Exploring the dynamic capabilities required for servitization

Abstract

Purpose The purpose of this paper is to examine what kinds of capabilities are required by process industry companies as they move toward servitization. The authors proceed in two steps. First, the authors explore the capabilities needed in servitization with a qualitative multiple case study. Second, the authors link the identified capabilities to the servitization steps that were derived from prior literature. Design/methodology/approach Based on earlier servitization literature, the authors build a five-step servitization model for industrial companies. Then, drawing on the empirical study consisting of three focus group sessions with three case companies and 20 interviews in 14 case companies, the authors identify 14 servitization capabilities and link them to the servitization steps. Findings The study reveals how dynamic capabilities are required in servitization. In contrast to operational capabilities, which are geared toward enabling firms to make a living in the present, dynamic capabilities extend or modify operational capabilities in response to market changes. Based on the empirical study, the authors were able to identify dynamic capabilities for all five steps of servitization: identification of current services and customer needs, determination of a service strategy, creation of new business models and pricing logics, improvements in capabilities, and, ultimately, management services as a separate function. Research limitations/implications The current study is exploratory in nature and the number of empirical observations is limited to 14 industrial companies operating in the process industry. Practical implications Most importantly, in servitization, companies need dynamic capabilities to transform their operating capabilities in sales and marketing as well as in quantifying and communicating the value created for customers. Originality/value The study is the first one to make a link between the capabilities needed and the various stages of servitization and also the first to study the specific context of process industry companies.

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