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Industry transformation towards service logic: A business model approach - December Paper

last modified Jan 16, 2014 11:34 AM

Industry transformation towards service logic: A business model approach
Anna Viljakainen, Marja Toivonen and Maiju Aikala

article tackles the issue of industrial transition into value- and service-based business, and offers a managerial tool on how customer value is turned into profitable business. It suggests a new business model construct based on the service-dominant approach that analyses customers as value co-creators, not as targets of selling. The aim is to depict the managerial opportunities to influence value co-creation. The article starts from the well-known business model canvas by Osterwalder, which is modified to include the active role of customers. The modification has been carried out step by step in four main components of a business model: the resources of a firm, value proposition, market characteristics and revenue model. The new construct points out the importance of the understanding of customer context and the fostering of collaborative interaction with customers. It also highlights an effectual way of using a firm’s resources: one and the same resource can be more or less valuable depending on how it is used.

The new business model construct is applicable in both service and manufacturing firms. It is particularly useful in servitizing manufacturing, i.e. in the companies that include services in their total offering while having material products as their business core. The broadening repertoire of services contributes in these companies to the awareness of the significance of value cocreation. The empirical material of the article illustrates this development in the media sector, more specifically in magazine publishing. Companies in this sector increasingly aim to be present in their readers’ life and encourage the emergence of communities that support the value creation of participants and function as platforms for idea generation.

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