Transforming Product Firms into Successful Service Providers

Stephen W. Brown, Arizona State University
Anders Gustafsson, Karlstad University
Lars Witell, Karlstad University

Many product dominant firms have started to emphasize the service side of their business in order to establish a relationship with their customers throughout the entire life-cycle of their installed product base. There are several reasons for doing this, from increased profits and an improved competitive position to making a radical change in the way they do business. A change from being a manufacturer or product company to being a service provider can be described as an evolutionary transition from pure goods into a more service-oriented mixture of market offerings. Despite the attractiveness and the pitfalls of moving into services, relatively little guidance is available to help firms make such a transition. This work addresses that gap by examining the factors that differentiate traditional manufacturers and product firms from those that are successfully transitioning into services. This research is based on over 20 case studies, a large survey of European-based companies and the authors’ personal experiences.

 

* An article based on part of this research appears in the Wall Street Journal, June 22, 2009