End of March, Rob Jaartsveld and Mariëlle Meuffels gave a masterclass on the topic: “From a product to a more services oriented business”. This masterclass, organized by Industry consulting, one of the key areas of expertise of Philips Innovation Services, gave an introduction to the challenges of transforming from a pure product to a more services oriented business. In their presentation, Innovation consultants, Rob and Mariëlle focused on the impact of the transformation on business ecosystems, business models and the business case.
Angelica Krsteski, Market Leader
“Relevant, to the point, nice setting and good networking opportunity”
Frank van Mook, Program Manager
“Useful and inspirational”
Mark Poldervaart, Director
“Informal atmosphere with a relevant real live case showing all aspects of transitioning from product to services business model”
“A very interesting, instructive and informative session”
Key take aways:
- Service based business models bring economic and competitive advantages:
- The sales of products is characterized by one time transactions, while the sale of services lead to long-term engagement and recurring revenue streams;
- A product-service revenue model allows companies to strengthen the relationship with customers, improve market insight and lead to more effective innovation cycles;
- A shift from being product based to being outcome based, allowing different business models.
- Servitization has a major impact on the organization:
- New capabilities are needed and the structure of the firm, including internal and external partnerships, will become more complex as the business processes will need to transform. The organization will require modifications of its management processes. Data analytics can enable this transformation;
- The organization needs to take into account external parties for the delivery of the service to the customer, which leads to a shift from a Value Chain to a Value Network;
- Especially the industrialization (scalability) of services is a challenge and deep knowledge of IT will be a relevant factor;
- KPIs differ dramatically from a product oriented business;
- Service revenue grows slower than product sales. As such, managing revenue streams and phasing in and phasing out services will become important;
- Total cost of ownership of assets is often carried by the service providing firm.
Did you miss this masterclass and want to get more knowledge on this topic or want to know what Philips Innovation Services can do for your business? Contact our Innovation consultants Rob Jaartsveld or Mariëlle Meuffels.