Overcoming the challenges that hinder new service development by manufacturers with diverse services strategies

Abstract

This paper explores the new service development (NSD) challenges that manufacturers face in undertaking servitization initiatives and their attempts to overcome these challenges. Prior work identifies some generic NSD challenges and manufacturers' responses to them. However, understanding how such responses relate to the manufacturer's services strategy remains under-explored. Recent research suggests that manufacturers adopt diverse service strategies and this diversity provides the context for our study. Four case studies are undertaken in large UK-based manufacturers with services strategies differing with respect to the importance of services within their portfolios of offerings. We identify several NSD process challenges facing manufacturers and discuss how the case organisations seek to respond to them. Different degrees of product-logic drive NSD for each of the cases, suggesting manufacturers risk losing key product advantages if they try to 'break free' from their product heritage. However, this can limit the role that services ultimately play in a manufacturing business, potentially putting it at risk from other actors' radical service innovations. Responses to challenges differ depending on the services strategy adopted. The more enthusiastic organisations have to overcome more challenges than those demonstrating lower levels of enthusiasm. The study offers a more nuanced understanding of how manufacturers can overcome key NSD challenges to create new services. Based on the study, seven propositions are presented regarding NSD by manufacturing organisations.