- 1. Delivering Value-Added Services Heiko GebauerACMS: optimize
for today...Driving organic growth initiatives, through an external
focus Florence 2010Department Innovation Research in Utility
Sectors - Eawag: Swiss Federal Institute of Aquatic Science and
Technology University of St.Gallen (Switzerland) Karlstad
University (Sweden)
2. Agenda Session 1: Adding value through service
innovationIntroduction8:00-8:10Session 1: Adding value through
service innovation Presentation on organic growth in service
business8:10-8:40Group work on service innovations8:40-9:10Selected
presentations of service innovations Coffee break9:10-10:00
10:00-10:30 3. Agenda Session 1: Adding value through service
innovationIntroduction8:00-8:10Session 1: Adding value through
service innovation Presentation on organic growth in service
business8:10-8:40Group work on service innovations8:40-9:10Selected
presentations of service innovations Coffee break9:10-10:00
10:00-10:30 4. Services are much more complex than the traditional
product businessParameterProduct businessService businessNature of
demandMore predictable, can better forecastAlways unpredictable,
sporadicRequired responseStandard, can be scheduledAs soon as
possibleNumber of product generationsLimited10 to 15 times
higherProduct portfolioLargely homogeneousAlways
heterogeneousAdapted from Cohen et al. 2006 5. Continuous extension
of the service offerings Bosch PackagingSelling products Core
product Own service products Provide services for own products
Parts Field service ModernizationProviding productrelated services
Bundle basic services Bundle & optimize services to full
packaging Service level agreements Extended warranty Parts &
labour package Service for other products Conduct services for
competitor productsOffering solutions Outsourcing services Provide
full functionality & responsibility for complete lines Product
unrelated services Leverage to other services such as Logistics
provider IT support 6. BOSCH PACKAGING extends the share of service
revenue in total revenue Total revenueMarket share in service
market Service revenueCustomer 45%34% 66%25% 30%22%Field
Service55%Spare Parts23%ModernizationRevenue of machines and
productsThird party suppliersQuelle: R. Hnggi, 2006 7. Leverage
your unique skills for extending the service business Leveraging of
competenciesExamplesUsing it for innovative services FESTO
Didactics personell development services LeveragingTRUMPFs services
(SYNCHRO) on production optimization TOYOTAs services on lean
production practicesUnique competencies and skillsPORSCHE
engineering services on automobile development 8. Identifying
strategic paths through visualizing service opportunities
ReconfigurationHow do service opportunities
appear?)Pre-SalesSalesAfter-salesExtensionPrimary customer
activitiesSupplementary customer activitiesWhere do service
opportunities appear? Adapted from Sawhney, 2004 9. Exploitation or
exploration: How to approach the service opportunities? Exploration
ReconfigurationHow do service opportunities appear?)Radical
improvementPre-SalesSalesAfter-salesNew value constellation Dynamic
capabilitiesExploitation ExtensionIncremental
improvementsValue-adding to existing value constellation
Development of operational capabilities Primary customer
activitiesSupplementary customer activitiesWhere do service
opportunities appear?Adapted from Sawhney, 2004, Fischer, Gebauer,
Guanjie, Gregory and Fleisch. (forthcoming 2010) 10. Exploitation
or exploration: How to approach the service opportunities?
Exploration ReconfigurationHow do service opportunities
appear?)Radical improvementPre-SalesSalesAfter-salesNew value
constellation Dynamic capabilitiesExploitation ExtensionIncremental
improvementsValue-adding to existing value constellation
Development of operational capabilities Primary customer
activitiesSupplementary customer activitiesWhere do service
opportunities appear?Adapted from Sawhney, 2004, Fischer, Gebauer,
Guanjie, Gregory and Fleisch. (forthcoming 2010) 11. Exploitation
and the corresponding service strategies Development
partnerAfter-sales service providerCustomer support service
providerOutsourcing partnerService focusSource: Gebauer, Fischer
and Fleisch (2010) 12. Operational capabilities for implementing
the service strategies Service orientation in the operational
capabilities A abstract value of services, B role understanding, C
personnel recruiting, D training, E compensation, F distinction
product and service organization, G proximity to customers
Development partners A 1 G B Customer support After-sales 0.5
service providers service providers 0 A A F C 1 1 G B G B 0.5 0.5 E
D Outsourcing partners 0 0 F C F C A 1 E D E D G B 0.5 F Legend (0
low, 1 high cluster means)0 EC DSource: Gebauer, Gustafsson,
Edvardsson and Witell (2010), Neu and Brown (2005 and 2008) 13.
Exploitation or exploration: How to approach the service
opportunities? Exploration ReconfigurationHow do service
opportunities appear?)Radical
improvementPre-SalesSalesAfter-salesNew value constellation Dynamic
capabilitiesExploitation ExtensionIncremental
improvementsValue-adding to existing value constellation
Development of operational capabilities Primary customer
activitiesSupplementary customer activitiesWhere do service
opportunities appear?Adapted from Sawhney, 2004, Fischer, Gebauer,
Guanjie, Gregory and Fleisch. (forthcoming 2010) 14. Service
innovation processExtension of service offeringTraining of fire
brigades on fire-fighting in tunnelsMaintenance Repair service
Mobile gas measuring devices Stationary gas measurement Compressed
air breathing equipmentService Innovation Process Development phase
Creating service ideasPreliminary service conceptBusiness
PlanIntroduction to the marketActivities Idea generation Idea
selection Concept description Concept evaluation Concept
selectionDescription of the Business PlanMarket test Introduction
15. Address hidden customer needsExtension of service offeringFleet
Management for Hilti tools, i.e. One agreement for many Hilti tools
Additional services, esp. repairs and leasing No consumables,
e.g.Hidden Customer NeedsIncremental improvements and shortterm
advantages Obvious customer needs Battery packs, battery chargers
Insert tools Fire stop, anchors, struts, pipe-rings, etc.Hidden
customer needsSustainable competitive advantages 16. 1.
Understanding the customer processes Customer process: Construction
operations Contracting Purchase Delivery Training Use / Operate
Maintenance Locate 17. with all its complexity Owner /
ArchitectGeneral Contractor BankCustomer process: Construction
operations Contracting PurchaseSupplier small & standard
partsDeliverySupplier building materialsTrainingSupplier heavy
equipmentUse / OperateSupplier construction
toolsMaintenanceConstruction logisticsLocate 18. 2. Absorbing the
complexity into own service innovations Customer process:
Construction operations Contracting PurchaseHiltiDelivery Training
Use / Operate Maintenance Locate 19. 3. Orchestrating complexity in
combination with suppliers Customer process: Construction
operationsOwner / ArchitectContractingGeneral
ContractorPurchaseBank Supplier small & standard
partsHiltiDeliverySupplier building materialsTrainingSupplier heavy
equipmentUse / OperateSupplier construction
toolsMaintenanceConstruction logisticsLocate 20. Achievements
Margin: price sensibility decreases dramatically; no upfront
investment; schedule; admin work reduction Customer retention:
unbelievable; pay for hole, not for tool Cross selling: spare
parts, other tools Imitation barrier: process and IT know-how lists
competitors on web to watch them dying Customer intimacy: here is
the real value Net sales (million SFr) Asia/Pacific North America
Latin AmericaEurope/AfricaSource: Hilti 21. Conclusion Service
business is much more complex than the traditional product
business. Nevertheless, companies continuously try to achieve
service growth Strategic paths for service business Service
opportunities arise around primary and supplementary customer
activities as well as extension and reconfiguration of customer
activities Service opportunities can be either exploited or used to
explore new value constellations Exploitation creates strategic
paths around after-sales service and customer support service
providers as well as development and outsourcing partners Service
innovations Exploitation is about identify ideas based on existing
and obvious customer need Exploration is about understanding
customers complexity 22. Agenda Session 1: Adding value though
service innovationIntroduction8:00-8:10Session 1: Adding value
through service innovation Presentation on organic growth in
service business8:10-8:40Group work on service
innovations8:40-9:10Selected presentations of service innovations
Coffee break9:10-10:00 10:00-10:30 23. 1. Understanding the
customer processes Customer process: Wearing black socks Search
Purchase Replenish Put on and wear (Hand) wash Emergency purchase
Wear colorful socks Dispose 24. with all its complexity Department
store BankCustomer process: Wearing black socks
SearchManufacturerPurchase ReplenishDistributorPut on and
wearLaundry(Hand) washHotelEmergency purchaseAirportWear colorful
socksClothes donationDispose 25. 2. Absorbing the complexity into
own service innovations Customer process: Wearing black socks
Search Purchase Replenish BlacksocksPut on and wear Wash Emergency
purchase Wear colorful socks Dispose 26. 3. Orchestrating
complexity in combination with suppliers Customer process: Wearing
black socksDepartment storeSearchBankPurchase ReplenishManufacturer
DistributorBlacksocksPut on and wearLaundryWashHotelEmergency
purchaseAirportWear colorful socksClothes donationDispose 27.
Achievements Margin: 98 CHF for 9 pairs of black socks; cash-in at
day 1 Customer retention: unbelievable Cross selling: underwear
Imitation barrier: process and IT know-how lists competitors on web
to watch them dying Customer intimacy: here is the real
valueSource: Courtesy of Samy Liechty 28. Task assignments 1.
Specify the customer processes and activities 2. Elaborate the
complexity of the customer processes 3. Create ideas in how to deal
and absorb the complexity into service innovations 29. Agenda
Session 1: Adding value though service
innovationIntroduction8:00-8:10Session 1: Adding value through
service innovation Presentation on organic growth in service
business8:10-8:40Group work on service innovations8:40-9:10Selected
presentations of service innovations Coffee break9:10-10:00
10:00-10:30