When servitization is not transforming the way we do business - analysis of two unsuccessful service offerings from the shipping industry

Purpose: Although servitization as a transformation process is recognized as a source of competitive advantage for both manufacturers and their customers, it has also suffered from limited success, dissatisfactory returns and slow adoption rates. The majority of the studies in literature are primarily focused on conceptualizing servitization and recognizing drivers and barriers towards successful implementation from the manufacturer point of view. Far less attention has been given to the customer organisation and to negative results, where manufacturer’s servitization attempts have failed to transform the perception of the customer.
Design/Methodology/Approach: Based on the hypothesis that unsuccessful attempts to servitize would share common characteristics and flaws, a longitudinal observational study was conducted from the customer’s point of view. The main research subject was a shipping company in the role of the customer that in the course of two years turned down two different servitized offerings from two manufacturers: one pooling and servicing agreement and one performance agreement.
Findings: The customer disregarded the servitized offerings because they were not perceived as important sources of value. Based on the two cases, two motifs emerged. The first was the lack of synergy between customer and supplier capabilities and focus, since the manufacturers’ service offerings were either indirectly competing or not complementing the customer’s internal resources. Together with the higher initial cost of the offerings, the customer company essentially challenged the necessity and efficiency of the transformation. The second was the manufacturer’s inability to deliver to the customer’s expectations. Even in cases where the customer was able to communicate its own needs and requirements, the manufacturer’s service organization was unable to match them with the proposed offerings.
Originality/Value: The results suggest that manufacturers should aim for better integration of their offerings within the customers’ business environment, in order to help transform customers into proactive buyers of service offerings.