Unlike products, which are tangible and usually sold directly to consumers, services have an intangible value and are often provided to other businesses (B2B). Many business services companies provide support for other companies’ operations by performing specific tasks that may be difficult or time-consuming for the company to perform itself. Examples include a logistics company that takes care of shipping and fulfillment for an online retailer, or an IT consulting firm that helps companies with technology infrastructure.
The service economy is important to many countries, and businesses depend on the availability of a wide range of services. Some of the most popular service businesses are banks, airlines, and software companies. In addition to these companies, many municipalities and government agencies provide a variety of services for their citizens.
A successful service company requires a different managerial approach than product businesses. It focuses on building a system that creates and delivers the right mix of customer experience and operational support. This requires a new set of tools that go beyond the traditional tools of financial analysis and operational management.
Unlike product businesses, which can succeed without strong leadership from top executives, successful service companies rely on a shared services model that relies on the strengths of revenue-generating line managers who can exert influence over the competing interests of other divisions. This type of structure requires a leader who can make decisions quickly and confidently. The leader also must be able to balance the competitive autonomy of individual service models with the need to maintain a consistent customer experience and ensure that the company’s strategic goals are met.