1. Service Business Development inManufacturing CompaniesHeiko Gebauer3rdInternational Research Symposium in ServiceManagement (IRSSM-3)Center of Innovation Research in Utility SectorsSwiss Federal Institute of Aquatic Science and Technology(EAWAG)Zurich, Switzerland

2. Traditional service research is beyond its peakService Management & Marketing1Number of articles1 -Scopus data base, Inquiry service, management and/or marketing June 2012 3. Service business in manufacturing firms has been an emerging topicNumber of articlesService Management & Marketing1100806040200Service business in manufacturingcompanies22 -Scopus data base, Inquiry product-service systems, industrial services, services in manufacturingcompanies, servitization June 2012 4. is a response to the third industrialrevolution & the globalization of manufacturing firmsNumber of articlesService Management & Marketing100806040200Service business in manufacturingcompanies 5. Service business development relatesto various theoretical perspectives Transition from product manufacturers to services providers Moving downstream towards services Servitization in the manufacturing sector Capital equipment manufactures moving towards high-value solutions Product-service-systems Solution providers Service infusion or growing for service solutions Hybrid offeringsSelected references: Wise and Baumgartner, 1998; Davies (2004), Vandermerwe and Rada, 1988, Oliva and Kallenberg (2003), Mathyssensand Vandendempt (1998 and 2008), Neely (2008), Brown, Gustafsson, Witell, 2009 6. Service business development changes thevalue contribution through servicesInvestments into the service businessService paradoxAd-hoc servicesupportLowValuecontributionthroughservicesMaintenance contractsPerformance-basedBusiness consultingIntegration servicesHigh 7. Contributions to service businessdevelopment in manufacturing companiesUnit of analysisManufacturing companies extendingthe service business4) Service strategies4) Service strategies1) Models for movingtowards services1) Models for movingtowards services2) Capabilities formanaging the servicebusiness2) Capabilities formanaging the servicebusiness3) Service offerings3) Service offeringsProduct1)Oliva & Kallenberg, 2003;Cohen et al., 2006; Gebauer etal., 2005; Reinartz & Ulaga,2008; Auguste et al., 20044Raddats and Easingwood, 2010;Davies, 2004; Windahl andLakemond, 2010; Sawhney et al.,2004; Wise & Baumgartner, 19992Neu & Brown, 2004 and2008; Baines et al.,2007, Davies et al.,2007 etc.)3Mathieu, 2001b; Windahl& Lakemond, 2010;Oliva & Kallenberg,2003)Services 8. Example IBMs move from productsto servicesMajor milestones Management commitment Management and financial system Recruiting new and intensive trainingof existing employees Incentive system for services Formulation & implementation of aservice strategy Creation of IBM Global Services asstrategic Business Unit Continuous service innovationen(Network, data storage, e-Business)Revenues in 2010 9. Beyond MNEs, there are also SMEs movingtowards services9Major milestones Management commitment Management and financial system Recruiting new and intensivetraining of existing employees Formulation & implementation of aservice strategy Creation of business unit forservices & components Service centers Service innovations and continuousservice improvementsRevenuesIn Million CHF 10. Qualitative case studies drive the research fieldArticle Authors Citations Research method1 Oliva & Kallenberg (2003) 240 Case studies2 Vandermerwe & Rada (1998) 113 Case studies3 Davies (2004) 103 Case studies4 Tuli et al. (2004) 95 Case studies5 Mathieu (2001a) 84 Case studies6 Mathieu (2001b) 81 Conceptual7 Sawhney et. al (2004) 73 Case studies8 Davies et al. (2007) 68 Case studies9 Neu & Brown (2004) 67 Case studies10 Gebauer et al. (2005) 65 Case studies 11. Stronger theoretical frameworks are necessaryProductmanufacturersManufacturingcapabilitiesSolution providersCombinations of products and servicesIntegration capabilitiesService capabilities ManufacturingcapabilitiesOperationalcapabilitiesDynamiccapabilitiesAdapted from Teece et al. (1997), Teece, (2007) Stefano et al. (2010)Individual skillsSensing Seizing ReconfiguringOrganizational routines(management innovations) 12. Cognitive phenomena limiting individual skills Overemphasize tangible and obviouselements Disbelief in economic opportunities Risk aversion for compete with customers Fundamental attribution error (pushingpeople, instead of setting up structures) Aggressive goalsSource: Ross, 1974; Gebauer and Friedli, 2004; Gebauer 2009Source: Ocasio, 1997Cognitive phenomenaCognitive theories 13. Succeeding through the service strategiesopens-up the potential of providing solutionsAfter-salesserviceproviderCustomersupportserviceproviderDevelopmentpartnerOutsourcingpartnerSource: Gebauer, Fischer and Fleisch (2010)Solution providerKey capabilities:Balancing differentbusiness modelsIntegration of differentbusiness modelsFlexibility acrossdifferent businessmodelsCustomer proximity tounderstandingrequirements accordingto the business model 14. Service orientation in the operational capabilitiesA abstract value of services, B role understanding, C personnel recruiting, D training, E compensation, F distinction product and service organization, G proximityto customersOperational capabilities for executing servicestrategies (1)After-salesservice providersCustomer supportservice providersDevelopment partnersOutsourcing partnersLegend (0 low, 1 high cluster means)Source: Gebauer, Gustafsson, Edvardsson and Witell (2010), Neu and Brown (2005 and 2008) 15. Management innovation drives servicebusiness developmentSensing routines(n=7)Down-stream-analysisUtility mapsService scenarios..Seizing routines(n=5)Strategy guide andhandbookService portfoliomanagement...Reconfiguring routines(n=7)Cost-accounting systemsService innovationprocessPerformancemeasurementManagementinnovations facilitatingthe sensing phaseMotivation, theorizing &labelingExternal > internalchange agentManagementinnovations facilitatingthe seizing phaseInvention &implementationExternal = internalchange agentManagementinnovations facilitatingthe reconfiguring phaseMotivationImplementationInternal >> externalchange agentsSource: Gebauer (2011) 16. Summary Service business development is an emerging research andmanagement topic Qualitative research drives the theoretical extension, but futureresearch should concentrate more on quantitative studies andunique qualitative research fields Research from emerging markets such as China, India, or Brazilare highly welcome Alternative theoretical perspective facilitate the researchcontributions16 17. Thank you very much for your attentionIf you have any further questions, pleasecontact me:heiko.gebauer@eawag.ch 18. More information can be found in following book