In knowledge-ba­s­ed industries the notion of and difference between products is increasingly fuzzy. An investment opportunity may be deemed a product, while hard-goods retailers are mentioned as service-providers. Nevertheless, in services, the concept of marketing, including promotions, advertising, branding, packaging, is quite different from that for (manufactured) products. Unlike goods sitting on store shelves, in services industry it is the total value-pr­op­osition such as aesthetics, fro­nt-desk personal interactions, and reliability that are vital deliverables.

Think of this: perhaps one of the biggest satisfactions in life is dealing with a credible and reliable business entity, which one can trust for authenticity of the delivered products and services. This is true for each and every transaction — be it medical treatment, education, banking, automobiles repair, network reliability, parcel delivery or goods refund and exchange. Often managers lose sight that the innovation management process should emerge from business strategy and strategic positioning of the firm. The confusion can be seen in the internal as well as external communications of the company. They attempt to transplant frameworks applicable in manufacturing industries into services, mostly with disastrous consequences. The results sometimes are promotional efforts through silly, misleading, and insipid advertisements. We have seen this in the case of deodorants and fixed deposits where the real delivered value to the consumer is completely missing. Strategy and marketing are often misconstrued as being ‘street smart’, and ‘manipulative’.

The power of brands in ser­vices results from the specific abilities that make up the core competencies delivering real value, and flawless service. It affects the entire organisational value-chain. The sum of any brand is the trust it generates. Trust itself is rooted in fairness and reliability.

In services business, the brand is the firm itself. This manifests in the employees and organisational processes, whi­ch ought to translate into functions such as ease of use, sweet experiences, and consistency. Employee behaviour has a direct bearing on customer (dis)satisfaction. The knowledge, dedication, motivation and reliability of the front-desk employees that interact with the customers become the differentiating factor between two competing services. They represent the company as a whole, and, therefore, the brand. Often service companies invest huge amounts of money in advertising, forgetting this important dimension.

Beyond the human factor, having a first-class infrastructure is the key to delivering services with exceptional reliability. DHL has created international delivery hubs with state-of-the-art vehicles and aircraft to sustain its leadership position. Similarly, in printing business, the two most important criteria for print-shops located in far-off regions include reliability of printing solutions and the quality of after-sales services and remote solutions by the supplier. Heidelberg has been able to create a perception of technological leadership and reliability in this area. This trust has been lasting for almost a century now.

Brand-building in services is related to organisational core values and critical success factors of business. Cornerstone values such as reliability, innovation, and responsible action become the drivers of performance. This manifests itself in various interactions with customers, investors and other important stakeholders. For instance, banking industry is about being trustworthy — customers flock to banks where they think their money is safe (the reverse is also true, in case of loss of credibility money runs out as fast as it ca­me!). This safety aspect must manifest itself in the risk management processes embedded in the systems.

For excellence in services, it is important to proactively tr­ack and respond to the technological and business trends. For example, the power sector in coming years will see that electricity supply systems will be completely networked, wh­ich will automatically manage ma­rket supply and demand. The interlinked networks will revolutionise the role of electricity customers. Kodak is a classic example that brand and distribution alone cannot win markets and consumers’ confide­nce. A 160-year old company, it has just gone under Chapter 11 bankruptcy in the US, and was once the icon of innovation, scale, and power of bra­nds. Co­mparatively, IBM completely transformed itself from a largely computer products-hardwa­re supplier to an essentially co­mpetition-tec­hnology related ‘solutions’ co­mpany and earning most revenues from services.

India missed the window of global leadership in industrial-capital and manufacturing goods that opened in the 1950s and lasted for the next three decades before the Japanese, Chinese and Koreans firmly clo­sed it. In the past two de­cades we have done well in so­me parts of the services businesses, especially banking, tel­ecom, low-end IT, education, and mass transportation. In many other big-ticket services we are woefully short —water, power, retail, high-end shrink-wrapped software, hospitality, tourism and related travel services. However, we have not been able to create any global powerhouse brands in the areas that we’ve done well in. Within the IT-enabled Services (ITeS) space Wipro, Infosys or Satyam had a great chance, which now stands squandered. Indian firms can still do it by making innovative efforts to streamline the processes and professionalise the workforce and offer genuine value-proposition to customers.

(The writer is a professor of strategy and corporate governance, IIM-Lucknow)

arunkumar@mydigitalfc.com