Internal levers for servitization: How product-oriented manufacturers can upscale product-service systems

Abstract

Manufacturing companies that venture into servitization can experience difficulties when upscaling product-service systems (PSS) for further growth. This research study has two main objectives: first, to develop insight into the internal levers to increase firms' servitization capacity, and second, to apply a new methodology to support companies in upscaling PSS. For these purposes, we conduct an exploratory research study of eight manufacturing companies, consisting of both multiple case and participatory action research methods. We find that manufacturers often experience challenges when either designing or rolling out PSS, which varies based on the company's chosen strategy. Additionally, they can be confronted with an organisational logic that hinders PSS upscaling efforts. This research offers guidance to practitioners facing internal barriers for servitization, providing a new method to explore, prioritise and work out concrete PSS-enhancing projects.

What drives product-service integration? An abductive study of decision-makers’ motives and value strategies

“…Particularly decision-makers with cognitive barriers, such as an overemphasis on products' tangible features or an aversion of the risks that often come with providing solutions, prevent firms from servitizing successfully (Gebauer et al, 2005). For example, there is the case of an air-compressor manufacturer that was reluctant to change its current business model out of fear for shareholders' reactions (Coreynen, Matthyssens, De Rijck, & Dewit, 2018). Also, firms implementing the new PSI strategy often experience internal resistance among employees, for instance due to changes in the overall way of working and the need to acquire new skills (Lenka et al, 2018).…”

“…In the servitization literature, this tactic has been referred to as "bootlegging", and it is used by individual managers to overcome structural resistance against servitization in the firm (Lenka et al, 2018). For example, a business manager at a large stainless steel pump manufacturer developed his own sales approach focused on offering customers "peace-of-mind" (Shankar, Berry, & Dotzel, 2009), which was not fully supported by other departments of the organization (Coreynen et al, 2018). However, affiliative people can be ineffective managers because their main concern is being liked.…”

“…For example, an insole manufacturer, on top of producing and delivering customized insoles, offers a range of other services for podiatrists, including software, training and also network opportunities (Coreynen et al, 2017). Another example is the manufacturer of contemporary office furniture that, on top of customizing furniture, also adopted a wide range of services such as advice (e.g., on office set-up), installation, repair and furniture recycling (Coreynen et al, 2018).…”

Theory-Based Design Principles for Digital Service Innovation

“…Service ecosystems also favour open styles of innovation (Chesbrough 2003), in which innovation is not driven in-house by dominant market leaders, but created in cooperation with the providers of other ecosystem components. Service orientation is also prevalent in public sector organisations, though here core technologies have remained relatively stable during the digitisation of service (Coreynen et al 2017). E-government has traditionally focused on providing digital improvements of existing manual paper-based services with some degree of service integration (for instance in the creation of national service portals), but with little room for innovation (Janowski 2015), and minor changes to back-office work systems.…”

Developing a product–service system through a productisation strategy: a case from the 3PL industry

“…Case studies on Xerox (Rothenberg, 2007;White et al 1999), IBM (White et al 1999) and Rolls Royce (Baines et al 2007;Spring and Araujo, 2009) have demonstrated the financial benefits of integrating services with a production offering through a strategy of servitization. However, despite the apparent commercial attractiveness of such strategies, many organisations struggle to successfully implement them (Coreynen et al 2017), a problem referred to as the "service paradox" (Gebauer et al 2005) As the aforementioned research illustrates, most PSS research to date has focused on production companies adding services to create a PSS. Evans et al (2007) go as far as to argue that production companies should be at the heart of any PSS.…”