[photopress:Mittelstaedt.jpg,full,alignright]Become service-oriented or lose ground. This was the message given at the recent Fourth Annual Executive Forum in Shanghai was part of graduation exercises for the W. P. Carey executive MBA Shanghai.
A panel said part of China’s coming innovation will involve a move from a primarily manufacturing economy to one which is more service-oriented.
Robert E. Mittelstaedt, dean of the W. P. Carey School, said the service industry, now 70-80% of the west’s economy, developed over just 25 years.
China’s own transition from manufacturing to service may well be even faster. Robert E. Mittelstaedt said, ‘Like everything else in China, I’m sure it will proceed very rapidly. Manufacturing cost advantages are not sustained very long’ and China will need to look for ‘ways to create value beyond manufacturing.’
Kui Chen, general manager of Microsoft’s Eastern Pacific and China regions, spoke about the software giant’s in-house tools for service innovation. He asked the self-answering question, ‘Is IT a service industry?’ In fact it is both a service industry and an innovation industry — one with the capacity to ‘change our work style and our lifestyle.’
An innovative culture is even more fundamental to the work of Dr. Edward Tse, vice president and managing partner for China of Booz Allen Hamilton, one of the world’s top three management consulting organizations. He said, ‘We’re not selling any hardware or software, we only “sell” people.
‘The nature of our firm is a knowledge-based organization. We sell our knowledge and ideas. To differentiate ourselves in the marketplace, we consistently, continuously need to develop ideas that work in the marketplace, that turn innovative ideas into real business models.’
More than that, though, Chinese companies that introduce service innovations anticipate the needs of the country’s growing middle class.
Summing up the conference agreed:
China must begin the process of moving from a primarily manufacturing economy to one in which the service industry plays a large role. As China’s economy grows, middle class consumers will demand increasing services to save time.
Adding services to a product-driven business model can increase revenue and build customer loyalty, while making retail businesses more resistant to price undercutting from larger retailers.
The service industry demands innovation in the coming decades; this innovation will come from companies that foster creativity and communication.
Service innovation has many inherent risks from both customers and competitors, but wise management of these risks can lead to increased profits and a stronger long-term position.
If this is the message these new EMBA graduates take back to their company and assist in them being carried out the future of busineess in China looks fine.
Source: WP Carey Knowledge