Servitization as reinforcement, not transformation

PurposeThis study explains why product-centric manufacturers utilize advanced services not as vehicles of transformation, but of reinforcement, to strengthen their established business model logic based on selling products and basic product-related services.Design/methodology/approachThe empirical basis of this study relies on an in-depth case study of a globally operating manufacturer of industrial pumps and related services. The data includes 31 interviews conducted over several years of in-depth collaboration with the studied firm.FindingsProduct-centric manufacturers utilize advanced services as engagement platforms to facilitate the external and internal engagement of the actors and the resources controlled by them. Externally, advanced services facilitate access to customer decision makers and insights into their latent needs. Internally, advanced services help the manufacturer to more effectively leverage resources that reside within its different organizational units. Ultimately, in leveraging advanced services as engagement platforms, the manufacturer seeks to boost activities with the greatest immediate impact on its market performance: the sale of products and basic product-related services.Practical implicationsThe study explains why managers should invest into development of advanced services even if such services contribute only marginally to the manufacturer’s direct revenues and profits.Originality/valueThis study contributes to development of an alternative explanation of servitization that departs from the current paradigmatic assumptions in the field</p

The making of convergence : knowledge reuse, boundary spanning, and the formation of the ICT industry

While mastering technology and industry convergence are essential for firms across a growing number of industries, convergence is often rapid and abrupt, challenging firms to develop appropriate strategic responses. Focusing on the historical convergence between information technology and communication technology, we examine the microlevel behaviors of scientists initiating and driving convergence. Analyzing a bibliometric dataset of 257 641 scientific articles, we demonstrate how industry convergence manifests in a microlevel scientific convergence, preceding industry convergence by several decades. Our article contributes to the literature on convergence by developing new bibliometric measures for scientific convergence, and by contrasting microlevel behaviors that underpin convergence. Based on our findings, we offer a set of methods and strategies to assist managers in technology-based businesses with anticipating and responding to convergence in a timely manner

Strategies for business model innovation: How firms reel in migrating value

This paper brings together firm-level research on business models and industry-level research on value migration to examine patterns of business model innovation. We draw on qualitative data from 14 cases and 68 interviews in the computer and telecommunications industries to demonstrate how business model innovation is sensitive to industry-wide forces of value migration. Based on our analysis we conclude that when value is rapidly migrating across industries and between firms, proactively substituting key elements of the primary business model provides a better fit with the new value landscape than launching secondary business models in parallel. We suggest four underlying mechanisms that link business model innovation, value migration and subsequent outcomes. Unpacking business model innovation allows us to discuss contingencies for the main business model strategies, specifically in terms of limitations to—and opportunities of—changing the primary business model and the practice of parallel business models

Management of convergence in innovation strategies and capabilities for value creation beyond blurring industry boundaries

Throughout the past decade, the phenomenon of technological convergence has increasingly gained managerial attention. In this special form of technological change, the coming-together of previously distinct knowledge bases gives rise to the creation of new applications and business models. When such innovations emerge at the intersection of industries, the resulting creative destruction may exceed previously established industry boundaries. As a consequence, convergence does not only promise the creation of new value, but may imply significant disruptions to established industries. Based on investigating 26 firms within the ICT industry, this book highlights implications of the convergence phenomenon on firms’ innovation management practices, and derives strategic guidelines for building and sustaining business models beyond blurring industry boundaries

A 3G Convergence Strategy for Mobile Business Middleware Solutions : Applications and Implications

Mobile business solutions are one of the most attractive market segments of mobile information services. The third generation of mobile communication systems (3G) will be a significant step forward in the convergence of telecommunications and datacommunications industries. More specifically, the convergence of mobile technologies and the Internet allows compelling possibilities for future applications and solutions. However, most current mobile businesses and mobile application and solution providers are rather contributing to the process of convergence; many current ideas and solutions are based on the restrictions of existing mobile networks combined with Internet-based services. In the future, when mobile networks and the Internet have merged, it will no longer be possible to create revenue with these types of solutions. One concrete solution is the mobile middleware concept, bridging the mobile technologies and Internet world. This Master’s thesis studies the middleware concept for providing business applications in the light of 3G, making strategic recommendations to a provider of these kinds of services. A comprehensive discussion about the developments after 3G is introduced. Alternative solutions are presented and some strategic implications are introduced. The implications are motivated by an industry survey, carried out within this project. The topic of over-the-air data synchronization is discussed as an example for interim middleware. Mobile computing file system issues are seen as an interesting opportunity for business applications. The possibility of remote desktop screen access is studied, and measurements proving its feasability for hosted wireless application service provision are made. Emerging mobile Java technologies are discussed as an efficient platform for providing ubiquitous, device independent end-to-end solutions. As one of the recommended strategies, this thesis introduces the concept of hybrid thickness client applications as a feasible solution for migrating from current middleware solutions to an (uncertain) future of native, thick terminal applications, within a scope of two years. Based on this concept, a prototype for a 3G smartphone application was developed as an example. A set of possible strategic scenarios is presented and discussed. This thesis also discusses operator differentiation and business solutions in an all-IP based world. 3G networks and handset devices will introduce a large number of new applications and business opportunities, but such a change will also introduce new challenges and risks. The migration challenge is being illustrated in the case of Smartner, a mobile middleware solution provider focusing on business applications. As shown by this case, compared to current enabling solutions, a major shift in technologies is seen as needed, in order to maintain long-term success.Mobila affärssystem bildar ett av de mest attraktiva marknadssegment inom mobila informationstjänster. Den tredje generationens mobila kommunikationssytem (3G) kommer att bli ett viktigt steg fram mot konvergensen mellan telekommunikationsoch datakommunikationsindustrin. Särskilt konvergensen som äger rum mellan mobila teknologier och Internet erbjuder utmanande möjligheter för framtida applikationer och lösningar. De flesta nuvarande företag och tjänster inom mobilbranschen kan dock snarast betraktas som ett bidrag till denna konvergens. Många av de nuvarande idéerna och lösningarna är nämligen baserade på avgränsningar och problem som uppstår vid kombination av mobila system med Internet-baserade tjänster. I framtiden, när mobila nät har vuxit ihop med Internet till en symbios, kommer det inte längre att vara möjligt att förtjäna på detta slag av lösningar. En konkret lösning är det mobila middleware-konceptet, som bildar en logisk koppling mellan mobila teknologier och Internet-världen. Detta examensarbete studerar middleware-konceptet från en 3G-orienterad synvinkel och framför strategiska råd för företag som erbjuder detta slag av tjänster. En detaljerad diskussion om utvecklingen efter 3G presenteras. Arbetet lägger fram alternativa lösningar och strategiska implikationer deriveras. Implikationerna är motiverade bl.a. av en intervjuunders ökning som utfördes i samband med detta arbete. Temat trådlös datasynkronisering diskuteras som ett exempel för provisorisk middleware. Mobila filsystem införs som en intressant möjlighet för affärsapplikationer. Diverse möjligheter för fjärrkontroll av en arbetsplatsstation studeras och mätningar bevisar deras genomförbarhet för trådlösa applikationstjänster. Framträdande mobila Java-teknologier analyseras och presenteras som ett efficient underlag för plattformoberoende end-to-end-lösningaröver lag. En av de rekommenderade strategierna är baserad på det hybrida klientkonceptet, vilket presenteras som en realistisk lösning förövergången från nuvarande middleware-system till en (osäker) framtid av nativa, tjocka terminalapplikationer. Den strategiska horisonten för detta är två år. Utgående från detta koncept utvecklades en prototyp som exempel för en sådan applikation. Arbetet definerar och diskuterar dessutom diverse strategiska scenarier. Slutligen nämns problematiken om operatörernas framtida differentieringsmöjligheter och rollen av affärssystem i en fullständigt IP-baserad värld. 3G nät och terminaler kommer att skapa ett stort antal nya användningar och affärsmöjligheter, men ändringen kommer också att medföra nya utmaningar och risker. Detta illustreras med hjälp av företaget Smartner som exempel för en leverant ör av mobila middleware-lösningar för affärsanvändningar. Som demonstrerat i detta fall, anses i jämförelse med nuvarande applikationslösningar en signifikant teknologisk reorientering vara nödvändig, för att bevara ett långvarigt perspektiv.Langattomat yrityssovellukset ovat nykyään yksi kiinnostavimmista mobiilimarkkinoiden segmenteistä. Kolmannen sukupolven (3G) mobiilit viestintäjärjestelmät tulevat olemaan merkittävä askel kohti telekommunikaatioja dataliikennealojen yhdistymist ä (ns. konvergenssia). Itse asiassa mobiiliteknologian ja Internetin lähentyminen mahdollistaa entistä hyödyllisempien mobiilisovellusten ja -ratkaisuiden rakentamisen tulevaisuudessa. Tällä hetkellä useat mobiiliyritykset ja mobiilisovellusten tuottajat ovat kuitenkin osana tätä yhdistymisprosessia. Monet nykyiset ideat ja ratkaisut ottavat nimittäin lähtökohdakseen rajoitukset, joita nykyiset tietoliikenneverkot asettavat yhdistyessään Internet-pohjaisiin palveluihin. Tulevaisuudessa, kun mobiiliverkot ja Internet ovat yhdistyneet, ei ole enää mahdollista ansaita rahaa tällaisten perinteisten ratkaisuiden avulla. Yksi konkreettinen ratkaisumalli perustuu mobile middleware -käsitteeseen, joka liittää yhteen mobiiliteknologian ja Internetin. Tässä diplomityössä tutkitaan middleware- käsitettä yrityssovellusten tarjoamisessa erityisesti 3G-verkoissa, ja työssä esitellään strategisia suosituksia näiden sovelluspalveluiden tarjoajille. Työssä käyd ään perusteellisesti läpi kolmannen sukupolven jälkeistä kehitystä. Vaihtoehtoisia ratkaisuja esitellään, ja joitakin strategisia vaikutuksia tuodaan myös esille. Vaikutuksia perustellaan tuloksilla, joita tämän projektin osana tehty kysely paljasti. Tiedon langatonta synkronisointia tarkastellaan esimerkkinä tilapäisestä middlewaresta. Mobiileihin tiedostojärjestelmiin liittyvät asiat nähdään mielenkiintoisena mahdollisuutena yrityssovelluksille. Toimistojärjestelmien etäkäyttömahdollisuuksia on tutkittu ja niiden sopivuutta langattomaan sovellustarjontaan on mitattu. Kehittyviä mobiileja Java-teknologioita pidetään tehokkaana alustana, jonka avulla voidaan tarjota kaikkialla saatavilla olevia, päätelaiteriippumattomia ratkaisuja loppuasiakkaille. Yhtenä suositelluista strategioista tämä diplomityö esittelee yksinkertaisen päätelaitesovellusmallin, jonka avulla nykyisistä middleware-ratkaisuista voidaan siirtyä tulevaisuuden kehittyneempiin päätelaiteratkaisuihin kahden vuoden sisällä. Tähän konseptiin perustuen työssä on kehitetty esimerkki 3G-älypuhelimen sovelluksesta. Lisäksi esitellään ja arvioidaan mahdollisia strategisia skenaariovaihtoehtoja. Tämä diplomityö käsittelee myös operaattoreiden differointimahdollisuuksia ja yrityssovelluksia täysin IP-pohjaisissa verkoissa. 3G-verkot ja -päätelaitteet tuovat mukanaan laajan valikoiman uusia sovelluksia ja liiketoimintamahdollisuuksia, mutta tämä muutos merkitsee myös uusia haasteita ja riskejä. Tätä haastetta kuvataan tutkimuksen esimerkkiyrityksen Smartnerin tapauksessa, joka on yrityssovelluksiin fokusoitunut mobiilien middleware-ratkaisuiden tarjoaja. Tutkimus tuo esille, miten Smartnerin nykyiset sovellukset huomioon ottaen tarvitaan valtava teknologinen suunnanmuutos pitkäaikaisen perspektiivin säilyttämiseksi

Business model innovation in incumbent firms : cognition and visual representation

Business model innovation (BMI) constitutes a priority for managers across industries, but it represents a notoriously difficult innovation, with several challenges, many of which are cognitive in nature. The received literature has variously suggested that one way to overcome challenges to BMI, including cognitive ones, and support the cognitive tasks is using visual representations. Against this background, we aim at offering a contribution to the emerging line of inquiry at the nexus between business models (BMs), cognition and visual representations. Specifically, we develop a new method for visual representation of the BM in support of simplification of the cognitive effort and neutralisation of cognitive barriers. The resulting representation – a network-based representation, anchored on the activity-system perspective and offering complementarity and centrality/periphery measures – allows to visually represent an existing BM as a network (nodes and linkages) of interdependent activities and to express information related to the degree of centrality/periphery of single activities (nodes) with respect to the rest of a BM configuration. This information, we argue, is potentially very valuable in supporting the cognitive tasks involved in business model reconfiguration (BMR). We guide the reader to progressively appreciate how the development of the proposed method for visual representation is anchored to two main characteristics of BMR, namely the discovery-driven nature of BMR and the path-dependent nature of BMR. We offer initial insights on the cognitive value of such a type of representation in relationship to the simplification of the cognitive effort and the neutralisation of cognitive barriers in BMR