Generally, clients buy the firm’s services at this level.
• Capability: A skill possessed by individual members of the firm.
Clients may elect to engage the firm for individual capabilities, but these resources tend to be viewed as staff augmentation.
In the context of these definitions, capabilities are combined with software, knowledge repositories, and other elements to create service offerings, and these service offerings are combined to create service lines.
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Setting Expectations
Before adopting a service creation process, the firm should endeavor to identify its goals for new service creation. Goal setting in the following areas will increase shared perspectives among interested parties and help ensure agreement on the desired end state:
• Level of desired (optimal) formalization such as investment performance hurdles and management reviews
• Financial strategy (growth versus maintaining market share)
• Market positioning strategy (boutique/niche services versus all purpose)
• Organizational strategy (trendsetting versus following, first-in versus reactive approach to service development)
In addition to goal setting, design considerations should be evaluated, for example: (1) the preferred use of a dedicated lab for research and development versus a field-based client-engagement approach, (2) the need for evolution versus innovation of new services, (3) the firm’s ability to build versus buy its position, (4) the balancing of the firm’s delivery structure with its service creation process, and (5) whether local business unit discretionary funding of a given idea is encouraged /permitted.
The Service Creation Process
Regardless of the level of formality introduced into the creative process, four basic steps are involved: propose an idea, commit support, develop and test the market, and launch and grow. Each of these steps is described here followed by Key Deliverables and Key Questions for each step. In addition, an itemized list of suggested work steps is provided on the accompanying CD-ROM.
PROPOSE IDEA.
The objective of this step is to encourage the firm to
seek market-oriented information to support its idea generation, surface the largest number of ideas from across as many areas of the firm as possible, and then identify and focus on those ideas with the most perceived potential.
An essential ingredient for choosing between two or more ideas is gathering information that supports a comparison. Emphasis should be placed on three elements of this step:
1. Using a standardized format to capture proposed ideas
2. Making the idea submission process as straightforward as possible
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3. Adjusting the idea selection criteria (including financial aspects and strategic value) as the firm’s need for new service offerings changes
Key Deliverables
• Market information
• Ideas documented in a standardized and comparable format
• Work plan for commit support step
Key Questions
• What client need does the proposed service offering address?
• How does this offering meet the client need?
• What is the current status of the service offering? (Existing intellectual property and client(s) versus green field)
• How well does this service offering idea match the firm’s current
capabilities?
• Does the firm need to acquire internally unavailable capabilities using an alliance or through other means?
COMMIT SUPPORT. The objective of this step is to commit resources to those ideas that are most likely to succeed. This step begins the conversion of an idea to service offering and will likely be the most difficult to complete adequately. Competing demands between (1) profit-seeking motives to show immediate results and (2) the analyst’s tendency to remain in the research stage indefinitely must be balanced. This is a challenge in professional services firms that tend to emphasize current billability above investment. A real commitment by the firm partnership or management, as well as a culture shift toward investment in future services, will be required in such firms.
Although it often will prove difficult, it is essential that each proposed service offering be detailed with a sufficient level of specification. This includes elements such as individual skills and capabilities, knowledge repositories, and support from software and hardware. Ideas that are elusive to sufficient specification may entail risk that the firm is not willing to accept. Along with each service offering’s proposed contents, a full understanding of the financial aspects (anticipated revenue, cost of service) and strategic benefit of the envisioned service offering is needed to ensure that a comparative analysis is possible.
Key Deliverables
• Service offering specifications
• Initial version of business plan with financial and strategic objectives
• Initial market research to support investment case
• Work plan for develop and test market step
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Key Questions
• How will competing offerings be evaluated and compared?
—Client value proposition
—Fit with existing—firm’s direction, offerings, sales, and delivery
channels
—Prospective market value (required investment)
—Perceived sustainability and expandability
• At what level in the firm should development of a given offering be funded?
• How much of the service offering can be developed internally? What elements of the service offering need to be acquired from outside
resources?
DEVELOP AND TEST MARKET.
The objectives of this step are to develop
the service offering, perform trial engagements with receptive clients, and determine whether rollout of the service offering is desirable. A development team is organized and is tasked with building the service offering based on the specifications created during the previous step. Depending on the complexity of and cost associated with developing the envisioned service offering, it may be desirable to create a prototype. The completed service offering is then test-delivered to a trial client under the auspices of a trial engagement. Trial clients should be chosen carefully. Selection criteria should include the client’s willingness to participate in and provide support for the firm’s efforts. Trial clients should also be willing to provide feedback and ideally possess size, industry, and other attributes that are ref lective of the intended market. Client feedback serves two purposes. First, it provides input about weaknesses in the proposed service offering that can be corrected. Second, feedback provides the basis for documenting prospective clients’ business benefits. Multiple trial engagements may be used to provide useful input such as the realized benefits and associated monetary value of the service offering, sales and marketing requirements for the next step of rollout, and the amount of training and type of support needed to deliver the service offering.
Key Deliverables
• Service offering solution or reasonable facsimile via prototype
• Completed trial engagements
• Client feedback
• Financial and other considerations for rollout
• Sales and marketing materials
• Work plan for launch and grow step
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Key Questions
• What level of completion is required for the proposed service offering so that a target client can effectively evaluate it?
• What criteria should be used for target client selection? How will prospective clients be approached?
• What is this service offering’s value proposition for prospective clients?
Why should a client buy this service? Who in the client’s organization will likely make the buying decision?
• How will the firm ensure that the client’s expectations are met?
• How much and what type of sales and marketing material and support will this service offering require?
• What will be the attributes of a typical client engagement (duration, staffing, revenue)?
LAUNCH AND GROW.
The objective of this step is to begin sales and de-
livery of the service offering to the market. Early client engagements should be viewed as extensions of the trials conducted in the previous step with client feedback actively pursued and acted on. As sales and delivery are optimized, engagement profitability receives added emphasis and attention.
Long-term plans, including enhancement objectives, sales and marketing approaches, and ongoing management structure and responsibility, are developed for service offerings that attain projected growth and profitability targets.
Key Deliverables
• Service offering refinement
• Various plans and deliverables to support marketing, sales, delivery, and training
• Transition of service delivery responsibilities to designated unit
Key Questions
• What steps are needed to ensure adequate deployment of the service offering?
• Are elements of the service offering suitable for intellectual property protection?
Roles to Support the Process
As the firm defines and adjusts its process for new service creation, it is essential to clearly delineate roles. Regardless of the level of formality introduced, accommodation for sponsor and director roles is recommended. The sponsor role is tasked with establishing the firm’s strategy for developing
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new service offerings, laying a foundation with clearly defined responsibilities, providing oversight, and allocating resources. The director role assumes responsibility for the effective execution of the service creation process and oversees financial accountability. In addition to these roles, depending on the formality of the process, provision should be made for mentoring, coaching, and marketing support for those individuals tasked with new service development along with resources to enable the associated development effort.
Intellectual Capital/Property
Development and Protection
As service lines and offerings are created, it is inevitable that intellectual property will be developed. Once developed, each firm should evaluate whether this property needs to be protected by addressing one key question: Does this property warrant the effort required to protect it, or does change occur so rapidly that the need to protect is ameliorated? This section provides a synopsis of other authors’ insights into the fundamental elements of this important topic.