Servitization Strategy
Description
Competing through advanced services involves offering products-as-a-service, delivering outcomes for customers, and regularly earning revenue when customers get the results they value. This strategic move towards delivering outcomes can present many challenges for a firm. Part of the Palgrave Executive Essentials series, this book introduces outcome-based business models as Advanced Services Business Models and provides a practical guide on how a firm can innovate these services through a process known as servitization.
Servitization offers businesses a pathway to both improve economic productivity and sustainability. It can create greater value for customers, while also improving resource efficiency and dematerialisation of the supply chain. It has the potential to reshape the industrial landscape for businesses, markets, and consumers around the world. This book is for executives, professionals, and anyone else who is looking for a practical guide to implementing service-based business models or seeking to innovate their business models to focus on services. It functions as a companion for students in executive education courses on servitization, business model innovation, strategy, and operations and should be on the radar of all instructors in those fields.Reviews / Votes
Endorsements"This comprehensive playbook is essential reading for industry executives looking to deliver increased customer value and improve their competitive position through advanced services."
Tom Palmer, Former Group Director of Services Strategy, Rolls-Royce
"This book takes the reader on the journey of why advanced services are so essential to support the long-term strategic needs of the customer and outlines how to develop a successful approach to delivering the required transformation. An essential read; thought provoking with truly relevant insights."
Mike Hulme, Site Managing Director, Alstom
"This book cuts through the maze of complexity of how to compete in the digital world. Every business should appoint their own CSO - Chief Servitization Officer."
Des Evans, Former CEO, MAN Truck & Bus UK Ltd
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Persons
Tim Baines is a Professor of Operations and Information Management at Aston Business School, UK, and Executive Director of the Advanced Services Group. He is an internationally leading scholar on servitization and advanced services and spends much of his time working hands-on with both global and local manufacturing companies to understand its application in practice and help to transform businesses. His previous book, Made to Serve, is a core text in the field of servitization for professionals, students and academics.
Ali Ziaee Bigdelie is an Associate Professor in Industrial Service Innovation at Aston University, UK, and a member of the Advanced Services Group. His interests lie in the organisational change and business model innovation brought about when companies move towards providing outcome-based offerings rather than just selling products on a transactional basis, or servitization. He has worked extensively with multinational companies and SMEs. consulting on the adoption and implementation of advanced services and has published widely on the subject.
Kawal Kapoor is a Research Fellow at Aston University, UK, and a member of the Advanced Services Group, where she works closely with manufacturing firms on servitization strategy. Additionally, she plays a major part in developing practitioner-oriented mini guides, frameworks, and executive workshops on servitization. Her research expertise is in service-oriented value networks and platform ecosystems, digital servitization and IoT, service and outcome-based business models, and diffusion of product and service innovations and her work has been published widely.
Content
PREFACE 3
Chapter 1: Introduction 9
This book 11
Purpose 11
Target 11
Scope 11
Research 12
Structure 13
PART I: WHAT IS SERVITIZATION AND WHAT ARE ADVANCED SERVICES 14
Chapter 2: Servitization, advanced services and outcomes 14
Business model thinking: a powerful lens to understand servitization 14
Services staircase: Understanding value propositions for servitzation 17
Advanced services and outcome thinking 20
Advanced services as outcome-based value propositions 22
Advanced services around products 24
Advanced services based around processes 25
Advanced services based around platforms 26
Risks 27
Chapter Summary 28
Chapter 3: Capturing value for advanced services 30
Foundations of value capture 30
Alignment of incentives across the value network: 31
Competency to manage risk: 31
Innovation pathway openness: 32
Economic value 32
Ownership 33
Subscription 34
Pay-per-use 35
Pay-per-outcome 36
Penalties 36
Blended revenue model 37
Strategic value 38
Knowledge value 39
Relational value 40
Key cost drivers and pricing 40
Chapter Summary 40
Chapter 4: Organising to deliver advanced services 42
Fundamentals of delivering advanced services 42
Systems thinking 42
Services language 43
Customer first 43
Innovation and Responsiveness 44
Brought together 45
Objectives 46
Design 47
Facilities 48
Supply 49
Partnerships 51
Digital 51
People 52
Processes 53
Chapter Summary 54
PART II: WHY SERVITIZATION AND ADVANCED SERVICES ARE IMPORTANT 55
Chapter 5: Broad drivers 55
Fundamentals when evaluating impact 55
Improving economic performance 56
Servitization, revenue and profit 57
Strengthening competitiveness of the firm 61
Defence 61
Growth 62
Icon of practice 64
Building business resilience 65
Servitization as an aid resilience 66
Icon of practice 69
Helping to achieve carbon NetZero and sustainability 70
Net Zero and servitization 71
Icon of practice 76
Pathway to improved productivity 78
Servitization and productivity 78
Icon of practice 81
Building exports, international trade, and emerging markets 82
Servitization exports, international trade and emerging markets 82
Icon of practice 84
Enabling new technology innovations to enter markets 85
Servitization and barriers to market entry 85
Icon of practice 88
Chapter Summary 89
PART III: HOW TO BRING ABOUT SERVITIZATION THROUGH THE INNOVATION OF ADVANCED SERVICES 91
Chapter 6: Exploring the processes of servitizaiton 91
Learning from experience 91
Explaining transformation 95
Stages 96
Exploration 97
Engagement 97
Expansion 98
Exploitation 98
Forces 98
Market centric forces 99
Technology centric forces 99
Value network centric forces 99
Organisation centric forces 100
Dynamics, tipping and exits 101
Pathways 103
Chapter summary 106
Chapter 7: Managing the innovation of advanced services 108
Framing the servitization process 108
Process stages 109
Objectives of each stage. 109
Principle activities for each objective 110
Context and accelerators of the servitization process 111
Senior management empathy for services 111
Customer intimacy 113
Services function 114
Customer demand 114
Digital exploitation 115
Reliable product 115
Applying the servitization process 116
Stepping off 117
Exploration of servitization and advanced services 117
Engagement in the innovation of an advanced service. 119
Expansion to deliver services at scale 120
Exploitation to optimise value creation 121
Chapter summary 122
Chapter 8: Close 123
Recap 123
The future 124
Resources 128
Glossary 128
Acknowledgments 128