Manufacturers forming successful complex business services

Abstract

PurposeThe purpose of this paper was to isolate and characterize organizational factors that enable the formation of high‐performing business services in product manufacturing firms.Design/methodology/approachThis study employed a case research design. In total, 32 depth interviews were conducted with 11 different managers from a Global 100 information technology manufacturing firm. These managers were directly responsible for forming a highly successful business service. All interviews were tape‐recorded, transcribed, and the resulting 500 pages of interview data were open‐coded in QSR NUDIST. A case report was reviewed by study participants to enhance construct validity.FindingsThe general conclusion is that forming high‐performing business services in product manufacturing firms stems largely from managers' ability to create internal alignment among several organizational factors that collectively “fit” conditions in the market.Research limitations/implicationsThis study does not provide the statistical generalization to a larger population offered by a large‐sample study. In addition, all data were collected from individuals who were directly involved in the formation of the focal business service.Practical implicationsThe insights from this study can help managers design within a product manufacturing firm an organization that supports the formation of complex business services.Originality/valueWhile product manufacturers' expansion into services is very prevalent in practice, the development has received sparse academic research attention.

Service infusion as agile incrementalism in action

“…As industries mature, commoditization tends to erode the competitive differential potential of product markets, and manufacturing firms increasingly turn to the provision of industrial services to stay competitive and avoid a deteriorating financial position (Mathieu, 2001;Neu and Brown, 2008;Potts, 1988;Wilson, Boström, and Lundin, 1999). In manufacturing markets, services have often been regarded as an add-on to the core product offering and a necessary evil for future product sales (Robinson, Clarke-Hill, and Clarkson, 2002).…”

Local and regional energy companies offering energy services: Key activities and implications for the business model

“…Several studies identify the need for multiple simultaneous changes in many elements of a business model during a transition toward the supply of more (energy) services (see, e.g., Gebauer et al, 2005;Kindström and Kowalkowski, 2014;Neu and Brown, 2008). Business model innovation, or change, is increasingly also forwarded as an analytical concept in various energy-related research areas, such as sustainability (Rauter et al, 2015), utilities (Richter, 2012), and energy ecosystems (Hellström et al, 2015).…”

“…Gebauer et al, 2005;Neu and Brown, 2008) and of senior management's taking an active leadership of energy services, especially if implementation is to gather momentum and be considered more than a peripheral activity. An energy service manager in one of the case companies explained that "without strong commitment and a clear direction from top management, energy services will never take off.…”

“…Gebauer et al, 2005;Neu and Brown, 2008) and to escape organizational inertia. Key considerations in this, for an energy company, are the very nature of energy services and the fact that a successful service business model will negatively influence the traditional product business model of selling energy, as energy services reduce the customers' need for energy and the associated revenue stream.…”

“…It has been emphasized that companies should establish a clear strategic intent for services as they extend their portfolios by offering them (Gebauer et al, 2005;Neu and Brown, 2008), among other things, to prevent them from being neglected in companies with a primarily product-oriented culture. The strategic intent of one of the case companies was to generate increased revenue and profitability, while another company's initial intent was to retain customers and create loyalty, primarily to secure its core business.…”