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The productivity imperative in services: Introduction

The key to preserving—or increasing—margins in a period of strong growth is to improve productivity.

What does it take to achieve profitable growth in a services business? As a wide range of factors promote a paradigm shift in services, executives across industries must answer this question.

In our previous compendium, “Reimagining how services organizations grow,” we looked at the growth opportunities offered by services. But even as they capture higher revenues from services, many companies have struggled to sustain profitability. The key to preserving—or increasing—margins in a period of strong growth is to improve productivity. In this compendium, we explore the productivity imperative in services through various lenses.

New technologies are catalysts, not disruptions

Companies can capture significant productivity improvements by implementing new technologies, including smarter and more integrated workflow tools, artificial intelligence and machine learning, and augmented reality. At the same time, they can use on-demand staffing to reduce complexity in the workforce. “The coming evolution of field operations” looks at the ways these new technologies are reshaping aftermarket services and how management teams can treat them as catalysts for performance, rather than disruptions.

Repair analytics prevents equipment breakdowns

Repair analytics enables industrial companies to proactively address the health of machines before breakdowns occur, instead of reactively making repairs. By enabling higher machine uptime, fewer service calls, and faster issue resolution, repair analytics allows companies to significantly reduce costs and improve customer experience. “Cracking the code of repair analytics” explores how this approach generates value and what successful companies get right. Identifying and prioritizing valuecreating use cases is essential. Although data and advanced technology are fundamental enablers, success requires adapting the company’s operating model so that stakeholders collaborate to develop solutions to the most important problems.

Analytics-based asset allocation combines quality with speed

To keep costs in check when installing more physical assets, companies need to increase the number of assets covered by their field force. Traditional methods of allocating assets to the field force inevitably sacrifice effectiveness to improve the speed of implementation. Some companies have tried using mathematical formulations, but they have found these complex and time-consuming to use. “Smarter and faster asset allocation: A new solution for increasing coverage and reducing cost” presents an advanced approach. The approach uses an adaptable mathematical formulation that focuses on reducing the drive time of the field force. The adaptability of the formulation eliminates the time-consuming set-up required by previous approaches. Organizations can easily and quickly incorporate new business constraints, enabling them to tailor the approach to their needs.

Project-based services don’t need to be loss leaders

Project-based services generate a high percentage of revenues for companies with large, multi-skilled mobile workforces. However, to get a foot in the door, many companies are willing to take a hit on their quoted margins. It doesn’t need to be this way. “The winning moves in project-based services” discusses how companies can win business even as they achieve higher margins from each project. For many companies this means improving quotations, scope management, revenue management, and resource management, as well as making delivery more effective. It also means applying a different mindset that focuses on earning repeat business through excellence in execution, not low margins.

Lean reduces costs while improving customer experience

Many companies recognize the need to implement lean-management techniques to increase the productivity of their field force. But few do everything they need to do in an orchestrated way. “How lean is your field force—really?” examines the new digital tools and advanced analytics that make it easier to plug the value leakage that flows through the gaps in lean-management practices. Leading companies have applied such advancements as the basis for a five-step holistic “lean journey” in field operations that generates step-change improvements in productivity. Continuous improvement and cultural change enhance the application of new technologies, simultaneously driving down costs and boosting customer satisfaction.


We hope these articles provide a road map for companies as they plan their journey to profitable growth in a services business. Those companies that are the first to master the challenges and reap the rewards will capture a significant advantage.

About the author(s)

Hugues Lavandier is a senior partner in McKinsey's New York office, Senthil Muthiah is a partner in the Boston office, Eric Egleston is a partner in the Dallas office, Florent Kervazo is a partner in the New York office where Guy Benjamin is an associate partner and Tomas Nauclér is a senior partner in the Stockholm office.

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