Business model innovation strategies for product service systems - An explorative study in the manufacturing industry

In saturated, product-oriented markets, services provide the potential for differentiation and growth. Innovating a firm's business model (BM) by adopting product service systems (PSSs) seems promising. However, research provides only limited insights on how manufacturing firms can innovate their BM towards offering PSSs. Literature lacks strategies not only to adopt PSSs, but also to further innovate existing PSS BMs. Therefore, this study analyzes reoccurring PSS BM patterns as well as innovation strategies to transform from one pattern to another. We use an explorative, qualitative study with interviews in 14 business units of large manufacturing corporations that are engaged in a PSS BM innovation initiative. Results show three PSS BM patterns, i.e. product-oriented manufacturing, use-oriented enabling and result-oriented service offering. We demonstrate their practical implementation and further derive a conceptual framework for PSS BM innovation describing six evolutionary or transformative innovation strategies. Evolutions, i.e. universalization, digitization and service expansion, change only modules of a BM, whereas transformations, i.e. servitization, integration and leapfrogging, affect the whole architecture. Limitations are the small number of interviews and related limited number of cases. Nevertheless, findings indicate transformation paths and extensions to existing research on PSS types regarding the customization and ownership of PSSs.