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PART
one
Strategizing the Promise
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This first section provides insight into the changing world of the service industry. First, we take a look at how the concept of service has evolved and the importance of service in todayâs marketplace. Second, we introduce the concept of collective leadership of all organizational members in a service setting. Finally, we provide a theoretical framework of a new concept, service leadership.
Leadership Insights  The Power of the Strategist (Actavis Group)
Chapter 2Â Â Looking Back on Service
What is service? What managerial implications are emerging in the service context?
Chapter 3Â Â Leading the Service Wave
How can leadership behaviors enhance service success?
Chapter 4Â Â Formulating Strategic Promises
How can strategic application of a collective leadership mind-set enhance an organizationâs adaptability and create a competitive advantage?
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Leadership Insights
The Power of the Strategist
The Strategic Application of Culture
Robert Wessman
Chief Executive Actavis Group
Robert Wessman, CEO of Actavis, one of the worldâs fastest growing generic pharmaceutical companies, talks about his experiences building an international company through an application of strategic mergers and acquisitions and a unique company culture.
Our company had a little over 100 employees 5 years ago. Today we have an army of about 7000 dedicated employees operating in 25 countries. Our market value has grown 50-fold. What we have achieved during those years is obviously something which Iâm personally extremely proud of, and all of us should be proud of, because everybody within our group has been contributing to this success.
We are actually being seen as one of the best companies developing generic products due to our capability to develop high-quality generic drugs faster and cheaper than our competitors. We have very strong sales and marketing units all over the world and we are continuing to build that up to be able to enter into more markets. We have low-cost production with very strategic location of our manufacturing sites.
We are growing very fast by the power of organic growth, but we are also making a lot of acquisitions. We have basically been starting up or acquiring companies every third month now for more than 4 years. Consolidation and integration has been our major challenge in all of this. Consolidation means that every single local unit has a role in the overall strategy of the company. Our people are critical to our growth. We need to have a shared vision and common core values. The culture needs to be clear, simple, and consistent.
Our name, Actavis, was selected because we wanted it to represent some of the key drivers behind our competitiveness and our vision for building a unique company culture that would be extremely difficult for competitors to copy. Actually, the name consists of two Latin words, acta, which means action, and vis, which means strength. Building and maintaining a culture where all organizational members ambitiously seek ways to continuously improve our performance has been our top priority. The energy created by our culture in the past has provided the drive and resourcefulness needed to operate in this highly competitive industry. To strengthen our culture even further, we have launched a program we call âone company, one vision.â
The objective of the project is to raise the awareness of the company values and to identify ways for us to live those values to the fullest every day. The six valuesâambition, flexibility, proactiveness, efficiency, teamwork, and customer careâare the framework that guides our behaviors and actions. They are the common thread between the different locations and operations of Actavis. They bind us together while we use and welcome our differences and local strengths. They identify how we should work in order to achieve Actavisâs ambitious goal of becoming a world-leading generic pharmaceutical company. The project has three main phases, carried out in each country of operation: In the first phase, a survey was conducted to measure current awareness and employeesâ perceptions of how well we all live the values today. In the second phase, workshops were held in each location to discuss and identify ways to raise awareness and improve our practices. In the third phase, the suggestions made in the workshops were implemented, accompanied by local training for employees and managers.
Managers must be role models if our core values are to be consistent and efficient. In addition to raising awareness of our company values and identifying ways of living them in our everyday practices, all our HR and management practices are tailored to those values. The aim is to create a dynamic workplace where proactiveness and accountability for results are high. Recruitment and selection of new staff aim to find ambitious, proactive, and flexible individuals who can efficiently work in teams to provide the level of customer care we seek. Our management team operates on the assumption that everyone has the freedom to act but not to neglect. The best argument at the table winsânot rank. The only victory is to be successful. We expect our management team to lead by example, and therefore our performance appraisal system is focused on the performance of our top 100 managers. Their performance is vigorously monitored, where they are expected to reach ambitious business objectives and deliver bottom-line results. However, it matters tremendously to us how that success is achieved, so we measure regularly other key performance indicators, based on how well they manage through our values and provide our staff with direction, purpose, and motivation. With a clear strategic vision, few rules, and strong values accompanied by a flexible structure, excellent teams of managers and scientists, and a unique mind-set of our staff, we face the future with confidence.
These are my rules of thumb: (1) Select the best people, (2) expect nothing but the best from them, (3) never expect less from yourself, and (4) never take no for an answer.
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2
Looking Back on Service
In manufacturing, a product is composed of hundreds or thousands of components. Similarly, services consist of hundreds or thousands of components. However, unlike a product, service components are usually not physical entities, but rather are a combination of processes, people skills, and materials that must be appropriately integrated to yield the âplannedâ or âdesignedâ service.
âGoldstein, Johnston, Duffy, and Rao111
Objectives
After completing this chapter, you should be able to
- Identify key characteristics of service phenomena
- Understand how service differs from manufacturing
- Understand the importance of service for Western societies
- Realize managerial implications of service organizations
The Importance of Service
Well into the second half of the 20th century, the industrial structure of Western societies was dominated by production of goods from the agriculture and manufacturing sectors. Our domestic production was dependent on steady increases in productivity, and our national resources were used for consumption or production of those goods. However, a new wave was on the horizonâa wave of intangible, value-adding tasks and interactions in unprecedented quantity. This was the rise of the service industry.
We become just by performing just actions, temperate by performing temperate actions, brave by performing brave actions.
âAristotle
By the 1980s, it had become apparent through development of the quality movement in management that the level of service in the United States was lower than desirable. This needed to be addressed, because service was no longer the least important industry sector of the economy.125 In the new economy, corporate focus began to turn toward managing these new service challenges.
In todayâs economy, service has become the foundation on which postindustrial societies are firmly based. The importance of the service industry in Western societies is beyond dispute because it is such a powerful vehicle of economic growth. The vast majority of our labor force works in services, through which it creates over two thirds of our gross domestic product (GDP). Organizations increasingly depend on their level of service to differentiate themselves from their competitors as they seek competitive advantage in the marketplace.
Although the importance of service is undisputed, managing these intangible assets is challenging. Services are designed to make our lives easier and to add value to our being. However, in spite of their importance, services often are major sources of frustration and disappointment to customers, because a mismatch occurs between what was promised or expected and what was actually received. When so much is at stake, why does this occur? The answer to this question lies in the intangible and elusive nature of the service phenomenon itself. The purpose of this chapter is to shed some light on the characteristics of service and to discuss why its very nature has made all of the attempts to apply traditional management and production methodsâwhich were so useful in the era of manufacturing and mass productionâproblematic in a service context.
Service Defined
The characteristics of service make it difficult to define. Service has been defined in a variety of ways, ranging from broad generic definitions encompassing the entire service process to highly specific descriptions of the value created by particular services. For example, services are âeconomic activities that produce time, place, form, or psychological utilities. Services are acts, deeds, or performances that are intangible.â326 The following is a more descriptive definition of service:
Service includes all economic activities whose output is not a physical product or construction, is generally consumed at the time it is produced, and provides added value in forms (such as convenience, amusement, timeliness, comfort, or health) that are essentially intangible concerns of its first purchaser.248
Zeithaml and Bitner326 argue for the importance of making a distinction between services and customer service. Services, as defined in the broadest of terms, include a wider rage of industriesâeach providing a set of services needed or wanted by their customers. Similarly, customer service is usually provided by all industries, but it is the service provided in support of an organizationâs core products. Customers are usually not charged directly for customer service. Typically, those working in customer service positions perform such tasks as answering phones, answering questions, dealing with billing issues, and handling service breakdowns.
It is easy to see that service has different characteristics from goods or tangible products, which are specific objects that are manufactured at one time and then sold or used later. In contrast, service is intangible and perishable. It is created and consumed simultaneously (or nearly simultaneously). This suggests that service cannot be stocked or easily demonstrated beforehand. Contrary to selling tangible goods, change of ownership does not take place as services are being bought and sold. In fact, services consist of acts and interactions that often can be described as social events.218a
The Art and Science of ...
