What service transition? Rethinking established assumptions about manufacturers' service-led growth strategies

Abstract

Research highlights• We challenge the established service transition assumption• We identify 3 service growth trajectories: becoming an availability provider; a performance provider; and an industrializer• Firms should generally downsize and standardize solutions, thus being able to offer them to a greater number of customers• Firms concurrently hold a number of system supplier roles rather than transferring from one role to another• We present a strong platform for further examination of theoretical and managerial implications of the study AbstractBoth academics and practitioners emphasize the importance for product firms of implementing service-led growth strategies. The service transition concept is well established, namely a unidirectional repositioning along a product-service continuum-from basic, product-oriented services towards more customized, process-oriented ones-ultimately leading to the provision of solutions. We challenge this service transition assumption and develop alternative ones regarding how product firms should pursue service-led growth.Using 'problematization methodology', and drawing on findings from thirteen system suppliers, we identify three service-led growth trajectories: (1) becoming an availability provider, which is the focus of most transition literature; (2) becoming a performance provider, which resembles project-based sales and implies an even greater differentiation of what customers are offered; and, (3) becoming an 'industrializer', which is about standardizing previously customized solutions to promote repeatability and scalability. Based on our critical inquiry, we develop two alternative assumptions: (a) firms need to constantly balance business expansion and standardization activities; and (b) manage the co-existence of different system supplier roles. Finally, we consider the implications for implementing service-led growth strategies of the alternative assumptions.

Servitization for territorial competitiveness: taxonomy and research agenda

“…The study also concludes that, regardless of the reason underpinning the managerial decision to servitize, there is a positive and significant relation between the implementation of services and firm performance. This result contributes to the current empirical debates on this topicin line with Neely (2008) and Visnjic and van Looy (2013), while challenging Benedettini et al (2015) or Kowalkowski et al (2015) -and is used to justify arguments for public policy that can support the implementation of service strategies among manufacturing firms as means of boosting competitiveness.…”

Service Innovation in Industrial Contexts

“…As Kowalkowski et al (2015) show, this innovation path is however the most challenging to many firms. Prerequisites typically include long-term service experience, profound customer knowledge, product and process data, feedback loops and the ability to learn from existing solutions and lead users, and modularization competence.…”

“…First, however, I will briefly discuss how NSD differs from NPD. The arguments put forward are drawn on field studies of leading producers of capital goods, representing industries such as commercial vehicles, fluid handling and separation, industrial machinery, material handling, and mining equipment (see Kowalkowski et al 2015, for information on the methodologies of 4 the research conducted). Common denominators between the firms are that they have strategically worked with service-led growth and extensively pursued service innovation activities.…”

“…A taxonomy based on the two dimensions -service focus and revenue model -is presented in Figure 2. In general, research on service innovation in product firms takes the perspective on service-led growth as a process, from basic product lifecycle services to more advanced availability services and potentially performance services (Matthyssens andVandenbempt, 2010;Oliva and Kallenberg, 2003 ries are also evident, albeit on a smaller scale (Finne et al 2013;Kowalkowski et al 2015). From an innovation perspective, there is often inherent potential to utilize elements of process-oriented, outcome-based services and solutions, which are usually offered to large clients.…”

“…From an innovation perspective, there is often inherent potential to utilize elements of process-oriented, outcome-based services and solutions, which are usually offered to large clients. As Kowalkowski et al (2015) point out, firms can exploit the knowledge and experience gathered in these more complex, resource-demanding and relationship-intensive offerings, by downsizing them and standardizing various service elements according to service modularity thinking. In doing so, they are able to offer these recombinative innovations in a more cost-efficient manner to a larger and more heterogeneous customer base.…”