Servitization: Developing a business model to translate corporate strategy into strategic projects

Abstract

The primary aim of this research study was to develop a business model, appropriate for a servitization environment that will facilitate the translation of corporate strategies into strategic projects. An additional aim of the research study is to determine the influence of organisational culture and employees skills on the successful implementation of a servitization process. Economic pressures and turbulent environmental conditions over the last few years has forced manufacturing companies to revisit their strategies to ensure some form of stability and long term survival. Notably, the emergence of services as being the fastest growing sector of the global economy, has given impetus to the need for manufacturing institutions to conduct a strategic reassessment of their operations. The challenge that companies were confronted with was based on how to successfully execute the well-intended strategies. Manufacturing companies realised that the manufacturing of products and the optimisation of manufacturing processes alone were not enough to provide them with a competitive advantage and maximise their economic growth. The strategic realignment in many instances not only focused on issues relating to the manufacturing of products per se, but also on providing a bundle of services to clients, resulting in a so-called servitization strategy. This, however, confronted the executive team with a strategic management challenge, namely the need to develop business models that would be both appropriate for a manufacturing and a service operational setting. Business models, such as the model developed by [10], provide a transformation platform for the servitization strategy. Elements that influence the successful implementation of the business models, that are not always considered or managed by executives, are organisational culture and the new skills required. In terms of the skills required, the so-called T-shape skills profile in particular, assumes relevance in implementing a servitization strategy. The focus in this research study is therefore to gain an understanding of the concept ";servitization";, from a strategic management perspective. Three very specific aspects are addressed in this regard, namely the need for a new business model deemed appropriate for implementing a servitization strategy, the organisational culture implications involved and the skills related issues that need to be taken into consideration for the successful implementation of the strategy. © 2011 IEEE.