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Hunters and Farmers: Unpacking the Silo Syndrome of Product-Service Business Units
KTH, School of Industrial Engineering and Management (ITM), Industrial Economics and Management (Dept.). Universidad Politécnica de Madrid.ORCID iD: 0000-0001-8542-1848
(English)Manuscript (preprint) (Other academic)
Abstract [en]

Industrial firms are increasingly servitizing their offerings by bundling products and services into solutions. This paper argues that a critical factor in the success of servitization is to structurally separate service and product business units. Yet, an integration that is close fitting and cross functional is also required since two businesses share resources and knowledge to a marked degree. This study explores the concept of functional ‘silos’ using pragmatic knowledge boundaries since they constrain the flow of knowledge between business units and contribute to the alienation of the units. Anchored in the empirical study of 10 subsidiaries of a major capital equipment provider, the findings of this study suggest that the product-service business unit silos are driven by the following alienation devices: the pricing process, the sales process, the installed-base factors, and the measurement process. On the other hand, this study identifies two important collaboration devices in the context of servitization: a unified market approach and long-term customer orientation. First of all, senior leaders need to formulate a business unit strategy that is aligned with the corporate strategy and to put in place overarching performance metrics that will dictate priorities and resolve any situations where businesses are seen to act in opportunistic ways. Second, when senior leaders identify the long-term benefit of the customer as a key driver for the firm and transparently present the product and service options to the customer, knowledge flows between business units are enhanced.

Keywords [en]
servitization, business unit silos, pragmatic knowledge boundaries
National Category
Business Administration
Research subject
Industrial Economics and Management
Identifiers
URN: urn:nbn:se:kth:diva-227274OAI: oai:DiVA.org:kth-227274DiVA, id: diva2:1204141
Note

QC 20180525

Available from: 2018-05-07 Created: 2018-05-07 Last updated: 2018-05-25Bibliographically approved
In thesis
1. Navigating Manufacturing Firms to Service-led Business Models
Open this publication in new window or tab >>Navigating Manufacturing Firms to Service-led Business Models
2018 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This thesis tackles an increasingly popular phenomenon – servitization of manufacturing – a growth opportunity for industrial firms through a service-led business model. However, implementing a servitization strategy in industrial firms triggers multifaceted challenges and requires further research.The thesis builds on extensive studies of world leading multinational capital equipment manufacturers that develop a successful service business model.

The dissertation builds on three closely interconnected studies. The first study is an in-depth exploratory case study of a Swedish industrial firm by cross-comparing two servitization initiatives—one that was highly successful, and one that was less so. The second study juxtaposes 10 worldwide subsidiaries of the same Swedish industrial firm to compare and contrast how the servitization process unfolded. This study focuses on the management of service capability development, as well as the management of emerging tensions between the product business units and service business units. The third study extends the research scope by analyzing four industrial firms that successfully developed advanced services (e.g. outcome-based contracts).

This thesis contributes to the servitization literature and business model literature by demarcating three business model archetypes for industrial firms: product business model, service business models and outcome business model. This thesis unpacks the content of the business model elements that underpins business model archetypes as well as the configuration and the relationship between the business model elements.

Place, publisher, year, edition, pages
Stockholm: KTH Royal Institute of Technology, 2018. p. 90
Series
TRITA-ITM-AVL ; 2018:13
Keywords
servitization, service transition strategy, service business models, outcome-based contracts
National Category
Business Administration
Research subject
Industrial Economics and Management
Identifiers
urn:nbn:se:kth:diva-227275 (URN)978-91-7729-770-3 (ISBN)
Public defence
2018-06-01, F3, Lindstedtsvägen 26, Stockholm, 14:00 (English)
Opponent
Supervisors
Note

QC 20180509

Available from: 2018-05-07 Created: 2018-05-07 Last updated: 2018-05-09Bibliographically approved

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