Douglas Morse is a service professional with more than 30 years experience in leading all aspects of global service for Fortune 500 companies. He spent 19 years with IBM and was deeply involved in its services transition. Following his stint at IBM, Morse was sought by other global companies to help build and lead new service strategies. From 2002 to 2008, Morse was with Peoplesoft/Oracle, heading up service operations, service strategy and customer experience for a $7 billion global services business. Most recently, he founded Services Transformation and Innovation Group LLC, a boutique consulting partnership that is focused on transforming the services industry. Morse is currently writing a practitioners guide to the “Service Oriented Enterprise,” a book for operating in the new service economy. He recently talked with Automation World Editor in Chief Gary Mintchell to explain the Service Oriented Enterprise.

Automation World: You talk about a “Service Oriented Enterprise.” Can you describe what you are getting at with that phrase?
Doug Morse: The Service Oriented Enterprise is something that I write about in my upcoming book. The name is derived from the information technology industry term, “service-oriented architecture,” which is a structured methodology for communications between services. SOA defines how two computing entities, such as programs, interact in such a way as to enable one entity to perform a unit of work on behalf of another entity. I believe that for the enterprise (company) of the future to survive in the new service economy and continue to deliver ongoing value to its customers, it will need a new way to operate and organize.

Enterprises of today are largely organized around the Adam Smith theory of organization for the industrial revolution dating back to the 1700s. In his work, “The Wealth of Nations,” he theorized that work was much more efficient if every department specialized and focused on its core area. Hence, we have companies organized into silos that have little incentive to collaborate amongst themselves and even less incentive to collaborate on behalf of their customers. Organizations make decisions every day about how to meet their internal objectives that are vaguely tied to shareholder value or other vague high-level goals. Few, if any, make decisions based on what might make the customer more successful. If you make customers successful, and they feel that level of partnership, you build loyal customers and better brands.

The essence of the Service Oriented Enterprise is the way that organizations will learn to align and collaborate internally and externally to become partners in their customers’ success and to financially share in that success. A quick example might be what we see from jet turbine makers that are now starting to create new engines operating infrastructures—data exchange networks that allow them to offer the jet engines as “power by the hour.” An airline will pay only for the value that the engine provides, which is reliable thrust as needed. Essentially, they are selling a power service and not a capital good. The airline is more successful because the power is delivered as needed with greater safety and even better passenger satisfaction, as delays for unscheduled engine maintenance are greatly reduced.

AW: You discuss going from a “manufacturing-based enterprise driven by products” to a “services-based enterprise driven by customer success.” Sounds like you’re advocating a change in outlook or attitude.
Morse: I am pushing for greater business innovation focused on delivering value rather than just delivering goods that are assumed to have value. There is a current theory that a particular good only has real value when it operates in its intended use. You might buy the most expensive car in the world, but if the car does not have all that it needs to be able to transport you from point A to point B, does it really have any value? If it is too complex to operate or needs special fuel or specialized tools for service, is that a good thing?

Companies build technology because they can, and we see these large consumption gaps between what the technology is capable of doing and what the customer is capable of using. If you just manufacture something that is better, faster and cheaper than anyone else, you might have an initial market for your goods but still fail because the mass market cannot take advantage of all the great things that you built into the product. If you think about how the customer will use the products to make their lives or companies better and focus ...