34% of manufacturers state lack of internal alignment and cooperation is a huge barrier to servitization. If people don’t see the value of your initiative, or inadvertently work against it, moving forward can feel impossible. The motivations and investment of other teams within your company seem out of your hands, but there are ways to plan and create a strategy for alignment.
Erik Forsberg, Head of Service at Kistler Instrumente, guided us through this process at our recent Aftermarket Business Platform. His strategy allows for support from all sides and keeps your servitization plan on the path to greatness.
Defining the Issue
As businesses attempt to move forward with servitization and a focus on aftermarket business, many of them run into similar problems.
- Decisions Contradictory to Aftermarket
- Product Development Without Lifecycle Perspective
- Sales Loves Selling Steel
- Sales Kills Service Opportunities
- Product Management Focuses on Hardware
- You are Constantly Explaining and Justifying Aftermarket
These problems can be boiled down to the fact that your company as a whole has a laundry list of concerns that do not include servitization. Without alignment within the entire company, these pushes for change will always be an uphill battle.
At the end of the day, you and your team are responsible for internal alignment with your goals. This requires a thorough understanding of your peers’ interests and motivations. While it may seem complex, ultimately there will be no sustainable and consistent development without a strategy for this alignment.
Step One: Assessment
Before you start bringing your strategy and plan to a wider audience, you need to have a full understanding of the goals your servitization plan has. You need to have researched the following
- Market Potential and Attractiveness – How likely is a service-focused strategy to take hold in the current market?
- Service Footprint and Capability – How much work will need to go into preparing your infrastructure for this shift in focus?
- Scalability of Services – How will your servitization grow with the company? What is the ceiling of your capabilities as they stand?
- Installed Base – How many customers are you currently serving and how likely are they to respond to this offering?
- Competitor Landscape – What are your competitors doing in terms of servitization and how successful have they been?
This is especially important if, like Kistler Instrumente, your company has several distinct departments and customer segments. You likely can’t roll out a service-focused strategy for every single segment, so you need to know which departments stand to gain the most from this transformation.
Step Two: Securing Buy-In
Knowing how amazing the servitization process could be for a specific department won’t automatically lead to alignment. You need to have buy-in from different stakeholders to make any meaningful change.
There are several different degrees of buy-in and understanding, and which one of these degrees you’re in will greatly impact the success of your venture.
- Agreeing With Yourself – If no one else understands your ideas and strategy, you are not going to get action out of anyone
- Agreeing With Your Peers – Getting other departments on board with your ideas without the support of management may get the ball rolling, but you will not have the resources you need. You are incapable of the large-scale changes that need to happen
- Agreeing With Management – By going directly to C-level management with your plan, but not having the chance to include other departments in the conversation, you will be left with resources but a lack of general buy-in. This can lead to alienation among your peers
- Agreeing With All Stakeholders – When you can explain your process, strategy, and goals to stakeholders across the board, you’re able to secure the resources you need and the support of the other departments. This is the clearest path to successful change
Having all stakeholders present and on board may seem like a lofty goal, but realistically, you don’t need every single person this change will affect in a room together. Your main objective is to get a variety of different shareholders from across all levels and departments involved.
Step Three: Defining the Approach
Once you have explained the goals to the stakeholders, it’s time to begin defining the approach. This will include several steps, each of which needs to be thoroughly discussed and planned.
- Mission and Vision (Why) – Financial goals, market goals, and strategic goals
- Ambition (What) – Markets, offerings, and potential
- Projects and Execution (How) – The specific programs you want to design and offer customers
- Roadmap (When) – Scenarios, impact vs. resources, do nothing consequence
- Budget (With What) – Creating the timelines for adoption and scope of the project
By including all the stakeholders in these conversations it may feel like you’ve started to lose control. However, when you come in with an analysis and a plan beforehand, your expertise will be able to steer the conversation.
Every step will include your suggestions and data, the stakeholders defining the scope, and management making the final call.
Step Four: Communicating Your Strategic Focus and Ambition
As they are focused on their departments, you will need a clear and easily understandable way to communicate your goals to other stakeholders throughout the process.
Forsberg does this by creating a four-step roadmap with a clear ambition for each step. When you have created this, you can show off what phase of servitization you’re in, as well as what your strategy is to move forward.
- Market Penetration – Existing service products and existing customers. How can you grow what you already do?
- Product Development – New service products and existing customers. How can you develop and extend your portfolio to add value for your customers?
- Market Development – Existing service products and new customers. How can you service competitors or bring in additional markets with your existing services?
- Diversification – New service products and new customers. How can you develop completely new services for new markets?
As you move through these phases, you should be sure that you have exhausted all opportunities in the phase before. Diversification would be a wonderfully lofty goal, but it should not be considered until all other markets and products have been explored.
Along with showing off which phase you’re in, you should also be able to define your ambition. This should be
- Not Using Too Many Measures
The goal will be to target a specified volume at a target profit. This ensures everyone understands what’s happening, why, and what the result should be.
Step Five: Execution
The most important thing to ensure alignment once you have your strategy in place is to understand the environment you’re in and repeat your message as many times as possible. Your company has other objectives, ambitions, projects, and managers, but if you repeat your goals and strategy they can’t allow it to slip out of focus.
Internal alignment, like servitization as a whole, doesn’t happen by accident. You and your team need to have a specific plan for how you will get the rest of the company on board with your changes.
While it sounds difficult, if you can follow these steps and keep your message clear and concise, victory is right around the corner.