Academic Research report: What service transition? Rethinking established assumptions about manufacturers’ service led growth strategies

Authors: Kowalkowski *, **, Windahl**, Kindström**, Gebauer.****

*University of Linköping Sweden

**Hanken School of Economics, Helsinki, Finland

***The University of Auckland Business School, New Zealand

****Swiss Federal Institute of Aquatic Science and Technology, Dübendorf, Switzerland

Language: English

Year: 2015

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Both academics and practitioners emphasize the importance for product firms of implementing service-led growth strategies. The service transition concept is well established, namely a unidirectional repositioning along a product-service continuum—from basic, product-oriented services towards more customized, process-oriented ones—ultimately leading to the provision of solutions. We challenge this service transition assumption and develop alternative ones regarding how product firms should pursue service-led growth.

Using ‘problematization methodology’, and drawing on findings from thirteen system suppliers, we identify three service-led growth trajectories: (1) becoming an availability provider, which is the focus of most transition literature; (2) becoming a performance provider, which resembles project-based sales and implies an even greater differentiation of what customers are offered; and, (3) becoming an ‘industrializer’, which is about standardizing previously customized solutions to promote repeatability and scalability.

Based on our critical inquiry, we develop two alternative assumptions: (a) firms need to constantly balance business expansion and standardization activities; and (b) manage the co-existence of different system supplier roles. Finally, we consider the implications for implementing service-led growth strategies of the alternative assumptions.

Keywords: Service transition; Solutions; Manufacturing companies; Service strategy; Problematization methodology