Integrated approach for risk management in servitization decision-making process

Abstract

PurposeThe paper proposes an innovative systemic method helping decision-makers to control servitization transition process, through decision process risk diagnosis.Design/methodology/approachThe proposed method is based on the modeling of decision processes and risk identification and analysis. This method was based on an action-research approach, in close relationship with two companies (SMEs). The paper develops the feasibility experiment at Automelec company.FindingsThe method was successfully implemented and delivered concrete diagnosis results.Research limitations/implicationsThe generalization of the applicability of the method needs to be tested on several different cases.Practical implicationsThe first practical implication is related to the efficiency of the method to help decision-makers in a servitization context to limit uncertainty and get a global view of the weaknesses of their decision-making process, it raises their awareness about servitization transition for their companies. Furthermore, the method also helps to explain the strategy of a servitization transition. It enhances the level of maturity of the decision process of the company, and can be used as a training/learning tool for managers.Social implicationsThe results brought by the research contribute to give the decision-making boards for organization living a servitization transition and especially SMEs a better control over the servitization decision process and related risks, which will increase the economic stability of the company and its vision over long, medium and short horizons. This will bring positive impact on the overall economic and social environment and networks of the servitized SME, and enhance the confidence of coworkers, subcontractors and clients.Originality/valueThe first originality of the paper is related to the new way of considering risk, not only as an analysis criterion but as the central driver in steering a strategic transition for the company, such as servitization. The second originality of the study is about assessing risk occurrence over a decision-making process through decision reliability and decision confidence.

Economic Assessment of Smart PSS Multi-actor Delivery Networks: Case Study in the Heating Appliance Sector

“…The configuration of smart PSS networks during the design and engineering process is submitted to a high level of economic uncertainty and risks (Dahmani et al, 2020, Boucher et al, 2019. In fact, the association of smartness and service orientations opens a large potential of diversity in the way to configure the economic model of a smart PSS offer.…”

9th International Conference on Business Servitization

“…How managers make decisions has become interesting topic for a few servitization scholars (see Cui et al, 2019;Dahmani et al, 2020;Huikkola et al, 2022;Kristensson & Magnusson, 2019). Huikkola et al, (2022) has found that in the era of digitalization and disruption, managers need to make decisions with autopilot, relying on mental shortcuts and "heuristics" that provide fast and frugal way to achieve "good enough" (see Gigerenzer, 2008) or better decisions (Bingham & Eisenhardt, 2014).…”

Unfolding the simple heuristics of smart solution development

“…Managerial decision-making has recently gained interest among servitization scholars (Cui et al, 2019;Dahmani et al, 2020). When firms undergo strategic transitions such as (digital) servitization, managers need to pay special attention to making decisions in risky and complex settings.…”

“…The existing literature on new service/solution development (NSD) has studied the evolution of processes (Panesar and Markeset, 2008), capabilities (Kindstr€ om et al, 2013), routines (Solem et al, 2021), innovation modes (Gremyr et al, 2014), and customer knowledge development (Johansson et al, 2019) among manufacturers engaged in servitization. Although there are studies investigating decision making in servitization (Cui et al, 2019;Dahmani et al, 2020) and NSD (see Kindstr€ om and Kowalkowski, 2009), little is yet known about managerial heuristics and, in particular, "simple rules" that guide how yes/no decisions are made in practice (Huikkola and Kohtam€ aki, 2021). Some previous studies have focused on a rational and slow decision-making approach among manufacturers engaged in servitization, but agile decision-making routines have not been given a particular emphasis (Kristensson and Magnusson, 2019).…”