Business Design & Innovation
Internal leverage for the creation of successful product-service systems
Translation of the available academic knowledge into a usable measuring instrument that helps companies list the internal levers they can use to make the transition to an integrated business logic. This business logic allows companies to successfully create product-service systems. This will enable product-oriented companies in Flanders to continue to distinguish themselves from cost-efficient foreign competitors.
Internal levers
Within the realm of the IWT TETRA project, Antwerp Management School and the University of Antwerp developed a method to guide companies in the search for and development of internal levers for their product-service systems. Flemish manufacturing companies can no longer focus solely on products if they want to stand out from their competition. The increasing international pressure challenges them to create added value for their users. To accomplish this, they should also add service components to their offer.
Many sectors build increasingly more original components around their product. However, research indicates that the internal preconditions to create successful product-service systems (PSS) are often not available in those companies. For example, because the structures haven’t been created from a customer point of view or because of a lack of service culture.
Experience
The cases show that a distinction can be made between companies with limited experience in PSS and companies that are more evolved in that respect. These groups experience different PSS thresholds. Based on observations, a model of three types of thresholds has been identified, further referred to as the PSS triad, namely:
- Insufficient knowledge and/or means to further roll out the existing PSS (type 1)
- Insufficient knowledge to develop new, integrated PSS (type 2)
- A product-dominant logic at organization level keeping the company from developing and implementing PSS (type 3)
It is possible that a combination of thresholds from the PSS triad exists in companies.
During the TETRA project some existing diagnostic tools were used in a holistic manner and experiments were conducted with a new tool to help companies to gain insights. This “PSS strategic rollout toolkit” shows PSS upscale potential in two aspects. Firstly, a distinction was made between exploration and exploitation, which coincides with the distinction between the development of new PSS and rolling out existing PSS. Secondly, the potential (practical) issues, often related to the thresholds of the PSS triad model or a combination of them, can easily be determined.
Insights
The results of the project offer relevant insights for companies and managers with an interest in upscaling their product-service combinations and advisors who want to help businesses in their transition to services.
First, managers and advisors should be aware of the fact that in the case of servitization (the transition towards PSS), several thresholds largely depend on the level of knowledge of and experience with PSS in the company. Additionally, they need to be aware of the type of PSS-strategy pursued by the company. Subsequently, they can use several existing instruments to map out the current as well as the intended company strategy and determine gaps in PSS development, roll-out or logic.
Within the TETRA project a new tool has been developed for companies to close these gaps by creating and defining potential PSS improvement projects. By using this tool with employees with different perspectives within the organization, companies can develop a general business logic that supports PSS throughout the organization. Antwerp Management School puts this tool at the disposal of companies and advisors.
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