Transforming Service Into a Source of Competitive Advantage

With more than 20 business units spread around the globe, ElectricCo has long been a leading manufacturer of heavy electrical equipment, industrial automation and related technologies. However, such a mature, sprawling company faced inherent growth challenges. Margins in its traditional equipment business were under pressure, and the company’s siloed structure impeded its growth ambitions. The company believed that Bain, with its deep roots in corporate strategy and keen understanding of organizational design and change management, could help identify promising sources of revenue growth.

It quickly became apparent that ElectricCo needed to look beyond its core business, to promising adjacencies. Services emerged as the most likely source of new revenue. With its substantial expertise in industrial services, the Bain team identified three distinct avenues of service-program growth (product-attached life-cycle services, sector/location-based services, and capability-based services) that, in the aggregate, had the potential to triple ElectricCo’s service revenue within five years, while also improving its EBITDA margin.

While that framework was essential to success, so too was the development of a trio of capabilities that would drive results. ElectricCo had to organize for service, by developing its talent, determining which responsibilities would reside at headquarters vs. regional locations, and implementing the right KPIs and incentives. It also had to have the right IT, R&D and infrastructure in place to meet its new service ambition. And, it had to provide customers with a rich and differentiated service experience, supported by a culture that was always learning how to serve customers better.  

Because the cultural component was so integral to success, the Bain team placed a heavy emphasis on involving far-flung teams from the beginning, to ensure this was not a “headquarters effort,” and it made sure the product side and service side of the business reinforced each other’s work. Bain’s Results Delivery^® approach was a core component of this effort.

ElectricCo rolled out the new strategy in three waves: pilot countries, must-win countries and second-wave countries. Throughout, the team carefully tracked results, placed high-potential staff in key leadership roles, and monitored each service offering to address any challenges—an approach that was essential to making the strategy repeatable across ElectricCo’s many markets.

Ultimately, more than 1,000 ElectricCo employees participated in the development and rollout of the new services strategy, while more than 20,000 were informed about the effort. ElectricCo saw service revenue increase by more than 15% within the first year in markets where the new strategy was deployed, and is on track to realize its goal of tripling its service revenue in a five-year span.

By bringing an “outside-in” perspective to the engagement and encouraging ElectricCo to see the full potential within its services business, Bain helped the company transform services from a unit that got scant attention to an empowered source of sustained economic advantage, one that builds and extends customer loyalty. Today, the company’s services unit is an important career step for ElectricCo employees, and a service culture extends across the entire company.