My services research confirms the critical importance of understanding and addressing the product company culture. I asked this question, which produced the following data:

What was (or is) the single most significant challenge your organization faced (or is facing) in building and selling services?

58% Culture Change

8% Acquiring Capabilities

7% Selling

6% Marketing

5% Senior Management Commitment

4% Obtaining Funding

4% Intra-Service Conflict

2% Project Management

1%

As you see, culture change dwarfs all the other obstacles that must be dealt with for a product company to be successful in building and selling services.

Seriously selling services requires a serious change in thinking about the business. Services now must be viewed as an equal offering of the organization, a true value-adder, the potential differentiator in the marketplace, and an important contributor to profitable revenue. Executives now must view products as customers have for a long time—as commodities that take a secondary role in a total solutions package. Services management and services employees must now vie for the respect that they may not have held before. This is not an easy transition to make, as it flies directly in the face of the tried and true.

Furthermore, certain departments are more threatened than others, as different internal groups, possibly product marketing or engineering, for example, feel that making services more important makes them less important. Transitioning to a more services-friendly, services-are-good-for-our-business mindset confronts internal tradition, established ways of thinking, and embedded power that will work together to try and squelch the selling of services.

Often it is true that the very things that made you successful yesterday are the same things that hinder your success today. Bringing about this services business mind shift is a leadership challenge of the highest order.

GIST: Set the compass heading to north, then stay the course, constantly bringing back the needle in the face of high seas, stiff winds, and changing currents.

Tags: differentiation, selling services

As already noted, big-time change targeted at making major improvements in organization performance is tough. Yet, making the transition to seriously selling services is often on a more difficult order of magnitude. Two factors drive this:

• The Invisible Factor. The first factor is the extreme difference between products and services. Products are tangible; they can be seen, felt, and easily quantified. However, services are intangible; they are invisible to the producer, the seller, and the customer. Evert Gummesson, a services researcher, probably said it the most eloquently: “Services are something that can be bought and sold but can’t be dropped on your foot.” The challenge of dealing with the added complexity of intangibility alone raises the bar.

This distinction has a fundamental impact on how one produces, markets, sells, delivers, services, and measures the performance of services offerings and the success of the services organization itself. What may have worked extremely well in managing a traditional product company often will be ineffective in running the services component. Hence, different characteristics and competencies in people must be sought, different management support systems must be created, and different metrics to reward performance and guide the enterprise must be developed. For example, even if all the recommendations in my book are followed, an estimated one-third of your product sellers will never be successful selling services! This is a significant management challenge.

• The Culture Fights Back Factor. The second critical factor is the significance of dealing with organization culture. Any manager who has been around for a few years understands the power of the company culture to resist change, even change that is necessary for survival. The culture will do whatever it can to maintain the status quo. Aggressively selling services in a product-thinking, product-acting business is a full frontal attack on the existing culture, and the defensive mechanisms of the organization will resist any way it can.

The fundamental problem is that, in most cases, the people running the show got there by being exceptionally good at making, marketing, and selling products. Products are their expertise, and this expertise got them promoted. Their past successes built around products helped create, develop, and nurture the culture—a culture that lives, breathes, and reinforces products-related success while shunning other alternatives to business. In this setting, services were regarded as necessary evils that were tolerated because they were a requirement in supporting products. Service was traditionally a cost center, and services were things negotiated and often given away either to make a sale or to keep a customer happy.

Seriously selling services requires a serious change in thinking about the business. Services now must be viewed as an equal offering of the organization, a true value-adder, the potential differentiator in the marketplace, and an important contributor to profitable revenue. Executives now must view products as customers have for a long time—as commodities that take a secondary role in a total solutions package. Services management and services employees must now vie for the respect that they may not have held before. This is not an easy transition to make, as it flies directly in the face of the tried and true.

Tags: differentiation, selling services