Transforming an Organization Toward the Service Business

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The new global economy and business structure requires new changes and transformations in traditional business entities. When, structures and procedures designed to achieve staff empowerment are used, an adequate mix of structure and leadership forces should be present to make up that development and investment of power. In order to meet customers and business demands, organizations transform themselves from traditional product oriented organizations towards service oriented organization. The main changes occur in strategic approaches, marketing goals, structure of bureaucracy, learning and motivation issues. The four main techniques used by organizations are culture, technology, human resources and structure. If leaders expect major changes, an understanding must be developed that change comes primarily when people, not organizations or tools, change. People need to be led to understand the need, to be involved with focusing on a vision, and to clarify the direction they and the organization will be moving. As change facilitators lead and nourish people to change as individuals, they must be supported in every possible way. If a systematic view of change is taken and if staff are seen as a pivotal element of the total system, until staff members are given support in changing their behavior, major changes will not occur (Govindarajan and Trimble 2004).

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Again referring to systems theory, until changes occur in product-oriented organizations, there will be no substantive changes in a company, since one of the key elements of the system, the staff, has not gone through a change. “What distinguishes relationship-centered organizations is their reaction to these mounting challenges and expectations” (Gulati and Kletter 2005, p. 82). To foster growth or change in structure requires many things: understanding and managing change, the investment of major prime resources, creating a productive climate, providing continued reinforcement and support; in short, changing staff is a major investment and requisite to changing a company.

In service-oriented organizations, technology requires skills and knowledge which allow employees to manage and control innovative solutions. Thus, many workers do not have enough knowledge and skills to deal with complex issues and technological processes. In some instances, what took place in past decades in the companies was based on opinion rather than upon a sound data base. As more data are available and as technology enables decision makers to collect and sort information at high speed, there is less need to plan based on opinion. In the future, as more data are stored in technologically accessed data banks and as artificial intelligence becomes a tool that has advanced to the application stage, planners will have even greater information resources upon which they can draw. Present and future planners who will be acknowledged for their success will be those who have the mentality to rely upon data in preference to grasping exclusively at their personal experience with its one degree of freedom (Govindarajan and Trimble 2004). The concepts present in systems planning suggest a logical and orderly process. The process of logic contains a flexibility that allows the planner to adjust the planning effort at any point in the entire effort. Dogmatism is not logical; thus, it does not have a place in the logic of systems planning. Technology calls for people working together who can capitalize on the combined mental capacity of those involved. The mind becomes the basic planning tool. Those who demonstrate the vision, who will take the needed risks, who possess the will, discipline, judgment, and the inclination to use data, who demonstrate the logic, and who know the planning process and the subject or area being planned are the planners most likely to succeed. Value chain becomes customer-centered aimed to meet buyers needs and requirements. “They focus on creating dramatically cost-effective offerings that they then make as differentiated as they can. The one organization, in other words, roots itself in effectiveness and goes in search of efficiency, while the other takes the opposite approach” (Moore 2005, p. 67).

The shift from, product-oriented towards service-oriented organizations is based on new operating principles, learning and motivation (Govindarajan and Trimble 2004). Operating principles is one of the important processes which help the company and employees to progress and prosper. There are organizational factors that clearly structure and distribute opportunities for workers to participate in workplaces. Consequently, the bases for learning in workplaces are not ad hoc or without structure. “Complex-systems companies envy the lean operating efficiencies and huge installed bases of volume-operations enterprises. Because the lines between the markets they serve are blurry, with enough money at stake to make things materially interesting, both sides are drawn to the other’s turf “(Moore 2005, p. 67). The shift cannot be described as concrete—fixed and embedded inextricably in the circumstances of its acquisition. Instead, at least some of what is been learnt in workplaces is transferable to other situations. The shift can be independent and interdependent, with the latter probably best able to be achieved through guidance rather than direct management.

In sum, the shift from product-oriented towards service-oriented organization is structured by many factors. Instead, the kinds of activities engaged in by individuals and the support and guidance they can access in the workplace from other workers will influence the quality of learning at work. In this way, much of the knowledge required for demanding vocational practice can be changed through work


  1. Moore, G.A. 2005, Strategy and Your Stronger Hand. Harvard Business Review. pp.62-72.
  2. Govindarajan, Vijay, Trimble. Chris 2004, “Strategic Innovation and the Science of Learning”, MIT Sloan Management Review. Vol. 45, Iss. 2; p. 67-75
  3. Gulati, R. Kletter, D. 2005, Shrinking Core, Expanding Periphery: THE RELATIONAL ARCHITECTURE OF HIGH-PERFORMING ORGANIZATIONS. CALIFORNIA MANAGEMENT REVIEW VOL. 47,NO. 3  pp. 77-104.

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