To define servitization we want to adopt this post “Towards a Common Definition of Servitization” by Prof. Tim Baines.
“Servitization is the transformation of a business to compete through a combination of services and products, rather than products alone.”
We particularly like this definition because it is extremely concise yet rich, with a well-considered choice of words. We highlight 3 of them.
Servitization is a transformation, a process, a journey. It is therefore not an object or a result to be achieved, but it is the process through which a result is achieved. In this journey, the technological and digital component is an enabling factor and an accelerator, but it cannot be considered the only aspect. Servitization also strongly impacts marketing, customer relationship, sales, economic and financial sustainability and organization.
Servitization implies not only “selling” services, but more, “competing” through services. Services are therefore not an accessory, but a fundamental component of competitive differentiation. The reason why a customer chooses one supplier over another.
Combination of services and products
The servitization journey leads to a new “value proposition”, the combination of services and products, product-service systems.
Product and service are therefore symbiotic. The service helps the customer obtain the result for which he purchased the product, the product generates the data on which the service is based.
The collection of this data is the pivot on which the system leverages. This is why, in fact, a sustainable and competitive value proposition based on a product-service system necessarily needs a connected product and connected services.