Power-by-the-hour: the role of technology in reshaping business strategy at Rolls-Royce

There is a recognised trend of manufacturing companies offering not only products, but services and even complete solutions to business problems. Research has highlighted economic, market demand and competitiveness factors as responsible for the re-shaping of business strategies that this has involved. This study analyses the extent to which another factor, technology, has been a significant factor in the switch from product oriented to service oriented strategies. A case study of the aero engine manufacturer Rolls-Royce is used to analyse the impact of technology, which is found to have led manufacturers to re-shape their business strategies. The study finds that developments in one technology in particular, namely digital electronics, have been a powerful enabling factor facilitating the implementation of service strategies. This provided original equipment manufacturers (OEMs) like Rolls-Royce with a competitive advantage relative to conventional service providers, by enabling them to acquire new knowledge management capabilities

Servitisation and value co-production in the UK music industry

Since the rise of music on the internet, record companies have reported falling sales of physical products. This has occurred at a time when technology has radically increased choice, availability and the opportunity for the consumer to purchase music. As the music industry has moved from a product to a service business model, has the loss of sales meant they have not taken their customers with them? This paper provides a description of different music consumers based upon quantitative analysis of consumer characteristics. The paper then undertakes an exploration of the relationship between the consumer groups and their purchasing preference in relation to intangible ‘service’ purchase such as downloaded music and the purchase of a tangible physical product such as CDs or vinyl. In addition, we analyse the relationship between consumer types and their propensity to actively engage with music communities, such as through engagement with social media, and thus their willingness to coproduce greater value. Finally we explore the moderating effects of age and time devoted to listening to music on purchasing preferences and music discovery

Management Accounting for Service: A Research Agenda

Purpose – The purpose of the paper is to point out a research agenda for Management Accounting under the emergent Service-Dominant (S-D) Logic. S-D Logic is widely discussed in the field of Marketing, the paper tries to extend S-D Logic in the Management Accounting context and develops some related considerations. Methodology/approach – Service related change in economy and firms raises new challenging issues in management accounting topics such as cost classification, cost structure, cost object, the role of “traditional” accounting tools and models, price-cost relations for pricing decisions. In this paper, we identify several critical research questions that address a tentative research agenda in the field of management accounting to better explore its role within service science. Throughout the paper many different examples are provided in order to support what is sustained. Findings – The conclusions of the paper trace some aspects addressed as core in the distinction between Goods-Dominant Accounting and Service-Dominant Accounting. Considering the new changing service environment, the role of management accounting in providing information to support managerial decision making and control can be widely renewed. Research implications – The paper opens many underexplored topics on Management accounting in the interface with service and traces a research agenda for further research. Originality/value – This is the first paper, after the brief overview on accounting and Service Science provided by Kerr (2008), aiming at understanding the role of Management accounting in the context of S-D Logic.Service-Dominant Logic, Management Accounting, Costing, Measurement, Value.

Sustainable Value Proposition Design in a Product-Service System

Many companies have started to add services to their tangible products in order to defend themselves from increased competition from low-cost economies. Research regarding the transition towards product-service systems (PSS) and how the PSS providers' business models are affected exists, but there is a lack of research regarding how the suppliers to the PSS providers are affected by the transition towards PSS. Therefore, this thesis studies the situation for a supplier/partner to an OEM that has changed their business model to a PSS providing one. As the first step in a development of a new business model aims this thesis to provide guidelines for how to set up value propositions suitable for a supplier/partner in this new environment. When technologically complex products, such as aircraft engines, are provided through PSS offerings it is hard to translate customer needs into quality parameters, which makes it hard to sustain the value to customer over time. Therefore, how to keep the value offering sustainable over time is also investigated in this thesis. The aim of this study was to investigate how a sustainable value proposition can be designed for a product and technology supplier/partner to an OEM that offers PSS solutions. The research has been performed through studying relevant literature and collecting empirical data from a case company through semi-structured interviews and a workshop. The case company in this research is Volvo Aero Corporation (VAC). The empirical findings show that VAC wants to offer product-service bundled solution, which fit the whole spectra of PSS value propositions, to their partners/customers. To be able to deliver these different types of product-service bundled solutions different value propositions that suit the different kinds of PSS offerings are needed. Requirements that must be fulfilled to be able to offer and deliver the different types of value propositions exist in terms of securing sufficient information access, aligning the incentives of all actors involved and achieving an internal consensus of what is delivered

CASE STUDY OF INDUSTRIAL SERVITIZATION AS AN ORGANIZATION DEVELOPMENT PROCESS DIMENSIONS OF INDUSTRIAL SERVITIZATION – DISCOURSE ANALYSIS ON ANNUAL REPORTS

This study examines how the transitioning process towards a more service-oriented logic has been carried out in four publicly-listed manufacturing companies based on their annual reporting; Kone, KoneCranes, Metso and Wärtsilä. The qualitative comparative case method is applied to analyze these companies in order to find out how far the com-panies are in the processes of service implementation and how they have reached this point. In this respect, a four-stage model is created to divide the service-implementation process into four distinctive phases; 1.) Product supplier, 2.) Add-on service provider, 3.) Solution supplier and 4.) Performance supplier. This model is further applied to de-termine how the servitization process has proceeded in case companies during the re-search period from 2001 to 2011. Study results suggest that case companies have gone through relatively different service development processes in terms of both chronological lengths and contents of each de-velopment stage. Case companies were located in different phases in 2001 as Metso represented a Product Supplier, whereas Wärtsilä and Kone were situated in the Add-on service provider -stage. Only KoneCranes had advanced into the Solution Supplier -phase. All the case companies have ended up to the Solution Supplier -phase in 2011. However, some of the companies seem to share better premises to progress into the last service development phase in the future. This paper complements the service-related research of manufacturing companies by paying attention especially on the comparative case study method with annual reports as the key source and by establishing the Four-stage service development model that can be further used to assess how companies have progressed in their servitization processes.fi=Opinnäytetyö kokotekstinä PDF-muodossa.|en=Thesis fulltext in PDF format.|sv=Lärdomsprov tillgängligt som fulltext i PDF-format

Proceedings of the Spring Servitization Conference (SSC 2013):servitization in the multi-organisation enterprise

The increased data complexity and task interdependency associated with servitization represent significant barriers to its adoption. The outline of a business game is presented which demonstrates the increasing complexity of the management problem when moving through Base, Intermediate and Advanced levels of servitization. Linked data is proposed as an agile set of technologies, based on well established standards, for data exchange both in the game and more generally in supply chains

Organizational design for service innovation development

This is the accepted manuscript. It was part of the Proceedings of the 2014 R&D Management Conference.Firms increasingly servitize, thus selling functionality instead of or in addition to products. Despite various qualitative studies little quantitative evidence exists on how firms should organize for effective service innovation. This paper presents results from a quantitative study on servitization in the German manufacturing sector. We focus on performance effects of three distinct organizational design element: autonomy of the service business, service innovation orientation in the innovation strategy and formalization of a service specific innovation process. We analyze how these organization design elements are contingent on service innovativeness. Our results are based on hierarchical regression analyses of data complied through a multi-item scaled questionnaire completed by two informants from 72 firms. The findings show that organizing for new service development in a separate business unit and formalizing a specific service innovation process positively impact service business success in general. When testing for moderating effects we find that the results are contingent on technological and organizational innovativeness of the new services that firms develop. However, when service units occasionally work on radical innovation projects such organizational design seems to be sub-optimal. We discuss how firms can counteract sub-optimality by specific remedies.We like to thank Thomas Meiren and the Competence Team Service Development at the Fraunhofer IAO in Stuttgart (Germany) for their generous support. Funding for the project was kindly provided by the Konrad-Adenauer Foundation