Balancing between products and services - An exploratory case study of internal challenges in the transformation process towards a solution business model

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School of Business | Master's thesis
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Product-centric companies are adopting service-based strategies and transformation activities towards solution-oriented business models to maintain their competitiveness in markets facing commoditization, slower growth, and declining profitability. Core product capabilities are thus being complemented with services and knowledge components solving unique customer problems in order to gain a sustainable competitive advantage that is not easy for competitors to replicate. Although a variety of these transformation strategies have been studied, there is still limited attention given to the implementation challenges with them. This study will explore the transformation process through an exploratory case study, from the perspective of a company at the beginning of the process. The objectives are to create an understanding of how the transformation process towards solution orientation is described by the company and what kind of challenges are identified. The research questions are the following: How does the transformation process occur and what are the main organizational challenges? What are the key activities when taking on the transformation towards solution-oriented business model? To explore these questions, seven semi-structured qualitative interviews were conducted in the case company, which is a small under 100 employee company, operating in the quality inspection business with customers in the manufacturing business globally. Based on the interview findings, the transformation process in the company was perceived to mostly take place on the grass-roots level. Interviewees identified challenges in cross-functional collaboration, organizational structure, lack of shared vision, and differences in underlying mindsets and logic guiding the actions. Still, some of these issues are already being addressed by different change activities. The discussion focuses on reflecting with the cross-functionality issues to previous findings in literature, as well as elaborating on finding the balance between product and service logic. Based on these findings and the analysis, managerial implications were suggested to be the following. First, the case company should continue and increase bridge-building activities, creating forums for collaboration and thus addressing the perceived silos and transparency issues. Secondly, it is important to support the development of culture to the desired direction and to promote the desired set of values. This work should be incorporated into multiple fronts and activities, from daily operations to training and celebrating small wins.
Thesis advisor
Granqvist, Nina
transformation, solution business, services, case study
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