Product companies fail profitability test on move into services

For 30 years product companies in Western economies have been moving into services, but many face years of depressed margins as a result, says Laurie Young in his new book, From Products to Services: Insight and Experience from Companies which have Embraced the Service Economy (published by Wiley, April 08).

In the book, Laurie Young suggests that the myth that such a move is inevitable for product companies has lead many to pursue new service markets without a clear strategic intent. “The change from products to services is profound and involves huge risk which many have underestimated. It has taken newcomers a great deal of time to manage the disruptive and radical change involved and to make real money,” he says.

While the phenomenon involves some of the world’s most famous businesses, little has been published on this fundamental shift of focus. As a result, myths and misinformation abound. Laurie Young, who has been at the heart of these changes in many companies, sets out to record for the first time how product companies evolve into services businesses – including the mistakes they make.

Featuring case studies of leading companies including IBM, Unilever, BT, Michelin, Ericsson and Nokia, the book traces the steps businesses go through to become successful service providers. It features practical tools for tackling strategic focus, change management, service operations, branding a service business, service sales and service marketing.

“Fat margins in existing businesses or relatively sheltered markets have allowed many newcomers with inadequate skills and muddleheaded management to survive. However, with more efficient and effective competition, perhaps from overseas, these businesses will be vulnerable. They need to clarify their strategic intent now and tighten their capabilities around a clear raison d’être before a crisis occurs,” Laurie says.

About the author
Laurie Young is a specialist in customer care and the marketing of services. His career includes senior positions with PricewaterhouseCoopers, BT and Unisys. Before joining PwC, where he oversaw a marketing team of 300 and a budget of $80 million, Laurie Young founded, built and sold a professional services company specialising in services marketing. During that period he advised a number of major international blue-chip organisations on the contribution of services marketing programmes to shareholder value. Laurie has written two other books: Marketing the Professional Services Firm (Wiley, 2005) and Making Profit from New Service Development (FT/Pearson, 1999). He co-authored: Marketing and Scenario Planning (Wiley, 2006); New Strategies for Marketing Information Technology (Chapman Hall, 1996); and Competitive Customer Care (Croner, 1994). Visit www.lauriedyoung.com

ISBN 978-0-470-02668-7;  Hardback;  £29.99

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