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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 Gerstener s big bet ; at GE it was one of 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 profound 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? Written by a successful businessman who has been at the heart of these changes in several companies and, with case studies from companies like IBM, Unilever, BT, Michelin, Ericsson and Nokia, this book explores the experience of those who have made the transition; and some who have resisted it. It covers in depth subjects such as: strategic focus, change management, service operations, branding a service business, service sales and service marketing. It is the first major work on this subject. This book is a must read for those considering the plunge into service growth and innovation. Even those companies that have already taken the plunge will gain fresh perspective Jim Spohrer, Director, IBM Almaden Research Centre, USA Laurie Young details in very practical ways the reasons and methodologies for change I would recommend this book to every one of my customers. Douglas Morse, Managing Principal for the Services Transformation and Innovation Group LLC I am thrilled with the publication of this much needed book. In my work with businesses around the globe, I find that grappling with the challenge of transforming a company from products to services is a compelling priority for increasing numbers of firms. Stephen W. Brown, PhD, Carson Chair, Professor and Executive Director, Center for Services Leadership, W. P. Carey School of Business, Arizona State University
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Table of Contents

Foreword 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 References Index

About the Author

LAURIE YOUNG is a business man who likes to write. During his career he has held senior positions at BT, Unisys and PricewaterhouseCoopers. He also founded, built and sold a company. As his education includes a postgraduate business diploma and an MBA, he combines practical achievement with sound business thinking. This, his third solo book, concentrates on the transition many companies have to make from the manufacture and sale of products to the provision of services. He first came across this phenomenon when he was director of service marketing at Unisys in the early 1990's but has advised several companies on its implications in later years. They include: Ericsson, Motorola, Hitachi Data systems, Datex Engstrom, and Nokia. Other books by Laurie Young: Marketing the Professional Services Firm (Wiley, 2005) Making Profit from New Service Development (FT/Pearson 1999) With others: Marketing and Scenario Planning (Wiley, 2006) New Strategies for Marketing Information Technology (Chapman Hall, 1996) Competitive Customer Care (Croner, 1994)


"...[uses] the best academic thinking, real case studies and the author's own experience...for anyone who needs to learn fast." (Market Leader, September 1, 2008) "...for companies keen to make the leap, this book outlines useful tools for establishing effective strategies to make the transition." (CEO Middle East, September 2008)

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