S-Business: The Global Mandate
by James A. Alexander, Ed.D. and Mark Hordes, Partners/Alexander Consulting

Look around, and what are you starting to hear people talking about at trade shows, at industry conferences, and on the Internet? Everyone is asking about “s-business,” the term that describes the exploding services industry.* New management themes come and go, but s-business is more than a fad or slogan; it is a proven organization strategy that is fast becoming the global mandate for all enterprises concerned with increasing shareholder value.

Giant organizations once thought of as pure product companies, such as IBM and General Electric, are already well on their way along the s-business transition path. And in fact, product-centric organizations have the greatest opportunity to expand revenue and improve margins in adopting and adapting to an s-business strategy.

But it is not only the box organizations that are interested in s-business—professional services firms such as Accenture and McKinsey are dancing the s-business waltz as they partner with other providers to try to meet the ever-expanding, ever-demanding issues and needs of customers and clients. They realize that they have much to lose if they don’t embrace s-business.

It is our firm belief that for organizations to survive and prosper, they must embrace s-business.

S-Business Definition: A client-centered, professional-services-led, solutions-driven enterprise.

Quite a mouthful, but a definition in which every word carries significance. It is especially important to establish and convey a clear meaning in a business environment in which terms such as “total solutions,” “customer-focused,” and “added value” are tossed around like candy in a parade, often with little bearing to their actual usage. Let’s review some comparisons to add a little clarity and precision. This analysis also will demonstrate what it takes to become a high-performance s-business—to make the move from business-as-usual to business-as-exceptional (Figure 1).

From Customer-Focused to Client-Centered

Customers are buyers that are transaction-based. They purchase offerings from selling organizations based on a comparison of features, functionality, and hoped-for benefits against a set of predetermined specifications. This cycle continues for each and every purchase, with the customer first determining requirements and then comparing reactive bids from various selling organizations vying for the business. Previous suppliers who have met earlier expectations may have an edge in the next round of decision-making; however, the transaction-based mindset and the established buying process of the customer remain the same. Under this transaction-based scenario, loyalty is not reality, and selling organizations must deal with customer retention issues under constant pressure to lower prices as “me, too” competitive offerings tout similar specifications for less.

Clients are buyers that are relationship-based. For whatever reason, clients love your offerings, your people, and your organization, and remain loyal over time. (You know these organizations—they keep buying from you time again, even when you mess up.)

Clients are one of s-business’ two cherished assets (the other is their star performers). S-businesses think of clients strategically, and they consciously plan and implement a process designed to turn pre-determined customers into clients through exceeding expectations. Once a client has been created, the s-business works diligently to nurture and expand the ongoing relationship as the long-term value of one client exceeds that of a dozen customers.

Well-cared-for clients can be counted on to do the following:

• Provide an ongoing, high-margin revenue stream.
  
• Be a constant and vocal advocate in the marketplace of the credibility and the value-producing capability of your organization.

No matter what their literature says or their executives espouse, organizations that target customers as the destination for their wares are inwardly focused companies that first try to build a better box and then go looking for organizations who like boxes. Client-centered s-businesses first work hard to listen and then understand the unique issues, needs, and wants of their selected market space. Then they build, align, and deploy capabilities to address those issues and exceed expectations.

From Product Push to Professional-Services-Led

Traditional product companies lead with their products—they have no other choice. For the straightforward transactional sale, in which the selling organization is the efficiency-driven, low-price provider, this is a fine approach. Organizations such as Dell and Wal-Mart prosper following this strategy.

However, for the s-business organization truly committed to addressing the critical business issues of potential clients, products are a secondary consideration. These potential clients demand the upfront needs assessment, problem analysis, and option development that only talented professional services providers can contribute. S-business providers know that if they can effectively lead with their intellectual capital, the product sales and the product support services will follow naturally. This is the first and vital step in account ownership and transforming a customer into a loyal client.

From the Capabilities-Limited Organization to the Solutions-Driven Enterprise

The solutions required to address the big, complex, and difficult problems and opportunities of potential clients are beyond the capabilities of even the largest organizations. Even IBM doesn’t try to go it alone. This has enormous consequences for the s-business organization. The implications are that businesses must look beyond their pre-determined, somewhat controllable, resource-limited organization to more ambiguous, free-wheeling, boundryless, enterprisewide alliances.

This means that every serious s-business organization must master the practice of partnering—another one of those bantered-about phrases that is easy to say but very difficult to do. The building and nurturing of alliances requires a competency not readily found in today’s businesses—that of partnership management. Our work with organizations making the transition to s-business shows that very few organizations have established partnership management as a required core competency, and even fewer have created standards of performance and instituted training to develop these capabilities.

S-business is a strategy, a form of organization, a business mindset whose time has come. The challenges are many, but the rewards are great. Now is the time to transition your organization from business-as-usual to s-business.

* The term s-business was first coined by John Schoenewald, CEO of AFSM International. For more background information on s-business, read the white paper, “S-Business: Defining the Services Industry,” available free at www.afsmi.org.

Jim Alexander and Mark Hordes are partners with Alexander Consulting, LLP, a management consultancy that creates and implements strategies for professional services organizations. They also are authors of the new book S-Business: Reinventing the Services Organization. Contact them at 239-283-7400, ac@alexanderconsultingsbiz.com, or visit www.alexanderconsultingsbiz.com.

S-Business: Reinventing the Services Organization
By James A. Alexander and Mark W. Hordes

S-Business: Reinventing the Services Organization offers a focused, cohesive, and comprehensive approach through which decision makers in product, professional services, and support services organizations can embrace services as a strategic weapon.

Click here, to order this extraordinary book at a 25% discount (offered to the SSPA Community).

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