Creating Growth with Service

Article #12: Creating Growth With Service

This article is based around the fact that companies that are faced with saturation of their core product markets are turning to services when searching for ways to grow. Companies that have had success with this strategy are GE, IBM, Siemen’s AG, and Hewlett- Packard Co., for example.

A certain approach in creating services-led growth can help managers of product companies improve the odds of success. Companies need to define their markets by looking at customer activity and outcomes instead of products and services. Relating a map of customer-activity to a service-opportunity matrix, managers can explore opportunities for new services in 4 directions. Managers also need to assess pitfalls and risks that these opportunities represent.

Peter Drucker has pointed out, “What the customer buys and considers value is never a product. It is always a utility-that is, what a product does for him.” There are particular outcomes that customers seek, and they participate in certain activities to achieve them. Such activities can be mapped on customer-activity chains, which have the following characteristics:

-Represents an end-to-end temporal sequence of logically related activities.

-Leads to defined customer outcomes.

-Must be defined at the segment level, not at the aggregate market level.

-Often crosses industry and product market boundaries.

This chain is the foundation for