understanding is for creating convincing proposals. This exercise raises a key question for business: who is our customer in a service context? For many manufacturers, the product is bought by the next link in the supply chain. But in service settings, where the product is part of a larger system and the engagement lasts through its use, the real customer is often the end-user, about whom we usually know even less. 3. Learn through piloting Develop compelling service value propositions that directly address customer pain points and benefits, focusing on the customer’s context to deliver real value. The goal is to develop straightforward propositions guiding targeted service development. Many manufacturers struggle here: while they often test and improve their product designs systematically, they neglect doing the same for services. Service development is more complex and uncertain because it hinges on the customer’s unique business activities – areas where manufacturers typically lack experience. From our perspective, successful service development is an ongoing cycle of experimentation focused on learning and validating the best ways to deliver value to customers. The focus is on creating candidate value propositions that can be piloted as minimum viable services with customers. These pilots serve to discover and validate. Among the candidate service value propositions that were identified within our cluster were a two-way radio manufacturer offering communication and coordination solutions for remote quarry operations, and a manufacturer of high-voltage connectors providing flexible, plug-and-play capabilities to its customers. NOT OPTIONAL For many manufacturers, servitization is increasingly a business imperative. When they cannot differentiate their products alone, innovation and expanding their service offerings become crucial. While the goal is straightforward, the path is often challenging and filled with common pitfalls: treating servitization as solely a digital or engineering project instead of focusing on customer outcomes; assuming you fully understand what your customers need; and overcomplicating services without testing them with real customers. One of the ElecTech Cluster companies has already taken one of its core service value propositions, which they are now testing with a major customer. We see a clear appetite for change among manufacturers. With the power of structured collaboration, this ambition can be transformed into action. Servitization is not about abandoning manufacturing; it is about leveraging deep product expertise to deliver maximum value to customers, and ensuring manufacturers are rewarded for their expertise and can compete with it in the future. FIFTY FOUR DEGREES | 13 Listen to Andreas discussing servitization on the Transforming Tomorrow podcast: https://pod.fo/e/2da6c3 trAnsfoRming toMorrow Andreas Schroeder is a Professor of Digital Strategy and Services Innovation in the Department of Management Science. Professor Kostas Selviaridis is Chair in Operations and Supply Chain Management in the Department of Management Science. Dr Nhu Quynh Do an Assistant Professor in Logistics and Supply Chain Management in the Department of Management Science. Their work on Servitization Bootcamps has been supported by Lancaster’s EPSRC Impact Acceleration Account (EP/X525583/1). Lancaster University will run further Servitization Bootcamps and, through these, will support more businesses to innovate, strengthen their service offerings, and accelerate their transition toward outcome-based business models. Companies interested in taking part are encouraged to get in touch to explore future opportunities by emailing lumsforbusiness@lancaster.ac.uk andreas.schroeder@lancaster.ac.uk; k.selviaridis@lancaster.ac.uk; q.do1@lancaster.ac.uk
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