Many manufacturers acknowledge the importance of moving toward product-service systems (PSS) – combining products and services to meet customers’ needs – and yet they often find themselves unable to exploit PSS to their full potential.
To find out why this is the case, we spent 18 months conducting research using both multiple-case and participatory-action methods at eight local manufacturers that have taken concrete steps into services. We looked at companies holistically and examined the barriers they encounter when scaling up their PSS. Our goal was to develop insight into the internal levers for servitization and to deploy a new tool to help companies generate and prioritize PSS-enhancing projects.
PSS design barrier
From the cases we observed, we identified three barriers that prevent companies from scaling up their PSS. First, companies may lack the knowledge and experience to develop fully integrated PSS, choosing instead to focus purely on improving products and technologies. We call this a PSS “design” barrier.
PSS rollout barrier
Second, companies may lack a go-to-market strategy and offer services either in a reactive manner or to only a handful of customers. We call this a PSS “rollout” barrier. We find that these two barriers exist primarily at the business unit level.
PSS logic barrier
Third, companies may not have the organizational mind-set needed to either develop or implement PSS because of their history of simply providing products or an inherent skepticism about the potential of PSS. We refer to this issue as a PSS “logic” barrier, and it is present at the underlying company level. In small companies, these levels tend to overlap, but in larger companies there can be a distinct difference in outlook between the various business units and departments.
We experimented with a new toolkit at companies that are currently having difficulties in either rolling out or designing PSS, and found that it can help in two ways. First, the toolkit encourages companies to reflect on their capacity for servitization before venturing into concrete PSS-enhancing projects. Second, by involving employees from different areas of the organization, companies can more easily address bottlenecks in specific PSS-enhancing projects and gradually create a shared organizational belief in servitization.
We gratefully acknowledge the financial support of Flanders Innovation & Entrepreneurship in conducting this research, which was part of a technology-transfer project (TETRA) by Antwerp Management School.
This blog post is based on a recently published paper by Wim Coreynen, Paul Matthyssens, Roel De Rijck and Ivo Dewit (2017) from Antwerp Management School and the University of Antwerp in the International Journal of Production Research.
Want to know more about how AMS kan help you with your PSS-projects? Contact Wim Coreynen. Discover more about our approach to designing products and services in our introductory course Business Design Thinking.