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This chapter is from the book


With the mission and target business model in place, the discussion surrounding strategic objectives can begin. On a strategic level, what does your new services organization need to achieve? You are looking at the two- to four-year time frame. Here, we'll take a play from David Maister's playbook. He recognized patterns in the mission statements of stand-alone PS firms. For service firms connected to product companies, we see greater potential for variability at the mission level and for commonality at the objectives level.

Every product-based PS organization must address the following strategic objectives sometime in its life span if it hopes to sustain itself as a viable business unit:

  1. Finalize your mission and business model: As stated, these two items may need to be refined once the service organization is actually operating. The PS senior management team must validate it is executing a mission and a business plan that make sense for its parent product company.

  2. Achieve your financial objectives: Regardless of what the financial objectives are (lose money, break even, make 5 percent operating profit), the new business unit must prove its ability to deliver results. If the management misses this objective, more often than not it will soon be the ex-management team of the PS unit.

  3. Teach your company to sell solutions: If the new PS team cannot transition the company from selling products to selling solutions, the service business will wither on the vine with no effective channel. Incidentally, achieving this objective is the reason many CEOs create an internal PS unit.

  4. Align your capabilities and solutions: A PS unit must offer skills and solutions that are in line with their corporate objectives. This topic is covered in greater detail later in the text. Suffice to say that failure in this objective will lead directly to poor profitability and internal friction.

  5. Implement your processes and infrastructure: As a new business unit, there is a host of business processes to be implemented and infrastructure needs to be met to support the business. Typically, a product company will be missing much of the support infrastructure critical to its services business. Also, the sooner the service team establishes common business practices across its workforce, the more efficient the service employees will become and the more consistent the delivery of services will be.

  6. Implement your customer satisfaction metrics: References are the lifeblood of the services organization. This topic is discussed in more detail in Chapter 3.

  7. Create an employee development program: Services can be differentiated by the unique skills you offer customers or the sophisticated solutions you deliver. Both solutions and skills require employee training and development. If the management team disregards this objective, it will find it extremely difficult to differentiate its service organization from others, now or later.

A new PS organization may have more than these seven objectives listed here. But these are the seven that simply won't go away. If they are not highlighted and addressed, the performance of the service organization will most likely not meet the expectations of this executive management team.

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