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  • Strategy

Servitization Comes to Staffordshire

A business model based on selling a package of product and services



Thursday 12 February 2015



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Servitization, although exemplified by Apple’s in-store Genius Bar, is not a Silicon Valley concept but is in fact most prevalent in the manufacturing sector, where it is a global phenomenon. So it is not surprising that Aston Business School, based in the West Midlands at the heart of UK manufacturing, is leading the way in servitization research and executive development.

Professor Tim Baines at Aston Centre for Servitization offers this description: “Servitization is a business model transformation - which can generate business growth, sustainable revenue and long term contracts.”

It is about the shift from a business model focused on products to one including solutions, a shift from outputs to outcomes, and from transactions to relationships. For companies considering a new service focused business model “the first thing you have to do is take time to really understand your customer. Think about the pains they have that you can take away from them by offering them services, and build your model from that.” says Baines.

Although the word ‘servitization’ may be new, the business model isn’t (Baines points to Rolls Royce celebrating the 50th anniversary of its ‘Power by the Hour'). However, in this decade the forces of deregulation, technology, globalization and fierce competitive pressure, are causing both service companies and manufacturers to move faster than ever into complementary services. And it is global. In 2007 less than 1% of Chinese manufacturing firms offered services. By 2011 19.33% of Chinese manufacturing firms claimed to, as part of a general move by Chinese manufacturers to move up the value chain.

In this video Professor Baines delivers an insight into how manufacturing companies can compete by offering services wrapped around their products using the example of Caterpillar's Finning dealership based at Cannock in Staffordshire:

 
Aston Centre for Servitization

 


60 years of pioneering research and teaching has made Aston Business School internationally renowned, whilst the warm community spirit has created a positive difference to the lives of all of our students, alumni, businesses and organisations.





 
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