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Performance management and servitization
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Qantas engine explosion costs Rolls-Royce $90 million is a news story currently making headlines in Australia. As Rolls-Royce is one of the most famous adopters of a servitization strategy, this incident and its implications raise questions regarding the impact of servitization on performance. While overall there may be good news, such incidents, even if isolated may warrant a closer analysis of the link between strategy, quality and risk.
Is such an incident a major dent in the success of a servitization strategy or a small bump?
In this case, risk management might be a factor. Before its net profit slumped 73% in 2010, Rolls-Royce enjoyed
nearly a decade of increases in annual profits.
It has a clearly defined strategy in place: http://www.rolls-royce.com/reports/2009/businessreview/our-consistent-strategy.shtml
uses a good selection of KPIs: http://www.rolls-royce.com/reports/2009/businessreview/kpi.shtml
and has a risk management framework in place: http://www.rolls-royce.com/reports/2009/businessreview/principal-risks-and-uncertainties.shtml
The strategic direction might be good, some drawbacks may be related to quality and risk management.