Applying value proposition design for developing smart service business models in manufacturing firms

Abstract

The digital transformation of economies is one of the megatrends of today’s world. The advancing equipment of machines and products with sensors and connectivity as well as their intelligent interconnection among each other leads to a mergence between physical and virtual worlds. This development is not limited to smart production systems in terms of an “Industry 4.0” only, but will also affect the increasingly important service business of manufacturing companies. Regarding “Smart Services” (data-based bundles of services, digital applications and technologies), the development of appropriate business models is seen as a key challenge for companies. Our paper illustrates how the approach “Value Proposition Design” can support manufacturing firms to develop Smart Service Business Models. Thus, we present insights from an applied research project, in which two different Business Model alternatives have been derived from applying Value Proposition Design.