Adoption of Servitization in product based companies

Table of Contents

1. Introduction

1.1 Problem statement and research questions

1.2 Scope and limitations

1.3 Structure of the thesis

1.4 Research Methodology

2. Servitization as a Competitive Strategy

2.1 Difference between Service and Product

2.2 Definition of Servitization

2.3 Service-dominant Logic

2.4 Product Service-System

2.4.1 Definition of Product Service-System

2.4.2 Categories of Product Service-System

2.4.3 Benefits of Product Service-System

2.5 Drivers of the Servitization

2.5.1 Reduced product margin and increased competition

2.5.2 New technology and innovations

2.5.3 Increased concern about Environment

2.6 Challenges in adoption of Servitization

2.7 Overview of literature review

3. Case Study

3.1 Case Company: Daimler AG

3.1.1 Servitization at Daimler AG

3.1.2 Need and advantages of Servitization in Daimler

3.1.3 Implementation

3.1.4 Impact and growth

3.1.5 Future perspective

3.2 Case Company: Michelin

3.2.1 Servitization at Michelin

3.2.2 Need and advantages of Servitization at Michelin

3.2.3 Implementation

3.2.4 Impact and growth

3.2.5 Future perspective

3.3 Case Company: Philips Lighting (Signify)

3.3.1 Servitization at Philips Lighting

3.3.2 Need and advantages of Servitization at Philips Lighting

3.3.3 Implementation

3.3.4 Impact and growth

3.3.5 Future perspective

4. Summary and common findings

4.1 Servitization in case companies

4.2 Need and advantages of Servitization

4.3 Implementation

4.4 Impact and growth

4.5 Future perspective

5. Guidelines to adopt Servitization

5.1 Guidelines

5.1.1 Shift from product to service mindset

5.1.2 Finding pain-point and designing value proposition

5.1.3 Build capabilities by making collaborations

5.1.4 Organizational changes

5.1.5 Involve client and co-create the value together

5.2 Evaluation of the case companies

6. Conclusion

Research Objectives and Core Themes

The primary objective of this thesis is to explore the evolution of servitization and determine how product-based companies can successfully integrate service-based business models alongside their conventional offerings to enhance competitiveness and generate new revenue streams. The research identifies key drivers for this transition, analyzes inherent challenges, and derives practical guidelines for organizations undergoing this transformation.

• The theoretical foundations and evolution of servitization, including Service-Dominant Logic and Product Service-Systems.
• Economic, technological, and environmental drivers pushing manufacturers toward service-oriented strategies.
• Common organizational and operational challenges, such as the "Servitization Paradox" and the need for cultural shifts.
• Comparative case studies of Daimler AG, Michelin, and Philips Lighting, highlighting successful implementation and impact.
• Strategic guidelines for managing the transition, focusing on mindset shifts, capability building, and customer co-creation.

Excerpt from the Book

Summary of Chapters

1. Introduction: This chapter introduces the concept of servitization as a competitive manufacturing strategy and outlines the problem statement, research methodology, and structure of the thesis.

2. Servitization as a Competitive Strategy: This section provides a theoretical framework by discussing definitions, the distinction between product and service, Service-Dominant Logic, and the drivers and challenges associated with the adoption of servitization.

3. Case Study: This chapter analyzes three successful companies—Daimler AG, Michelin, and Philips Lighting—using a defined framework to understand their servitization strategies, implementation processes, and future perspectives.

4. Summary and common findings: This chapter compares the three case studies, highlighting similarities and differences in their approach, impact, and organizational changes required for servitization.

5. Guidelines to adopt Servitization: This section translates findings from the case studies into strategic recommendations, covering shifts in mindset, capability building, and organizational transformation.

6. Conclusion: The final chapter synthesizes the research findings, emphasizing that successful servitization requires a long-term commitment, cultural change, and strong partnerships to deliver value in use.

Keywords

Servitization, Product Service-System, Service-Dominant Logic, Manufacturing Strategy, Competitive Strategy, Circular Economy, Business Model Innovation, Customer Value, Digital Transformation, Fleet Management, IoT, Mobility Services, Sustainability, Value Co-creation, Operational Efficiency

Frequently Asked Questions

What is the fundamental purpose of this thesis?

The thesis explores how product-based manufacturing companies can remain competitive by shifting from selling products to offering service-based solutions, thereby creating new revenue streams.

What are the primary themes discussed in the research?

The core themes include the definition and evolution of servitization, the shift to a Service-Dominant Logic, the importance of Product Service-Systems (PSS), and the organizational transformation required to manage this change successfully.

What is the main research question?

The research investigates the drivers of servitization, the difficulties associated with adopting this strategy, and how established companies successfully integrate these services while remaining profitable.

Which scientific methods were employed for this study?

The study relies on extensive secondary research and desk research, utilizing company annual reports, internal and external case studies, journal articles, and trade literature to build a comprehensive framework.

What does the main body of the work cover?

The main body consists of a detailed literature review, a comparative analysis of three major case studies (Daimler, Michelin, and Philips), and a set of practical implementation guidelines derived from these experiences.

Which keywords characterize this research?

Key terms include Servitization, Product Service-System (PSS), Service-Dominant Logic, digital transformation, and circular economy.

How does the "Servitization Paradox" affect companies?

The "Servitization Paradox" refers to the difficulty companies face when trying to reach expected financial targets after investing in service business models, primarily caused by the challenge of changing the entire organization's focus from product-centric to service-centric.

What role does the "Circular Economy" play in Philips Lighting’s strategy?

For Philips, the circular economy is a pillar of their business; it allows them to sell "Light as a Service," where they retain ownership of lighting equipment, manage performance, and promote sustainability through reuse and recycling.

Why did Michelin create a separate entity, "Michelin Solutions"?

Michelin created this independent entity to minimize risks and provide a dedicated platform to design, develop, and market innovative services like EFFIFUEL without interfering with their core, conventional tire manufacturing business.