Every boater knows the feeling, the queasiness in the stomach that comes the instant you feel you are no longer in control--stretched (literally) between where you have been (the dock) and where you’d like to go (the boat). Docking line in one hand and boat hook in the other, while your feet continue to move in opposite directions, you immediately grasp the meaning of “between the devil and the deep blue sea.”

In this situation, your immediate actions will determine whether you cast-off on your new intended voyage, tie-off back to the firm ground from which you came, or splash-off “down to Davy Jones” (as old sailors would say). Not a pleasant situation.

As a leader of a services organization, you may find yourself with one foot on the dock and one foot on the boat much more often than you’d like. As you work to steer your services organization ahead to accomplish your goals, you may feel a constant current tugging you back to support the different objectives of the product-side of the house. One foot stretched to deliver profitable services projects, the other foot extended (non-billable, of course) supporting product sales or putting out customer fires.

So what do you do to stay on the course of high performance? My latest study of 157 services organizations within product companies provides some guidance to smooth sailing. The high-performing services organizations had this in common:

1. They did a better job of communicating the services organization value proposition both outside in the marketplace and inside the organization. Hence, you need to constantly be communicating what your services organization does and the benefit it produces for all stakeholders. This is a big part of your job.
2. They had a clearer understanding of how their services organization differentiated itself from competitors. Therefore, get the market intelligence you need to focus your services organization on areas it can distinguish itself with clients (deliver more value and make more money).
3. They were much better at aligning their services strategy with the overall business strategy (this is a best practice). So take the time to meet with senior management on a regular basis to force the question, “How can the services organization best help the business accomplish its mission and achieve its goals?” Sure, there will be times when it is necessary to steer a little off your desired heading, but you can plan for this ahead of time and put contingencies in place.

The natural elements (winds of business change, rising tides of the marketplace, and undertows of competition) are always a danger to pulling your services organization off course. Keep both feet on your boat--plan ahead, anticipate trouble, and steer toward your destination with conviction.

Tags: differentiation, selling services, professional services

"Whistling through the graveyard" ... I love this phrase and wish I could take credit for coining it.* However, I first heard it while interviewing a services executive about how his business operates and the strategic role of services. When I asked him what would happen if there was not dramatic change to his company's business model due to major competitive challenges, his response was, "Well, for the few of us left, it would be like whistling through the graveyard--the business would be dead, and all that would be left are memories of what might have been."

I share this stark but vivid picture with you as a warning signal for all of us who are currently "doing OK," "have things under control," "are meeting our numbers" and so on. If our focus becomes an obsession of doing things better, driving efficiencies, or fine-tuning our plans, we are vulnerable to competitors (both old and new) who don't know the rules of our schoolyard and don't care. If we don't have an eye out, before we know it, the sand might be removed from our box, tag switches to dodge ball, and recess becomes study hall.

Of course, you should strive to streamline your organization, drive efficiencies, and do more with less. But the lesson is that continuous improvement is the opposite of innovation, and innovation is what drives dramatic, positive change and blocks the competitive threats of organizations that want our business.

So don't let your milestones become headstones, dedicate 10 percent of your thinking and your resources to innovation--speculating, scheming, and pondering questions like: "What if we give the product away and really focus on selling services? What would customers do if we send champagne as well as roses after screwing up a project? How about we focus on making our intellectual property our competitive advantage and outsource everything else?"

If you proactively balance your existing model of efficiency with a portion of innovation, you'll not only keep your organization alive, but you’ll be whistling a happy tune.

* I can't remember from whom I heard this. If it was you, please contact me, and I'll give you credit for it in a future article.

Tags: differentiation, selling services, professional services, leadership

You gotta give to get…chances are this life principle was engrained into your being from an early age. Societies are created and communities held together by this universal code of humanity. Psychologists call this principle reciprocity--people feel obliged to give back to others who have given to them

Personal Examples

Let me share a personal example. My wife, Jan, and I were invited to dinner at the home of a couple we had recently met. The couple was nice, but not the type of people we wanted to invest the time to cultivate as friends (I hope this doesn’t sound snobby; it isn’t meant that way). However, on the ride home, not ten minutes after saying we didn’t want to expand this relationship, Jan was talking about having them over to dinner, to reciprocate. When I said I wasn’t crazy about it, I felt her anxiety; she (we) had been inculcated from an early age to return favors in kind. It was a hard decision not to reciprocate. Have you had a similar situation?

Here is another personal example I bet you can relate to. Let’s say it is the holiday season and you have sent out all the cards on your list of family and friends. Three days before the holiday you get a card from someone you barely know or a relative you don’t particularly like.* If you are like us, you drop everything, search for another card, fill it out and rush it to the mail. Think about how strong this reciprocity principle is: you drop everything to do a task that by logical definition has no value. If you don’t, it will bother you. This is one strong principle!

Business Impact

The reciprocity principle transcends into the business world as well. Most people first think, “Who can help me here?” Top influencers ask, “Whom can I genuinely help here?” When the other person receives from you something that has personal value without asking, it triggers the need to respond in kind. They will be actively looking for a way to return your kindness. This is a powerful builder of relationships and a great way to influence with integrity.

Personal Business Example

Let me share an example of my own. Whenever I talk to someone whom I feel has an interest in building a better services organization, I ask them if I can give them a copy of my latest book, Seriously Selling Services. No strings attached, they just give me a mailing address and that’s it. The response? People like it! I can hear and feel the tone of the conversation become more positive and more open. Later (and without me asking), I often see that this person has bought more book copies that they give to others in their company. Sometimes I receive a call about speaking, consulting, or training. This is a small investment on my part for such a positive return.

Recommendation

If you want to become better at persuasion, embrace this powerful principle and make it a part of your modus operandi. Before every important conversation, think about what you can provide that the other person will value and do so without being asked and without any strings attached. I think you will be pleasantly surprised.

Must-Have Resource

The principle of reciprocity, along with other research-based influencing concepts, is explained extremely well in the book by Robert Cialdini, Influence: Science and Practice (5th edition). If ethically persuading others is important to you, then this is a must-read.

*Cialdini’s research shows that because of the reciprocity principle people will return holiday cards from people they don’t even know!

If you’re interested in becoming a better influencer, join me in Denver, May 16-17 for Selling Services: Tools and Techniques for Top Performance. This two-day hands-on workshop will help you and your organization sell services easier and faster.

Tags: differentiation, selling services, leadership

Would you like to get more from your current resources?



Would you like to get higher billable hours from your technical talent?



Would you like to gain a distinct competitive advantage?

Join us for…

Leading and Managing Technical Talent:

Turning Technical Experts into Trusted Advisors

One-day Workshop

October 25, 2010

San Diego, CA

2010 Service Industry Summit

Technical experts who achieve trusted advisor status with their customers provide your organization with a distinct competitive advantage. Their value to your organization is immense. Yet, on average, only about five percent of technical talent enjoys this special relationship.

This one-day, highly interactive workshop teaches the critical concepts, practices, methods, and tools required to effectively lead and manage your technical talent. Implementing what is taught will help you increase the number of your trusted advisors and improve the competencies of all your people to add more value for your customers and more value to your organization.



There are two ways to attend:

1. Attend the pre-summit workshop for only $799


2. Attend the workshop and the Summit

LEARN MORE

What Makes this Workshop Unique?

Dr. Jim Alexander, the workshop leader, has conducted five studies (including the industry leading Transitioning Technical Experts into Trusted Advisors) to determine the best practices that separate the very best from all the rest. In addition, he as consulted and trained organizations on this topic for over 15 years. Therefore, everything taught is research-based, yet highly practical—and actionable. Participants will leave this hands-on session motivated to use the information and tools learned to immediately improve the performance of their technical talent.

Who Should Attend?

Any executive or manager who has responsibility for technical talent who interact with your customers and all others looking for ways to improve profitable growth.

What You Will Learn

• The benefits gained from increasing your number of trusted advisors.

• Highlights from Alexander’s latest trusted advisor research.

• What trusted advisors do that others don’t do.

• Where your people are on the Technical Talent Continuum.

• How your people stack up today on the Trusted Advisor Assessment.

• The six trust builders.

• The 10 commandments of trust-based consulting.

• The 12 success levers.

• The four trusted advisor capabilities.

• The six business development roles.

• Core relationship skills.

• Why everyone who touches the customer needs to sell.

• Influencing with integrity.

• Influencing the senior executive.

• Creating value.

• Steps to increasing your people’s business acumen.

• Special issues in managing knowledge workers.

• How to assess your technical force.

LEARN MORE

Tags: managing technical talent, professional services, selling services, training

As in any business, if you don’t get the strategy right, it is darn near impossible to get the marketing right, the selling right, or anything else right—stuff rolls downhill.

My research in the technology industry confirms this criticality and expands it to the realities of being embedded inside a product company. A key differentiator that separates top-performing services organizations within product companies from everybody else is their ability to better align their strategy with the mission and focus of the parent organization. Of course this makes perfect sense, but doing so is a constant challenge.

The repercussions of non-alignment can be quite severe, as there is nothing worse than doing things really well that shouldn’t be done in the first place. For example, maximizing utilization rates can be an important target of a mature, free-standing professional services organization (PSO), but if the appropriate strategy of a PSO is primarily that of supporting the parent company by helping to sell products, the goals may be in conflict to the overall detriment of the company. As the quality folks say, “optimizing one group [the PSO in this case] while sub-optimizing the organization.”

Strategic alignment means determining which of three possible strategic roles of services best supports the overall business mission. Take a look at it from your perspective. Which phrase best describes your company today?

1. Product-enablement. The purpose of the services organization is to make sure that the product works as intended.

2. Product-enhancement. Along with product enablement, the services organization is expanded to contribute to profitable revenue by providing additional value-adding services that impact customer functionality, process effectiveness, and efficiency.

3. Services-led. The company pushes services and pulls products.

Number one, product enablement, is pretty straightforward. The role of services is to support the product, help get the business in pre-sales, help keep the business through successful installation (or implementation or commissioning or start up), and troubleshoot, where needed. Products have been, are, and will be the dominant focus. Enough said.

Number three, services-led, is also easy to understand, as the organization pushes the benefits of services and services-led solutions first, and then pulls along their products. Here we emphasize development of new and unique services offerings, encourage the sales folks (and everyone) to sell services, and manage utilization.

Number two, product enhancement, is the tricky one, being betwixt and between, neither fish nor fowl. In this strategy, senior management wants to have its cake and eat it too. This is a philosophy I admire! However, this is not easy to do. Let me give you an example of the pressure this strategy puts on the services organization. This is a summary of what I often hear from services vice presidents far too often that really exemplifies this challenge:

On Monday I had my review with the CEO, and she assured me that my mission was to support the company by profitably growing services revenue while keeping our customers happy. This was just what I wanted to hear! On Tuesday the vice president of sales stopped by, really concerned about services pricing and the need to ‘value-price’ (code word ‘deep discount’) services to help land strategic business. I laid out my best defense—my mandate to drive business, the need for the sales force to really sell value—but in the end I lost the discussion as I knew I would. Sales trumps services every time. My profit margins just took a hit. Bummer.

Then on Wednesday morning I was called into a crisis meeting and ordered by the CEO (the same person I talked with Monday) to board a Boeing to Boston with my best technical experts to fix the problems at Galactic Enterprises and not to come back until the client was satisfied. Never mind that my people were committed to other projects, and of course, it wasn’t billable; it was for the ‘good of the company.’ Forget about what was said, this is a product company first. I just have to live with it and try and make my numbers any way I can.

Running a product-enablement business requires constant vigilance toward efficiency. Hence, the entire services organization is focused on keeping things lean and low cost. Implementing a product-enhancement strategy requires a focus on effectiveness—balancing the requirements of profitable growth with the necessity of helping to sell products on one hand, and keeping customers satisfied on the other hand. Constant negotiations with sales and other executives are required to deliver on the duality of expectations. Running services in a services-led organization requires emphasis on innovation, as the services component is recognized as the greatest potential value contributor. Emphasis is on the creation of unique services that differentiate the organization from the competition. Marketing and selling push services and pull along the products.

Obviously, each philosophy requires different capabilities and mindsets to optimize performance. So being absolutely, positively sure of the strategic role of your services organization is vital to running it appropriately.

Tags: selling services

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

Business consultants like to talk about adjacency strategy (Zook, 2004), the strategy of building upon an organization’s core competencies in one market to transport those capabilities to an adjacent, but different market space. For example, a company with specialized battery technology designed for the automotive industry could potentially attempt to build upon that battery expertise to develop and sell to the marine market. The same possibilities hold true with services. For example, an energy utilization assessment developed for the automotive industry could be adapted for the marine market. Taking advantage of your past experience and expertise can crack new markets and expand profitable revenue.

GIST: Services adjacency strategy can be a powerful component of any growth blueprint.

To summarize, services have proven themselves to be able to contribute significant value to many, many product companies through profitable growth of both products and services. Properly executed, strong services capabilities can increase customer satisfaction and generate customer loyalty. In addition, for some companies, having the right portfolio of services helps smooth the entry into new markets. Finally, in some cases, having an arsenal of new or better services can create competitive differentiation.

Tags: selling services