Transcript

Driving  the  servitization  transformation  through  change  management:  lessons  learnt  from  industrial  cases

Aston  Spring  Servitization  Conference,  May  2016

Dr  Shaun  West  and  Paolo  Gaiardelli

West  &  Gaiardelli,   2016

IntroductionThe  problem  and  the  purpose  of  this  paper

To  describe  a  series  of  challenges   leaders  in  the  service  business  faced  during  their  servitization  journey

Servitization  as  a  transformational  process  has  major  effects  on  the  cultures,  business  models  and  processes  of  a  firm.  Yet  the  change  management  is  poorly  understood.

To  identify  the  impacts  of  organisational  barriers  on  different  types  of  companies

Purpose  of  this  paper

Preliminary review  on  how  six  firms  in  Europe  navigated  the  servitization  journey  successful  without  tripping  over  barriers

Problem

West  &  Gaiardelli,   2016

IntroductionWhat  does  the  literature  say?

”…is  generally   agreed  that  such  a  transformation  calls  for  organisations  to  radically   innovate  all   components  of  their  business  model…” Gebauer

”…there   is  no  unique,  ideal   servitization   transition,  as  a  successful   transition   to  services   depends  upon  context…” Neely

” …there  are  no  specific   models   for  servitization   as  a  change  process…”   Pawar

Servitization  is  a  change  process  that  impacts  on  the  operation  and  the  culture  of  the  business

West  &  Gaiardelli,   2016

MethodologyA  three  step  methodology  was  applied  in  this  study

An  initial  review  to  gather  a  wide  range  of  inputs  and  categorize  them  systematically  

Literature  study Interviews   Cross  case  analysis

West  &  Gaiardelli,   2016

Results   and  analysis  of  the  literature  reviewThe  servitization  barriers  were  categorised  according  to  those  defined  by  Hou and  Neely

These  categories  will  be  used  to  help  analyse the  findings

Competitors,   suppliers  and  partners Complex   and  competitive   environment,   involving  different  actors

Society  and  environment Lack  of  policy,   infrastructure   support  and  incentives

Customers Heterogeneous   demand

Economic   and   finance Unexpected   costs  and  difficulties   in  pricing   services

Knowledge  and  information Difficulties   in  knowledge   and  information   management

Products   and  activities Lack  of  competences   and   infrastructuresDifficulties   in  designing   service   packages

Organisational   structure   and  culturePreconceived   thoughts  and  resistance   to  change  conflicts   among  different  departments   and  different  hierarchies   in  organisationsLack  of  service-­‐based   organisational   structure   and  service-­‐oriented   culture

West  &  Gaiardelli,   2016

Results   and  analysis  cross  case  analysisOverview  of  the  six  firms  selected  for  interviews

Firm Segment HQ OEM  tier Service  emplyees

1 Equipment  for  trains GER 2nd 540

2 Marine   and  power CHE 2nd 1,300

3 Textiles CHE 1st,  2nd 400

4 Logistics  equipment NLD 1st 1,200

5 Video  surveillance ITL 1st,  2nd 540

6 Energy CHE 1st,  2nd 3,200

-­‐ The  objective   to  get   insights   from  manufacturers-­‐ Diversity   measured   by

-­‐ Segment-­‐ Geography-­‐ Position  of  OEM  business   in  supply  chain-­‐ Size  

-­‐ Interviewees   requirements-­‐ Long-­‐term   experience   of  the  firm-­‐ Senior   management  

-­‐ Detailed   feedback   provided   to  the   firms

A  wide  range  of  manufacturing  firms  were  targeted  for  interviews

West  &  Gaiardelli,   2016

Results   and  analysis  of  the  interviewsInterviewing  process

The  interviews  provided  an  insight  into  the  reasons,  problems  and  benefits  of  servitization  

West%&%Gaiardelli%

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ANNEXE'–'DETAIL'OF'THE'FIRMS'%

Firm%1%

The%firm%begin%its%service%transformation%in%2002%and%has%gown%in%service%employees%from%100%to%450FTEs,%

during% that% time% the% sales% from% services% have% increased% from% 15%% of% total% sales% to% over% 35%% with% the%

expectation%of%50%%in%the%future.%%The%business%objectives%have%been%achieved%but%the%start%was%tough%and%

continued%management%focus%and%attention%was%required%to%guide%the%firm.%%The%positioning%on%the%service%

matrix%is%given%in%Figure%2.%

Prior%to%2002%there%were%limited%management%change%programmes.%%Between%2002%and%2016%four%changes%

programmes%were%implemented:%

•! organisational% structures% –% the% creation%of% a% service%division%with% P&L% responsibility,% prior% to% 2002%

service%fell%under%the%responsibility%of%sales%as%basic%‘after%sales%support’;%

•! project% management% development% –% the% delivery% of% complex% service% project% required% a% different%

approach% to% project% management,% basic% project% management% was% embedded% within% product%

development%and%production%however%missing%were%the%commercial%aspects;%

•! sales%development%–%the%selling%of%services%was%found%to%be%different%from%product%selling%and%a%wider%

base%of%sales%skills%were%required,%more%on%a%consulting%selling%bases’%

•! services%R&D%–%this%was%required%to%address%specific%issues%that%were%identified%during%the%operational%

life%of%the%equipment.%

%

Over%the%transformation%the%business%has%moved%from%a%reactive%service%business%into%one%where%service%

is%now%integrated%into%the%culture%(Figure%2).%%The%firm%has%a%desire%to%move%to%‘service%as%a%product’%but%has%

yet%to%reach%this%position,%there%remains%a%focus%on%productKservice%systems.%The%service%maturity%for%the%firm%

has%increased%in%the%six%dimensions%measured%over%the%transition%with%the%major%focus%being%on%getting%closer%

to%the%customer.%%

%

%Figure%2%Service%matrix%and%service%maturity%for%firm%1%

%

Key%direct%comments:%

•! ‘[service]%culture%is%everything%as%it%is%drives%the%attitudes%and%behaviours%of%our%employees’;%%

•! ‘[we]%are%starting%to%offer%service%‘as%a%product’%on%its%own%to%better%create%customer%value;%

•! ‘we%look%today%for%customers%problems’;%

•! ‘we%must%have%an%ecosystem%view%as%it%helps%us%to%work%together%but%this%is%a%change%in%mindset’;%

•! ‘we% need% to%work% during% the% life% of% the% equipment% to% overcome% design% problems% and% changes% to%

operations’;%

•! ‘our%success%has%in%a%large%part%been%borough%about%because%we%have%a%P&L%responsibility%and%a%seat%

on%the%leadership%of%the%business’.%

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-­‐ A  detailed   interview   form  was  designed-­‐ Questions   based  on  findings   from  the  literature  and  prior   studies   (published   and  unpublished)

-­‐ Company  details   and   information-­‐ Questions   to  support  basic  benchmarking-­‐ Open   interview   question

-­‐ Interviewees   were   from   leadership   positions-­‐ All   interviewees   had  long-­‐term   connection   to  the  firms

-­‐ A  detailed   report   from  the   interview   was  given   to  the   firms

West%&%Gaiardelli%%

% 13%

Firm%2%The%firm%started%its%transformation%into%services%in%1999%and%over%that%time%has%grown%into%a%full%business%unit%with%around%1300%FTEs%from%a%base%of%around%100K500.%%Over%this%time%the%aftermarket%service%business%has%grown%from%being%simply%spares%to%one%that%constitutes%over%30%%of%their%business%and%a%higher%figure%for%the%margin%generation.%%The%longerKterm%aim%is%to%grow%the%service%business%further%without%growing%the%head%count%so%that%it%is%over%50%%of%the%business.%The%business%objectives%have%always%been%met,%however%the%leader%of%the%business%pointed%out%that%it%takes%three%years%to%make%a%visible%change.%The%position%on%the%service%matrix%is%given%in%Figure%3.%

Prior%to%1999%there%had%been%a%six%sigma%operational% improvement%programme.%%Since%then%there%have%been%two%major%change%programmes%and%one%additional%planned%programme:%

•! single%service%origination%–%service%business%unit%with%its%own%P&L%and%this%is%seen%in%Figure%3%with%the%increase%in%service%offering%and%greater%focus%on%customers;%

•! Sales%focus%K%the%firm%had%put%in%place%a%sales%focus%programme%which%had%the%effect%of%positive%impact%on%the%service%behaviours%and%put%the%business%closer%to%the%customer;%

•! customer% value% and% process% integration% –% this% programme% is% planned% for% the% next% phase% and% that%address%customer%value%and%process%integration%as%this%will%help%them%to%move%from%product%services%to%thinking%as%service%as%a%product%and%assist%the%final%push%to%a%cultural%intensity.%%%

Over% this% time%the%business,%according% to% the% interviewee,%has%generally%moved% from%being% reactive% to%more%proKactive%a%key%to%this%was%having%a%service%business%unit%with%its%own%P&L%and%this%is%seen%in%Figure%3%with%the%increase%in%service%offering%and%greater%focus%on%customers.%%

%Figure%3%Service%matrix%and%service%maturity%for%firm%2%

Key%direct%comments:%•! ‘we%need%to%work%more%efficiently%together%over%the%coming%years%to%get%the%growth%without%additional%

white%collar%staff’;%•! ‘our%productKservice%system%offing%is%quite%complete,%we%need%to%push%more%into%pure%services’;%•! ‘we%got%closer%to%our%customers,%now%we%need%to%invest%in%the%IOT%and%integrate%into%our%customers%

processes’;%•! ‘you%need%HR%to%help%drive%business%thinking%in%a%knowledge%rich%environment’;%•! ‘we%need%to%move%to%appreciate%our%customers%even%more%than%the%technology’.%%%

% %

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% 15%

Firm%4%

The%firm%started%it%service%transformation%in%2010%and%has%grown%services%from%less%than%5%%of%the%business%

to%over%20%%today%with%the%longerKterm%objective%of%reaching%25%%of%the%total%sales.%During%this%time%the%

business% objectives% of% increased% customer% intimacy,% new% revenues% and% improved% customer%

relationships/experiences%have%been%archived.%%The%positioning%within%the%service%matric%is%given%in%Figure%5.%

Prior% to% 2010% there%were% no%major% change% programmes,% however% the% new%CEO% had% a% desire% to% drive%

services% and% he% had% a% major% impact% on% pushing% through% the% changes% necessary% to% develop% the% service%

business.%Since%2010%the%service%focused%changes%have%included:%

•! cultures%and%structures%–%these%have%been%flattened%and%cooperation%between%teams%has%improved,%

the%CEO%has%fostered%commitment%and%initiative%taking%within%the%service%business;%

•! offerings%–%there%is%a%move%to%bring%products%and%services%closer%to%focus%on%customer%value;%

•! coKcreation%–%with%key%customers%this%is%a%key%learning%process%to%test/pilot%new%offering%before%selling%

them%more%widely;%

•! sharing%knowhow%–%there%is%an%active%training%plan%with%‘internships’%and%job%rotations%for%the%service%

leaders%within% the%business% to%help% them% learn%more%about% the%business%and% to% instil% standardised%

working%methods.%

%

Over%the%past%six%years%the%improvements%to%performance%have%been%generally%what%was%expected%with%

some%regions%being%easier%than%expected%although%other%reasons%have%been%harder.%There%were%no%major%

external%barriers%other%than%providing%service%business%in%some%countries,%notably%Brazil%and%Russia,%can%be%

very%complex.%Today%there%is%now%a%more%balanced%view%between%technology%and%customer%focus,%this%is%now%

starting%to%support%new%product%development%in%terms%of%customer%feedback.%%%%

%

%

Figure%5%Service%matrix%and%service%maturity%for%firm%4%

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Key%direct%comments:%

•! ‘when%your%customer%is%asking%for%services%the%management%has%to%follow’;%

•! ‘services%are%maturing%and%are%becoming%a%commodity’;%

•! ‘you%have%to%create%productKservice%systems%as%these%are%more%customer%value%focused’%

•! ‘CEO%sponsorship%and%separate%service%business%unit%was%critical%[to%success]’.%

%

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% 16%

Firm%5%The%firm%started%its%service%transformation%in%2000,%at%that%time%virtually%zero%sales%came%from%services%even%though%there%were%280%staff%delivering%‘after%sales%services’,%today%2%%of%the%sales%are%related%to%services,%there%is%an%ambition%to%grow%this%to%5%%in%the%longerKterm.%%The%initial%objectives%were%to%grow%services%above%10M%EUR%of%sales%and%to%enter%both%B2B%and%B2C%markets%with%systems,%today%the%objective%has%changed%so%that%they%are%looking%at%productKservice%solutions%based%on%intergrade%packages.%The%longerKterm%objective%is%then%to%create%payKper%solutions.%The%positioning%within%the%service%matrix%is%given%in%Figure%6.%

Prior% to% 2000% the% firm% was% highly% product% focused% and% providing% services% mostly% associated% with%installation%service.%Since%then%the%following%changes%have%been%implemented:%

•! the%installer%as%a%customer%–%this%created%a%new%layer%of%customer%within%the%firm%with%different%drivers%and%expectations;%

•! charging%for%service%–%this%%was%a%major%change%in%mindset%with%employees%having%to%understand%the%customer%value%to%allow%them%to%charge%for%services%that%prior%were%provided%for%free,%this%showed%internally%and%externally%that%service%was%a%differentiator%in%the%market;%%

•! service%solutions%–%this%is%the%next%step%in%terms%of%service%provision%for%the%firm%where%a%fee%will%be%charged%based%on%use%where%the%product%becomes%a%platform%to%base%the%services%upon;%

•! new%customer%relationship%channels%–%investment%in%faceKtoKface%and%phone%communication%with%the%customer% with% the% aim% to% address% customer% problems% (prior% the% phone% was% use% to% support% only%warranty%issues);%

•! service% hires% and% training% –% new% approach% to% hires% based% on% behaviours% rather% than% technical%competencies,%training%to%ensure%that%the%new%hires%are%able%to%deliver%the%service;%

%The% impact%of%the%changes%was%generally%considered%positive%for%both%the%customers%and%the%firm.%The%

mind%set%has%changed%from%thinking%of%services%as%a%cost%to%one%of%value%creation%for%both%the%customer%and%the%firm.%%Services%have%created%an%improved%customer%experience%and%depth%to%the%relationship%with%the%customer%preferring%to%purchase%a%productKservice%system.%This%has%been%the%case%where%the%technology%has%become%a%commodity%and%service%(eg,%installation,%warranty,%operation%support)%becomes%more%important.%This%change%had%made%the%employees%move%from%product%thinking%to%appreciating%a%customer%who%modifies%their%behaviour%due%to%technology%innovation%and%the%service%solution%offered%by%the%firm.%%

%Figure%6%Service%matrix%and%service%maturity%for%firm%5%

Key%direct%comments:%•! ‘the%market%was%ready%to%accept%new%service%offer’;%•! ‘some%managers%failed%to%accept%the%transition%to%services;%•! ‘the%need%to%move%to%data%from%technology%supported%our%transition’;%•! ‘the%low%investment%cost%in%services%was%supportive%of%the%transition’;%•! ‘the%demonstration%of%the%increase%in%customer%retention%and%margins%support%the%transition’.%%

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Firm%3%The%firm%began%its%service%transformation%in%2010%and%during%that%time%they%have%grown%service%sales%from%10%%of%total%sales%to%14%%today.%%To%achieve%this%the%service%employees%(internal%and%external)%have%increased%from%350%to%around%400.%The%longerKterm%aim%is%to%grow%services%to%15%%of%the%business%with%around%500K550%FTEs.%Over%the%past%six%years%services%have%moved%from%being%reactive%to%a%point%where%more%effort%is%placed%on%customer%experience%and%how%to%continually%improve%the%experience.% %Future%plans%include%the%integration%of%IOT%into%the%service%offering%and%a%continual%improvement%in%customer%satisfaction.%The%mix%of%direct%and%inKdirect%service%teams%creates%support%issues%and%all%service%partners%need%to%be%treated%fairly.%The%service%matrix%position%is%shown%in%Figure%4.%

Prior%to%2010%there%had%been%a%standardisation%programme%(part%of%operational%excellence)%to%understand%and%limit%the%local%differences.%%Since%2010%the%following%change%programmes%been%implemented:%

•! customer%pull%–%allowing%the%customer%to%demand%and%support%development%of%services;%•! service%quality%–%zero%defect%approach%to%quality;%•! team%structures%–%providing%a%focus,%although%not%a%service%organisation%for%service%activities.%%

%Figure%4%Service%matrix%and%service%maturity%for%firm%3%

Key%direct%comments%•! ‘service%culture%is%not%measured%but%we%do%have%an%HR%survey’;%•! ‘learning%about%services%is%hard,%we%need%to%use%cases%to%help%change%the%mindsets’;%•! ‘moving%now%to%look%at%service%pricing%–%how%do%we%price%pure%services%rather%than%the%pricing%of%basic%

services’;%•! ‘key% aspect% was% the%master% data% for% the% installed% fleet,% without% this%moving% to% services% is% almost%

impossible%particularly%with%where%to%locate%spares’;%•! ‘we%cannot%not%always%charge%for%services’;%•! ‘we%need%more%serviceKminded%technicians,%must%hire%by%mind%set%then%train%them’;%•! ‘to%sell%service%as%a%concept%to%management,%use%the%growth%story’.%%

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Firm%6%The%firm%started%its%service%transformation%in%the%midKlate%1980s,%at%that%time%virtually%zero%sales%came%from%services%even%with%only%65%staff%delivering% ‘after%sales%services’,% today%almost%25%%of% its% sales%come%from%service%and%almost%30%%of%the%EBIT.%%The%initial%objectives%were%to%support%the%sales%of%new%equipment%in%a%single% regain,% today% this%has%grown%to%many%different%services%over% the%world.% %The%services%are%normally%associated%with% the% large% complex%mechanical% equipment% in% the% B2B%market.% The% positioning%within% the%service%matrix%is%given%in%Figure%7.%

Prior% to% 1990% the% firm%was% highly% product% focused% and% providing% virtually% no% services.% Since% then% the%following%changes%have%been%implemented:%

•! acquisition%of%adjacent%service%businesses%–%this%created%the%critical%mass%with%all%business%being%closely%associated%with%the%technical%services%provided%and%supportive%of%the%service%network%concept;%

•! integration%of%the%low%service%intensity/customer%services%of%an%OEM%business%into%the%service%business%of%the%firm;%

•! ERP% system% has% provided% the% opportunity% to% professionalise% the% business% and% allow% activities% like%benchmarking%to%take%place%to%check%performance%of%different%sites;%

•! integration%of%basic%lean%process%into%the%service%business%leading%to%cost%improvements;%•! sales%training%programme%to%get%closer%to%the%customers%and%to%better%understand%their%requirements.%%The%business% is%now%a%major%portion%of% the% firm%and%on%a%ROS%basis% the%most%profitable.% %Business%has%

struggled%at%times%with%customer%cycles.%Not%as%tough%as%the%new%equipment%cycles%but%has%forced%down%performance%at%time.%CRM%system%for%service%business%that%provide%technical%services%to%customers%has%been%hard%to%set%up%and%share%meaning%that%opportunities%have%been%missed%or%not%shared%as%they%should%have%been.%The%business%is%now%looking%at%how%to%use%IOT%technology%to%provide%improved%support%to%the%field%service%teams.%%

%Figure%7%Service%matrix%and%service%maturity%for%firm%5%

Key%direct%comments:%•! ‘every%change%was%harder%than%expected’%•! ’being%the%service%division%in%an%OEM%is%hard’%•! ‘you%cannot%just%turn%services%on’%•! ‘service%is%a%different%culture’%•! ‘staff%rotations%are%very%tough%to%arrange%today%due%to%duel%careers’%

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West  &  Gaiardelli,   2016

Results   and  analysis  of  the  interviewsMathieu’s  index  provided  a  useful  framework

-­‐ The  businesses   were   delivering   services  -­‐ There   was  a  strategic   move   to  grow  services-­‐ Overtime   the  transition   becomes   cultural

-­‐ Firms  1-­‐5  were   initially   doing  service   ’because   they  had  to…’

-­‐ Firm  6  was  acquired   as  a  service   base   to  allow  access   to  a  new  markes

Having  started  the  journey  there  is  a  drift  to  cultural  organizational  intensity

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West  &  Gaiardelli,   2016

Results   and  analysis  of  the  cross  case  analysisCompetitors,  suppliers  and  partners

Lessons   learnt-­‐ Partners   as  a  key  service   resource   was   important  -­‐ Ecosystem   view  helps,  but  this  needs  a  mind-­‐set  shift  

The  move  to  ecosystem  innovation  was  important  for  the  servitization  journey

“…we  prefer  to  encourage  our  partners  to  do  it  directly!  Actually,  such  a  strategy  involves  losing  part  of  our  service  profits,  but  it’s  the  best  way…”  Firm  5

“…we  must  use  an  ecosystem  view  to  help  us  work  together  better,  but  this  is  a  mind-­‐set  

change!”  Firm  1

Implications-­‐ Cooperation   with  partners   critical  -­‐ Trading   value   in  the  ecosystem   for  relationships

West  &  Gaiardelli,   2016

Results   and  analysis  of  the  cross  case  analysisSociety  and  environment

Local  rules  and  ’norms’  can  make  create  barriers  to  service  delivery

Lessons   learnt-­‐ Cannot  always  charge   for  services  -­‐ Local   legal   and  tax   issues  

Implications-­‐ Smaller   firms  encounter   larger   investment   barriers-­‐ Different   solutions   needed   for  different   firms-­‐ Impact  on  firm’s organisation   and  processes

“…tax  is  becoming  a  major  problem  for  transfer  of  pricing...”  Firm  1

“…we  have  to  offer  free  of  charge  solutions   to  support  the  loyalty  of  final  customers  and  help  to  strengthen  our  relationship  with  the  front-­‐end  partners…”  Firm  5

“…some  regions  were  harder,  because  some  managers  don’t  think  of  service  as  the  real  business.  However,  

some  other  regions  were  easier,  because  management  support  came…”  Firm  4

West  &  Gaiardelli,   2016

Results   and  analysis  of  the  cross  case  analysisCustomers

Important  to  learn  to  work  and  use  customer  pull  to  support  servitization

Lessons   learnt-­‐ Training   to  help   to  improve   customer   understanding-­‐ Customer   pull   to  move   into  services-­‐ Co-­‐creation   creates   opportunities  -­‐ Customer   is  more  or  as  important   as  technology

Implications-­‐ Northern   firms  transforming   relationships   with  customers   (culture)

-­‐ Southern   firms  identify   services   and  a  business  opportunity   (strategy)

“…we  look  for  our  customers  problems…  we  moved  our  target  to  offer  service  as  a  product,  to  what  is  

customer  value…”  Firm  1

“…we  are  well  aligned  with  key  customers.  We  do  co-­‐creation  …  to  enter  the  unknown  and  test/pilot  new  offers  before  selling  them  more  widely…”  Firm  4

“…transition  is  hard,  especially  when  the  market  is  very  cost  focused  rather  than  reliability  focused…we  

will  need  more  customer  integration...”  Firm  2

West  &  Gaiardelli,   2016

Results   and  analysis  of  the  cross  case  analysisEconomic  and  finance

Service  pricing,  sale  growth,  margins  and  retention  are  critical  success  factors  

Lessons   learnt-­‐ Pricing   is  important   in   services-­‐ Revenue   growth  and  margin   growth  important   for  senior   management  

-­‐ Measure   impact   on  customer   retention   and  customer   margins  

Implications-­‐ Firm’s  efforts  are   focussed  on  creating   awareness   on  strategic   relevance   (profitability)  

-­‐ Southern   firms  could   have  a  size-­‐related   issue

“…we  need  to  work  more  to  be  efficient  and  that  is  the  plan  over  the  coming  years:  growth  in  sales  with  

no  growth  in  white  collar  FTEs...”  Firm  2

“…giving  the  top  management  the  growth  story  of  service  business  was  the  best  argument  to  convince  them  to  get  on-­‐board…  “  Firm  2

“…analyses  carried  out  by  the  commercial  department  demonstrated  that  service  increases  

customer  retention  and  margins…”  Firm  5

West  &  Gaiardelli,   2016

Results   and  analysis  of  the  cross  case  analysisKnowledge  and  information

Internal  sharing  of  know  how  and  customer  process  can  reduce  servitization  barriers

Lessons   learnt-­‐ Project  management   skills  needed   for  delivery  -­‐ Understanding   of  customer   processes/value   creation-­‐ Understanding   the  product-­‐service   system-­‐ Sharing   knowledge   important

Implications-­‐ Product-­‐focused   firms  need   to  focus  on  understanding   their   customer   processes

-­‐ More  servitized firms  need   to  address   problems   of  knowledge   management  

“…move  to  cross  learning  from  the  “ad  hoc”  knowledge  management  systems  of  today.”  Firm  3

“…How  do  we  move  to  ’service  as  a  product'  rather  than  just  customer  services?  Through  a  PSS  

based  on  Knowledge  Management…” Firm  3

“…technology  and  service  skills  are  the  main  areas    we  are  likely  to  invest  in  the  

next  18  months…” Firm  1

West  &  Gaiardelli,   2016

Results   and  analysis  of  the  cross  case  analysisProducts  and  activities

Basic  data  and  understanding  is  required  before  moving  to  more  advanced  product-­‐service   systems

Implications-­‐ Basic   building   blocks  not  always   in  place-­‐ Understand    the   technology   around   the  product-­‐ Smaller   firms  focus   internally   rather   than  on  relationships

Lessons   learnt-­‐ Installed   base  critical   data  for  supplying   services-­‐ Standardisation   supported  professionalisation  -­‐ Focus  on  services   only  once  PSS  is  understood-­‐ Services   supports  new  equipment   sales   “…keepworking  on  the  installed  base  and  improving  

market  data,  this  is  key...”  Firm  3

“…add  service  to  create  a  PSS  that  has  positive  feedback  loop  to  NPD  has  been  our  biggest  challenge  

in  our  service  transformation  journey...”  Firm  4

“…new  products  drive  our  world  and  we  need  to  overcome  design  problems  and  provide  service/upgrades  

that  are  of  value  to  our  customers.”  Firm  1

West  &  Gaiardelli,   2016

Results   and  analysis  of  the  cross  case  analysisOrganisational  structure  and  culture

The  businesses  must  have  their  own  P&L  and  support  of  HR  to  deliver  the  change

Lessons   learnt-­‐ Need   top  management   as  a  sponsor-­‐ Separate   service   business   unit/P&L   needed-­‐ Service   R&D  to  address   the  equipment   lifecycle  -­‐ HR   is  needed   to  help  change   behaviours

Implications-­‐ Efforts  should   focus  on  creating   management   buy-­‐in-­‐ Product-­‐based   firms  need   to  overcome   a  goods-­‐centric   culture

-­‐ Learn   to  work  with  and  educate   HR

“… support  from  HR  is  needed  to  drive  business  thinking  in  a  knowledge  management  rich  

environment...”    Firm  2

“…  by  being  separate  we  are  able  to  be  effective  for  the  customer…”  Firm  1

“Culture  is  everything,  attitude  and  behaviour…”  Firm  1

“…local  empowerment  is  a  hard  to  achieve  but  it  means  effective  and  efficient  service  provision...”  Firm  3

West  &  Gaiardelli,   2016

ConclusionsServitization  transformation  through  change  management  is  an  important  theme

Servitization  transformation  is  a  complicated  change  process

Hou/Neely’s  model  allowed  the  change  barriers  to  be  categorised

All  of  the  firms  had  contextual  differences:  there  were  similarities

Every  firm  starts  from  a  different  starting  point  and  therefore  experiences  their  own  journey.  There  cannot  be  a  single  recipe  for  change  management.

Not  all  servitization  journeys  require  the  same  change  management

West  &  Gaiardelli,   2016

RecommendationsMore  research  servitization  transformation  change  management  is  needed

More  research  is  needed  on  ”servitization  change  management”

The  aim  to  identify  servitization  change  management  best  practice

Practical  tools  are  needed   to  identify  service  opportunities

There  is  a  need  to  undertake  specific  research  into  servitization  change  management  to  help  firms  to  navigate  this  complex  transformation.

Understanding  of  a  journey  with  different  starting-­‐ and  end-­‐points

West  &  Gaiardelli,   2016

Thanks  for  your  time!Questions  over  coffee…