In response to competitive and economic pressures, an increasing number of manufacturing firms are adding services to their traditional product offerings. However, companies are confronted with an arduous undertaking, and find it difficult to servitize successfully and profitably. This thesis investigates the transformation that traditional manufacturers undergo to become providers of integrated products and services, a phenomenon known as servitization. Servitization is considered a strategic re-direction of the manufacturing organisation and a major challenge for senior management. The purpose of this study is to provide better understanding of the change that occurs when a manufacturer attempts servitization. The study adopts a qualitative theory building approach to investigate an under-researched phenomenon and a major managerial challenge. It follows a strategy of engaged scholarship to understand a complex organisational problem. The research utilised multiple case studies, action research, and focus groups to tackle a problem with significance to industry. The findings reveal the nature of servitization as a complex transformative change which exposes the manufacturing company to its environment in new ways, and closely interlinks the organisation with a network of stakeholders through new dependencies. The transformation of traditional manufacturers towards servitized organisations is multi-dimensional and goes through eleven dimensions of transformation across the organisation and its network. In addition, thirty nine forces of change were found to influence the outcome of servitization, and were categorised into three sets of change drivers for servitization. The results of the study led to the formation of a model for transformation towards a servitized organisation for use by industry practitioners to roadmap and facilitate their organisation‟s shift towards services. The model represents a novel approach to managing servitization. This research has addressed a literature gap and met an industrial need, and has made a significant contribution to knowledge about the change that traditional manufacturers experience to become servitized organisations.

從顧客觀點探討製造業服務化:從OEM/ODM到OBM / If we look back at the history of Taiwan’s industry, the main characteristic of its development over the past 60 years has been the appearance of OEM / ODMs. However, due to the shrinking profits of OEM / ODMs, manufacturers are seeking new ways to transform themselves. Therefore further research into the increasingly blurred boundaries between manufacturing and services and the concept of “servitization” is essential. Some companies in Taiwan have successfully transformed from a low-profit path by following a value-added path and transforming themselves from OEM/ODM to OBM. This paper focuses on a study of three OBM companies who were once OEM/ODM manufacturers, but expanded into the role of “customer-oriented services” and explored their capability to transition between OEM/ODM and OBM. This paper uses a case study methodology and research on these three OBM companies. It will investigate two findings. Firstly, when transforming from OEM/ODM into OBM the process of servitization, is made up of four stages that represent the different roles of the end customers in the process of servitization. Roles like imitation, exploration, inspiration, and aspiration. Secondly, when transforming from OEM/ODM into OBM in the process of servitization, there are four main capabilities needed to develop; customization capability, new value proposition, organization redesign, and new trading norms. This thesis seeks to make two specific contributions to the discussion of servitization. Firstly, this research will concentrate on consumer goods, rather then capital goods like with previous literature concerning servitization and focusing less on the changes from products to “Back-end services”. Secondly, it will seek to give manufacturers with a desire to develop into an OBM company clear paths to follow. So manufacturers can adjust their own strategies to the specific situation and environment they face.

Esta dissertação propõe a elaboração de uma análise das consequências da combinação de produtos e serviços na gestão do processo de desenvolvimento de produtos. Atualmente, pode-se constatar que as empresas de manufatura têm aumentado o valor estratégico dos serviços em seus portfólios. Contudo, os serviços são desenvolvidos com processos empíricos ou, quando planejados junto ao processo de desenvolvimento de produtos, em geral, são pensados somente em suas fases finais. Embora possa se constatar que existe forte relação de interdependência entre os serviços e os produtos. Assim, a integração da gestão do processo de desenvolvimento de serviços ao processo de desenvolvimento de produtos é um desafio para as empresas. Com base em revisões de literatura e estudos de caso, foram desenvolvidos neste trabalho duas ferramentas e um framework para auxiliar as empresas na gestão integrada produto-serviço. O Sistema de Avaliação do Valor Estratégico (SAVE) mensura o valor estratégico dos itens do portfólio e a Matriz de Configuração Produto-Serviço (MCPS) revela as interdependências do portfólio e as características gerais do processo de desenvolvimento das empresas. Finalmente, o framework resultante orienta os gestores na operacionalização da gestão do Processo de Desenvolvimento Produto-Serviço (PDPS). / This dissertation proposes an analysis of the product-services integration consequences in the products development process management. As a result, the strategic value of services in manufacturing companies‘ portfolio was found in an increasing tendency. However, services are normally developed using empirical methods or planned exclusively in the final stages when designed within the product development process, even if there is a strong interdependence between the service and the product. Thus, the managerial integration of service and product development processes is a challenge for companies. Based on literature review and case studies, two tools and a framework are presented in order to help companies overcome this difficulty. The System for Evaluation of Strategic Value (SESV) measures the strategic value of the portfolio items and the Product-Service Configuration Matrix (PSCM) reveals the interdependencies of the portfolio and the general profile of company‘s development processes. This contribution is intended to guide the management of Product-Service Development Process (PSDP).

abstract: Most advanced economies have evolved into service economies with the majority of their activity and jobs being in the service sector. The manufacturing sector is also going through a similar shift towards services. Manufacturers are increasingly complementing their products with new services in order to satisfy a broader array of customer needs and increase the value of their offerings. This shift has offered significant opportunities to the sector and the success of major firms such as IBM, Caterpillar, and Rolls-Royce in competing through services has been remarkable. Despite the increased importance of services in the manufacturing sector, the academic literature is yet to investigate the many questions that arise under this new manufacturing paradigm. Perhaps for the same reason study of servitization is listed as a research priority in recent publications both in the field of service operations management and in the field services marketing. This dissertation covers three essays aimed at disentangling multiple aspects of the role of services in the manufacturing sector. The literature on the drivers and implications of transition towards services in manufacturing firms is limited. The three studies in this dissertation aim at shedding light on this issue. Specifically, the first essay looks at the innovation benefits of service transactions with customers. This paper demonstrate the value of services in getting manufacturers closer to customers and allowing them glean useful information from their service interactions. The second essay investigates the antecedents of service strategy adoption. We suggest that the extant diversification theory does not fully explain servitization and this phenomenon represents a unique type of diversification, which is likely driven by different factors. Through econometric analysis of financial data over a 27-year period, this study explores characteristics of product, firm resources, competition, and industry that encourage adoption of service strategies in manufacturing sector. Finally, the third essay takes a deeper dive and focuses on dealerships, as service centers, in the automobile industry. It investigates the role of dealerships in the success of automakers and explores dealership traits that are critical for market success of an automobile brand. / Dissertation/Thesis / Doctoral Dissertation Business Administration 2018

Esta dissertação propõe a elaboração de uma análise das consequências da combinação de produtos e serviços na gestão do processo de desenvolvimento de produtos. Atualmente, pode-se constatar que as empresas de manufatura têm aumentado o valor estratégico dos serviços em seus portfólios. Contudo, os serviços são desenvolvidos com processos empíricos ou, quando planejados junto ao processo de desenvolvimento de produtos, em geral, são pensados somente em suas fases finais. Embora possa se constatar que existe forte relação de interdependência entre os serviços e os produtos. Assim, a integração da gestão do processo de desenvolvimento de serviços ao processo de desenvolvimento de produtos é um desafio para as empresas. Com base em revisões de literatura e estudos de caso, foram desenvolvidos neste trabalho duas ferramentas e um framework para auxiliar as empresas na gestão integrada produto-serviço. O Sistema de Avaliação do Valor Estratégico (SAVE) mensura o valor estratégico dos itens do portfólio e a Matriz de Configuração Produto-Serviço (MCPS) revela as interdependências do portfólio e as características gerais do processo de desenvolvimento das empresas. Finalmente, o framework resultante orienta os gestores na operacionalização da gestão do Processo de Desenvolvimento Produto-Serviço (PDPS). / This dissertation proposes an analysis of the product-services integration consequences in the products development process management. As a result, the strategic value of services in manufacturing companies‘ portfolio was found in an increasing tendency. However, services are normally developed using empirical methods or planned exclusively in the final stages when designed within the product development process, even if there is a strong interdependence between the service and the product. Thus, the managerial integration of service and product development processes is a challenge for companies. Based on literature review and case studies, two tools and a framework are presented in order to help companies overcome this difficulty. The System for Evaluation of Strategic Value (SESV) measures the strategic value of the portfolio items and the Product-Service Configuration Matrix (PSCM) reveals the interdependencies of the portfolio and the general profile of company‘s development processes. This contribution is intended to guide the management of Product-Service Development Process (PSDP).

Esta dissertação propõe a elaboração de uma análise das consequências da combinação de produtos e serviços na gestão do processo de desenvolvimento de produtos. Atualmente, pode-se constatar que as empresas de manufatura têm aumentado o valor estratégico dos serviços em seus portfólios. Contudo, os serviços são desenvolvidos com processos empíricos ou, quando planejados junto ao processo de desenvolvimento de produtos, em geral, são pensados somente em suas fases finais. Embora possa se constatar que existe forte relação de interdependência entre os serviços e os produtos. Assim, a integração da gestão do processo de desenvolvimento de serviços ao processo de desenvolvimento de produtos é um desafio para as empresas. Com base em revisões de literatura e estudos de caso, foram desenvolvidos neste trabalho duas ferramentas e um framework para auxiliar as empresas na gestão integrada produto-serviço. O Sistema de Avaliação do Valor Estratégico (SAVE) mensura o valor estratégico dos itens do portfólio e a Matriz de Configuração Produto-Serviço (MCPS) revela as interdependências do portfólio e as características gerais do processo de desenvolvimento das empresas. Finalmente, o framework resultante orienta os gestores na operacionalização da gestão do Processo de Desenvolvimento Produto-Serviço (PDPS). / This dissertation proposes an analysis of the product-services integration consequences in the products development process management. As a result, the strategic value of services in manufacturing companies‘ portfolio was found in an increasing tendency. However, services are normally developed using empirical methods or planned exclusively in the final stages when designed within the product development process, even if there is a strong interdependence between the service and the product. Thus, the managerial integration of service and product development processes is a challenge for companies. Based on literature review and case studies, two tools and a framework are presented in order to help companies overcome this difficulty. The System for Evaluation of Strategic Value (SESV) measures the strategic value of the portfolio items and the Product-Service Configuration Matrix (PSCM) reveals the interdependencies of the portfolio and the general profile of company‘s development processes. This contribution is intended to guide the management of Product-Service Development Process (PSDP).

Product-oriented firms are increasingly moving towards providing services to customers in a bid to differentiate their offerings, increase customer loyalty, and achieve higher, more stable revenue streams. This trend of servitization is becoming ubiquitous in manufacturing firms. These firms increasingly invest resources in efforts to offer basic and advanced services. Basic services focus on supporting the functioning of the product and increasing its efficiency. But advanced services focus on helping customers achieve their desired outcomes. Providing advanced services holds potential of greater benefits for the manufacturing firms, but a closer look indicates that most firms still largely offer basic services. This is because, advanced services demand greater intensity in relationships with customers, a higher degree of customization, and a sharper focus on assisting customers in their own value creation processes.   Offering advanced services is more risky, complex, and difficult to execute. Therefore, significant changes must be made in terms of company culture, structures, processes, capabilities, and business models. In fact, servitizing firms must transform almost every aspect of the way they do business – from their business strategy to their capabilities, organizational structure, culture, mindset, and business logic. This transformation towards advanced services therefore affects all levels of the firm: strategic, operational, and individual levels. Although prior studies have explored many aspects of the challenges involved in the transformation towards advanced services, they typically focus on function-specific practices without linking initiatives at other organizational levels. The literature lacks a multilevel understanding of the transformation process. Such an understanding could provide a better understanding of the transformation process, linking various aspects at multiple levels within the firm. To address this gap, this dissertation aims to improve our understanding of multilevel transformation towards advanced service provision in manufacturing firms.   Based on extensive qualitative studies with 13 leading Swedish manufacturing firms engaged in servitization, this dissertation provides a framework that shows how manufacturing firms experience ambivalence (i.e. the simultaneous pull in opposite directions) during transformation and how this affects the firm at the strategic, operational, and individual levels. The dissertation provides specific insights of how individual actions enable capability building for advanced services and how capabilities for advanced services help address business model alignment problems, thereby supporting transformation towards advanced service provision. This dissertation extends our understanding of how various aspects at multiple levels within a manufacturing firm are linked during the transformation towards advanced service provision. It marks one of the initial attempts in the servitization research to provide a multilevel explanation of firms’ overall transformation from providers of products to providers of advanced services.   This dissertation also uses the lens of ambivalence to provide insights into co-existing product and service orientations and their consequences during servitization. Ambivalence theories have been associated with individuals and have been applied in the sociopsychology literature. This dissertation extends these theories to the organizational context and the servitization literature. It also identifies specific capabilities that can help manufacturing firms in their transformation towards advanced services. Specifically, it redefines digitalization capability and shows how this capability is one of the most important capabilities that manufacturing firms must develop to transform into advanced service providers. This dissertation also provides a capability maturity model that can help guide the capability development process in manufacturing firms. Finally, this dissertation contributes to our understanding of the role of individuals in the transformation process within firms. This is one of the first systematic attempts to provide a microfoundation-based view of individual-level influences on higher-level outcomes in the servitization literature.

Purpose - The purpose of this thesis is to investigate what barriers there are when it comes to developing PSS in the process industry for their non-assembled products, both from a provider and customer perspective. Additionally, the purpose is further to investigate how companies can manage these barriers. Method - This master thesis is an exploratory multiple case study with an abductive approach. In total, 25 qualitative interviews were made, with respondents from seven different companies, both companies within the process industry and companies who act as customers to the process industry. The interviews were made during two phases, the first phase was exploratory interviews and the second phase was semi-structured interviews, the collected data were later analyzed with a thematic analysis. Findings - The main findings from this study is divided in five overarching categories, three originating from the interviews provider perspective, and two from the customer perspective, within all overarching categories, barriers and possible ways to manage these are identified. The three provider categories are: Characteristics of the process industry, Market and customer awareness and Extensive transformation required. Additionally, the customers categories are Customers perspectives of servitization and Fundamental management activities. The barriers from these categories has been grouped in a framework after the two constraints time and difficulty. Theoretical implications - This study contribute to the current literature about PSS, which has a clear gap when it comes to PSS for non-assembled products. This study contributes in two ways: Firstly, the findings from this study suggest that some part of the literature about PSS for assembled products could be transferred to products that are non-assembled, above this, the findings also highlighting unique barriers with PSS for non-assembled products. Secondly, this study contribute with clarity about how different barriers should be managed, something that partly lacks in today's PSS literature. Practical implications - With this study, companies within the process industry are provided with support when it comes to investigating new business opportunities, if it is worth for the companies within the process industry to start working with PSS, or if it is not. This study has three important contributions for managers. Firstly, due to the unique characteristics of the process industry, it is suggested that managers broaden the perspective and look wider than just the core-process to find servitization-possibilities. Secondly, managers are provided with useful information regarding PSS which could make them more comfortable when deciding to work with servitization, or not. Thirdly, as the findings shows that the process industry has constrained resources, a framework is presented aiming to aid managers prioritize which barriers to manage. Research limitations - Due to the limited time for this master thesis, only companies within Sweden has been contacted, at each company, a maximum of two persons were contacted.

The service economy is flourishing and due to high competition, manufacturers are turning to service innovation as way to distinguish and meet their customers increasing and changing demands. Service design and an increased utilization of employees are seen as way of improving the innovative capabilities. The aim of this thesis is to explore in a manufacturing company undergoing servitization, what is the role of front-line-employees (FLE) for service innovation and in what ways can front-line-employees be leveraged to enhance a firm’s service innovation capability? To do so, a hermeneutical research approach was adopted to interpret both FLEs collective customer understanding and the strategic view from management and service design within a company. Results reveal an encountered complexity and unstructured development of customer knowledge through long ongoing relations where the continuous identification of customer needs is a unformalized process and FLEs are relying on experience and tacit knowledge to do so. The study identifies FLEs as a resource to innovation, with aggregated customer knowledge, product knowledge and practice knowledge and are mainly contributing as a supporting actor in the innovation process. The study makes a contribution by emphasizing the needed support to empower FLEs as contributors to service innovation. Service design tools and techniques are a suggested way to provide structure and formalization in the involvement of FLEs into the innovation process. Future studies should aim to validate and explore the suggestions further through a comprehensive study of the inter-organizational customer knowledge creation and dissemination and its effect on service innovation.

Tjänstefiering är en strategi som förekommer allt oftare inom tillverkande företag. Genom att komplettera ett befintligt produktutbud med tjänster försöker företag tillgodose kunders behov, skaffa sig konkurrensmässiga fördelar och öka verksamhetens lönsamhet. Att implementera tjänstefiering har dock visat sig innebära vissa svårigheter och problem. En av de största utmaningarna är att ta betalt för de tjänster man levererar eftersom kunder är vana vid att tjänster är gratis och ingår vid köp av produkter. Detta är extra problematiskt för mindre företag vars kunder ofta är betydligt större. Syftet med rapporten är att undersöka hur mindre företag kan ta betalt för tjänster och komma med konkreta förslag på åtgärder för att lyckas med detta. För att uppfylla syftet har följande frågeställningar tagits fram: Hur kan mindre företag värdera och prissätta tjänster? Hur kan mindre företag ta betalt för de tjänster som man levererar? En litteraturstudie har genomförts för att hitta forskning och teorimetoder rörande problemformuleringen. I teoriavsnittet beskrivs den tidigare forskning som ansetts relevant och som utgör de mest vedertagna modellerna och teorierna inom sina områden.   I arbetet med rapporten har en fallstudie utförts på företaget Aspervall Instrument AB. Aspervall är en finmekanisk verkstad med cirka 15 anställda som länge levererat produkter till kunder inom mät-, styr- och reglerbranschen. Som ett komplement till sina produkter vill man erbjuda tjänster men upplever liksom många andra mindre företag svårigheter med att ta betalt för dessa. Fallstudien har utförts på en av de produkter som Aspervall insourcar från kund. Information har sammanställts från intervjuer med anställda på Aspervall, interna dokument, affärssystemet Monitor och observationer. Utifrån denna information har en processkartläggning och en nulägesbeskrivning genomförts samt kostnader som tillkommer eller förändras vid tjänstefiering kalkylerats. Utifrån teori- och resultatavsnittet har förslag till hur mindre företag kan börja ta betalt för tjänstefiering tagits fram. Åtgärderna har grupperats ”kalkylering interna kostnader som uppstår vid tjänstefiering”, ”värdering av tjänster utifrån tjänstelogik” samt ”visualisering och prissättning”. Samarbete och relationer med kunder har identifierats som en viktig faktor för att mindre företag ska kunna värdera tjänster utifrån tjänstelogik. Detta då mindre företag ofta saknar de resurser som krävs för att utföra det helt på egen hand. När det kommer till ”visualisering och prissättning” har betydelsen av särskiljning av tjänster och produkter belysts. På så sätt är det lättare att både göra kunden medveten om en tjänsts värde och att ta betalt för den. För att leverera förslag på hur mindre företag kan kalkylera interna kostnader som uppstår eller förändras vid tjänstefiering har en kalkylmodell tagits fram. Modellen är avsedd att ses som ett komplement till befintliga kalkylmodeller för att bättre kunna kalkylera tjänsters omkostnader. Resultaten från fallstudien har använts för att ta fram modellen som baseras på aktivitetsbaserad kalkylering. / Servitization is a strategy that becomes more and more common in manufacturing companies. By adding services to the existent selection of goods, companies try to satisfy their customers, get competitive advantages and increase the profitability. The implementation of servitization can though involve some difficulties and problems. One of the biggest challenges is to get paid for the services that are delivered, owing the fact that customers are used to get the services for free as an add-on. This is particularly problematic for smaller enterprises, whose customers often are considerably bigger. The aim with this thesis is to investigate how smaller enterprises can be rightly paid for services and to deliver tangible proposals how to succeed with this. To fulfil the aim, the following problem statements were formulated: How can smaller enterprises value and price services? How can smaller enterprises get paid for the services they deliver? A literature research has been accomplished to find research and theories about the problem. In section “theory” previous and relevant research are described, which provide the most used models and theories in the subject. The thesis is based on a case study, which has been performed at the company Aspervall Instrument AB. Aspervall is a fine-mechanical workshop, with approximately 15 employees, which for a long time has delivered products to customers in the process manufacturing. As a complement to their products, they want to offer services but is, like many other small enterprises, finding it hard to get paid for these services. The case study was performed on one of the products that Aspervall insource from a customer. Information was composed from interviews with employees at Aspervall, internal documents, the business system Monitor and observations. From the information, a process map and a report about the present situation have been constructed together with calculations of the costs, which are increasing or added due to servitization. From the theory- and result chapter suggestions for how smaller enterprises can start charge for services have been developed. The measures can be categorized in “calculating internal costs for servitization”, “valuing services by a service-dominant logic” and “visualising and pricing". To be able to value services by a service-dominant logic, cooperation and relations have been identified as important factors for small enterprises, which often lack the necessary internal resources. For “visualising and pricing” the importance of separating services and products has been pointed out. By doing so, the customer will hopefully realise the value of the service and it will be easier to charge for it. To deliver suggestions for how smaller enterprises can calculate internal costs that are increasing or added due to servitization a cost estimate model has been developed. The model is built as a complement to present cost estimate models to better be able to estimate the indirect overhead costs of services. The results from the case study have been used in the development of the model, which is a based on activity based costing (ABC).