Operations strategy
Competing Along Five Continua
Industrial operations strategy is broadly analyzed on five performance objectives as shown in the following table. The list is generic and depicts the most commonly observed performance objectives.
Competitive Performance Objectives
Performance Polar Diagram example
Market and industry dynamics influence the choice and importance of performance objectives, and successful strategy entails making the right trade-offs and competing by setting the right priorities along the five continua. In setting competitive priorities it is important to develop a deep understanding of the value customers attribute to competitive factors. As the following table suggests it is important to distinguish between qualifying factors and order winning factors and to develop appropriate metrics for measuring performance.
Finding the Right Balance
While developing appropriate measures of performance is critical to success, practice shows that it typically represent a significant challenge for companies pursuing servitization. Key performance indicators should be adjusted to reflect the growing importance of the service business. As suggested in the text box, service market indicators can be a good starting point for developing KPIs for the service business.
Creating KPIs for your service business
Service performance has traditionally been hard to quantify. Practice shows that developing KPIs for a new service business requires a trial and error approach. A good starting point is to begin creating service market indicators.
- How well are you represented in service markets?
- What is the desired installed base?
- Are you providing service coverage in a customized and flexible way?
- What percentage of your revenues comes from service activities?
- What are your service profit margins?
