Business Services: Four Core Elements of a Successful Business

Business services

Business services are the activities that benefit a company but do not result in the sale of a tangible product. Large firms, in particular, rely heavily on these services for production, cost, marketing and other purposes. These services can encompass a wide range of areas, and include everything from food service to cleaning to transportation. A successful business depends on getting these services right.

Service businesses are a significant segment of the economy in many countries and can contribute significantly to GDP. Yet they are often challenging to manage. A service-based organization may resemble a manufacturing company in some ways, but there are critical differences that affect management practice. In my class at Harvard Business School, I teach students to think about these distinctions and consider how the success of a service business depends on getting four core elements right.

1. Managing people.

A successful service business depends on hiring and retaining top talent to deliver value to customers. It also needs to have processes that make it easy for employees to perform their jobs. This includes developing training programs and creating clear standards that everyone in the company must follow. In addition, companies should have systems for accepting online bookings, quoting work, scheduling jobs, and invoicing clients.

2. Optimizing service operations.

Just as a manufacturing plant can’t survive without a strong production system, a service business cannot succeed unless its operations are efficient and effective. This involves identifying and measuring performance across key service processes, including customer interactions. In doing so, a service business must develop a clear understanding of the experiences that matter to its customers, as well as the capabilities and resources needed to produce those experiences.

3. Creating an attractive offering to the market.

As in the case of product manufacturers, a service business will not survive if it offers an unattractive proposition to its target customers. To be competitive, a service business must attract and retain a large, attractive group of buyers by offering an experience that meets their needs, desires and expectations in an affordable manner. This requires a fundamental shift in thinking from product design to service design.

4. Aligning IT with business services.

For a service business to be successful, it must align its IT assets with the needs of its employees and customers. This means developing a process for documenting business needs, establishing IT service catalogs and providing self-service portals to improve employee productivity. It also requires a process for creating an IT service roadmap that prioritizes investment in the most important technology-enabled business services.

In service environments, the actions of employees and other stakeholders can have a major impact on cost and quality. For example, a customer who dithers at a fast-food counter slows down the entire line behind him. A well-managed service business can minimize these effects by ensuring that its operational processes are designed to be effective and efficient. This includes building systems for accepting online bookings, delivering service, communicating with customers, and invoicing clients.