How do companies servitize? Case company: Mölnlycke Health Care AB

Abstract

The rapid technological development has commoditized product differentiation and squeezed products margins. Consequently, manufacturers have sought alternative routes to increase the opportunity for competitive differentiation and found that they could do so by increasing the service component in their offerings. Due to the very unique and different natures of service, many companies experience problems identifying the service propeller. It has been our attempt to analyze and describe how businesses approach service development by conducting interviews and by reading relevant literature.

Our findings and subsequent analysis excavated a number of product culture residuals that had hampered the servitization process. One of our main findings showed that in order to overcome the barriers of change, there was an attested need to restructure a company's organization and reorient the company culture.

Nonetheless, we found, on the basis of our interviews and relevant literature, that the final and most important common factor was the unawareness as to the service development phase whereabouts. It was revealed to us that the unawareness by and large was due to the inability of product-dominant companies to handle the abstractions of the service concepts. The development process appears to be an ad hoc phenomenon, which also helps explain the frustration of the internal obstacles everyone had encountered. We came to the final conclusion that it was in fact the new service development process per se that had posed the strategic challenge.