From Products to Services

During the last thirty years, a wide range of product companies throughout the Western economies have considered moving into or setting up service businesses. Some have rejected the idea after careful consideration, some have wandered into competitive services without any real idea of what is involved and others have deliberately executed a carefully considered strategic manoeuvre. Included in this debate are some of the most famous business names in the western world: Unisys, Ericsson, Michelin, Nokia and HP. For IBM it was Lou Gerstner's 'big bet'; at GE it was one of the former CEO Jack Welch's 'four major strategies' and at General Motors, the financial services arm was its most profitable business for many years.

Yet very little has been published on this rpofound transition. As a result, myths and idiocies abound. Some routinely claim that the 'evolution from products through services to solutions' is inevitable. Others think that manufacturing is being outsourced to China and India while American or European teenagers face a career in hamburger stalls. The truth is much more fascinating.

To succeed in a service business, most functions of a product company need to change. Operations, management, recruitment, finance, sales, new product development and marketing must all be adjusted. So the move into service therefore involves huge risk caused by disruptive and radical change.

What has pushed realistic business people in such widely different industrial sectors to take so large a risk? Does their experience contain lessons or warnings for others? Is the trend likely to continue and affect other parts of the world as their economies develop? Will India, China or other developing economies need to learn how to export service once their manufacturing industries mature?

• Chapter 1: Why products companies consider service business
• Chapter 2: Clarifying the strategic intent of the service business
• Chapter 3: The degree of change needed to set up a service business
• Chapter 4: First base: gaining a clear perspective of service markets
• Chapter 5: Creating the services to be sold in the new market
• Chapter 6: Altering the operations of a product company to provide services
• Chapter 7: Selling services
• Chapter 8: Marketing services instead of products
• Chapter 9: Positioning a product brand in a service market
• Chapter 10: In conclusion

When I started reading this, I was astonished by the US-view and naive outlook on economics. After reading the first chapter, I contemplated just throwing it away… but I continued. And I found out that the chapters afterwards were very good and gave an overview of the obstacles and different strategies, product companies may face when entering into the service economy.

It would have gotten a Very Good rating, if the start of the book hadn't been so terrible.