As the world’s major economies have matured, they have become dominated by service-focused businesses. But many of the management tools and techniques service managers use, were designed to tackle the challenges of product companies. Are these sufficient, or do we need new ones?
Let me submit that some new tools are necessary. When a business takes a product to market, whether it’s a basic commodity like corn or a highly engineered offering like a digital camera, the company must make the product itself compelling and also field a workforce capable of producing it at an attractive price. To be sure, neither job is easy to do well; enormous amounts of management attention and academic research have been devoted to these challenges. But delivering a service entails something else as well: The management of customers who are not simply consumers of the service, but can also be integral to its production. And because customers’ involvement as producers can wreak havoc on costs, service companies must also develop creative ways to fund their distinctive advantages.
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