The operational dilemma in data-driven development of advanced services in a manufacturing company

When developing transformational business strategies, managers often make a decision with limited pieces of evidences and decide on where to go based on a hunch. Servitization is one of the typical examples of a transformational journey with many uncertainties. The aim of this paper is to study the complexity that arises from the ongoing trend – servitization that manufacturing firms are pursuing after. Managers, who are developing transformational business strategies, are struggling in dealing with pressures from both outside in and inside out environments. In this research work, we intend to investigate how manufacturing firms can respond to the transformation challenges coming from servitization using a data-driven approach. We aim to explore the drivers and constraints of taking a data-driven approach of developing advanced services in transforming the organization toward servitization paradigm. This research work is built on two previous studies: 1) a case study, to understand the behaviors of the product-centric thinking of the organization from the management perspective, and 2) an iterative design science research (DSR) experiment, to induce those invisible interactions of taking the initiations in implementing the data-driven approach. Those organizational behaviors, emerging from developing advanced services, are captured and demonstrated in the causal loop diagram. It also reveals several attribution errors of thwarting their efforts to extend the operational focus, such as the innovation delay and isolation inertia. These are critical to understanding in this emerging dynamic situation that managers are facing when they commit to their bold decision on pursuing advanced services in servitization context. Two potential contributions to knowledge are in the operations focus of servitization and in applying system dynamics method into the emerging needs of handling the challenges toward the dual-focused product-service operations.