Servitization: Three Streams for Company Transformation - Essay Sample

Introduction

Servitization is faced by three important streams, which include service development, service provision, and internal organization design. To manage any serviced company, there, three streams should be considered since they are essential. The thesis of this theoretical framework referred to as the concept of service production which will focus on the three challenges. In figure 5, it comprises of the visualization of service component for company transformations towards securitization and how there three streams are related. At the bottom of the figure, shows the point of contact between the organization and the final product. Moreover, at the center shows the internal design that builds the basis of services productions from development to delivery. The three components are affected by the service development process, according to Kindstrom and Kowalkowski (2009) while the internal organization design is illustrated by (Gebauer at al: Neu and Brown 2005). In every component, we shall highlight the parts that form challenges and an explanation of the importance of each part of the production process

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Service Development

Service development is the first challenge that faces servitization and thus has a significant influence the thesis and also the entire stem framework from the model of the "New Service Development Process" (Kindstrom & Kowalkowski, 2009). For a company to develop its services successfully, they must undergo different stages in service development, which in turn contains various important activities accompanied by challenges that need to be effectively managed. For successful service development, there should be a collaboration of several functions, which includes, intra organizational elements, additional cross functions, and coordination than product development (Kowalkowski, 2009). The authors continue to explain that if product development project majorly focuses on the early stages such as market sensing, while the service development projects have a similar impact process and it requires concentration on providing proper rollout of the services.

As Service development is a continuous process, it contains four stages, which include; market sensing, development, sales, and delivery, as illustrated in figure 6 ( Kindstrom & Kowalkowski, 2009). The stages are discussed separately to give a clear sense of reasoning in the entire thesis of the framework. In both marketing and development stages, they are conducted in house, and therefore they are categorized under service development component. The design of the service organization, in turn, generates an effect on the contact between service provision and development.

Internal Organization

Internal organization is the second stream that draws further challenges in servitization. The foundation of service from production to delivery is dependent and built upon the internal organization design. The main challenge faced in internal organization design results from the combination of goods and services (Shah et al., 2006; Neu et al., 2005, 2008; Gebauer et al., 2010a,b). The manufacture companies should find importance in this dimension of service production that creates a transformation towards servitization when the organization design supports the needs of both service production and goods. Therefore, internal organization design has three different aspects, which include corporate human resource management, organization structure, and culture (Gebauer et al., 2010a,b).

Service Provision

All servitized companies emphasize more on their sales and delivering stages those companies that sell goods. This is because all their services are intangible , and the idea of the value that is created on them is particularly important when the services are sold (Kindstrom & Kowalkowski,2009). For that reason, service provision can be said to be formed from two parts that are delivered and sales, which will mark the last theoretical stream to depend on when creating our theoretical framework.

Manufacturing companies are faced with the three component challenges which may either create a transformation towards servitization or not. According to our research thesis, the three component challenges may not have a full application on the type of company that we are going to investigate. Consequently, the study will help to create understanding and form a more inclusive group of challenges through analyzing how challenges facing manufacture companies are impacted when a manufacturer is performing company transformation towards servitization. In this approach, it will be easier to identify new modifications that were not noted earlier through tradition challenges literature or either Kowalkowski. The following section will be a presentation of typical challenges that face companies which are transforming towards servitization, categorization of challenges through the three components of service production, and lastly, identifying challenges in this literature review through visualization together with the challenges identified by Kowalkowski (2011) under the specific component.

The following section shows the categorization of challenges that companies face when transforming towards servitization under their specific components of service production.

Challenges of Service Develop

Challenges of Market Sensing

Investigation of the possibilities of service provision is an important aspect to consider before developing any services. This aspect is referred to as market sensing, which entails careful scanning of the external and internal environment, installed based, customers, and competitors (Kindstrom & Kowalkowski, 2009). For a company to maintain the long and short run competitive environment, it should establish its business service through two different approaches (Fischer et al., 2010). First, is the exploitation, which is a way of improving short term performance and profits where its activities are linked to the existing products and processes (Fischer et al., 2010). The second is an exploration approach which entails the ways of finding new offerings, maintaining more concentration on long term profits, performance, and new markets (March 1999). The two approaches are also used in developing service business for servitized companies (Fischer et al., 2010). In contrary, the approaches are found to be challenging as they lack to sense the market opportunities for companies (Kindstrom & Kowalkowski, 2009). Therefore, before any idea is addressed, there is a need to examine one's organization, according to Kowalkowski (2009) and partners (Mattyssens et al., 2006). Secondly, it is evident that many companies miss out their potential revenue due to lack of management of present service portfolio in a structured way according to Kindstrom & Kowalkowski (2009) and also a provision of free services to their customers. Mapping out these services can maximize profit and also help the company to be exposed to a wide view(Kindstrom & Kowalkowski, 2009).

Challenges of the Service Development Process

Regardless of manufacturing companies having well-outlined service development process according to Kindstrom (2010); most companies face a challenge when receiving funding for their projects and commitments from other organizations (Kindstrom & Kowalkowski, 2009). Also, the authors also describe that there is a need to conduct innovation to adapt to the needs of manufacturing companies by involving the customers and the final user in the product design process. In the provision of services products, constant and quick feedback is essential compared to goods (Kindstrom & Kowalkowski, 2009). Additionally, the often standardization of development process with classes and gates causes unsuitable development of services. However, innovations must be included in the sales and delivery systems of services (Kindstrom, 2010). The challenge in the production of the service rises when designing the service portfolio, but in turn, it ensures economies of scale provision (Oliva & Kallenberg, 2003; Reinartz et al., 2008).

Conversely, designing service platform can be flexible enough to fit the different context of customers and combining it with standardization and rear office. The flexibility can be compared to permit reconfiguration resources that cater to customer needs, and also they only require slight modification to fit different customer profiles. For flexibility to be supported, communication channels and mechanisms must be established in an organization which at times emerges to be challenging (Antonacopoulou & Konstantinou, 2008). Efficient service delivery can be achieved when there are a standardized service process and control mechanism, which also promote flexibility that the company can adapt to suit their customer's preferences (Reinartz & Ulaga. 2008).

Challenges of Internal Organization Design

Challenges of Service Culture

Organization culture is made up of attitudes, beliefs, experiences, and values in depending on the type of organization. These valuable resources are not easily substitutable nor cannot be faultlessly imitable (Barney. 1991). The values of a particular company are determined by how the services are impacted. Thus servitized companies find a challenge in coming up with a service orientation that will incorporate culture (Gebauer eta l., 20101a). Though, the incorporation is not easily done, since the servitized companies are required to shift from cultural and organizational state to goods -dominated business logic where both goods and services are combined(Mathieu, 2005; Gebauer eta l, 2005).

On the contrary, having an influential manufacturing culture may lead to internal resistances, according to Martinez et al., (2010), which are against new service strategies (Gebauer eta l., 2009). In the same case, an organization that has adopted both goods and services strategies have two types of cultures which is challenging to combine (Schein 2004' Gebauer et a., 2009). In service culture; their values, goals, and beliefs may lead to conflict in goods oriented culture.

Challenges of Deciding the Structure of the Service Organization

The degree of organization uniqueness is determined by extending at which the service business is set up to acquire profit and loss responsibly as a separate business. (Gebauer et al., 2010a). Also, the most significant challenges manufacturing companies face is when deciding the structure of the service organization, which is based on how to develop both goods and service in a concurrent manner (Kindstrom, 2010). From the literature research, we identified the three main views in which the service organization can enhance service provision performance through separating from product organization. As a result, this shows how the decision on how to properly structure a service origination creates a challenge for the companies which have upheld servitization.

According to Oliva & Kallenberg (2003), through the creation of a separate business unit for services with loss and profit responsibility, it has resulted in coming up with a well-organized business structure that helps the organization to ensure that the customers facing personnel have acquired service development know how (Kindstrom, 2010). The author also adds and says that customer retention and satisfaction emerges when companies create separate business units for internal delivery. Secondly, to achieve a successful production, higher level of integration of business unit should be considered according to Neu & Brown (2005 & 1998) through combining organization efforts according to Kindstrom(2010) which is contrary to Oliva's view. Through intra-firm collaboration, unlike business units...