Transformational Shifts through Digital Servitization

Manufacturers increasingly look to digitalization to drive service growth. However, success is far from guaranteed, and many firms focus too much on technology. Adopting a discovery-oriented, theories-in-use approach, this study examines the strategic organizational shifts that underpin digital servitization. Notwithstanding strong managerial and academic interest, this link between digitalization and servitization is still under-investigated. Depth interviews with senior executives and managers from a global market leader revealed that to achieve digital service-led growth, a firm and its network need to make three interconnected shifts: (1) from planning to discovery, (2) from scarcity to abundance, and (3) from hierarchy to partnership. Organizational identity, dematerialization, and collaboration play a key role in this transformation. For managers, the study identifies a comprehensive set of strategic change initiatives needed to ensure successful digital servitization.Highlights: • Three strategic organizational shifts are needed for digital servitization success. • The key role of organizational identity, dematerialization, and collaboration • Digital servitization requires changes within both the firm and its entire network. • New business models centered around big data are driving competitive advantage. • Agile mindset and ways of working are imperative for digital servitization