Development of industrial service offerings: a process framework

Abstract

Purpose -The purpose of this paper is to propose a service development process that is adapted to manufacturing companies and to discuss its implications for companies with a traditional focus on product development and product sales. Design/Methodology/Approach -The paper looks at new service development (NSD) literature and argues for a rationale to study NSD processes in a manufacturing context. Next, a generic NSD framework for manufacturing companies is presented. Examples are given based on an explorative multiple case study (10 companies) with in-depth interviews and focus groups. The analysis reveals organizational requirements and other critical factors related to each stage of the NSD process. Findings -A four-stage service offering development framework is presented. Critical aspects of NSD in a manufacturing context are highlighted. The importance of considering both NSD and NPD together is also emphasized. Research Limitations/Implications -The limitations are based primarily on methodology; the case studies focused only on the service organizations of the manufacturing companies studied. Practical implications -Managers need to be aware of the inter-relationship that exists between NSD and NPD and on the specificities of service development in companies where an industrial logic dominates. A number of managerial implications are proposed and discussed. Originality/Value -The study emphasizes the importance of latter stages in NSD, something that has not previously been extensively studied or addressed. In addition, to explicitly discuss NSD in a manufacturing context is novel.

The risks of providing services

“…A main driver for the transition from product-only to product-plus-service is the increased customer demand for services and solutions generated by outsourcing and new possibilities for information-based services (Kindström and Kowalkowski, 2009;Neu and Brown, 2008;Penttinen and Palmer, 2007). A wider range would thus seem to be strategically advantageous because it increases the likelihood that customers will buy something from the provider-at least in the short term.…”

Service Innovation in Industrial Contexts

“…Alternatively, they modify the steps in these stage-gate processes to accommodate some of the service specificities they have experienced in previous NSD projects. Nonetheless, as Kindström and Kowalkowski (2009) report, product firms may fail to commercialize compelling service concepts due to this practice, which resonates with an assimilation perspective on service innovation. While the specific stages in the development process may not necessarily differ, the relative emphasis on each stage in terms of time and resources required generally does differ between NPD and NSD.…”

“…Developing a first draft of a new service concept is rather straightforward compared to a new physical product prototype. The key challenge for many firms is instead to ensure that the sales and delivery organizations have adequate competence and commitment before launching the new service on the market (Kindström and Kowalkowski 2009). Table 1 shows important differences between product development and service development processes.…”

“…This is especially true if the service is continuous or repetitive, such as monitoring or contract-based service. Many companies underestimate the need to invest in the delivery infrastructure and people when developing the service, which potentially results in deteriorated service quality once the service is to be produced and delivered (Kindström and Kowalkowski 2009). Such problems are especially hard if the supplier has only recently moved into the service domain, as the credibility of the overall service initiative may be affected negatively.…”

“…Typically, companies that fail with their NSD projects launch the service before they have ensured that the sales organization is ready to sell services (Kindström and Kowalkowski 2009). For instance, moving from a situation where many basic services are given away for free, in order to land the product deal to actually start to charge and actively sell services, can be a strenuous effort.…”