The Transition towards Product-Service Systems : A Business Development Method for Small and Medium-Sized Manufacturing Enterprisees

The increasing competition on today’s globalized markets creates drivers for new business models in order to create competitive advantage. By integrating services with the physical product, unique offers that aim at fulfilling customer needs rather than just providing physical goods can be created. This type of offers, in the literature often referred to as Product-Service Systems (PSS), are more difficult to imitate than pure products. Furthermore, the focus on fulfilling customer needs rather than just providing physical goods can reduce the use of resources, decreasing both costs and the environmental impact of the offer. From the customers’ point of view, PSS offers can bring increased flexibility and reduced risk. The development of successful PSS offers requires structured methods. Much of the research within the area, and consequently models and guidelines, has focused on large companies. However, since small and medium-sized enterprises (SMEs) constitute the foundation of economic growth in all developed countries, there is an important gap in the existing research within this area. One research initiative to fill this gap is the ongoing IPSE project (Integrated Product and Service Engineering), which aims at developing a methodology for efficient development of PSS offers in manufacturing SMEs. The methodology developed in the IPSE project is however at a conceptual level that is not applicable for the management in smaller companies. This thesis hence aims at developing a concrete and useful business development method applicable for the management in manufacturing SMEs, with the focus on generation of PSS offer concepts. Based on earlier research within the PSS area, with the emphasis on the IPSE methodology, a concrete business development method for the generation of PSS concepts was created, which was then tested on three SMEs in order to verify and improve the method. The method consists of the three steps internal analysis, external analysis and planning of the new PSS offer. Each step contains a number of tools to be used in order to analyze different aspects of the business context. After analyzing the studies of the three case studies a revised method was developed, which was then summarized in managerial guidelines to be used by managers in manufacturing SMEs. The revision of the method mainly regarded simplifications of some of the tools in order to ease the use and increase the applicability. The method proved to be useful and concepts could be generated for all the case companies. The method thoroughly examined the possibilities of creating PSS offers, even though it was found that it was also useful for the development of conventional business offers. Since the drivers for the case companies were specific threats or opportunities that would require changes in the offer, rather than a purpose in itself to integrate more services in the offer, this implies that the method can be useful as general business development method for manufacturing SMEs. An important learning from our studies is that the day-to-day business is strongly focused by the managers in manufacturing SMEs, leaving little time for long-term business development. As stated by a manager in the case companies: “It is like running beside the bicycle, but we do not have the time to get on it.” The developed method can work as a tool for structuring the information needed in the business development process and hence reducing the time needed. However, if the reduction in time needed for long-term business development is enough to get the managers on their bikes is a question assigned to further studies.