Redesigning the Manufacturing Business Model for Services: Lessons From the Office Products Industry

Transcription

1 Redesigning the Manufacturing Business Model for Services: Lessons From the Office Products Industry Spring Servitization Conference May 2015

2 The Authors Ed Crowley Dr. Jamie Burton Dr. Judy Zolkiewski CEO, Photizo Group Doctorate Student Manchester Business School r.ac.uk Senior Lecturer Manchester Business School Professor of Marketing Manchester Business School

3 Key Definitions Office Products Industry: Manufacturers of print, copy, fax, and multifunction products (also called the print and imaging industry). Servitization: Integration of services with products to create bundles of greater value than products alone. (Vandermere and Rada, 1988) Measure of servitization: Service revenue divided by total revenue. (Fang, 2008)

4 Literature Review Previous research identifies executive recognition (Aspara et al 2013), ability to take action (Chesbrough, 2010), and defining a crises point event (Qureshi 2006, Davidson 1999) as enablers of BM transformation in support of servitization.

5 Research Question Servitization involves the transformation from a manufacturing business model to a services business model (Kindström 2010). Is business model transformation in the Office Products (OP) Industry a conscious effort (Chesbrough 2010), actively planned and managed to avoid potential pitfalls (Visnjic et al 2012), or is it a byproduct (Visnjic & van Looy 2013) of this effort?

6 Research Method Elite interviews with 13 senior executives at six global OP Industry firms. Part of a larger mixed-methods study on OP Industry servitization.

7 Data Sources 13 Elite Interviews with six companies.

8 Results: Industry Servitization A majority of the firms identified the manufacturing BM as a barrier to transformation. You can mange your manufacturing side and your forecasting and your processes based on that but your sales approach is totally different. Everything is different and your productivity is totally different in that business. Visibility is totally different. They are two different business models. Organization C, VP Sales I think there has to be this compelling business impact externally but the other half of the equation is it has to have a business model impact internally as well... The printing companies loved the business model. Organization C, Exec VP/GM One interviewee identified the services BM as a complimentary BM to the current manufacturing BM.

9 Results: Industry Servitization Interviews with four of the firms identified BM transformation as an active focus. Identified specific activities (Amit, 2015) associated with active BM innovation. All of the firms are seeing a significant shift in revenue to services (servitization). That is a big challenge for a traditional organization prompting the industrial organization to change the charging model or business model. Then in order to follow those business models or charging models, we should also enhance or modify our internal systems to manage those new business models. Organization B, General Manager Services Three of the firms did not identify BM as an active transformation focus and appear to be servitizing at a slower rate or even going through reverse servitization. We haven't really been successful to be honest and within the company the priority wise- for us to do the proper MPS again we have to have the proper resources to do it but we haven't really been successful as a result, and looking at the result top management is hesitant, well not convinced to put more resources into it unless we show some success. Organization D, GM of Marketing

10 Discussion Intentionality of BM evolution or transformation appears to be one contributor to servitization. Firms have different levels of cognitive recognition relative to their ability to proactively address BM transformation. Some firms perceive this as an area of active transformation While others see this as a passive result of servitization activities.

11 Management Implications An intentional approach to BM innovation is an important aspect servitization. Research indicates a need for active planning of BM transformation activities including planning for the transition, measuring and managing the transition, and proactively addressing and monitoring the BM transformation process.

12 Limitations and Areas of Further Research Limitation of Research: This does not define the level of importance for BM transformation relative to other servitization activities. Future Research: Research in other industries would enhance the projectability of this research.

13 Thank You Questions / discussion Contact: Ed Crowley» [email protected]»

14 References Amit, R. & Zott, C., Creating Value Through Business Model Innovation. MIT Sloan Management Review, 53(3), pp ASPARA 2013 Aspara, J. et al. (2013). Long Range Planning. Long Range Planning, 46(6), pp Chesbrough, H. (2010). Business Model Innovation: Opportunities and Barriers. Long Range Planning, 43(2-3), pp Davidson, W.H. (1999). Beyond re-engineering: The three phases of business transformation. IBM Systems Journal, 32(2), pp Fang, E., Palmatier, R. W. & Steenkamp, J.-B. E. M Effect of Service Transition Strategies on Firm Value. Journal of Marketing, 72, Kindström, D. (2010). Towards a service-based business model Key aspects for future competitive advantage. European Management Journal, 28(6), pp Photizo Group, I MPS Decision Maker Tracking Study. In: PHOTIZO GROUP, I. (ed.). Midway, Kentucky, USA. Qureshi, P.K.A.S. (2006). Organizational Transformation through Business Models: A Framework for Business Model Design. In 39th Hawaii International Conference on System Sciences. pp Stewart, Ken MPS Market Metrics: Market Size, Vendor Share, and Forecast. Photizo Group, Inc. Vandermewre, S. & Rada, J Servitization of Business: Adding Value by Adding Services. European Management Journal, 6, 10. Visnjic, I. and Van Looy, B. (2013). Successfully Implementing a Service Business Model in a Manufacturing Firm. University of Cambridge. Visnjic Kastalli, I. and B. Van Looy Servitization: Disentangling the Impact of Service Business Model Innovation on Manufacturing Firm Performance. Journal of Operations Management 31(4):