Organizing for servitization:examining front- and back-end design

Abstract

Purpose: Research suggests that to structure for servitization, organizations should separate their front- and back-end units by reference to high versus low contact activities. However, these prescriptions are overly simplistic and largely based on anecdotal evidence that fails to account for context. This research addresses the need to explore the design decisions taken by organizations in support of servitization. Design/methodology/approach: A large-scale exploratory case study was conducted, consisting of embedded cases in three divisions of a UK-based, global manufacturing firm. Findings: Each division provided different combinations of offerings (i.e. product-, use- and result-oriented). The findings suggest that front-end / back-end configurations differ according to the offering and can exist concurrently within the same organization, challenging the assumption that different configurations within an organization are not possible. The findings show that underlying contextual factors, such as the complexity and temporality of the offering, as well as the power of the customer, have implications for the structuring of servitizing organizations. Research limitations: This is a context-specific, qualitative case study conducted within a large original equipment manufacturer, yet the findings are analytically generalized. Originality/value: In identifying the relevance of different design decisions in terms of customer contact, decoupling of activities and grouping of employees, the findings challenge the extant view that organizations simply split activities between the front- and back-end functions. The research identifies an additional design configuration - Integrated Project Teams – involving a dominant customer dictating organizational interfaces. This research exposes the need for further investigation into how to organize for servitization in project based contexts.