Who Owns Servitization?

I’ve been described as a Servitization evangelist for beating the drum for its beneficial influence on the global manufacturing industry. So it’s no surprise following the Spring Servitization Conference at Aston Business School in the UK that I am trying to better understand who actually “owns” the end-to-end transformation processes – strategy, enablement and measurement – of Servitization inside the manufacturer.

If Servitization is the next wave of sustainable growth for worldwide manufacturing, there is surely an identifiable initiative – led by a senior business strategist – inside a well formulated team and corporate priorities and investments must be aligned around it. But I’ve discovered that’s just not the case.

In the years that I have been following Servitization, I have engaged with hundreds of companies, analysts and academics focused on the topic and have experienced some very exciting examples of true Servitization – real business model transformation versus service process improvements. For example, MAN Truck & Bus UK and their innovative “Trucknology”, its related servitized business model and how Des Evans (CEO) describes the shift for MAN from selling trucks to selling intelligent transport systems. He stresses that the change at MAN UK was driven by a fundamental commitment to help MAN’s customers grow their businesses. As a result of MAN’s servitization strategy and subsequent process changes, MAN Truck & Bus UK now helps their customers improve fuel utilization, decrease maintenance costs with higher driver effectiveness, reduce accident rates, and even reduce fleet size by improving the performance of every vehicle and driver so less trucks are needed in the fleet to meet the same requirements. Although that may seem counterproductive for a manufacturer, it’s this customer culture that keeps MAN UK in their leadership position with the highest customer value scores, ultimately leading to higher revenues for new products and services.

And although the success numbers for servitization are starting to creep up – extensive business transformation within manufacturing toward Servitization isn’t commonplace. Yet.

Manufacturers are hungry to learn more about practical examples similar to MAN UK and in the recent article “From Goods to Great” the authors define ways for manufacturers to identify how to discover service innovation opportunities through better understanding their customers business.

So who owns this responsibility to understand and bring back the knowledge of the customer’s business? At the recent Spring Servitization Summit the agenda included several industry speakers responsible for servitization in their organizations. The presenting companies represented included MAN UK, Rolls Royce, Alstom Energy, Goodyear, Airbus Helicopters and Toyota Materials Handling. The presenters, in no particular order, represented a wide range and somewhat disparate list of titles, roles and departments within their organizations – Operations Management (Sales & Business Development), VP Global Innovation (R&D), CEO (executive suite), Director of Maintenance (Repair and Overhaul), Director of UK Sales and Marketing (Corporate sales and marketing) and Director Business Improvement & Capability (Operations).

Of course, this conference alone doesn’t conclude that the responsibility and opportunity for servitization is still looking for a home within manufacturers. However, there is some additional primary research data from the Oxford Economics survey “Proving the Service Continuum: Quantifying the Strategic and Economic Impact of Global Service Transformation” conducted on behalf of PTC in late 2013. In the survey, 370 senior service leaders were asked “To which business function in your company do you report?” and their responses reflect what I experienced at the Servitization Conference. The findings show that service leaders and their organizations today roll up to Sales (27%), Marketing (23%), Operations (20%), Services (16%) and Engineering, R&D (14%).

Who Owns Servitization-Image   Oxford Economics Survey “Proving the Service Continuum: Quantifying the Strategic and Economic Impact of Global Service Transformation”: 2013, PTC

In my opinion, this inconsistent model for services alignment within the enterprise contributes to the varying approaches – and levels of success – to servitization within manufacturers. I’ve heard comparisons that servitization is at a stage like the early years of Lean Manufacturing, where theories outnumbered the practical applications, and challenges to unify the processes seemed insurmountable. However, I see that interest in servitization is starting to reach a groundswell and manufacturers are investing in the right people and resources to apply the principles.

So back to the question for this writer, Who Owns Servitization?

Maybe it’s that no “one” is responsible for the comprehensive strategy, execution and analysis related to servitization and the related substantial business culture shift. More likely it’s a combination of innovators across the enterprise – who can collectively enable a new “how do we help the customer” mindset and who can influence the necessary new business models.

Or maybe it’s best described by Mr. Hegarty of Rolls-Royce UK, who put it in these terms at the Servitization Conference, “80% of Rolls-Royce innovations are driven by the customer” – they do this by better understanding how Rolls-Royce can provide products and services that improve our customers’ business.

So, who owns servitization within your organization? Maybe you should start with your customers.

To learn more about the Servitization Center at Aston Business School visit their website or read other PTC Service Leader Blogs.

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