As in any business, if you don’t get the strategy right, it is darn near impossible to get the marketing right, the selling right, or anything else right—stuff rolls downhill.

My research in the technology industry confirms this criticality and expands it to the realities of being embedded inside a product company. A key differentiator that separates top-performing services organizations within product companies from everybody else is their ability to better align their strategy with the mission and focus of the parent organization. Of course this makes perfect sense, but doing so is a constant challenge.

The repercussions of non-alignment can be quite severe, as there is nothing worse than doing things really well that shouldn’t be done in the first place. For example, maximizing utilization rates can be an important target of a mature, free-standing professional services organization (PSO), but if the appropriate strategy of a PSO is primarily that of supporting the parent company by helping to sell products, the goals may be in conflict to the overall detriment of the company. As the quality folks say, “optimizing one group [the PSO in this case] while sub-optimizing the organization.”

Strategic alignment means determining which of three possible strategic roles of services best supports the overall business mission. Take a look at it from your perspective. Which phrase best describes your company today?

1. Product-enablement. The purpose of the services organization is to make sure that the product works as intended.

2. Product-enhancement. Along with product enablement, the services organization is expanded to contribute to profitable revenue by providing additional value-adding services that impact customer functionality, process effectiveness, and efficiency.

3. Services-led. The company pushes services and pulls products.

Number one, product enablement, is pretty straightforward. The role of services is to support the product, help get the business in pre-sales, help keep the business through successful installation (or implementation or commissioning or start up), and troubleshoot, where needed. Products have been, are, and will be the dominant focus. Enough said.

Number three, services-led, is also easy to understand, as the organization pushes the benefits of services and services-led solutions first, and then pulls along their products. Here we emphasize development of new and unique services offerings, encourage the sales folks (and everyone) to sell services, and manage utilization.

Number two, product enhancement, is the tricky one, being betwixt and between, neither fish nor fowl. In this strategy, senior management wants to have its cake and eat it too. This is a philosophy I admire! However, this is not easy to do. Let me give you an example of the pressure this strategy puts on the services organization. This is a summary of what I often hear from services vice presidents far too often that really exemplifies this challenge:

On Monday I had my review with the CEO, and she assured me that my mission was to support the company by profitably growing services revenue while keeping our customers happy. This was just what I wanted to hear! On Tuesday the vice president of sales stopped by, really concerned about services pricing and the need to ‘value-price’ (code word ‘deep discount’) services to help land strategic business. I laid out my best defense—my mandate to drive business, the need for the sales force to really sell value—but in the end I lost the discussion as I knew I would. Sales trumps services every time. My profit margins just took a hit. Bummer.

Then on Wednesday morning I was called into a crisis meeting and ordered by the CEO (the same person I talked with Monday) to board a Boeing to Boston with my best technical experts to fix the problems at Galactic Enterprises and not to come back until the client was satisfied. Never mind that my people were committed to other projects, and of course, it wasn’t billable; it was for the ‘good of the company.’ Forget about what was said, this is a product company first. I just have to live with it and try and make my numbers any way I can.

Running a product-enablement business requires constant vigilance toward efficiency. Hence, the entire services organization is focused on keeping things lean and low cost. Implementing a product-enhancement strategy requires a focus on effectiveness—balancing the requirements of profitable growth with the necessity of helping to sell products on one hand, and keeping customers satisfied on the other hand. Constant negotiations with sales and other executives are required to deliver on the duality of expectations. Running services in a services-led organization requires emphasis on innovation, as the services component is recognized as the greatest potential value contributor. Emphasis is on the creation of unique services that differentiate the organization from the competition. Marketing and selling push services and pull along the products.

Obviously, each philosophy requires different capabilities and mindsets to optimize performance. So being absolutely, positively sure of the strategic role of your services organization is vital to running it appropriately.