Exploring Modularity in Servitization: A Theoretical Development of the Servitization Matrix

Abstract

The strategic role of service in has been increasingly acknowledged by product manufacturers, as well as the research area of servitization. Successfully adding service to product can benefit manufactures with extended revenue stream and enhanced customer relationship. However, the transition process from a product-seller to a service-provider is not straightforward. With customer requirements being progressively more sophisticated, and technologies continuously advancing, it is likely that the complexity of the product and service system will gradually rise. Failing to cope with the complexities may lead to service paradox, i.e. undermined financial performance.
Striving to provide recommendations to solve the system complexity from an architectural perspective, this thesis exams how modularity manifests in the product-service offerings of the manufacturer. Being related to systematic decomposition and recombination, utilizing modularity in the design of product and service can reduce complexity and increase flexibility. This thesis provides the theoretical ground for the servitization matrix that distinguishes between the architectures of products and services.
Using two cases from the smartphone industry, this thesis demonstrates the effects of modularity and integrality on the orientation of the product-service offerings. This thesis posits that the focus of standard service on modular product is to deliver the best-preferred product-service offerings to customers by increasing module variety and process efficiency. For manufacturers with standard services added to integral products, the focus is to increase the volume of the standardized offering through replication and applying personalization in the delivery process.