For decades, the importance of services to the global economy has grown steadily while the importance of goods has declined. In fact, services now dominate, making up about 70% of the aggregate production and employment in the Organization for Economic Cooperation and Development (OECD) nations and contributing about 75% of the GDP in the United States.1 It’s only natural, then, that companies are constantly seeking to provide better services, regardless of whether they are in a “pure” service business or in a manufacturing industry that must increasingly rely on its service operations for continued profitability.
However, most improvements to service activities are incremental. Stores stay open longer; product makers establish Web sites with e-commerce functions; airlines, casinos and supermarket chains enhance loyalty card programs. These improvements are useful and indeed necessary, but they are limited in the kind of returns they can produce. Only rarely does a company develop a service that creates an entirely new market or so reshapes a market that the company enjoys unforeseen profits for a considerable length of time.
One such organization is Enterprise Rent-A-Car Company. Enterprise has been strikingly successful: In an industry long led by The Hertz Corp. and Avis Rent-A-Car System Inc., it exploited a new idea to overtake them both. Founded by Jack Taylor in St. Louis in 1957 as a car leasing business,... To read the complete article, login or sign-up using the form below.
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