Don’t be surprised or angered or embarrassed if customers don’t see your professional services organization (PSO) as possessing some unique capability of high value today. That is the rule, not the exception, in our industry and, thus, presents a big opportunity.
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Core is good
For years, strategists have urged executives to “keep to your core,” “stick to your knitting,” define what you can do really well and try to outsource everything else. This is solid advice that has helped many an organization re-direct its resources and fine-tune its focus to extract both efficiency and effectiveness internally.
This is all well and good, but it is not enough. The downside is that often your core competency is the same as your top competitors’ core competency. So unless your core competency is seen as markedly better externally (in your customers’ eyes, not yours), you have no marketplace differentiation, zip advantage, nada uniqueness. In other words, your organization is a commodity.
Distinct is better
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The key to marketplace uniqueness is not core competencies but distinct competencies — capabilities or attributes that make your company clearly superior to your competitors in things that customers care about (hence, they will pay for them). Distinct competencies are what strategy is all about.
Ideally, distinct competencies are difficult and/or time-consuming to imitate (e.g., patents, industry benchmarks/best practices data, powerful brands). Therefore, they build barriers to entry, dissuading potential newcomers from targeting your market and preventing existing competitors from copying your approach, as the potential value is outweighed by the high cost of time and effort. True distinct competences yield more, better and easier sales and the profitable growth that results. From a big-picture perspective, business focus should strongly favor the development, growth, expansion and protection of your distinct competency, as it is the secret sauce, the get-out-of-jail-free card, the force field that protects organization sustainability.
Professional services as differentiator
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Seminar
Strategies and Tactics to Grow Profitable Services
Dates: Tuesday, October 24 - Wednesday, October 25, 2006
Hours: Day One: 8:30 a.m. - 4:30 p.m. Day Two: 8:30 a.m. - 4:30 p.m.
Meeting Place: Hyatt Regency O'Hare, Chicago, Illinois
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In many product companies, just having a viable professional services capability can differentiate your organization from the competition. Strong professional services improve win rates by embedding more credible horsepower in the pre-sales team. Solid professional services build customer loyalty because they increase product performance. In-depth professional services also allow a business to have a true solutions capability (all solutions are services-led) and gain a larger share of customers’ wallets while building executive-level bonds that resist competitive inroads.
Research supports that this philosophy is catching on, as professional services revenue is growing at two-and-one-half times that of products and traditional product-support services. If your organization does not have robust professional services capabilities, you are not only missing out on profitable growth, you are also making yourself vulnerable to competitive threats.
Distinguishing your PSO
If you and your top competitors already have professional services organizations, how do you drive distinction? Depending on your comparative market position, several opportunities exist for differentiation. Perhaps your depth and breadth of services offerings may be a potential area of strength that your competitors cannot match. Maybe density and scale provide you the best opportunity. There are lots of possibilities.
For many PSOs, however, the best chance for distinction is in creating a superior reputation for relentless reliability — doing it right the first time, every time. In an industry where customers often describe solutions implementation as “hit or miss,” “always a gamble,” “geez, I hope they get it right,” a professional services brand of utter dependability offers incredible promise.
So what do you do?
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Jim Alexander |
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Conduct in-depth market research to learn how your PSO is perceived in the marketplace compared to your competition and learn about one important area of current or potential differentiation. Then begin to see how you can use that differentiator to make your organization stand out.
Build a “plan for distinction,” outlining what is needed (e.g., new skills and knowledge required, alliances created, systems developed, etc.) and the steps to bring about competitive advantage. Most organizations should think in a one-year to three-year time frame. Of course, resources need to be reallocated from other less-valuable projects to support this strategic initiative.
Monitor metrics, manage momentum and master the motivation as your people see the benefits of true competitive advantage.
Remember that distinct competency is only defined from the customer’s perspective — something with substantial value that no one else can provide. It is a difficult status to achieve, but no other objective is more worthy.
About the Author
Jim Alexander is the founder of Alexander Consulting, LLP, a management consultancy that helps product companies create and implement professional services strategies. Alexander is also the U.S. Department of Commerce’s e-business subject-matter expert for President Bush’s Inter-American E-Business Fellowship program and the services pundit for the IBM Global Services 2003 Headlights Program. A services industry thought leader, he has published dozens of articles, white papers, research studies and books, his latest being S-Business: Reinventing the Services Organization (co-authored by Mark Hordes). He may be reached at (239)283-7400 or alex@alexanderconsultingsbiz.com.