From Service Firm to Product Powerhouse: How AI Is Rewriting the Rules
The New Convergence: The Disappearing Border Between Products and Services
The business world is undergoing a fundamental shift: Traditional service companies—consulting firms, marketing agencies, even law practices—are rapidly weaving AI-powered products into their offerings.
This isn’t just an operational change; it’s a cultural transformation that’s forcing organizations to rethink how they work, sell, and deliver value. And it’s challenging business models that have stood for decades.
The Rise of Service-Oriented Entrepreneurship
AI has lowered the barrier to product creation, sparking a wave of service-oriented entrepreneurship.
Firms that once sold expertise and billable hours are now developing proprietary tools, platforms, and automation solutions that scale without adding headcount.
A financial advisory firm builds predictive analytics software for portfolio management.
A marketing consultancy launches an AI-powered content generation platform.
A law practice deploys contract analysis tools or IP automation to enhance client work.
This isn’t just “adding tech” to existing services—it’s creating repeatable, scalable value propositions that can exist independently of client-specific engagements. The result? Hybrid models that blend the personalized touch of services with the scalability of products.
The Cultural Shift: From Advisor to Entrepreneur
The most fascinating part of this transformation is cultural.
Consultants, advisors, and subject matter experts—long defined by relationships and expertise—are now expected to think like product entrepreneurs.
That means:
Risk tolerance at scale
Comfort with uncertainty
Iterative product development
Go-to-market execution
Market positioning
Many consultants already have deep domain expertise and problem-solving skills. But product entrepreneurship is a different muscle. The winners will be those who embrace what’s sometimes called entrepreneurial evolution—leveraging their expertise while building new competencies in product strategy, brand marketing, UX, and tech development.
It’s a mindset shift: from solving one client’s problem to solving a market’s problem at scale.
Restructuring for the Hybrid Future
This evolution requires more than new thinking—it demands new structures.
Traditional service companies run on people, relationships, and project-based revenue. Product companies thrive on technology, recurring revenue, and different success metrics.
The most successful hybrids are adopting strategies like:
Dual Operating Models – Separate but connected divisions for service and product lines, each with its own staffing, KPIs, and growth strategies.
Investment Reallocation – Shifting resources from headcount expansion toward tech development, product management, and market research.
Talent Hybridization – Recruiting people who can bridge service and product mindsets—or upskilling existing talent.
Client Engagement Evolution – Expanding beyond consulting to include licensing agreements, platform subscriptions, and tech-enabled partnerships.
The Universal Question: Product or Service?
Soon, every business will face a core strategic question:
Are we a product company, a service company, or something entirely new?
The most successful won’t pick one lane. Instead, they’ll develop integrated value propositions where:
Services inform product innovation.
Products enhance service delivery.
The consulting firm becomes a technology company that also advises.
The software platform becomes a service experience delivered through technology.
The Future Is in the Blend
This convergence is one of the biggest business model challenges of our time.
Those who master it will create more resilient, scalable, and valuable enterprises. Those who resist risk obsolescence in an AI-enabled economy.
The truth is, this isn’t a choice between product or service—it’s about creating new categories of value that transcend the old boundaries.
The future belongs to companies that can blend human expertise with technological capability, delivering experiences that are both deeply personal and infinitely scalable.
The only real question is: How fast can you adapt?
Doug,
Thanks. This is a terrific article. Spot on.
Looking forward to our next sushi adventure in Tokyo.