Equipment manufacturers are currently utilizing new digital technologies such as the Internet of Things (IoT), Artificial Intelligence, or Big Data, for new digital offerings. However, these offerings seldom enhance revenue, because companies struggle with business model (BM) dynamics. By analyzing 27 companies through an explorative case-study approach, the authors consider how companies can successfully achieve revenue enhancement through digital offerings. The result is a threefold framework for revenue enhancement through digital offerings. First, this framework distinguishes between three phases of BM dynamics: 1) augmenting products through a "hardware plus" logic, 2) developing a portfolio of multiple logics for creating customer value, 3) integrating this portfolio through platform logic. Second, the framework emphasizes that three barriers, which we refer to as confidence, mixing, and collaboration barrier, limit the progress from Phases 1 to 3. Third, the framework reveals that each phase contains certain modifications of BM components. In the first phase, companies adapt their BM components slightly, so as to advance toward a "hardware plus" logic. In the second phase, companies embrace more radical BM innovations in order to convert services into an outcome-based BM and develop a new software subscription BM. In the third phase, companies modify BM components in order to integrate the BMs internally and to open them up for external collaboration partners.

By studying servitization processes and service competencies in the wind-to-energy industry in European regions, this paper provides a framework for territorial servitization. The framework resonates with the concepts of knowledge-intensive business services (KIBS) and industry life cycles, and its elements can be embedded into concepts of regional development (e.g., lead-market models, sustainability transitions, territorial innovation models). The framework suggests that regions benefit from servitization processes via the interplay of generating employment opportunities, enabling an efficient allocation of technology resources, opening up new markets, strengthening territorial competitiveness, raising the odds of securing employment in the consolidation period and enabling technological leaps.

Despite the demonstrated opportunities for revenue enhancement through digitalization, companies often experience a digitalization paradox. This paradox suggests that although companies may invest in digitalization, they often fail to achieve the expected revenue enhancement. In reporting research on 52 companies, we make the following fou r contributions: First, we focus on industrial companies in the business-to-business context, which largely have been neglected in previous research on digitalization. Second, we introduce the digitalization paradox as an important phenomenon in the discussion of revenue enhancement through digitalization. Third, we describe three growth paths: (1) commercializing digital solutions, (2) utilizing product connectivity, and (3) establishing an IoT-platform-based application business. For each growth path, the article takes a dynamic perspective on business models, highlighting triggers and modifications in business-model components (including value proposition, value-creation activities, and profit equation). Fourth, while the described modifications require initial investments to let these growth paths develop, we highlight how growth traps can prevent investments in business-model modifications from leading to revenue enhancement and how they can ultimately lead to the digitalization paradox. (C) 2020 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights reserved.

Many barriers must be overcome when entering the base-of-the-pyramid (BoP) market. Firms facing these barriers need to innovate new business models and reinvent existing ones to suit the BoP context. While previous literature has focused on the innovations of particular components of business models in BoP markets, we investigate the reconfigurations in the business model components that underpin the successful business model innovations. This study is based on multiple case studies in the water sector that we carried out in several different countries. Our findings suggest five business model innovations: (a) design, (b) renewal, (c) expansion, (d) diversification and (e) replication. Each business model innovation is a specific response to the barriers met in the BoP market and requires consistent configuration between its various components (i.e. value proposition, value creation and profit equation). These findings add, in two important aspects, to the academic realm of the business model domain: by contributing to the debate of business models in BoP markets and by advancing the configurational view of business models.

Purpose - Despite the opportunities provided by pay-per-use (PPU) services, product companies in business-to-business sectors often fail to compete systematically by using them. The purpose of this paper is to explain how companies can avoid failures when it comes to PPU services. The paper describes the "seizing" capabilities needed to achieve the strategic objectives of PPU services. Design/methodology/approach - The research process is divided into a pilot and an in-depth study. Altogether, 17 companies participated in the study. Findings - The findings reveal that the seizing capabilities depend on the strategic objectives of PPU services. To expand the market share with PPU services, companies need to broaden the customer portfolio for PPU services, to align individual services within the entire service portfolio and to balance profits made by PPU services and other business lines. For strategic objectives such as rapid sales growth early in the market development and new market creation other seizing capabilities are required. Research limitations/implications - The findings are not generalizable, due to the use of a qualitative study. The study is restricted to product companies in the business-to-business sector. Practical implications - Managers often believe that extending and modularizing the service portfolio is beneficial. When achieving sales growth during the market development phase, these capabilities are in fact sometimes counterproductive. Practitioners have to look into the costs and benefits of setting-up their own financing company and working with banks. Social implications - PPU services contribute to a more sustainable consumption and make product design more resource-efficient. Originality/value - The study is original by virtue of systematically studying PPU services, providing a microfoundation for seizing capabilities and developing testable propositions for future research.

Pay-per-use services are an interesting phenomenon, both empirically and theoretically. Despite the alleged benefits, companies still struggle to succeed with pay-per-use services. Theoretically, it is common sense that existing service capabilities cannot easily be converted into organizational capabilities for pay-per-use services. Based on multiple case studies, the present article narrows down the existing empirical and theoretical gaps through an inductive research approach. Our findings make the following contributions to the field of services in product-oriented companies and to the servitization literature. We describe the organizational capabilities necessary for pay-per-use services (e.g., financing such services, aligning costs with equipment usage, and collaborating with customers). We reveal that companies should convert these capabilities into three core competencies (strategizing pay-per-use services, utilizing technologies for pay-per-use services, and de-risking pay-per-use services), in order to achieve competitive advantages.

For over three decades now, several product companies around the world have been undertaking servitization paths. They have been devoting growing and substantial efforts to expand their service business. Expanding the service business in addition to their traditional core product business secures long-term growth and strengthens competitive advantages in business-to-business marketplaces. Recently, service business expansion has taken up many of the new digital technologies offered through the digital transformation. Thus, the servitization literature has progressed toward a dialogue on digital servitization. Against this background, the present article introduces the reader to this special issue. It first recalls key aspects of the emerging digital servitization discussion, and then depicts, through illustrative case studies, the growth paths utilized by industrial product companies when they take advantage of the digital servitization process. After discussing how the articles included in this special issue advance the literature, the article develops a number of directions for future research on digital servitization.

The present study analyzes how servitization delineates a manufacturers boundaries. Based on interviews with 57 senior managers and extensive secondary data collected from four global solution providers, this study contributes by revealing how servitization shapes firm boundary decisions and repositioning practices. First, the results demonstrate that servitization changes a manufacturers a) identity from technology-focused to customer-centric, b) capabilities to integrate technology development with customer value understanding, c) power position in the manufacturing ecosystem from upstream to downstream, and d) efficiency logic toward a service factory logic. Second, this study describes the interplay among these boundary lenses in servitization. The developed framework can assist managers in their strategy implementation when moving toward servitization.

This study extends the discussion of digital servitization business models by adopting the perspective of the theory of the firm. We use four theories of the firm (industrial organization, the resource-based view, organizational identity, and the transaction cost approach) to understand digital servitization business models of firms in the context of ecosystems. Digitalization transforms the business models of solution providers and shapes their firm boundary decisions as they develop digital solutions across organizational boundaries within ecosystems such as harbors, mines, and airports. Thus, digitalization not only affects individual firms business models but also requires the alignment of the business models of other firms within the ecosystem. Hence, business models in digital servitization should be viewed from an ecosystem perspective. Based on a rigorous literature review, we provide suggestions for future research on digital servitization business models within ecosystems.

The present study investigates the effect of the interaction between digitalization and servitization on the financial performance of manufacturing companies. We challenge the simple linear assumption between digitalization and financial performance with a sample of 131 manufacturing firms and hypothesize a nonlinear U-shaped interaction effect between digitalization and servitization on financial performance. From low to moderate levels of digitalization, the interaction effect between digitalization and high servitization on company financial performance is negative and significant. From moderate to high levels of digitalization, the interplay between digitalization and high servitization becomes positive and significant, improving companies financial performance. The results demonstrate the need for an effective interplay between digitalization and servitization, the digital servitization. Without this interplay, a manufacturing company may face the paradox of digitalization. For managers of manufacturing companies, the study provides insights into the complex relationship between digitalization and financial performance, emphasizing the value of servitization in driving financial performance from digitalization. Thus, the study demonstrates how manufacturing companies can become data-driven by advancing servitization.

The topic of servitization has generated a considerable body of research and many conferences, as well as industry engagement. Yet, despite the extensive literature associated with this now-mature discipline, there is no broad-based consensus on the core concepts and definitions deployed by servitization scholars, and both terminology and usage often seem ambiguous. This paper examines challenges related to service growth strategies, as well as strategies involving deservitization or a retreat from service offerings. Showing that these strategies have been pursued for more than fifty years, clarification is sought here by framing the corresponding processes and proposing definitions for four core terms: servitization, service infusion, deservitization and service dilution. It becomes clear that in focusing on the organizational change entailed by these processes, future research must elucidate "softer" issues such as leadership and business logic. (C) 2016 Elsevier Inc. All rights reserved.

Service growth in product firms is one of the most active service research domains and is open to a variety of conceptualizations. This article provides a critical inquiry into the past, present, and future of the research domain. The evolution of the research on service growth is discussed in two phases: (1) setting the boundaries of the research domain, and (2) emergence of the conceptual foundation. We find that while research in this area has a well-established tradition in terms of output, theoretically it is still largely in a ‘nascent’ phase. Next, we highlight the contributions of the papers in this special section, emphasizing their challenges to prevailing assumptions in the research domain. We conclude by identifying, from the contributions to this special section, suggested themes for further research on service growth: the assessment of empirical evidence of the impact of service growth on firm performance, the role of merger & acquisitions in the service growth strategy, the exploration of single/multiple positions along the transition line, the process of adding or removing services, and expanding the context of service growth beyond product manufacturing firms.

Overview: The Internet of Things (IoT) offers product companies the opportunity to develop an IoT business. Existing performance measurement systems (PMS) are unsuitable for measuring and managing the business logic of IoT business. Based on research conducted with 31 product companies, we present three measurement traps, a key performance indicators (KPI) set suited for steering IoT business in product companies, and three recommendations for implementing the KPI set. Companies can use the KPI set to manage their IoT businesses more effectively and avoid the measurement traps.

Purpose The emergence of Internet of Things (IoT) platforms in product companies opens up new data-driven business opportunities. This paper looks at the emergence of these IoT platforms from a business-model perspective. Design/methodology/approach The study applies a mixed method with two research studies: Study I-a cluster analysis based on a quantitative survey, and Study II-case studies based on qualitative interviews. Findings The findings reveal that there is no gradual shift in a companys business model, but in fact three distinct and sequential patterns of business model innovations: (1) platform skimming, (2) platform revenue generation and (3) platform orchestration. Research limitations/implications The results are subject to the typical limitations of both quantitative and qualitative studies. Practical implications The results provide guidance to managers on how to modify the components of the business model (value proposition, value creation and/or delivery and profit equation) in order to enable platforms to advance. Social implications As IoT platforms continue to advance, product companies achieve better performance in terms of productivity and profitability, and more easily secure competitive advantages and jobs. Originality/value The paper makes three original contributions: (1) it is the first quantitative study on IoT platforms in product companies, (2) identifies three patterns of business model innovations and (3) offers a first process perspective for understanding the sequence of these patterns as IoT platforms advance.

Purpose Open service innovation is an emergent new service development practice, where knowledge on how to organize development work is scarce. The purpose of the present research is to identify and describe relevant archetypes of open service innovation. The study views an archetype as an organizing template that includes the competence of participants, organizing co-creation among participants and ties between participants. In particular, the studys interest lies in how open service innovation archetypes are used for incremental and radical service innovation. Design/methodology/approach For the research, a nested case study was performed, in which an industrial firm with nine open service innovation groups was identified. Forty-five interviews were conducted with participants. For each case, first a within-case analysis was performed, and how to perform open service innovation in practice was described. Then, a cross-case analysis identifying similarities and differences between the open service innovation groups was performed. On the basis of the cross-case analysis, three archetypes for open service innovation were identified. Findings The nested case study identified three archetypes for open service innovation: internal group development, satellite team development and rocket team development. This study shows that different archetypes are used for incremental and radical service innovation and that a firm can have multiple open service innovation groups using different archetypes. Practical implications This study provides suggestions on how firms can organize for open service innovation. The identified archetypes can guide managers to set up, develop or be part of open service innovation groups. Originality/value This paper uses open service innovation as a mid-range theory to extend existing research on new service development in networks or service ecosystems. In particular, it shows how open service innovation can be organized to develop both incremental and radical service innovations.

Technologies like the Internet of Things (IoT) are offering new opportunities and posing serious challenges to firms, forcing them to create entirely new business models, migrating from the conventional product-centric approaches to (digitally-based) service-oriented ones. This paper - following a qualitative research method - aims at describing the service-oriented impact of IoT technologies on firms business models, with a particular focus on opportunities and challenges for BtoB manufacturing firms. Being the impact of IoT technologies on businesses a quite recent research stream, to date scarce attention has been devoted to the topic with specific attention to its impact on service-oriented business models in manufacturing firms. The paper contributes in this research stream in different ways. It proposes a map of digital servitization that helps in understanding firms strategic transitions caused by technologies, making both theoretical and managerial contributions. Firstly, the research underlines the impact of the firms sales model as a strategic factor in shaping firms digital servitization strategies. In addition, three progressive levels of digital servitization complexity are identified, namely product- process- and outcome-oriented, that are based on an increasing use of IOT technologies and have specific challenges and opportunities.

Our investigation draws on a qualitative study, which explores the anomaly of Born Solution Providers. Compared to the traditional assumption that product companies shift toward solutions during the maturity phase, companies can already offer solutions in the market development phase. We investigate the dynamic capabilities for providing solutions in the market development phase. Our findings reveal a microfoundation of dynamic capabilities. This microfoundation is structured into 10 dimensions along sensing, seizing, and reconfiguring activities. Within these 10 dimensions, we disaggregate the dynamic capabilities into individual skills and organizational routines. Interestingly, organizations utilize routines underlying the options for each dimension (e.g., routines for sensing internal and external opportunities, seizing standardization, and customization), but they tend to stick to routines for one of these options. Individual skills enable organizations to balance the options. Our results suggest that these individual skills evolve through higher-order processes, namely, single- and double-loop learning activities.

People in Base of the Pyramid markets still face difficulties when it comes to sanitation. Container-based Sanitation (CBS) services represent a promising advanced sanitation service. Despite the observed outcomes of CBS services, organizations face obstacles when providing these services. To overcome these obstacles, digital transformations of these services are being carried out. We rely on multiple case studies to understand these digital transformations. Our findings highlight (1) the challenges these case organizations faced before engaging in the digital transformation, (2) their individual digital transformation pathways, and (3) a general framework for digital transformations in BoP markets.

To leverage the opportunities provided by the Internet of Things (IoT), product-based companies are exploring new data-driven business opportunities. They may miss these same opportunities, however, owing to data-privacy chal-lenges. These challenges start with the customers of product-based companies, extend to the wider business ecosystem, and continue with the companies them-selves. This article identifies 12 data-privacy challenges and introduces 12 mea-sures to address them. These include intuitive recommendations, such as enabling cross-product consent collection, as well as less intuitive measures, such as fostering a can-do attitude in legal units, closing the gap between legal and busi-ness initiatives, or implementing a clear process for well-reasoned risk-taking. The following four principles were found to support companies in implementing these measures: (1) letting privacy and data-driven business go hand in hand, (2) putting customers first and turning their privacy preferences into opportunities, (3) aligning risk-management activities with the process of digital service development, and (4) using technology to professionalize legal processes.& COPY; 2022 Kelley School of Business, Indiana University. Published by Elsevier Inc. This is an open access article under the CC BY license (http://creativecommons.org/ licenses/by/4.0/).

The provision of basic services is falling short in informal settlements of cities in the Global South. In particular, public utilities have had difficulties expanding their services to the urban poor. Why is this the case despite utilities having improved their capabilities substantially over the last years? This paper investigates how innovation strategies of utilities are aligned or misaligned with the broader contexts in informal settlements, which are populated by different socio-technical regimes. We propose a framework to identify new capabilities needed by utilities to deal with these different regimes. The paper reconstructs pro-poor initiatives of a water and sewerage utility in a large East-African city and explains why they tended to fail in terms of livelihood improvement. We show how the alignment between capability portfolios and specific regime structures have set limits to the success of pro-poor innovation strategies in informal settlement contexts.