Knowledge in Servitization Management: A Comparative View

ISBN-13: 9783031186868 / Angielski / Twarda / 2022 / 106 str.

H. M. Belal; Kunio Shirahada; Michitaka Kosaka

Opis

The last two decades have seen a shift towards service-based value in a process referred to as servitization. Manufacturers have been challenged to create relevant knowledge and adapt to this change. This book has two key purposes. First of all, the authors examine the theoretical underpinnings of knowledge management and servitization, before proposing a conceptual model for knowledge co-creation and organizational knowledge management processes. Then, the model is tested through a series of case studies from Japan and Malaysia, providing insight into experiences of business transformation from produce-centric to service-centric in developed and developing Asian economies. This book will be of interest to academics, students and practitioners in servitization, knowledge creation and knowledge management, especially those interested in Asian economies.

Spis treści

1.      Introduction

This chapter describes the objectives of this book, case analysis methodology including case studies summary. Also propose and develop a model for knowledge co-creation process at the aim of adapting and managing servitiation from the knowledge view. 

 

Part 1: Theoretical aspect of Knowledge and Servitization

 

This part argues the theoretical view of knowledge in relation to the insight of servitization. It is because, to find new service in terms of the value co-creation process, the integration of knowledge from different parties such as human resource and organization is crucial. In this perspective, it reviews ‘service concepts’ including Service-Dominant (S-D) Logic, Product Service System (PSS), etc. Then and there, connect and apply them (e.g., knowledge view) into servitization. Based on the review of theory this section also develops a model called ‘knowledge-oriented servitization model’.

 

2.      Knowledge View

 

o   Knowledge concept

o   Knowledge management and knowledge creation

o   Knowledge management and knowledge creation in process application

o   Knowledge management and knowledge creation practice in service value co-creation

 

The knowledge view includes into four sections. The first one provids and explains a clear overview around knowledge concept using up-to-date sources. The second section discussed on knowledge management and knowledge creation concept. It shows the importance of understanding and proper management plan and create new knowledge according to that plan into service value creation. The dealings and interaction between tacit and explicit knowledge through working on information treatment, organizational infrastructure, culture, people mindsets, and so on is the main of knowledge management and organizational learning. This section also shows that organizational knowledge management practice is regular aspects as the organization always promised to offer service per market situation and managing knowledge are required for it.

The third section is development of knowledge management and knowledge creation in process application, where the theories and models suggested that the constant dialogue between tacit and explicit knowledge is significant for knowledge creation and the knowledge creation is a dynamic process (e.g., Knowledge Space (KS) Management (Belal, Shirahada, & Kosaka, 2012). It is differ on context basis. Review shows, though the individual members of an organization drive organizational knowledge creation, but in services value chain perspective the customers are not outsider. The customers are core part of co-creating knowledge through introducing their ideas, experiences, and desire with company and make a service with knowledge creation platform (e.g., socialization, externalization, combination, and internalization (SECI), (Nonaka, Toyama, & Konno 2000). This part also describes the influence of collaboration at the aim of idea and/or concept and/or information sharing in managing new knowledge for service-based value offering. It argues the importance of corporate collaboration is increasing due to changing business environment from goods-oriented basis to services-oriented basis. To make a service-oriented view business platform, it is required additional resources. In this scheme two or more independent organizational business ‘make collaboration and share or integrate their competencies (e.g., resources, knowledge)’ aimed to achieve a common purpose of new knowledge creation. Again, company can run-through the way of process to how tacit and explicit knowledge are converted into organizational new knowledge using four knowledge dimensions – SECI (Nonaka, Toyama, & Konno 2000).

The fourth part is knowledge management and knowledge creation practice in service sector. This part describes about GE Healthcare’s knowledge management and knowledge creation practice as an example. The example shows, GE relates its all competencies and strengths to manufacture their medical equipment and same time they connected their stakeholders aimed at gathering as well as sharing knowledge to generate more services as total hospital management. Therefore, building an active method of connecting stakeholders to understand their value and create services as solution. Another good example also provided here in as Nike Inc., who made collaboration with Apple and has come as a servitized firm by knowledge integration in relations of managing and co-creating knowledge to produce service based value.

 

 

 

3.      Servitization View

·         Service Concept

·         Service Dominant (S-D) Logic

·         PSS (Product Service System)

·         Servitization

 

The term ‘service’ is hard to define because it is related to many entities (Rathmell, 1966), in business cases, ‘service’ is viewed as an act of providing a solution to a specific problem that has value in return. Meanwhile, to understand value, is to study the service exchange and the human efforts to apply knowledge for the benefit of others. Michael, Roos, and Gustafsson (2005), suggested that ‘service’ is a value creation through the insight of customer. However,  Vargo and Lusch (2004) illustrate that ‘service’ as a type of process, that specifically process of one or more entity applying competencies (e.g., knowledge, resources) for the benefit of one another. Which most of the researchers in this field agreed with Vargo’s theory.

According to Vargo and Lusch (2004) the S-D logic is viewed as “service-for-service exchange” with the mutual application of resources for others' benefit. In this, goods considered as operand resources and using specialized competences (operant resources) in the process offering values to customer by transmuting it as services. Whereas, customer is involved in this process and customer is measured as a co-producer of service and value creation (Vargo & Lusch, 2004). In foundational premise six (FP6) stated, “all economies are services economies” because today even agricultural or other industrial era (e.g., manufacturing) are transitioning to a services era, (Vargo & Lusch, 2004). Gummesson (1995) argued that customers are more interested to buy offerings, which render services which create value than goods or services. Consequently, meeting customer demands and customization for competing with the global business environment, it suggests that offering services that creates value than goods is the key core competences.

However, it is difficult to changing the industrial or organizational culture from typical goods or product producing platform to desired services value producing one. Therefore, this section positioned the S-D logic as a function of service based value creation on the output that manufacturing firms produced products, which is ‘servitization’. Again, the influence of service activities as a process to value creation can connect firms, employees, customers, stakeholders, government agencies, and other entities all together. Which can address market, economic, and social challenges and same time can find the way of breakthrough of those changes as solution. Hence, the service research as well as servitization (Vandermerwe & Rada, 1988) has become an important study area in the area business science and social science field. While product-service-system (PSS) concept sets out to improve social, economic and environmental and industrial sustainability. The foundational work on PSS is exemplified by (Goedkoop et al., 1999) reported on the ecological and economic basis. Then followed by (Mont, 2000) explain the PPS in depth in that being a foundation of PSS research. Later various models and tools have been developed to help the organization to adopt PSS.

Traditional product-based company usually offer after-sales-service for protecting their products rather than as the way of value co-creation process for gaining competitive strategy (Belal, Shirahada, & Kosaka, 2012). In this Servitization strategy (transition process of adding service concepts into product-based business in manufacturing companies) can help to differentiate products through product-based services (Kastalli & Looy, 2013; Belal, Shirahada, & Kosaka, 2012; 2013) and for environmental benefits (Mont, 2004) as well. Thereby, company can provide continuing value, increase revenue, and compete on cost. Though it is a unique strategy and difficult to easily recognized for typical manufacturing company (Teece, Pisano, & Shuen, 1997), but modern corporations were increasingly offering fuller market packages or bundles of customer-focused combinations of goods, services, support, self- service, and knowledge (Vandermerwe & Rada, 1988) to add value on their core corporate offerings.

Oliva and Kallenber (2003) also stated regarding this change, in which a manufacturing firm transfers itself from recognizing services as add-ons to its physical goods towards viewing goods as add-ons to their core services. After realizing the benefits of servitization, developed economy’s manufacturing companies are changing in the relationship between the customer and the provider to create mutual value (Neely, 2008) to practice servitization in terms of move towards customer centricity from physical-goods centricity (Baines, et. al., 2007; Belal et. al., 2013). For example, Japan based world high respected monitor maker company signifying itself as a servitized farm by practicing ‘knowledge focused servitization management model’ (Belal, 2015) and the mentioned model is one of the verified structure in servitization field. More examples are available also like; Ericsson and Rolls-Royce. This section explains them carefully.

4.      Knowledge-oriented Servitization Model

 

A knowledge-oriented servitization management model develops in this section, which is considered as ‘organizational learning outline’ in this book. Since to manage a successful servitization, a product-based company should capable of dealing and adapting a ‘system’ for new knowledge co-creation process at the aim of service-based value offering. Whereas enough resources to support internally or externally (e.g., company itself, partners, customers) is needed (Brax & Jonsson, 2009). In this, ‘resource integration’ along with partners involvement may most appropriate techniques to dealing and adapting the stated ‘system’. Therefore, this model structured based on the interaction of knowledge space (KS) management (KS management contains a set of knowledge co-creation process centered on collaboration impact).   

 

The knowledge-oriented servitization management model supports the theory and concept of this book that explained. It connects readers to existing knowledge. It also gives the foundation of hypotheses.

 

Authors conducted a deep analysis in the aim of developing a verified and effective knowledge-oriented servitization management model and the analysis of the result shows that to transform a product-oriented firm to service-based culture, there is need to achieve the servitization opportunity and a knowledge-oriented servitization management model is effective in this organizational transition process.

 

 

Part 2: Asian Cases in Servitization

 

In this part, the book presents 6 business examples of servitization practice from Japan and Malaysia. It is selected in Japan and Malaysia as a country for choosing case examples due to give priority to include developed and developing countries as well as both successful and failure case examples. Moreover, according to this book’s hypothesis, the company can manage knowledge-oriented servitization through ‘different knowledge integration’ and ‘organizational knowledge creation’, so the case examples designed to meet the mentioned hypothesis and testing theories as well as concepts. For example; HDRIVE-Hitachi Capital Case; and Uniqlo-Toray Case are meet ‘different knowledge integration’ perception in the servitization practice. Eizo Corporation; PKT Logistics Group; and Feruni Cerameche are meet organizational knowledge creation’ perception in servitization management practice. In addition, Penawar Industries Ltd. considered as failure case in this book, while a successful discussion presented over this company based on knowledge and service view aimed at servitization. 

Data collected through a series of investigations, actions (e.g., seminars, workshops, and training over years), and structured interviews. Then, the collected data are further analyzed through the theoretical lenses of service science, knowledge science, servitization concept, organizational culture management, and operations management. The case findings show that the co-creating knowledge process by ‘integrating knowledge’ from operating partners and/or thru ‘creating organizational knowledge’ is significant for transforming a traditional product-based company as a  service-based value provider.

 

 

5.      Japanese Cases

5.1.            Eizo Corporation

 

Eizo is a leading Japanese monitor maker, adapted and managed the methodology of transforming the way of thinking and supporting knowledge creation for new corporate value propositions. In details, by applying this method company create service based value offerings climate in organization followed by promoted individuals services-oriented thinking and idea generation skills. The method also introduced the way of doing business including what knowledge company have currently and what are needed for further actions to meet proposed value, which translated the ‘organizational knowledge creation’ process for founding service culture platform from typical manufacturing culture.

5.2.            HDRIVE and Hitachi Capital Case

 

HDRIVE is highly admired, totally new type and excellent energy-saving service business, under Hitachi, Ltd. The company principally offers its clients’ production plants with such product based equipment as high-pressure inverters and highly effectual motors with at no cost. The company is providing additional benefits to clients’ by accepting its payment in monthly service fees basis. Again, Hitachi Capital is manufacturer-affiliated financial services company. It is committed to providing newer and higher added value through ‘function-oriented service’ (company information, 2014) basis on financial supports to their customer that focuses on products. It is increasing overseas service network to run into meet global basis customers’ demand. The company is well trusted by customers, local community, and society as well, because of reliable relationship with stakeholders. This case analysis demonstrates the ‘knowledge integration’ between HDRIVE and Hitachi Capital using collaboration for new knowledge creation at the aim of offering service value.

5.3.            Uniqlo and Toray Case

 

Uniqlo is leading clothing retail chain in both sales and profits in Japan. It offered casual clothing to customers. High quality, well-made, affordable and fashionable clothing offering at a low price in the market is key business target of Uniqlo that anybody can wear whenever and wherever.　In order to achieve this aim and acquire the highly brand-conscious consumer group, it aimed to provide additional customer service within fashion clothing.

Toray Industries, Inc. is Japanese Multinational Corporation and one of Japan’s largest fiber producers. The core production of Toray is fibers and textiles, plastics and chemicals, pharmaceuticals and medical products,　films and resins, housing and engineering products, circuit materials used in information technology related products, carbon fiber composite materials, environment & engineering including water treatment, and progress and a host of various other products ranging from artificial kidneys and catheters to contact lenses. Nikkaku (2014), the president of Toray says in his message that ‘the vision of Toray is to contribute society through the creation of new value with innovative ideas, technologies and products’ and the mission is to deliver new value to customers through high-quality products and superior services (Belal et al., 2012). The company believes in strategic management to form long-term relationships with stake holders. At present, Toray generates business throughout Asia, Europe, and North and South America and plays a significant role in the world economy.

This case study reveals the ‘knowledge integration’ between Uniqlo and Toray by means of knowledge co-creation process for ensuring service value to recipients.

 

6.      Malaysian Cases

6.1.            PKT Logistics Group Sdn Bhd

 

In 1974, Dato’ Tio Sook Keo founded a trading company called Port Klang Trading in Shah Alam, Malaysia. The company was renamed and is operating today as PKT Logistics Group Sdn Bhd. Their motto is “We serve… with passion.” PKT is currently considered a leading logistics company not only in Malaysia but also in the Asia Pacific region. To reach this position, PKT had to differentiate itself by changing its business philosophy from the standard to the service concept perspective. In doing this, they transformed their business operation process as a knowledge creating service company. We examined how PKT designed and adapted the knowledge-creating system using SECI process for founding service culture platform from typical manufacturing culture. nto their company’s philosophy towards business operation, thereby become servitized company and acquiring more of the global market.

 

6.2.            Feruni Cerameche

 

Feruni Ceramiche is a Malaysia-based premium ceramic tile company, delivering the world’s latest tile trends together with world-class customer experience. It operates its business with the vision of “thinking different and bring transformation to the tiling industry”. The culture of this company is all about creating and delivering “happiness” by fusing product and service, employees, customer as a guest, and the community. This company driving force is simply to ensure everyone has a great experience with their service offering with the experience and technical know-how in producing quality tiles and service for customer satisfaction. In this, they restructured their business model as the transition process from typical ceramic provider to full customer satisfaction as a ‘happiness’, which is based on 10 core values that shaped the working culture in their organization for become a service-oriented solution-based company. Thus, this case exploration proves the ‘organizational knowledge creation’ process thru analyzing the tacit and explicit knowledge with service culture.

6.3.            Penawar Industries Ltd.

 

Penawar Industries Ltd has been operating since 1992 and had registered in year of 1996 as a Kedah-based (Malaysia) SME. It is known as the pioneer manufacturer and distributor of health products, traditional medicines using herbal and sea cucumber (gamat) active ingredients in Malaysia. In addition, the company makes and sells cosmetic products also under the same brand name. Beside of producing and marketing of the herb product and cosmetics it is also functioning as the planner to strategize more opportunities for the company and consumers as well. Currently Penawar is selling their products in a variety of retail stores almost all over in the country, the company sells directly in Langkawi and the revenue from that store is the significant according to the statement from company’s top management.

Until 2001 the company has performed well in business but after that the annual sales has started to decrease, it is about 5% annually. Same time it also has started to lose its market and competitiveness. They have realized that it is happening due to easily penetration of the similar products by other competitors, to win over this competition successfully, so far, no effective innovations over competitive service related were incorporated by company B, only typical product manufacturing, selling vision and so on.

After realizing those mentioned circumstances, they would like to extend their business line in the perspective services marketing. Nevertheless, they are facing some difficulties to generate service activity on their core business. This kind of concept is truly new for them and they don’t know what kind of resources, knowledge, organizational change, or people is needed for it. Therefore, we investigated regarding this company’s ability to transform itself as pure goods-oriented to service-oriented one.

7.      Summary and Discussions

 

Authors summarize and compare presented cases in this book based on the key results in relation to developed model. They also discuss the implications of knowledge co-creation in servitization. The further research agendas discussed too in this book.

 

O autorze

H. M. Belal is a Senior Lecturer and the programme manager for MSc in Management and MSc in Management with Advanced Practice programmes in Liverpool John Moores University (LJMU) at Faculty of Business and Law, Liverpool Business School (LBS), UK.

 

Kunio Shirahada is an Associate Professor at the Japan Advanced Institute of Science and Technology (JAIST).

 

Michitaka Kosaka is an Emeritus Professor at the Japan Advanced Institute of Science and Technology (JAIST) and a Guest Professor at Fudan University, China.

 

Olatunde Amoo Durowoju is a Senior Lecturer and the programme leader for collaborative programmes at Liverpool John Moores University, Faculty of Business and Law, Liverpool Business School (LBS), UK.

Blurb

The last two decades have seen a shift towards service-based value in a process referred to as servitization. Manufacturers have been challenged to create relevant knowledge and adapt to this change.

This book has two key purposes. First of all, the authors examine the theoretical underpinnings of knowledge management and servitization, before proposing a conceptual model for knowledge co-creation and organizational knowledge management processes. Then, the model is tested through a series of case studies from Japan and Malaysia, providing insight into experiences of business transformation from produce-centric to service-centric in developed and developing Asian economies.

This book will be of interest to academics, students and practitioners in servitization, knowledge creation and knowledge management, especially those interested in Asian economies.

H. M. Belal is a Senior Lecturer and the programme manager for MSc in Management and MSc in Management with Advanced Practice programmes in Liverpool John Moores University (LJMU) at Faculty of Business and Law, Liverpool Business School (LBS), UK.

Kunio Shirahada is an Associate Professor at the Japan Advanced Institute of Science and Technology (JAIST).

Michitaka Kosaka is an Emeritus Professor at the Japan Advanced Institute of Science and Technology (JAIST) and a Guest Professor at Fudan University, China.

Olatunde Amoo Durowoju is a Senior Lecturer and the programme leader for collaborative programmes at Liverpool John Moores University, Faculty of Business and Law, Liverpool Business School (LBS), UK.