weak signals are being ignored by the majority. After some time, we see the first competitors moving, but actually also struggling to successfully address the threats of opportunities. Their initiatives seem to be failing. As a result, the majority still waits. Once the leading competitors are having their first successes and the trends become emerging, the burning platform becomes visible.
But now, the leading competitors have learned and built capabilities and can scale. While the lagging majority is still trying to find the right questions, let alone the right answers. They are dropping behind the leading pack in their industry. They are too late.
2. You get a deeper performance dip
The urgent situation of a burning platform means there is a critical situation which requires a rapid response and rapid results.
The topic is becoming increasingly dominant in the daily activities of everyone in the organisations. All hands on deck!
It starts distracting attention from the daily work of running the business. The overall performance will suffer more and longer than if the urgent can critical situation would have been prevented by innovation and change at a much earlier stage.
3. You disengage your valuable people
In general, a necessity to change – the burning platform – will create higher stress levels which will impact altitude and behaviour towards change. The more critical and urgent the necessity, the bigger the chances are for stress levels which will trigger defensive reactions like fight, flight or freeze.
Too often, we see the stress levels resulting in internal fights, pointing fingers, pushing problems to other teams and the best talents moving to other companies.
These are negative sentiments, which can be transformed into a positive and bonding sentiment within teams for a while, but not for long.
4. You miss the best solutions
The defensive fight, flight or freeze behaviour mentioned above, also triggers short term reactive thinking and blocks constructive and creative thinking.
When solutions require deeper analysis, being open to new types of solutions and require collaboration between different teams or department, this reactive short-term thinking is counterproductive.
The high level of stress increases the risks of not seeing the real problems or opportunities, not finding the right solutions and not doing what it really takes to get the results.
"It starts distracting attention from the daily work of running the business..."
5. You increase the risk for failure
During the first attempt of implementing a new solution, we should expect hiccups. Instead of experiencing this as a failure, everyone should see this as learning.
They should be able to have a constructive and forward-looking mindset to collectively understand why it is not working yet and what interventions are required to get it right. With a flight, fight or freeze attitude, the chances are bigger people will blame others or the conditions, find reasons to justify the disappointing results and give up.
For sure, we know about success stories where companies successfully pivoted their business during a crisis, like IBM. We also now the examples where companies miserably failed during a crisis and did not survive.
The better alternative: Purpose
The better alternative is what the leading and dynamic manufacturers do very well: the rally their employees, their clients and their partners with a strong and compelling purpose which makes continuous innovations and change the natural, logical and compelling thing to do.
Like everyone at Philips Healthcare is committed to transforming our healthcare by offering and developing integrated solutions (hardware, software, services) for people to live healthier, prevent deceases, be diagnosed quicker and more accurately, receive better and less intrusive treatment and receive the care they need at home.
Or like Tesla is accelerating the transition of sustainable energy and transportation with electric vehicles, better batteries and solar panels. This approach will be more rewarding for everyone, lead to sustainable success of the business and reduce the chances of entering periods of critical decline of performance. It will avoid you being on a burning platform.
The Essence: People Do change!
I believe that people do change and drive innovation, if there are compelling reasons and not too many obstacles. After all, that is the only reason the world is changing so rapidly.
Too many organisations do a bad job in providing compelling reasons and good job in creating obstacles. That is the reason organisations struggle in keeping up the high pace of changing world.
Leading, dynamic and innovative companies set themselves apart by maintaining a clear and compelling purpose, direction and strategic intent as well as e great environment for collaborative change and innovation.
Conclusion and recommendation
In this article, I described five reasons why the common practice burning platforms and sense of urgency are bad for innovation and change. I also briefly described the best practice alternative: build and maintain a compelling purpose for everyone to be proud of and to work on.
If you are on the same page and would like to take next steps, I would recommend you to:
• Assess what your personal view is on the reason your business or department should change and innovate differently or quicker.
• Assess to how compelling this is for the 1) shareholder, 2) boardroom, 3) employees and 4) clients.
• Evaluate and enrich (your view of) the purpose of your company or your department. What is your relevance for the industry, for your clients and for the society?
• Reach out to me for a discovery or sound-boarding session. I am happy to help and also curious to learn from your experience.
I am confident this will bring you actionable insights for your department - if not for the business as a whole. Good luck!
Jan van Veen is Founder and Managing Director at moreMoumentum.
In November last year, Mactavish published a report entitled ‘Cyber Risk & Insurance Report’, which identified eight common flaws in cyber insurance policies. This includes, for example, cover being limited to events triggered by attacks or unauthorised activity and excluding cover for issues caused by accidental errors or omissions.
Another flaw is only providing systems interruption cover for the brief period of actual network interruption, as opposed to the more significant knock-on revenue impact during the period after IT systems are restored but the business is still disrupted. In the last two weeks alone Mactavish has reviewed cyber insurance policies for a large British business and a medium sized business. Both of these policies had three or more of the flaws. Mactavish warns that despite insurance industry denials, the eight flaws are widespread.
Bruce Hepburn, Chief Executive Officer, Mactavish, commented: “Many in the industry have challenged our findings but we continue to find these issues affecting the actual policies we review that are being offered to UK businesses, and we will be publishing a second paper on the sector next month providing more details on our findings. “However, in the meantime, we are calling on brokers to challenge insurers more on the quality of the cyber cover they provide and push for improvements. If they can’t achieve this, they need to warn their clients of the omissions in their policies to give them a better understanding of what they are buying.”
Mactavish has issued a challenge to insurers and brokers to guarantee that the eight common flaws it has identified in policies will never be used as reasons to refuse pay-outs on cyber insurance claims unless they can show that a client has been informed but decided not to buy the additional cover. The eight flaws outlined in the Mactavish Cyber Risk & Insurance Report are:
1. Cover can be limited to events triggered by attacks or unauthorised activity – excluding cover for issues caused by accidental errors or omissions;
2. Data breach costs can be limited – e.g. covering only costs that the business is strictly legally required to incur (as opposed to much greater costs which would be incurred in practice);
3. Systems interruption cover can be limited to only the brief period of actual network interruption, providing no cover for the more significant knock-on revenue impact in the period after IT systems are restored but the business is still disrupted;
4. Cover for systems delivered by outsourced service providers (many businesses’ most significant exposure) varies significantly and is often limited or excluded;
5. Exclusions for software in development or systems being rolled out are common and can be unclear or in the worst cases exclude events relating to any recently updated systems;
6. Where contractors cause issues (e.g. a data breach) but the business is legally responsible, policies will sometimes not respond;
7. Notification requirements are often complex and onerous;
8. Businesses are forced to choose IT, legal or PR specialists appointed by their insurer.
In the latest Field Service Podcast, Jan Van Veen discusses why manufacturers unable to innovate their business model risk falling behind their competitors.
In the latest Field Service Podcast, Jan Van Veen discusses why manufacturers unable to innovate their business model risk falling behind their competitors.
In this special episode, Deputy Editor Mark Glover, speaks to moreMomentum's Jan van Veen who urges firms to take advantage of servitization and digitilastion and avoid stagnant business as usual behaviours.
Click here for material complimenting Jan's podcast including diagrams and charts. You can also contact Jan about any of the content raised in this recording and to find out how to get involved in Jan's new book, mentioned in the podcast, then click here.
Service outfits, recognising this shift, are now building in Key Performance Indicators (KPIs) to keep pace with a change that
can ultimately bring profit. Mark Glover tracks the evolving nature of KPIs in field service affirms their importance to a firm’s strategy...
Employers stifle groans and share knowing looks when a project manager starts listing KPIs. Touted in boardrooms and meeting rooms, they do however drive a business forward. They serve as signposts along a journey, ensuring that important milestones are met, completed and contribute to the end goal.
It’s a complex process to streamline but one that can bear much fruit. But is there a magic formula?
Type in ‘field Service KPIs’ to Google and your browser gets filled with an array of subjective suggestions. This is not surprising, as KPIs can be as far-reaching as a business requires. Efficiency, for example, incorporates time, such as the time it takes to complete a task, what billable time was used-up and what overtime was given to a job.
However, drilling down too much into one KPI can create issues. Martin Summerhayes, Fujitsu’s Head of Delivery Strategy and Service thinks defining a KPI is essential, something that comes from taking a long view of your service strategy. Failure to do so, he offers, could risk negative outcomes. “If you don’t look at the end-to-end,” he says, if you don’t look at the value chain that you want to achieve, if you’re not looking at the outcomes that you want to achieve and if you’re not looking at the total cost to serve then inefficiency is what you’re going to get.”
To illustrate his point, Summerhayes gives an example of the engineer told by his Manager to attend four jobs per-day.
The first he attends but without the correct parts and after explaining the situation to the customer, he leaves. He fits the parts at site two but the fault remains so raises another ticket, unable to do more, he makes a swift exit. He needs to call his branch manager (who isn’t there) after inspecting the issue at the third job, so the fault can’t be dealt with, he again explains this to the customer and departs. Finally, at job number four he fixes the part and completes the job. “
You get what you measure,” Summerhayes says, explaining the issue. “Four jobs have been done, but they haven’t been completed. The engineer hasn’t been told what to do with those four jobs. As the engineer is not being asked to completer the job, a whole load of waste is created. Of those four jobs, only one has been completed. The others will be swept back, picked up by a different engineer. You start to build complete inefficiency into the process, just purely by one measure and not being clear.”
And here lies the danger of loose KPIs. It may be tempting to create them to the nth degree but unless you create the right ones in line with the outcomes you want to achieve then you could end up pushing the wrong behaviour completely. “You need to be aware of the consequences,” Summerhayes warns. “You might measure the metric you think is right, but it will actually drive the wrong behaviour and it could even drive the wrong culture.”
Other broad KPIs, as well as time, include service delivery and the aforementiond efficiency; yet customer service – a key focus in modern field service - feeds into all the above: processes, service delivery and efficiency. In fact, one could argue it sits over the top of all KPIs being fed by those beneath it. Field service management requires a balance between time and cost savings while creating better customer service.
But how can you measure this ambiguous metric? Summerhayes says it consists of many elements. “The right people, with the right training and the right skills and the right motivation will drive employee satisfaction, employee engagement, employee loyalty and employee motivation,” he conveys.
But within that, there needs to be a further question. How does an organisation create a positive employee culture? Does it come down simply to managing your team correctly and should you differentiate KPIs between your team and management?
In a podcast recording for Field Service News, Co- Founder and Managing Partner at Si2 Partners, Nick Frank identified that separate KPIs were extremely useful, particularly when relaying an employees’ worth to the company back to that employee. “It’s important to find the measure that motivates your staff and they can actually do something about,” he said. “If they’ve taken action, they can actually see how they’re impacting how the business is working. You should see that Managers and engineers, for example, are two different sets of stakeholders, so you should separate out the management metrics from the team metrics.”
I think Nick hits on an important point here, one that relates on human level and the impact we have in the world we operate in; which in this instance is the world of work. If you’re an engineer who is part of a large organisation, who checks-in once a month for the firm’s monthly meeting and reliant on mobile connectivity to keep in touch with colleagues, then it can be difficult to feel part of the company’s bigger picture. Having someone explain to you – through KPIs – that your excellent fix-rates are positively impacting the firm’s bottom line can only be motivating.
Service KPIs, therefore, should drive profits through loyal employees and satisfied customers. The latter achieved by acknowledging three aspects that customers expect today: access to support; overall solution time and being kept informed throughout the service experience.
Satisfied customers in turn creates customer loyalty which in turn creates revenue. Acquiring a new client is three times more expensive than retaining a current one. The focus should be on customer retention not customer acquisition. Keeping clients satisfied means adhering to KPIs that put them at the core. It means being creative with your data and having the courage to look at results a different way. If your measurements are showing positive numbers - for example, an 85% first-time fix rate - then turning the metric upside can really disrupt how you look at your services. Once flipped, analysing the 15% of jobs that didn’t meet customer expectation can lead to more insightful analysis of your service performance. It’s easy to remain in a KPI comfort zone.
Measuring what you don’t want to measure can sometimes return results that you didn’t expect but once acted on, can make all the difference in an era where the customer has, and will always come first.
If you are in the service business, then you know just how much technology is changing the way service is being delivered. Just about everything to do with field service has been impacted by technology innovation and it is revolutionizing the way we do business.
Technology has allowed us to improve efficiencies and to get a more accurate picture of the effectiveness of our business practices. It has improved our ability to diagnose and solve problems. It has facilitated the sharing of expertise with less experienced employees. It has also allowed us to empower our field personnel. Most of these changes have been good for the customer, for us and for our field teams.
But the adoption of technology takes resources – primarily time and money and because of the sea of technological innovation we encounter everyday, it is easy to lose focus on the personal touch of service – the simple interactions that our field service professionals have with our customers and which contributes to the overall customer experience. This comes at a time when it is now that we need that personal touch the most. This is because the implementation of the latest technology is increasing the relative importance of the softer skills of the business – the personal touch of our field service team with our customers. Technology is creating a shift in the relative importance between the “soft” and “hard” skills of service and soft skills are winning out. This is not to suggest that soft skills were not important in the past – they certainly were – just that they are more important now.
Shrinking Competency Gap
Emerging technologies in the field service business are reducing the competency gap between top service professionals and less skilled service providers. The result is that it is becoming harder to differentiate on technical skills. With remote diagnostics, artificial intelligence, visual reality and embedded information in the serviced equipment, the field service professionals rely more on the new technology to troubleshoot and repair and less on their experience and technical expertise. This opens up the door for less experienced individuals who use these same diagnostic tools to give comparable levels of technical service. This means that, even though it is highly competitive now, it will become even more so in the future.
Customers will have an increasingly difficult time distinguishing between service providers based on technical competence. Service professionals and service organizations alike will have to rely more on the service experience that they create when interacting with a customer to differentiate them from their competitors. The basis of competition will shift from who is doing the best job of servicing the equipment, to who can create the best service experience while doing the job. This is not to say that technical competence will go by the wayside. Obviously, it won’t. Technical competence is and will remain critically important.
Providing a positive interaction without the ability to solve the problem is not a sustainable service strategy. But as technology levels the playing field between service professionals of different capabilities, technical competence of the individual and the organizations that employ them will become less of a factor of differentiation.
Limiting Personal Touch
"It is becoming harder to differentiate on technical skills..."
Technology can limit personal contact opportunities with the customer. For example, when problems are diagnosed and repaired remotely, we save both the customer and ourselves time and money. That’s a good thing in that it gets the customer back on line more quickly and reduces the cost to service. However, it also creates a lost opportunity to expand our personal relationship with the customer. If that is the case, how does the customer distinguish us from our competitor who can provide a similar service?
It may be tempting to use technology to avoid the customer. Although this is something that service providers have been grappling with for some time, it is no less prevalent today. Why spend time explaining the work completed when the details can be sent to the customer at a touch of a button? Why not use email or texting to share information rather than picking up the phone? As a field service professional, this approach may improve their efficiency in the field, but it may not contribute positively to the customer’s overall service experience.
It’s All About Maintaining a Personal Touch
The winning service organizations of the future will be the ones that can find ways to maintain a personal touch while implementing the efficiencies that technology provides. They will clearly define the service experience they want to create and invest in the processes and soft skills training of their field service team to achieve it. Perhaps the best way to avoid allowing the sea of technical innovation drown out the personal touch in service, is to create a clear picture of the service experience you want your customers to feel and have clearly defined expectations of the nature of all interactions with your customers to achieve it. Technology can be evaluated, at least in part, in how well it facilitates these interactions. Here are some questions to consider.
• Do you have a clear picture of the service experience you want your customers to enjoy?
»» Can you describe how you want customers:
»» To think about you?
»» To feel about you?
»» Can you articulate what you want your customers to say about you
• Does everyone in your organization share this picture?
• Have you translated this picture into action?
»» Do you have clear expectations about how your team interacts with the customer in order to deliver this service experience consistently over time and across the organization?
»» Do you provide soft-skills training to ensure everyone has the skills to create the defined experience?
»» Do you provide coaching and reinforcement of these skills to help your team adopt and maintain the behaviour change you require?
• As managers, do you model the service experience through your words and your actions?
• When you consider new technologies, do you evaluate how its adoption will contribute to your ability to deliver your service
experience as part of your assessment?
It’s a thrilling time for service – full of change and new experiences. The future is really quite exciting. The challenge for service providers will be to maintain a personal touch with their customers while adopting new technologies to ensure their continued service leadership. This challenge can be summed up by the direction often given by a manager that I worked for many years ago.
When confronted with “I just don’t have time to get everything done. Which do you want me to do, this or that?”, he would typically answer “Both”.
Jim Baston is the President at BBA Consulting Group Inc.
Report highlights that threat actors are advanced and persistent, but companies are using outdated systems and technology to save money. Poor security posture, prioritization, and awareness are also gifts to attackers.
Report highlights that threat actors are advanced and persistent, but companies are using outdated systems and technology to save money. Poor security posture, prioritization, and awareness are also gifts to attackers.
Malicious actors are targeting critical infrastructure (CNI) sites and energy distribution facilities exponentially. Interconnected systems in the energy industry increase vulnerabilities, and cyber attacks often go undetected for some time.
As energy companies save costs against the backdrop of lower oil prices, consolidating operations can weaken business resilience and redundancy levels. This gives rise to new, single critical points of failure, with any disruption across the supply chain potentially having increased consequences.
“Espionage and sabotage attacks against CNI organizations have increased over the years and I don’t think we have seen it all yet,” says Sami Ruohonen, Labs Threat Researcher at Finnish cyber security company F-Secure.
Connecting Industrial Control Systems (ICS) to the Internet is increasing, and a considerable number of CNI systems in use today were installed and built before 24/7/365 internet connections were the norm and the advent of Stuxnet. Many Operational Technology (OT) components have built-in remote operation capabilities, but are either partly or entirely lacking in security protocols such as authentication.
Moreover, cyber security was not a realistic threat when these systems were manufactured, and legacy protocols and systems never had the built-in security controls that we take for granted today. Transitioning these systems to the Internet has opened them up to attacks from a myriad of angles.
“Critical Infrastructure due to its nature is an interesting target for a foreign nation-state, even during peacetime,” Ruohonen explains.
F-Secure’s report shows that:
- A variety of different adversaries, each with their own motivations and tradecraft, constantly strive to compromise organizations that operate critical infrastructure
- Attackers have more time than their targets and will take months to plan their attack
- People are the weakest link in production, with company employees seemingly being criminals’ go-to target
- Attackers continue to succeed mainly due to organizations’ lack of mature cyber security practices
- Nation-state sponsored Advanced Persistent Threat (APT) groups are relentless, and continue to seek network foothold positions on CNIs and espionage opportunities in the interests of exercising political leverage
- Nine different attackers/malwares/techniques targeting the energy industry stand out, with spear phishing being the most common initial supply chain attack technique
- Keeping a small attack surface in the energy industry – while often pitched as the best way to mitigate the risk of a cyber attack – is simply not possible
While breaches are a certainty, Ruohonen advises organizations review their cyber security posture to implement latest technologies such as an endpoint detection and response (EDR) solution.
“EDR is a quick way to tremendously increase capabilities to detect and respond to advanced threats and targeted attacks which might bypass traditional endpoint solutions,” he explains. “Managed EDR solutions can provide monitoring, alerting, and response to cover the needs 24/7. This means organizations’ IT teams can operate during business hours to review the detections while a specialized cybersecurity team takes care of the rest,” says Ruohonen.
The complete report is available here.
For the next years, many manufacturers will focus more on “how to servitize”: How to make these innovations successful? How to accelerate these transitions and stay ahead of the pack? How to escape from “business as usual”? How to prepare the organisation for such journeys? In this article, I will share an overview of critical challenges and strategies for servitization.
Servitization is a different ball game
Many manufacturing businesses have made good progress in building a common understanding and commitment to business innovation including servitization, and they have allocated resources and funding for servitization.
Now, they are experiencing that servitization is a different ball game from usual innovations and face new challenges, such as:
• Political discussions when deciding on nitiatives and investment
• New risks from uncertainty and unpredictable trends
• Forces towards ‘business as usual, with signs like “not invented here”, “that does not work in our industry”, “our clients don’t want that” and/or “this is not our core business”
The central question: How to organise for servitization
We hear and read a lot about new (digital) technologies, new disruptive business models and servitization. However, the real challenges are about organisational and human aspects:
1. How to translate these general insights into concrete and relevant initiatives?
2. How to overcome the challenges and obstacles and increase momentum?
In essence, servitization is innovating your business model, particularly when you move beyond “condition of product” related services. We need to rethink our value proposition, our target market, our position in the value chain and in the competitive landscape. We will be facing new opportunities and new risks. This requires us to be open to new thinking, new mindsets and different strategies for innovation and change.
The problem: One innovation approach doesn’t fit all
Too often, we see successful strategies for one type of innovation being applied for other types of innovation also and therefore fail.
Before diving into best practices, let us first better understand the challenges in different phases of innovation: 1) discovery, including ideation, 2) decision-making, including resource allocation, and, 3) implementation, including development.
The “Hybrid Innovation Matrix” helps to recognise different types of innovation based on respective typical challenges so we can better choose the best strategy for each.
About the “Hybrid Innovation Matrix”
The “Hybrid Innovation Matrix” (see following page) differentiates four types of innovation with the respective challenges and strategies along two dimensions. Along the horizontal axis, we differentiate innovations within the existing business logic from those developing new business logic. In every industry and business we have prevailing business logic, which is a set of common patterns, knowledge, experience and frameworks of thinking. We use this logic to understand our environment and make decisions. This common business logic defines how we act, learn and change.
Our brains are hardwired to maintain a cognitive framework to rapidly assess their environment, filter information and make decisions. This results in a strong bias towards protecting the established business logic.
Along the vertical axis, we have the relative size of the innovation or change. In the left column, we differentiate incremental improvements from the more radical innovations that push the boundaries. In the right column, we differentiate reconfiguring and extending an existing business model from developing completely new solutions and markets with completely new business models.
I will describe the two quadrants of the “Hybrid Innovation Matrix” which are most relevant to servitization.
Adaptive and Incremental Improvements
“Adaptive and Incremental Improvements” is all about improving the performance of existing products, services and operations. Every industry has its common recipe of annual improvement of functionality, performance, speed, cost etc.
Examples include: improvement initiatives from departments like product development, marketing service based on customer feedback following, adding new features. And PDCA, Lean, Kaizen and similar approaches to improve the quality and efficiency of our operations.
How servitization fits in:
As this is not the quadrant in which servitization takes place, I will not elaborate on this quadrant.
Pushing the Frontiers
“Pushing Frontiers” is about bigger innovations within the common business logic. In every industry, we have common pathways of how the performance of products and services develop and how (latent) customer demands evolve. We can learn from the best practices and results from others in our own industry.
Typical examples are:
• How advanced technology continues to develop in the world of semiconductors.
• How there are hybrid and electric transmissions in cars.
• How we now have FaceID on our phones
• How we become more predictive in sales,supply chain, manufacturing and maintenance with digital capabilities.
How servitization fits in:
The early phases of the servitization journey fits in this quadrant. The service offering focuses on managing availability and condition of equipment in a more predictive manner.
Innovations in this quadrant often impact a large base of stakeholders in the organisation, advancing the knowledge in various disciplines, and involves bigger investments with bigger bets on the outcome.
A key challenge is to avoid obstacles at all levels in the organisation and a too narrow focus on, for example, only products or technology.
• Much higher levels of expertise, increasing the knowledge gaps between different stakeholders
• Finding strategic knowledge inside and outside the company
• Understanding a wider spectrum of (latent) customer needs beyond functional
• A too narrow focus, such as product technology or internal processes
• The commodity trap with innovations which hardly add customer value and are difficult to monetise.
• Mitigating risks from an uncertain outcome with higher upfront investments
• Lack of digital and service mindset
• Political battles or polarised discussions
- The more qualitative arguments
- Uncertainty of outcome
- Lack of new expertise, prepared by the experts.
• Limited capacity to implement change fluidly in the operating organisation
• Lack of required expertise and knowledge
• Lack of digital and service mindset.
Reconfiguring and Extending Business Model
“Reconfiguring and Extending the Business model” involves a combination of entering new markets, applying new technologies, encountering new competitors and facing new political actors. These are new aspects, different from common and dominant business logic in a business or industry.
Typical examples are:
• Low-cost airlines with a new value proposition and operating models
• Dell selling directly to the end-clients
• Storage solutions moving to cloud services
• Trucks manufacturers reducing fuel consumption by influencing truck drivers
• Fresenius (manufacturer of kidney dialysis equipment) operating entire dialysis centres in hospitals.
How servitization fits in:
As you can see from the examples, the more advanced phases of servitization extending the value offering beyond product availability perfectly fit in this quadrant.
The main challenge is to widen a peripheral vision escaping from the established dominant business logic.
• Being open to new knowledge, patterns, ideas and opportunities without being pulled back into ‘business- as usual’ by many forces
such as colleagues, clients, vendors, service suppliers and investors
• Recognising weak signals of potential trends, threats and opportunities, and when these become emergent
• Mitigating “conflict” with mainstream research activities
• Understanding and recognizing potential market disruption from immature and emerging alternatives (often at the low end of
• Limited knowledge and uncertainty about unpredictable developments
• Battles between stakeholders in operating organisation and innovation organisation
• Stopping initiatives because of lack of shortterm results, in favour of initiatives closer to ‘business as usual’ with quicker results
• Not considering weak signals for potential threats, like market disruption
• Fear of cannibalism.
• Embedding new knowledge throughout the organisation
• Building new mindsets and competencies
• Mitigating “conflict” with mainstream operations
• Existing clients may not like the new solutions (yet).
Coevolution of New Solutions and Markets
“Coevolution of new solutions and markets” is about the radically new emerging solutions. Here, we see many different solutions and ideas popping up while it is still unclear which of the competing alternatives will emerge and become the dominant solution.
Current examples of innovations in this quadrant are renewable energy, data-driven healthcare, mobility (including self-driving cars), Google Maps rapidly pushing away TomTom, and tachographs gradually being replaced by cloud-based applications. Other examples are PC’s displacing mini-computers and digital photography displacing analogue photography.
How servitization fits in:
I will not elaborate any further on this quadrant, as servitization in principle is not about developing these radical solutions. Even though for some industries there are actual opportunities and threats in this quadrant, in which servitization could play a role (like the Google Maps versus TomTom).
The solution: Differentiate innovation strategies with a focus on human aspects
The challenges I described concentrate on the human factors for successful discovery, decision making and implementation. They are quite different for each type of innovation in the “Hybrid Innovation Matrix”, which means we need different strategies to be successful.
I will now describe the best practices for the two types of innovation which are most relevant for servitization.
The name of the game here is “Managing a wider portfolio, including higher risk projects”. The following practices will help accelerate the innovations that push the frontiers.
• Establish a clear and compelling direction in which the company is heading and how that relates to the developments in the industry and market
• Build a shared concern on developments in the industry and the importance of adapting to it
• Establish cross-functional and dedicated teams of experts for specific initiatives
• Establish dedicated project management.
• Use advanced techniques for finding (latent) opportunities, such as design-thinking and empathic design
• Involve external experts (consultants and new partners)
• Strategic level decision making
• Maintain a balanced portfolio of different types of innovations
• Apply a stage gate and review process, with clear criteria, such as;
- What initiatives should be higher risk initiatives pushing the frontiers
- In which domains to push frontiers (technology, products, services, customer experience etc.)
- Success criteria for go/no-go for the next phases
- Level of investment in different types of initiatives
• Educate stakeholders on the decision level
• Invest in further research first
• Develop solid business cases, supported by solid information
• Use advanced risk-assessment techniques
• Lean startup and agile development techniques
• Co-development with your best clients
• Early involvement of stakeholders from various functions
• Develop the digital and service mindsets
• Incremental improvement techniques such as PDCA and customer feedback programmes
• Not having dedicated innovation teams
Re-configuration and extending business models
The name of the game here is running “Entrepreneurial satellite teams”.
• Add a transformative direction of the company, which is fairly open
• Build a shared concern for developing business models for the next growth curves
• Being flexible in an unpredictable world
• Entrepreneurial and multi-disciplinary teams decoupled from the mainstream organisation
• Allow addressing different markets or segments for (first) success
• Less targeted search assignments
• Techniques to reframe and thinking in “new boxes”
• Build new and broad expertise networks outside your industry
• Experiment and learn
• External contracting or outsourcing
• Scouting for successful initiatives in the market
• Develop scenarios around weak signals
• Reframing of the opportunities and threats
• Decentralise decision-making
• Decision-making on vision and scenarios
• Rapid prototyping
• Acquisition of early successes in the market
• Allow competing initiatives to be pursued Implementation
• Keep the new business in entrepreneurial satellite teams
• Lean startup and agile development teams
• Co-creation with the most interesting (potential) clients
Pitfalls / what does not work:
• Decision-making and resource allocation by senior leadership in the operating organisation
• Input from customer feedback programmes
• Decision-making based on business cases and stage-gate reviews
• Early integration into the current operating organisation or business model
Conclusion and takeaways
We see an increasing number of manufacturing companies committing to business innovation and servitization and allocating resources for it. A hybrid innovation strategy, focusing on the human factors of the transition will make the difference between success and failure!
If you want to boost momentum for servitization;
• Share this with your colleagues
• Assess the ideas, initiatives, progress and obstacles with the “Hybrid Innovation Matrix”
• Build a shared concern for the need for ongoing innovations in each of the quadrants
• Put the organisational and human aspects on the strategic agenda
It is a great time to be in manufacturing. We are facing exciting opportunities to make manufacturing a stronger backbone of our service-oriented economies. We have a unique opportunity to make manufacturing a great place to work and to invest in.
Jan Van Veen is Managing Director at More Momentum.
transform when required. The key, Bill Pollock writes, is in Service Lifecycle Management...
Enaging today’s service enterprise means planning and coordinating service on a global scale. It means delighting your customers – and your shareholders. And it calls for new technologies and business practices designed specifically to solve the Service Lifecycle Management (SLM) challenge.
Based on these reasons, we believe that any field services organisation that strives to provide “bestin-class” field service in support of its customers must first implement a robust SLM solution in order to achieve its objectives. The benefits of implementing an SLM solution are many – and are fairly universal (that is, applicable for virtually every field services organisation, regardless of type, size, or geography served). Users typically identify the following five areas of benefits as the most compelling talking points in selling the
concept to management:
1. Reduced Service Costs
2. Streamlined Workflow
3. Improved Service Levels
4. Enhanced Quality and Growth
5. Increased Customer Satisfaction
Reduced Service Costs
Simply citing generic data regarding potential cost reductions does not generally entice management to look any further. In order to truly gain their attention, it must be specified exactly where the cost savings will be coming from – and to what extent (i.e., provide them with hard numbers). The good news is that a robust SLM solution can manifest quantifiable cost savings from several
specific areas including:
• Improved technician productivity
• Improved Inventory/parts management
• Optimized service delivery
• Reduced time in the “service-to-cash” cycle
These areas of cost savings will very likely peak management’s interest – as well as entice them to ask for more detailed cost-saving information. For example:
Improved Technician Productivity
Through SLM, improvements in technician productivity can be gained in a variety of ways including:
• Providing field technicians with realtime, direct access to customer service history, equipment repair records, product information, and inventory and parts availability enables them to provide the best service possible in the most cost-effective manner by eliminating time-consuming paperwork and forms preparation. As a result, the technicians are able to spend virtually all of their billable time providing customers with the highest levels of service and support, rather than simply collecting information and
filling out forms.
• Providing field technicians with specific service level information for each customer they serve so that they never unknowingly
provide their customers with anything less – or more – than those levels of service that are specifically covered in their respective Service Level Agreements (SLAs).
• Reducing overhead costs through the elimination of most paperwork, delays in communications, and the use of outdated systems that had previously required manual data entry or redundant data input. Empowered by the data and information made available through SLM, field technicians can also serve as the “eyes and ears” of the organisation with respect to identifying potential cross-selling or upselling opportunities for the company’s various products and services. By doing so, customers will not only look at their field technician as “the person who gets things fixed”, but also as a “trusted advisor” – or the one they can count on to both fix their equipment, and provide them with recommendations for acquiring new products and/or upgrading their service level coverage.
Improved Inventory/Parts Management
SLM can also result in “hard” cost savings through improved inventory/parts management, as summarised below:
• SLM enables services organisations to enhance their Equipment Asset Management (EAM) capabilities by allowing them to track
specific component/equipment relationships, and monitor their inventories for the purpose of automatic replenishment. By developing
– and following – tightly integrated inventory management processes, users are able to significantly reduce inventory size and related carrying costs.
• SLM also provides technicians with access to real-time inventory information, as well as the ability to order parts directly from the
field, rather than having to wait until they return to their home base, or gain access to a telephone connection. The ability to work
with real-time parts/inventory information provides both the technicians – and the customers they serve – with immediate access
to parts availability, while simultaneously updating inventory levels and triggering automatic replenishments.
"Citing generic data regarding potential cost reductions does not generally entice management to look further..."
Optimized Service Delivery
Optimized service delivery may mean different things to different people; however, the most compelling benefits of service optimisation, delivered through SLM are typically realized in terms of:
• Minimized time to dispatch (i.e., quicker response time);
• Increased first-time fix rates (i.e., fewer repeat failures and/or service calls); and
• The ability of customers to perform self diagnosis and problem resolution via the Internet.
Ultimately, each of these benefits is realized through improved response time, decreased need for follow-up/repeat calls, and less equipment downtime. Even so, there are still several other types of benefits that will also be of significant interest to company management.
Technology is the tool that assists services organisations in making their operations run more efficiently – but it is only a tool. However, SLM leverages best-of-breed field service management solutions with industry best practices already builtin, thereby allowing practitioners to benefit not only from the automation of their current processes, but also by allowing them to redefine and improve their processes to deliver optimum results. These results are typically manifested in the following ways:
Integrated Processes and Technologies
Only through SLM can the practitioner benefit from a completely integrated and seamless solution that provides an instant 360-degree web-based view of the entire business. For example, when Sales or Marketing require information from Service.
Operations to develop targeted promotions to maximize cross-sell and up-sell opportunities, a robust SLM solution can give them exactly what they want – when they want it.
Similarly, when Service needs real-time customer information from the Contact Center prior to making a call, SLM makes that information readily available.
Improved and Streamlined Processes
The end result of successfully integrating the organisation’s processes and technologies is improved and streamlined processes – in
other words, running the organisation more efficiently. These benefits are typically manifested in the following ways:
• Through an automated call management system based on CTI, IVR, dynamic scheduling and dispatch, and closure capabilities,
services organisations can rapidly improve and streamline their call management process, thereby significantly increasing
customer satisfaction and retention.
• With the ability to apply contract templates, initiate automatic contract renewals, and build structured workflow processes, users
can maximize their contract processing, resulting in more predictable revenues and improved productivity.
• The capability to track, monitor, and automate stock based upon user-defined rules, in conjunction with the ability to support multiple warehousing strategies, also leads to improved and streamlined stock management levels at reduced inventory
levels (also resulting in reduced costs).
Improved Service Levels
There are basically two ways to look at SLM – (1) as a tool for lowering the cost of doing business, and (2) as a means for improving existing service performance. While the cost savings may be very real, SLM can also be a significant contributor to the overall improvement in the levels of service performance for the organisation. Complete charge capture, and maximizing cross-selling and up-selling opportunities are just some of the ways that play to both perspectives on SLM
Complete Charge Capture of Service Delivery
SLM enables the complete capture of all parameters involved in delivering service (e.g., parts, T&M, expenses, ancillary services, extended warranties, etc.) ensuring that no billable charges are ever lost or overlooked, and ultimately improving invoicing
accuracy. Through SLM, as soon as the technician closes a call and captures the customer’s electronic signature, that data can instantly be transmitted to the central billing system, thereby significantly streamlining and compressing Days Sales Outstanding (DSO).
Maximized Cross-Selling and Up-Selling Opportunities
Through the capability of leveraging a Web-based customer self-service portal in conjunction with a dynamic self-learning knowledgebase, users gain the ability to offer new products/services at every customer interaction, resulting in increased
revenues without increasing costs. A state-of-the-art SLM solution that embeds intelligent automation along with a robust product information management repository can arm all of the employees in the field with first-rate cross-selling and up-selling capabilities by prompting/alerting them of any potential sales opportunities (e.g.,contract/warranty expirations, aging equipment, ancillary accessories, add-ons, etc.) at the specifictime of interaction with the customer.
Ability to Leverage Service as a Competitive Advantage
Through SLM’s Business Intelligence (BI) capabilities, users can identify, monitor, and track opportunities to offer customized and global service agreements based upon each customer’s unique usage levels.
By doing so, the customer benefits from having its service needs and requirements fully met, and the services organisation can maximize its total revenues in the field. SLM also supports the services organisation’s ability to deliver proactive rather than
reactive personalized service – at an affordable price– empowering it to exceed customer expectations and generate repeat sales.
"SLM enables the complete capture of all parameters involved in delivering service..."
Enhanced Quality and Growth
While most of the benefits described thus far focus primarily on transitioning from the past to the present, enhanced quality and growth clearly looks to the future of the organisation – and this is where SLM excels. The three main components of these forward-thinking benefits may best be summarized as follows:
Ability to Deliver Consistent Service Globally
The most effective SLM solution is one that is truly global, able to support customers using all summarised below:
Ability to Anticipate Customer Service Requirements
SLM provides users with easy-to-use functionality, an intelligent knowledgebase, and a comprehensive customer repository to track problems and potentially identify many other problems before they occur. With this valuable information at their fingertips, users can offer more efficient scheduling or preventive maintenance (or implement an IoTpowered Remote Diagnostics / Remote Monitoring
platform), and minimise the need for on-site visits and repeat service calls, wherever possible. As a result, customer satisfaction is increased, and costly unscheduled service visits can be minimised
Improved Responsiveness to Customer Calls and Service Delivery
SLM empowers Contact Center and field personnel with visual alerts, automatic escalation, scripting, and question trees, so they are able to respond to customers’ inquiries quicker and more completely. Through SLM, they will also have a full range of corporate knowledge stores readily available to optimize the customer interaction process.
In addition, the integrated, multi-channel inbound/outbound capabilities facilitated by SLM provide for unparalleled customer support in all areas, including placing and tracking an order, updating records,making payments, receiving remote support, and scheduling a service call.
Making It Easier to Do Business - Making It More Profitable
In today’s increasingly fast-paced business environment, customers have very high expectations, and they will take no excuses for poor customer service. They expect fast, relevant, and accurate information from the companies they do business with, and they will accept nothing less.
The self-service capabilities offered through SLM provide customers with all of the information they need – when they want it, anytime, anywhere.
This, in turn, ultimately results in improved customer satisfaction and strengthened loyalty throughout the user’s customer base.
Bill Pollock is President at Strategies For Growth
In the UK it is estimated there are six million lone workers and approximately 23 million in the US. Workers sent to fix a coffee machine, lorry or an offshore wind turbine, by definition, are lone workers.
The Health and Safety Executive (HSE) who oversee the regulation and enforcement of occupational health and safety in the UK define lone workers as “people who work by themselves without close or direct supervision”. Given the spectrum of lone vocations in field service, we can assume that most workers fall into this category.
In the UK, while there is no specific legislation that governs lone working, the act is encompassed by the overarching Health and Safety at Work Act which requires employers to provide a duty of care to their workers and to do all that is “reasonably practicable” to protect them.” Similarly, in America, there exists no defined legal requirements but the framework of the Occupational Safety and Health Act (OSHA) expects firms - as part of their legal duty of care - to have a lone worker policy in place.
Today, firms across both sides of the Atlantic are now taking health and safety far more seriously. What was once seen as a paperwork-heavy burden, necessary to keep inspectors from the door, is now appearing higher up a firm’s agenda resonating in
the boardroom and becoming integrated within a firm’s business strategy. Directors can see tangible numbers such as lost time
and accident statistics that can visibly affect a company’s bottom line; as well as the impact the effect on a company’s brand if they are found in breach of the regulations. Employers are now also taking a more holistic view of their workers’ health and safety. As well as the obvious risks in lone working such as sudden illness or injury, violence, threats or abuse, employers are now taking more notice of their employee’s wellbeing and the risks associated with mental health. Lone workers have been identified as vulnerable in this regard, susceptible to issues such as depression and anxiety. But why is this?
The very nature of lone working means interaction with others is not as frequent as that between office workers, for example. As social creatures we work best in groups, bouncing ideas around and receiving affirmation from each other on challenges and solutions. And while those who work alone are in touch with colleagues or managers, it is often conducted remotely and task-focused with little opportunity for informal conversation. The desk-based employee can usually find relaxed, pressure releasing conversations at the office kitchen while making a coffee with another colleague.
"Lone workers have been identified as vulnerable, susceptible to depression and anxiety..."
It’s this removal of a lone worker’s relaxed workplace interaction that can have a detrimental affect on their wellbeing. However, communication software such as the consumable cross-platform messaging service WhatsApp is being utilised by working populations to interact and share challenges, becoming a virtual coffee between workers in a virtual office kitchen.
Technology has also played a part in physically protecting lone workers with a sharp advancement in safety devices, particularly in alarms and monitoring systems.
The first wave of tech was very much stand alone, connected to very little. Those in danger would press a button and hope that someone hears it. Now devices have become much smarter with GPS and IoT connectivity, in turn creating tracking and
therefore productivity metrics. This was further ring fenced in the UK by the introduction of the 2016 BS8484 standard, meaning
companies offering technology-based solutions had to comply with. A key requirement of which, is that a lone worker’s alarm once activated, supersedes the 999 British level of emergency response, and be directed immediately to the relevant control unit,
guaranteeing an appropriate action.
This regulation has led to another level of lone worker devices encompassing video, analytics and the use of IoT. Solutions now include personal ID tags that incorporate video technology and small fob alarms, triggered discreetly triggered if an incident occurs
that can also integrate with a mobile workforce management platform. Like service management platforms, analytics software specifically for lone workers exists that covers usage, training and alarm elements and produces graphically-friendly reports
to showcase progress to the CEO or department heads.
Financial, moral and legal: three reasons why firms should take their health and safety management systems seriously. Far from being a burden, it’s about making sure your workers go home unharmed. People are your biggest assets and they deserve to be protected to the highest possible standard. Physically, and also mentally.