Business services are activities that benefit companies without resulting in the production of a physical commodity. Companies often outsource certain tasks that may require expert expertise or specific equipment to business service providers, which include delivery companies, real estate agents, and utility services businesses. These services allow companies to focus on their core work and improve efficiency, safety, cost, and convenience.
In the broadest sense, any activity that a company outsources to another organization falls under this category, and it can be as simple as paying for someone to clean a workspace or providing employee training. Moreover, it can also involve complex contracts and agreements between the two companies, such as when a company hires a consultant to help them with a specific project.
This type of business is different from a product-based business because the value that is created in a service experience varies depending on how the experience is delivered and perceived by the customer. In order to be successful, service business managers must shift their perspective from focusing on the characteristics that buyers will value about their products to understanding what the customers actually want to get out of their services experiences and delivering those things.
In the world of service design, there are four critical elements that are required to build a profitable business: customer value proposition, value creating processes, knowledge management, and infrastructure. Developed as a core teaching module at Harvard Business School, this approach recognizes that the success or failure of a service business depends on the integrated interaction between these four components. Attempting to address any one of these elements in isolation is likely to fail.