Mastering the Transition to Product-Service Provision: Insights into Business Models, Learning Activities, and Capabilities

Abstract

OVERVIEW:Traditional manufacturing companies are increasingly offering industrial services in order to secure their position in the globally competitive environment. However, little is known about the extent and effect of this transition. Based on a large-scale survey of Finnish manufacturing companies, this study offers descriptive statistics for current industrial service offerings. Merely adding on simple services to a current product offering is shown to be negatively associated with financial performance. Rather, our statistical analysis suggests a thorough and comprehensive organizational transformation is required to generate significant financial value. In addition, qualitative data from globally recognized Swedish and Finnish frontrunner manufacturing companies offer insights into how these market leaders have successfully navigated the organizational challenges of such a transformation to offer successful industrial product-service systems. Based on the data, we outline four distinctive capabilities and associated key learning activities required to facilitate a successful transition toward becoming a high-value industrial product-service provider.