Aligning the Mindset and Capabilities within a Business Network for Successful Adoption of Smart Services

Abstract

This paper explores the synchronized change of mindset and capability within a business network that is driven by the adoption and provision of smart services. The research is implemented as an empirical multi‐case study, and the primary data include interviews and observations in seven globally operating firms. The findings identify two categories of barriers and three categories of alignment needs to successful adoption of smart services. The study combines the institutional theory and dynamic capability perspectives to make three main contributions to the research of service innovation for an improved understanding of the determinants of successful field‐level adoption of smart services. The results show that firms need to align the change of logic and capabilities within the organization and the business network to succeed in the adoption of smart services.

Contemporary Issues and Critical Challenges on Innovation in Services

“…Töytäri et al () explore the impact of digital transformation studying the adaptation of smart services at a systemic, or network, level. The article focuses on the role of dynamic capabilities throughout a service innovation process building on institutional theory and dynamic capability theory.…”

“…Töytäri et al () believe the next step for future research is to understand how connected firms address their alignment needs. They believe research further theorizing on value logic would complement the previously well‐established theoretical foundation of cost logic.…”

Digital Transformation: The Interplay of Explorative and Exploitative Capability Development

“…Thus, we contribute to literature on ambidexterity [33,44] and dynamic capabilities [20,34]. We add to the growing stream of research on digital transformation [15,26,42]. Our aim is to elaborate theory [29] by illustrating the different types of organizational learning activities and cross-functional knowledge search [32].…”

“…Therefore, the firm should be visionary and set the program performance indicators which balance exploration vs. exploitation, short-term vs. long-term, and inhouse development vs. partnerships. Previous literature [15,34,42] has already pointed out how poor alignment between these aspects can lead to considerable tensions in the transformation process.…”

Agile New Solution Development in Manufacturing Companies

“…Servitization (also known by other terms, such as service infusion, service business development, servicizing, tertiarization, service transition, and value migration in the literature; while in this study, we use the general term "servitization" henceforth to describe the business phenomenon where the relative amount of services increases in manufacturing sales) refers to a company's attempt to strategically renew itself by starting to sell an increased number of services and customer solutions to its clients (Tuli et al, 2007). Some researchers have described manufacturers as having gone downstream and becoming closer to the end customer (see Wise & Baumgartner, 1999), while others have claimed that this is reminiscent of synchronized development (Töytäri et al, 2018) that requires development activities in parallel between suppliers and customers (Huikkola et al, 2013). The existing literature has acknowledged how to structure services and solutions within a firm (Oliva & Kallenberg, 2003;Gebauer et al, 2010), how to sell more of them (Reinartz & Ulaga, 2008), what types of capabilities are needed to provide those solutions (Ulaga & Reinartz, 2011;Kindsröm et al, 2013;Huikkola et al, 2016;Visnjic et al, 2018) and what kind of organizational processes are needed to effectively bundle products and services into solutions (Storbacka et al, 2013;Huikkola & Kohtamäki, 2018).…”