I suppose it makes sense to round up some of these key learnings, since this is the time of year for "Best of" lists, but I'd rather look forward. On the cusp of the leap year 2008, what should we expect from the next 366 days in smart services? At the risk of repeating past prognosticative pitfalls, I can't help but to offer up the following holiday food for thought:
1. Green is the new black
It's hard to pick up a newspaper these days without reading about another corporation's ostensibly earth-conscious efforts to "go green." Whether or not we have Al Gore to thank for this is open to debate, but the reality is that there are plenty of green-backs to be won in the new green economy. As discussed on this blog earlier this year, law-makers are contributing to this heightened consciousness with legislation aimed at holding corporations more accountable for their impact on the world around them. Increasingly, smart services will figure prominently in this landscape, elevating the responsibility of and opportunity for OEMs to partner with their customers on energy-saving, pollutant-reducing initiatives.
Further, as "clean technology" emerges as its own industry category, smart services will prove invaluable means to efficiently monitor and control the first generations of widely dispersed physical assets needed to provide and sustain alternative energy sources. In fact, I expect to see these new OEMs adopt smart services much more aggressively and unilaterally than have manufacturers in mature categories like industrial, medical, or construction equipment.
2. Unexpected category leaders emerge
In most manufacturing industry categories, one or a few companies stand apart from the rest of the pack, usually determined by a combination of market-share and mind-share. And although they might not admit it publicly, the also-rans take their ques from these category leaders.
What might not be surprising is that I expect 2008 to be a smart services leadership year for companies in a few key verticals, like construction equipment and industrial HVAC. But what might surprise you is that in some cases, the company that emerges as the smart services leader might not be the category’s incumbent.
For some enterprising product manufacturers, smart services represent a growth platform upon which strategies to topple giants can be executed. It’s been said before – even on this blog – that changing from a product-dominant to a service-driven business is a complex undertaking leaving very few, if any segments of the business unchanged. With everything to lose and unsure of what's to be gained, often overly inertia-reliant category market-share leaders might be unable or unwilling to make these changes. Historical B-players on the other hand might just have the agility and gusto required to harness the potential of smart services and chalk up a win for the ages in 2008.
3. Get to know your neighborhood CFO
As corporations increasingly submit to the scrutiny of financial regulators, CFOs are becoming more involved in strategic company decisions earlier in the decision-making process. Line-of-business executives who've grown accustomed to acting first and getting forgiveness later have already begun to change their ways to include financial stakeholders.
This cross-over culture might place some CFOs outside their comfort zones. As such, when financially justifying smart services strategies, service and product execs should prepare to take leadership roles in educating financial management on the appropriate metrics to gauge success. For instance, finance team members might encourage using payback periods and ROI calculations, but these methods are often too simplistic or even misleading. LOB execs should develop deeper relationships with their financial counterparts in order to begin to socialize more comprehensive business case justification tools including NPV (net present value) and scenario forecasting.
All the best for a prosperous... and smart... 2008!
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