Servitization, explained without jargon
My research topic in plain words: why companies that make things are increasingly selling services, and why it is harder than it sounds.
When people ask what I study, "digital servitization" usually gets a polite nod and a change of subject. So here is my attempt to explain it in plain words.
Servitization describes a shift in how firms, especially manufacturers, make money. Instead of only selling a product and walking away, they add services around it, or sell what the product does rather than the product itself. A machine maker might offer maintenance contracts, training, spare-parts management, or even charge customers for the hours a machine runs instead of selling the machine outright.
The logic is easy to see. Products can be copied and compete on price. Services build longer relationships, can bring steadier revenue, and are harder for competitors to imitate because they depend on knowing the customer well.
Digital servitization adds technology to the picture. Sensors, connected devices and data platforms let a firm see how its products are actually used. That makes new services possible: predicting a breakdown before it happens, adjusting settings remotely, or offering pricing based on real usage.
It sounds like an obvious win, but the research literature has long discussed a so-called service paradox: firms invest in services and do not always see the returns they expected. Services need different skills, different sales conversations, and a different way of thinking about risk. Selling an outcome means the firm now carries part of the customer's problem.
This is the part I find most interesting. The question is not only should firms servitize? but under what conditions does it actually make them more competitive and more efficient? Some of my work tries to look at that through efficiency models, comparing firms on what they put in and what they get out.
If I had to put the whole topic in one sentence: it is about companies learning to sell a relationship, not just a thing, and finding out how hard that really is.
Photos: 8268513, goumbik on Pixabay, used under the Pixabay Content License. These are not my photographs.
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