Prof. Wilhelm Bauer
THE MAN WHO MAKES TOMORROW
As an author, he can look back at over 300 scientific and technical publications. He is also a member of several committees, providing advice to politics and business. He was recently named "the man who makes tomorrow" by the State of Baden-Württemberg. We speak to Prof. Wilhelm Bauer about service and performance.
Prof. Bauer, what is the difference between service as we all know it and industrial service?
Service as we know it is usually centred around the consumer. This can mean a hairdresser or baker, or a service to business customers such as financial services. Industrial services, by contrast, are services that are directly linked to industrial products, such as plants and machinery.
Previously, product and service were two separate things. Provided by two separate suppliers. When and why did they become one?
Customers today expect solutions to complex problems instead of individual products. Services provided alongside products are therefore becoming increasingly important as a competitive advantage. Commissioning, training, support, financing and disposal now play an incredibly important role in purchasing decisions. This issue is not exactly new. At the Fraunhofer IAO, we have been researching it for over 25 years.
Why do people now think that a product alone is not enough to be competitive?
Tough competition means that companies have to make greater efforts to satisfy their customers. Expanding a product range with accompanying services can be a way to create more value and encourage customer loyalty. Digitalisation especially is a strong driving force for these kind of services, as products are "connected" and interact with portals via data. This is creating entirely new business models.
Who do you think produces the best full package of product and complementary service? The manufacturer or the service provider?
There are well-positioned service providers that procure physical products in the supplier market, add value through additional services and then sell them successfully to market. And of course there are manufacturers who now successfully develop and market services related to their product. What's important is that you understand the issue and are proactive. The fast will gobble up the slow.
This appears to point to a competition between the manufacturer and the pure service provider. Who will come out on top? Maybe the customer?
Yes, this is already clear. You can see that the big internet service providers like Google or Facebook understand that the value creation potential in their current core business is limited. They are now investing heavily in entering the world of products. They are buying companies in the logistics sector, in robotics and in building automation. There's the so-called "Internet of Things", which will create an entirely new world of smart service. That is the big challenge for our old economy.
What is the best way for this kind of change to occur in a business? From a supply of individual components to a system provider?
It requires a big effort. The company has to change the way it thinks, adapt its strategies and introduce processes from service engineering. And, of course, they have to bring in new people. It's no longer just engineers and technicians who are required, but also IT specialists, mathematicians and data experts.
Does this mean that in future, the question will no longer be "What would you like?", but "What can I do for you?"
Yes, precisely. The focus is no longer primarily on the product, but on the service that the customer receives. Customers no longer buy the machine, rather a certain quantity of a service. They don't care about how it is created or the technology and services used to do so.
What service could you personally not do without?
There are lots of new services that I consider essential, such as navigation on my smartphone, online banking, my smartwatch. It's fun, you get used to it and can't imagine life without it. Successful business is exactly the same!
He is responsible for research and implementation projects in innovation research, technology management, life and work in the future and smarter cities. He leads a research organisation with over 500 employees. Prof. Wilhelm Bauer is Director at the Fraunhofer Institute for Work Management and Organisation (IAO) in Stuttgart.