DLL is a proud sponsor of the World Servitization Convention, 14-16 September 2020. Recently Lee Thompson of DLL was interviewed by Tim Baines of the Aston Business School. Lee is the Pay-per-use Solutions Leader for Europe and Australasia, and Tim is the Professor of Operations Strategy at the Aston Business School, Birmingham, who are organising the WSC.
Lee shares the expressed view from this interview in the blog below.
The full webcast can be listened to, for free, on ASG’s website.
Servitization, what does it mean?
When searching for ‘What is servitization?’, Google gives me over 112.000 results. So it might help if I start with explaining how I look at servitization. Simply put, Servitization is the combining of assets and related services into one single offering from suppliers to their customers. As a combined offering, it enables suppliers to sell more than just the sum of the parts; instead the offering supplied can be expressed in outcome terms. In other words, the supplier is now supplying whatever it takes to derive the customer’s desired outcome, not just an asset and services to make it go. If a supplier is able to accurately identify what outcome the customer wants, then it can design its servitized offering accordingly. All successful businesses have this in common – they have worked out what the customer wants and designed their offering towards that, and they understand this doesn’t stand still. As needs change so too must the offering.
When it comes to servitising their offerings, I see there being 3 groups of suppliers: the confident, the curious, the confused. While some industries have embraced it (notably printing, transportation and recently healthcare, particularly the NHS), some are aware the market is starting to turn this way and are interested to know more but have simply continued to do more of the old. And some are aware, but could benefit from more guidance on what this means for their business. Why change, what will my servitized product look like, and how I do get from here to there. There certainly seems to be a lot of “I get it, but where do I even start?”
Two major trends in servitization
We’ve already been seeing servitization for a long time. If you look at copiers, I can’t recall anyone ever wanting to sell copiers into the workplace without also signing the customer up for the supply of ink. In fact, DLL was at the forefront of developing the cost-per-copy funding solution back in the ‘80s which brought the product and services into one single payment per click. It has also been commonplace in the supply of vehicles, from trucks down to cars. These always typically go hand in hand with some form of service and insurance pack. So servitization as a concept is not new.