Service Factory

With increased commoditisation, pressure on growth and margins are forcing companies to think outside the box when it comes to their services. Service businesses need savvy new programs, which allow them to evolve quickly and nimbly – they need to create new customer-oriented offerings, quickly adapting to changing markets. However, navigating the right path to service transformation isn’t always straightforward. Most common approaches, Big Bang and Incremental, carry risks and yield surprisingly low success rates.

There’s an alternate path however, increasingly being adopted by today’s more successful and forward-looking service organisations: ‘The Service Factory’. It is an agile and stepped approach to change, but offers quantum leaps at limited risk.

The Big Bang
Leaders often decide to change the services organisation by redesigning the entire business and everyone is required to comply. This is a complex and risky undertaking: An extensive design phase and a total overhaul of all processes involve a myriad of functions. And like a game of Chinese Whispers, each time the program is handed over to the next team (that has different backgrounds, objectives, and perceptions) valuable information gets lost. This creates a disconnect making it virtually impossible to manage a smooth operation. Moreover, if one element proves ineffective, the entire process needs to be redesigned. We often see this happen in companies implementing a new ERP (Enterprise Resource Planning system). No surprise some 70% these projects fail, taking longer than planned, costing more than budgeted and momentum is lost.

By contrast, the incremental approach aims at gradual and systematic improvement. It seems sensible, but the issue here is that this approach focuses on isolated issues. The big picture and strategy are then lost out of sight. Much like a traditional Western medic, this approach treats symptoms but not the underlying cause. The scope of incremental approaches such as Six Sigma is limited, their outlook not holistic and results are often disappointing.

The Service Factory

Introducing a systematic, high success, low risk approach to service transformation:

As Europe’s leading service consultancy, we’ve seen that organisations successful in transforming their operations look at their business from a ‘The Service Factory’ perspective. These businesses are able to adopt innovations in tandem with changing customer and market needs.

How does it work?
The Service Factory, an analogy to an actual factory, comprises three core steps: 

  • Creating and maintaining a high level vision of the future for your business
  • Defining a precise architecture of your business components
  • Defining a roadmap in which the components are improved step-by-step according new and changing requirements

In further detail, having developed a high level vision of your organisation’s future, the approach requires that you break down your business into components; Request Management, Diagnosis, Planning, Maintenance Engineering and Knowledge Management are examples of valuable components in your Service Factory. Each component is then looked at from the following perspectives:

• Management Practices

• Processes

• IT functions

• People Competencies

• Performance Metrics

Step by step, selected components are then developed or modified according to business needs. The approach replaces current components with new, more mature innovations as the business runs. This results in less organizational impact and risk. In short, component-based development allows ongoing improvement of your business capabilities at sufficient speeds, minimal risk and cost.

Businesses implementing this approach must:

  • Have a clear vision of how they will development in years to come.
  • Set out well-defined long-term business objectives.
  • Develop an understanding of how each component will look in the future and how it lends itself to the long-term vision.

Using this holistic approach, businesses can embark on an ongoing process whereby a new component is implemented every 6-8 weeks. As such, the Service Factory is a high-paced, focused approach involving fixing, raising and maturing the level of the business, component by component.

Best Practices
Businesses successful in implementing this approach share a number of best practices. A thorough assessment of the business is a good place to begin. Best in class service organisations assess their service factory on Key Performance Indicators (KPIs), Customer Experience, Productivity, etc. versus cross industry best practices. Descriptions of components and reference data for assessments are available. Smart executives do not start from scratch or reinvent the wheel; they use best practice industry standards.

As Europe’s leading Service Management experts, Noventum has developed a comprehensive library of best practice industry standards for components covering all the major capabilities of a Service Factory. They are developed and updated frequently based on our research activities and our work with leading service businesses across the globe.

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