Let’s talk about “change”. It is a simple word yet it has many meanings and many implications. Let’s look at Webster’s definition of Change as transitive verb: “a: to make different in some particular: ALTER b: to make radically different: TRANSFORM. It can be verb, a noun or variances of those. A simple word and yet people rate this as one of their top fears. People will adapt to snakes and spiders or other scary things faster than they can adapt to change.
To reduce the fear factor we may use synonyms like transform, alter or call things as evolutionary or revolutionary. These other words seem more positive to us like only good things will happen to us. Our experience seems to lead us to the fact that when change happens to us, the experience tends to be negative. Why? I think it is because people generally fear what they cannot or do not control. Change tends to happen to you and not by you.
I am certainly not a Psychologist but I do know that quite often the therapy to overcoming phobias is to approach the phobia or fear, knowing that you are in control. I have known pilots that are afraid of flying when they are not in the pilot’s seat. When they cannot control their destiny, in this case the plane, they are not comfortable. If we want to diminish the fear of change in the services economy, we must gain control over change and not just let it be forced on us.
The services industry has changed dramatically in the last 30-40 years. The services economy over took the manufacturing sector in terms of GDP in the last 10 years. Have we been in control of the changes? We would like to think so but in reality the customers have been the drivers of change. The change in customer values has evolved over time and companies, both big and small, have largely been slow to react. The customer value chains have tended to shift from the technology or products to the outcomes that the technology produces. Most often, services play a major role in the successful and useful outcome of the technology in its intended use but organizationally they are not given that level of strategic importance.
IBM is an example of a company that reacted to the market place, changing the services landscape back in the late 1980’s. The change was forced a result of dramatic overall business change. Rather than be afraid of the change, they set out a course to change from a manufacturer of IT systems to a service provider of information systems. Having been a part of that change I can say that few know or remember how revolutionary that cultural change truly was. IBM still sets the standard today in working to create a revolution in the services industry. Most recently they have provided AI as a service and platforms to support IoT and analytics of unstructured data..
The services economy is all about change. As we have seen in agriculture and manufacturing, change happened due to market forces driven by customers. The service economy is looking for the innovations that will transform the industry. If we want to control change, and not let it control us, we need to lead the innovation. Innovation will not be just about automation, knowledge management and driving out costs. To truly innovate we will need to rethink our business models and think about how we deliver technology in a services context. Software-as-a Service ( SaaS ) is a small example of this today. To be a change driver in this economy, companies will have to think more holistically. This means blending and aligning the traditional silos in an enterprise to focus externally on driving customer value. This means front office and back office functions start to blend with success measured in terms of the customer’s measure of their success, not yours. Should we fear reacting to the coming changes or take control? How can something that will benefit your customer and your own company be scary? What you should fear is that your competitors take control change faster than you do. One should never fear success or a simple word like CHANGE.
3 Key points to consider:
- Customers are the drivers of change. You need a tops down and bottoms up line of communication to monitor how your customer create value and apply your expertise to help them.
- Clayton Christiansen refers to the “innovators dilemma” where companies often fear change that may erode current revenues and are prevented from changing from what the “board” wants to what the customers need. (ask Kodak how that worked for them…) Change the conversations from “why we can’t” to what will it take to make customers successful and achieve long term financial benefit.
- Traditional organizations deliver traditional results. Company change is about changing people, process and enabling technologies in synchronized, symbiotic strategy. The Services economy requires a much more horizontal organizational alignment to customer needs than the vertical alignment taught under the Adam Smith school of management.
Author: Douglas Morse is currently Founder of ServTrans LLC, focused on driving a revolution in services through a laser-like focus on customer values through strategic business innovation and transformation. Doug Morse has spent over 35 years in the services industry with leading companies IBM and Oracle. He is currently writing, lecturing and consulting about “The Service Oriented Enterprise” as the future of the services industry.