Business services are intangible value-added activities that companies require to operate efficiently. They are distinct from products and are primarily sold to other organizations rather than directly to consumers. Examples of business services include professional and consulting services, management services, software development, marketing, information technology (IT), travel, warehousing and logistics. These services provide critical functions that support the core business operations of organizations.
A growing number of businesses are experimenting with and succeeding at service-based business models. However, the success of these enterprises depends less on the strength of their operational processes and more on their ability to create and deliver attractive experiences for customers. In addition to the traditional elements that make up a successful business model—an effective operating structure, a compelling value proposition and a well-trained workforce—service-based businesses must be especially adept at managing a range of complex issues.
Unlike product-based companies that have to continuously improve their production processes, service businesses must constantly work to ameliorate the experience of their customers. This requires an important shift in perspective. While product designers focus on the characteristics that buyers will value, service designers must identify and focus on the experiential benefits that differentiate their offering from competitors’.
A successful service business also needs to establish a strong leadership model that balances the competitive autonomy of revenue-generating line managers and the collective value of shared services. Without a strong leadership structure, revenue-generating managers can override the decisions of shared services management, and the overall performance of the organization suffers as a result.