by Lionesses of Africa Operations Department
Working as we do across all industries we often fall into the trap of generalising, assuming that what works well in one industry automatically delivers in another. If we group these further and say, split our membership neatly between the Manufacturers (the agricultural, manufacturing and mining worlds) and those in the Service Industry (take a bow, those who have built Consulting, Marketing, PR, Accounting and Law firms), there is so much advice within the great management books that has been written with Manufacturing in mind that cannot jump across the divide into the Service space, but why is this? Milton Friedman said: “The business of a business is business”, so just how different can these industries be?
For a start the Service industry is far more complex than many think. Harvard Business Review talk (here) about those in the industry falling within “…a continuum of sophistication that ranges from ‘commodity’ to ‘rocket science.’ Any position on this spectrum can be profitable, though the forces driving profits change as you move along it—as do the capabilities and skills required. Successful practices understand their true position on the spectrum and know which performance levers to pull.”
Then of course pricing - the cost of manufacture and therefore the price of a widget for a customer is far easier to calculate than the price for your time, effort, energy to say nothing of the decades of knowledge and experience one has built up in your particular field…which at the end of the day comes down to what HBR describe as “…the client portfolio matrix, which separates clients into four categories on the basis of cost to serve and willingness to pay.”
If we drill down deeper within these, we see the complexity further. HBR split the practices into four:
“A commodity practice helps clients with relatively simple, routine problems by providing economical, expedient, and error-free service.
A procedure practice offers a systematic approach to large, complicated problems that may not be cutting-edge but require attention to a plethora of considerations.
A gray-hair practice provides seasoned counsel based on experience.
A rocket science practice addresses idiosyncratic, bet-the-company problems that require deep expertise and creative problem-solving.”
The top practices have in their words “sharp focus” on one of these areas. That does not mean that you cannot move into a different practice as you grow, but then you have to let go of the old, it is focus that makes your name: “A diffuse profile dilutes a practice’s identity and renders it a jack of all trades and a master of none.”
HBR point out that there are four drivers of profitability - margin, rate, utilization, and leverage, which change with each of the practices. The rocket science practice can charge high rates because they have partners best in class, constantly keeping ahead of the knowledge curve, but then you can’t hand the relationship over to one of the juniors as in a commodity practice such as accounting, as customers of the rocket science practice will demand the best of the best. Clients have leverage there. Plus utilisation within a Rocket Science practice is awful as your partners have to spend more time at conferences keeping apace with the latest knowledge, systems and so on, less time in front of customers, so when they get in front of customers, they need to make it pay, unlike the other end of the spectrum, the commodity practice, where if you are not in front of a client constantly billing, then you are fired. You cannot dilute your practice’s identity, even in billing.
So having found your ‘practice’ and now knowing your billable capacity, what next? Manufacturing involves handing over the widget, something tangible in return for cash. The service industry is not this tangible 1on1 relationship, but instead as Thomas A.Stewart and Patricia O’Connell in their book ‘Woo, Wow, and Win: Service Design, Strategy and the Art of Customer Delight’ (here) say it is a ‘together’ relationship. We work together to produce the result.
This is important to remember. Manufacturing can be a single transaction, but in the Service world, we work together to deliver, which in turn delivers the trust. The Lionesses’ mantra - If you want to go fast, go alone, if you want to go further, go together. ‘Fast’ is one widget sold, end of transaction (although we hope not!). ‘Further’ is a deep and deepening relationship working together for decades.
It also means that the customer is not always right. If we look back to many of our more successful service deals and relationships, there has been a great deal of guidance involved, Marketing, PR, Legal, Accounting (“With all due respect, you simply cannot expense your child’s birthday party” kinda advice…), and so on. The guidance built on years of experience of Marketing, PR, etc that enables advice to be given, respected and taken.
But this is also about making the customer ‘right’ for you and in turn you ‘right’ for the customer. Find a customer who pushes the boundaries of what is right and wrong in their finances? Perhaps you would enjoy being their accountant as it tests your abilities and knowledge of the law to the full, but if not (last time we looked accounting was a Science, not an Art!), then they are not the ‘right’ customer for you. In marketing they say that all PR is good PR, but is it really? Is it really good for your brand to be associated with those who don’t have a brand or way of doing things that matches in morality where you want to take yours? Thought not - the customer is not always ‘right’. The Harvard Business Review ‘HBR’ (here) talk about “…the misguided desire to be all things to all people…firms should design their service models for more targeted excellence by being specific things to specific people…Great service companies are, almost without exception, very clever about selecting their customers.”
These truly successful ones then create long term relationships, built together around a great experience. So yes, although this is called the ‘Service’ Industry, that is wrong, it should in fact be called the ‘Experience’ Industry. HBR agree: "Whereas product designers focus on the characteristics buyers will value, service designers do better to focus on the experiences customers want to have.”
If you see this as an Experience, then every interaction you have with your customer will be so guided. ‘Service’ hints at that single transaction - I have ‘served’ you, now pay, but ‘Experience’ takes it all to a higher partnership level.
‘Experience’ also shows you that nothing can be left to chance, from your website; to your manner when you pick up the phone; to the speed you answer your emails and whatsapps; to your following up; to the energy you bring to the room; to the trust you build; to the listening to understand (most listen to answer, not to understand!); even to the professional clothes you wear; to the professional results you then bring and even how you handle and solve mistakes. Every time a customer has an interaction with you, every interaction has to point in the same direction. This consistency is central to the ‘Experience’, done well, this is powerful.
Consistency…“Great service should not require heroics, either on the part of the employee or the customer…It’s about consistency.” – Patricia O’Connell (here). Of course we are all able and willing to go above and beyond for our customers, but that should only be when something has gone wrong (if daily then it points to something being “…wrong with the design”) - the rest of the time we should be able to deliver the service “…reliably, repeatably, scalably and profitably” for you and for the customer.
…On every channel. Every touch point you have must work to the same level of high professionalism, you have to deliver. There is so much change happening in the world (and the world of business is certainly no exception) that you not only have to remain nimble (without forgetting the first point that customers are not always right - you have to stay true to yourself, you don’t have to say ‘yes’ to everything the customer asks or demands), but have the ability to be coherent, be innovative, be consistent, be yourself…
…and be together.
Stay safe.