Transforming the servitization maturity model from a rigid staircase to a dynamic, fluid framework – DERO GROEP Service B.V.

 Overview

Company Description

We are the DERO GROEP. We see ourselves as an enthusiastic group of go-getters with a high level of technical knowledge. As our slogan indicates: “Our drive. Your solution”, we devise tailor-made production automation solutions for every situation. We also supply maintenance for these solution. You can also have a look at our website (https://www.dero-groep.nl), for more information about who we are, what we deliver and what our so-called DERO drive entails.

Project Description

Project description:

Driven by market opportunities and the needs of our customers, we as DERO Group are fully committed to servitization. Aware of the risks, however, we run into several challenges.

Organisations used to focus either on providing goods or services. However, in recent decades, influenced by globalisation, there has been a shift towards offering so-called “bundles” (service packages), a combination of products, knowledge, service and support.  The shift in which organizations adjust their business model and evolve from a product-oriented strategy to a service-oriented strategy has been called “servitization” in the literature.

The shift towards servitization strengthens the customer relationship and creates “resilient” profit streams, increasing barriers to competitors (T. Baines & W. Lightfoot, 2013). In the literature, the shift towards servitization has long been understood as an inevitable trend for any product organization and a prerequisite for organizations to survive. Possibly the best-known example of servitization is Xerox, which changed its business model from supplying office equipment to supplying printed documents with its “pay-per-copy” concept. This example of performance contracts between customer and supplier seems to prove that moving towards servitization is the key to success (Visnjic Kastalli & Van Looy, 2013).

Meanwhile, the discussion is a lot more nuanced. Research shows that some companies deliberately choose “deservitization” (Kowalkowski, Gebauer, Kamp, & Parry, 2017a, 2017b; Valtakoski, 2017). As an example, Xerox chose to divest their organizational unit based on servitization in 2016.

In many cases, the process towards servitization was not fully implemented and not well understood. The costs for the additional service and services provided exceeded the additional revenues (Gebauer, Fleisch, & Friedli, 2005; Gebauer & Friedli, 2005). Because the transition to servitization involves a different business model, large financial risks are taken, which in the worst-case scenario can lead to bankruptcy (Benedettini, Neely, & Swink, 2015). Despite these risks, servitization is a popular topic with many companies and, as a result, much is written about it, and much is known.

In the existing literature, 4 stages of servitization are identified, also known as the servitization maturity model. They start at being a product manufacturer that (unfortunately) has to give service to being at full servitization and actually basing on output instead of use. The literature discussing this model mostly considers an absolute state within these 4 stages, meaning either you are fully in stage 2 or fully in stage 3. However, in practice, we feel these stages are far more fluid then depicted. This has also come up while discussing this matter with other companies. Because of this, we would like some research about the fluidity of these stages. Where for our own application it is the most interesting to look at this when going from stage 2 to 3. However this is something that can always be discussed with the student.

• Transforming the servitization maturity model from a rigid staircase to a dynamic, fluid framework.

In addition to this, we are open to, together with the student, search for a topic (within servitization) that is interesting for the student, our company and that adds to existing literature.

Goals of the project:

Gain a deeper insight into the stages and strategies for elevating a company’s level of servitization.

Deliverables:

Deliverables can be decided upon later however we can imagine a roadmap or a view on the different steps and places where companies can position themselves to elevate the level of servitization.

Essential student knowledge:

Some understanding of servitization.

 More information: escf@tue.nl