Paths Toward Radical Service Innovation in Manufacturing Companies—A Service‐Dominant Logic Perspective

Research on servitization of manufacturing companies concentrates on typologies of product–service bundles, on transition pathways to increased servitization, and on resource and capabilities configurations necessary to accomplish this transition. Missing from existing research is an analysis of the degree of novelty of service innovations introduced by manufacturing companies. Therefore, this article shifts the focus from the transition process itself to the question of how manufacturing companies can introduce radical service innovations to the market. This article links servitization literature with service innovation literature and investigates how manufacturing companies can introduce radically new services in terms of three forms of innovations: service concept innovations, customer experience innovations, and service process innovations. Service‐dominant logic (SDL) is applied as the theoretical lens because it covers four significant factors influencing the success of companies’ innovation activities: actor value networks, resource liquefaction, resource density, and resource integration. Based on a multiple case study of 24 Danish business‐to‐business manufacturing small‐ and medium‐sized enterprises and through a fuzzy set qualitative comparative analysis, different configurations of the principles of SDL are analyzed. They describe the paths to radical service innovation. Digitalization appears as a central causal condition in the bulk of the configurations. Big and rich data generated internally within the focal company in combination with for instance customer data can enhance the innovativeness of the service offerings. However, digitalization is not a sufficient condition for launching radical service innovation—it should be combined with an efficient mobilization of resources internally within the focal company and/or collaboration with other organizations within the value system. In addition, the analysis hints to a need to detach from immediate customers as the prime driver of service innovation.     

Service innovation of cold chain logistics service providers: A multiple-case study in China

This exploratory study investigates how cold chain logistics service providers (LSPs) in emerging markets gain competitive advantage through service innovation, and how state ownership and regulatory pressure influence their innovation practices. By applying a multiple-case study research design, this study examines service innovation in four leading cold chain LSPs in China. For each case, specific service innovation practices are documented and coded according to the service innovation framework adapted from previous research. The results show that service innovation is indeed important impetus for cold chain LSPs' superior competitiveness, even though previous research suggested that firms in this industry are not as innovative as others. Cold chain LSPs in emerging markets tend to innovate in providing new value-added and differential service offerings to specific customers, industries or regions. Cross-case analysis also reveals that high state-owned share and regulatory pressure may limit LSPs' capability for investing service innovation and developing novel business models.     

Developing logistics value propositions: Drawing Insights from a distributed manufacturing solution

With a focus on supply chains as ecosystems of service exchange, our paper aims to explore how value propositions are developed and evolve via combinations of service innovation. A single longitudinal case study is presented. The units of analysis are different projects along a logistics service provider (LSP)’s innovation journey. The study explores how the case company identified innovation in logistics as a gap and developed a distributed manufacturing strategy with a unique business model involving a reallocation of production functions across a global supply network. Our contribution is two-fold. In terms of theory, we adopt a service-dominant logic perspective to investigate how companies' value propositions evolve over time. In terms of managerial contributions, our paper provides insights into how service providers can strategically integrate their resources with service ecosystem partners to provide competitive business propositions.     

Value Creation and Value Capture Alignment in Business Model Innovation: A Process View on Outcome-Based Business Models

Industrial manufacturers are innovating their business models by shifting from selling products to selling outcome-based services, where the provider (manufacturer) guarantees to deliver the performance outcomes of the products and services. This form of business model innovation requires a profound yet little understood shift in how value is created, delivered, and captured. To address this research gap, our study examines two successful and four unsuccessful cases of this shift. We find that effectiveness in business model innovation hinges on the three process phases that unfold in collaboration with the customers: value proposition definition, value provision design, and value-in-use delivery. We also find that that success is determined by the alignment of specific value creation and value capture activities in each phase: identifying value creation opportunities—agreeing on value distribution in value proposition definition, designing the value offering—deciding on the profit formula in the value provision design, and finally refining value creation processes—regulating incentive structures in the value-in-use delivery. Our process model contributes to the literature and practice on business model innovation by providing a thorough understanding of how alignment of value creation and value capture processes is ensured, whilst paying special attention to their interdependence and the interactions between provider and customer.     

Transitioning and co-evolving to upgrade value offerings: A competence-based marketing view

This article shows how subcontractors in the steel and metalworking industry can effectively upgrade their customer value offerings. The study intends to identify internal and external drivers for successful transitions. It builds on the IMP's (Industrial Marketing and Purchasing Group) research tradition by looking into value creation and competence-based marketing within business networks. Using qualitative methods, the research identifies ‘ideal’ value-added market positions and relates these to specific competence configurations. It also reveals the need to manage co-evolution with other network partners in order to make a successful transition from basic to value-added offerings. The paper contributes to business marketing science by looking explicitly into the mechanisms of internal alignment when upgrading value offerings (a pre-condition often overlooked in extant literature) and by extending the concept of co-evolution.     

A service perspective on business relationships: The value creation, interaction and marketing interface

Adopting a service perspective or logic on business directs suppliers' focus in business relationships towards engaging with their customers' business processes. The purpose of this article is to analyze implications for value creation and marketing of adopting a service logic in business relationships. In the article it is demonstrated that a service perspective is multi-dimensional, enabling the mutual creation of value, with service as a mediating factor in that process. It is argued that value creation, purchasing, usage and marketing are intertwined processes. Here supplier-customer interactions are in a focal position. This perspective enables marketers to better understand how to develop and extend service offerings through assistance to customers' processes relevant to their businesses. Therefore, the underpinning logic of industrial interactions is analyzed in detail, extending marketing's conventional boundaries.     

The impact of network configurations on value constellations in business markets — The case of an innovation network

A growing body of scholars are advocating a better understanding of how value is created in business networks, rather than merely in business relationships or at the level of single actors. Among such networks, innovation networks, i.e. the configurations of strategic entrepreneurial nets aimed at improving the effectiveness of innovation performance, have come under scrutiny in the business marketing literature. However, research that explicitly connects value considerations with innovation network configurations is still in its infancy, with empirical evidence being notably scarce. This study is aimed at identifying if and how network configurations affect value constellation aspects in business networks, in terms of value recipients and value outcomes. We interviewed key informants representing 46 high-technology entrepreneurial firms co-located in an innovation network (Daresbury Science and Technology Park — UK). Our study identifies that different network configurations can co-exist in the same overall network; these, nevertheless, are not alternative independent structures, but rather they interact with each other through actors spanning their boundaries. Our study thus provides an understanding of network configurations relating to specific value consequences, but also provides evidence relating to the interactions between different configurations. By doing this, we establish a bridge between a business marketing and a strategy perspective on value in networks. Important managerial implications and implications for policy makers also emerge from our study.     

Servitization in global business-to-business distribution: The central activities of manufacturers

Manufacturers' servitization development is a prevalent trend in the current business world. Companies then aim to increase customer closeness and complement product offerings with services. However, extant literature on distribution and marketing channels literature remains limited in terms of the implications of servitization for global business-to-business distribution. Therefore, this qualitative multiple case study identifies the central activities of servitizing manufacturers in global distribution. The study concludes with the following research propositions: Servitizing manufacturers develop global service portfolios and customize offerings according to local customer characteristics; build global operation models and adjust local service processes; ensure global brand coherency and design the customer experience according to local customer expectations; and create global value propositions and enhance local value co-creation with business customers. The study outlines managerial implications in terms of organizing global distribution. It also discusses new knowledge sharing and capability needs regarding solution sales, service provision and customer relationship management.     

Industrial internet of things business models in the machine-to-machine context

This study analyzes Industrial Internet of Things (IIoT) business models in the machine-to-machine (M2M) context. Thereby, it develops a conceptual framework to categorize different types of business model innovation for companies operating in the M2M business space. Business model innovations tend to cross multiple industries and drive ecosystems in which smart objects facilitate business models and service applications that are incrementally or radically novel in terms of their modularity or architecture. Our framework identifies four distinct types of IIoT business models: (I) Company-specific business models, (II) Systemic business models, (III) Value designs, and (IV) Systemic value designs. Moreover, it sheds light on different abstraction levels of business model building blocks and exposes the characteristics and differences in the value potential between the four business models. Finally, we advance the idea of ‘value design’ referring to business models of multiple actors coupled together, ultimately resulting in complex networks and ecosystems of diverse things, processes, and companies.     

Application and performance impact of stage–gate systems – the role services in the firm’s business focus

Although service innovation is important, knowledge of new product and service development, including the positive effect of stage‐and‐gate‐type systems, has been derived almost exclusively from studies in the manufacturing sector. In the present paper, we address two important questions: How do differences in the firm’s business focus, which describes whether a firm puts more emphasis on products or services in its business activities, influence the usage of such formal innovation processes? Is stage‐and‐gate‐type systems’ impact on innovation program performance contingent on the firm’s business focus? Unlike previous studies, we not only differentiate service and manufacturing by industry classification codes but also apply a continuous measure to take into account the blurring of boundaries between the manufacturing and service businesses. Based on a comprehensive discussion of service‐specific characteristics and their implications for innovation management and using a cross‐industry, multi‐informant sample of innovation programs from 272 firms with 1,985 informants, we find empirical support for firms with a stronger focus on the service business being less likely to use stage‐and‐gate‐type systems. Furthermore, the use of stage‐and‐gate‐type systems fosters innovation program performance, and this effect becomes stronger as the business focus shifts toward services. This result implies that service‐based firms can benefit from stage‐and‐gate‐type systems to a greater extent than product‐based firms. Our research also demonstrates the gap between the desired level of innovation process formalization and its current usage in practice, especially for firms with a dominating service business.     

The effects of knowledge interaction for business innovation

The objective of this paper is to examine the effects of knowledge interaction on different types of business innovation. We first identified three indicators that reflect on the quality of the interaction between customers and technological knowledge, and then classified business innovations as product innovation, problem-solving innovation, or general innovation capability. Hypotheses about the impact of different qualities of knowledge interaction on business innovations were tested by collecting data from 178 high-technology firms in Taiwan. The results revealed that product innovation requires both wide-ranging and deep interaction between customers and technological knowledge, that problem-solving innovation requires either wide-ranging or deeper interaction between customers and technological knowledge, and that wide-ranging knowledge interaction is the most important driver for building general innovation capability. The research results enhance our understanding of knowledge interaction, with a special focus on the content and quality of the knowledge interactions within an enterprise. It also helps business managers in allocating resources and facilitating interorganizational communications for different situations related to innovation.     

Stakeholder management in complex product systems: Practices and rationales for engagement and disengagement

Collaboration with stakeholders has become a cornerstone of contemporary business; however, absolute collaboration is not trouble-free. The present study explores how and why firms engage and disengage external stakeholders in their value-creating activities in complex product systems over time. From the existing research on stakeholder management, we know that actor roles, strategies, reasons and challenges of engaging external stakeholders in innovation and business activities vary across contexts. However, additional research is needed to construct a more comprehensive understanding of the practices as well as their rationales by which firms engage or disengage external stakeholders in complex product systems. Our empirical study of a European district development megaproject improves the current understanding of stakeholder management in complex product systems contexts. We derive nine practices and four rationales that timely describe the engagement and disengagement of external stakeholders. The study develops a processual model of stakeholder management in complex product systems with implications for both stakeholder management literature and managerial practice.     

Marketing of competence-based solutions to buyers in exploratory relationships: Perspective of OEM suppliers

In face of mounting challenges from delocalized production, commoditized products, and escalated demand from professional buyers, providing solutions rather than selling products has been put forward in the normative literature as a promising business model for creating high-value differentiated offerings. Nonetheless, empirical survey research into the processes whereby traditional suppliers of “basic products, spare parts and services” migrate towards marketing of “integrated solutions” is still sparse. Grounded in a competence-based marketing view, the current research addressed the research problem of how OEM suppliers upgrade their value offerings via competence-based solutions. The research model was tested by a sample of 403 contract/OEM manufacturers located in China. This resultant findings revealed the processes undertaken by OEM suppliers during the development of competence-based solutions, found out the internal coordination and innovation capabilities required to support competence-based solutions, and uncovered the external communication/disclosure of competence needed to strengthen the link between competence-based solutions and upgraded relationship value.     

第三方医药物流企业的服务创新动力与路径研究

我国医药物流市场巨大,第三方物流是医药物流发展的趋势。根据服务科学的基本原理,分析了医药物流和第三方医药物流的状况,阐述了第三方医药物流服务创新的必要性,建立了第三方医药物流企业服务创新的动力模型和服务创新的“五星图”模式,提出我国第三方医药物流企业要从新服务概念、新客户服务界面、新的服务传递系统、技术选择及物流服务创新战略的选择与协调等五条路径推动服务创新。     

商业模式体系重构

商业模式从根本上讲是企业价值创造的逻辑。基于此种认识,笔者提出了商业模式的“3-4-8”的构成体系。“3-4-8”构成体系实质是一种从“远—中—近”三个层次对商业模式进行全面考察的立体架构。根据模块化的思想,商业模式变革可以遵循的三种基本路径:基于价值模块的商业模式变革路径、基于界面规则的商业模式变革路径、基于二者混合的商业模式变革路径。在三种基本路径的基础上,商业模式变革可以进一步分为四种类型:完善型商业模式变革、调整型商业模式变革、改变型商业模式变革、重构型商业模式变革。这四种类型商业模式变革对商业模式核心逻辑的改变程度不同,分别适用于不同的环境动态性和产业生命周期。     

Modular interconnected processes,fluid partnering,and innovation speed: A loosely coupled systems perspective on B2B service supply chain management

In this paper, we examine whether and how loosely coupled systems in service supply chains influence the speed of innovation in service organizations. Drawing upon the nomological network of loosely coupled systems, we propose a way for supply chains in the business to business (B2B) market context to be conceptualized as loosely coupled systems and explain how the dialectical elements of modularity at the interface of standard process and content interfaces (SPCI) and structured data connectivity (SDC) enable the sharing of high-quality information through fluid partnership in service supply chains to improve innovation speed. Results that are based on a sample of service firms indicate that SPCI and SDC are positively associated with modular interconnected processes, and they, in turn, positively influence the ability to reconfigure supply chain partners (fluid partnership). Fluid partnership enhances information quality, which in turn, influences innovation speed. Implications are discussed for B2B service supply chain efforts in improving innovation speed.     

Only the Brave: Product Innovation,Service Business Model Innovation,and Their Impact on Performance

Recent empirical findings concerning the performance effects of service business model innovation (servitization) and its interplay with product innovation are mixed. Using the lenses of the demand‐based view on value creation and complementarity, the performance impact of two key service business models is examined: the product‐oriented model and the customer‐oriented model, implemented jointly with product innovation. Results indicate that the interplay between service business model innovation and product innovation results in long‐term performance benefits coupled with a degree of short‐term performance sacrifice. Service business model innovation in isolation from product innovation results in short‐term profit gains but long‐term knowledge loss and, thus, market performance decline. Our study suggests that firms need to look beyond the evidence on short‐term effects in order to achieve superior performance in the long run.     

Managing value in use in business markets

Suppliers in business markets are increasingly providing complex offerings, which is reflected in concepts like hybrid offerings, servitization and solution business. Such complex offerings are characterized by value propositions in which the value that emerges throughout the entire customer usage cycle builds the core element. To secure and increase this value in use, as perceived by the customers, suppliers need to establish activities of value-in-use management. This value-in-use management comprises monitoring the delivery of the promised value, and enhancing customer value in use throughout the entire lifecycle of a complex offering. This article investigates which value-in-use management activities are currently implemented by suppliers, how these activities are linked to other business processes, and what differences in value-in-use management activities exist between various types of complex offerings. By addressing these questions, this research contributes to literature by exploring post-deployment processes that affect value in use customer experience when using complex offerings. Moreover, from a managerial perspective, it reveals in which constellations measures of value-in-use management are currently implemented in practice and therefore are of particular importance. Furthermore, the results of the study may serve as a starting point to elucidate how measures of value-in-use management can be implemented successfully.     

From collaborative community to competitive market: the quest to build a crowdsourcing platform for social innovation

Crowdsourcing presents new opportunities to generate social innovation. However, many crowdsourcing social innovation initiatives struggle with turning their promising projects into sustaining platforms. We studied how to design crowdsourcing platforms for social innovation by building and examining a platform called travel2change. We illustrate a framework of crowdsourcing platform building blocks based on the evolution of our case study from a collaborative community to a competitive market. Thriving platforms have a clear purpose, they facilitate value‐creating interactions for well‐understood actors and build a valid business model. The insights reveal design principles to guide organizations that seek to leverage crowdsourcing for social impact.     

Business model innovation and decision making: uncovering mechanisms for coping with uncertainty

As a research subject, business model innovation spans the strategy, innovation, and entrepreneurship fields. Yet, despite the importance of the concept, prior work has paid little attention to how decision-makers cope with uncertainty and gain understanding about interdependencies in new business model configurations. To address this gap, we combine top-down theorising and evidence-based exploration and seek to unpack some of the coping mechanisms that operate in the evolutionary view of business model innovation. Using in-depth interviewing to collect data, our study reveals five strategies – customer centricity, value co-creation, capability evolution, ecosystem growth, and adaptive pricing – that decision-makers apply to cope with uncertainty in business model innovation. We find that coping mechanisms support decision making during the development of new business models. Furthermore, we find that the five coping strategies delineate decision making for value proposition, value creation, and value capture configurations in more detail than existing literature has described. Our findings have important implications for decision making in business model innovation.