Product design engineers and technicians are, of course, no different. Successful manufacturers have built their reputations on the performance and reliability of their products, and their engineers take great professional pride in this. They innovate product features and capabilities, and find new ways to ensure reliability throughout a product's lifecycle. In this way, they have held significant influence over the evolution and innovation of what the company offers to the market.
In today's markets, however, manufacturers are increasingly recognizing that selling a product on a purely one-off transactional basis isn't a sustainable strategy for growth. Markets become saturated, products become commoditised and competitors develop cheap substitutes.
Across a range of industries, more personalized services are increasingly in demand: these may be expressed as new payment models, new ways of sharing risk, or new types of contracts and outcome guarantees. Ultimately, the focus is on the customer — on understanding their needs, their 'job to be done' in much greater depth, and competing to be the provider that best satisfies these needs, by providing a combination of product and service.
Service as a Response
So when the leadership of a company sets its sights on growing profitable revenue by moving towards delivering advanced services such as outcome-based contracts, what does this mean for its product-design engineers?
Thinking about how service has traditionally been positioned and viewed within a product-led organization, it's easy to see that such a shift might encounter reluctance. Engineers design products to last; having to perform a service on the product usually means that in some way (whether through its design, manufacture or use) something has gone wrong. During a recent research interview, a senior manager in manufacturing expressed it to me like this: "It's an emergency situation. Our commitment to the customer has been broken." Viewed this way, the need for service can feel like a failure, and something that is a cost and inconvenience to the manufacturer.
"Engineers design products to last; having to perform a service on the
product usually means that in some way something has gone wrong."
To generate internal buy-in for services, it is important to make clear the difference between reactive service — dealing with an "emergency situation" — and proactive service — doing things for the customer that actively improve their operations, and ultimately their profitability on a daily basis.
Proactive services offer an opportunity to win more business and develop new profitable revenue streams by doing new things for the customer. In turn, they can generate new and different requirements for products. This in itself can be a challenge for product engineers because it fundamentally changes their position in the company's innovation process.
Innovating Through Service-Led Rather Than Product-Led Design
In product- or technology-led companies, the product design engineer is the originator of new ideas. They develop new products or new features and capabilities, around which the rest of the business then builds plans for pricing, marketing, sales and distribution.
Under a services-led strategy, innovation is fundamentally different. It doesn't start with thinking about the product, its features and the new technologies that could be put into it. In a customer-oriented, services-led business, design of services and solutions cannot start with the technology.
Under a services-led strategy, innovation is fundamentally different. It doesn't start with thinking about the product, its features and the new technologies that could be put into it.
Instead, the process of design starts with the customer, and the challenges the customer faces in doing business. The people in the organization who have the closest relationship with customers and the best knowledge about their needs probably aren't the product design engineers. It is more likely they work in sales or service.
Re-calibrating to Customer-Led Innovation
This puts the product engineer in a totally different place in the innovation process. Those designing the service now set the requirements for the product. They develop service offerings, contracts, charging models and price points, and they have certain needs from the product to be able to support this: to last a certain amount of time, with certain scheduled maintenance intervals and complete reliability outside of that to minimize disruption to the customer, and at a certain cost determined by the service designers.
The engineer's role is to design the product to meet the requirements of the service that is being delivered to the customer. Adjusting to this new order can take time and persuasion, but as a senior product designer in Rolls Royce pointed out to me, 'Product designers are naturally-inclined problem solvers'- so present them with the parameters of performance needed for service and they will relish the challenge of designing something to meet the need.
'Product designers are naturally-inclined problem solvers'
Mindset and cultural change is one of the biggest challenges in any strategic organizational transformation, and is often underestimated. Understanding the heritage of how the company has operated traditionally, and the legacy that has for how people view their roles within the organization, is important to changing its culture. Once you understand where people are coming from — and why — you have a good starting point to get them on board with the change.
A previous version of this article first appeared in the October print edition of Field Service Digital, a Servicemax publication.