PurposeManufacturing companies are increasingly making efforts to combine products and services into integrated offerings. However, the companies’ success in such transformation is linked with the presence of structured routines and processes, which we conceptualize as Product-Service Systems (PSS) innovation capabilities. Therefore, in this study we address the important question of how manufacturing companies can systematically build PSS innovation capabilities and does its presence or absence significantly influence PSS innovation.Design/methodology/approachThis study is based on longitudinal data from an aerospace company, which acts both as an OEM providing through-life services for aircraft engines, as well as a developer of innovative subsystem technologies. Data has been collected over 3 years (2009-2012) and constitutes 40 in-depth explorative and semi-structured interviews with diverse respondents. For analysis of the data, we have used constant comparison technique leading to identification of three high-order categories. In addition, we gain from observations and secondary data which enable us to achieve data triangulation and data validity.FindingsThe results objectively depict an overview of how the case company developed PSS innovation capabilities, though progression of routines over three early PSS development stages. More specifically, we find evidence for development of formalized routines related to customer interaction and innovative organizational climate during need phase, cross-functionality and network partnering during solution seeking phase, and competence and business case development during solution development phase. As these routines become more structured within the case company, they forge a path for PSS innovation capabilities development.Originality/valueThis study provides two distinctive contributions to emerging PSS literature. First, we propose and explain how PSS innovation capabilities are developed. Although prior studies acknowledge the importance of possessing specialized PSS innovation capabilities, limited studies have reported empirically how they are developed. Second, through adopting a longitudinal perspective, we reveal key routines and actions that drive PSS innovation during different development stages. To our knowledge, no prior study has combined insights from PSS literature and resource based view to objectively explain capabilities development process.

In recent years there has been growing interest in utilizing a productservicesystem (PSS) approach when developing products and services in order toarrive at a business model focused on selling function or availability instead of physical products. However, the complex nature of PSS development has left many manufacturers still struggling to arrive at PSS concepts out of their traditional product sales situation in early design phases. The purpose of this paper is to propose an approach using the Business Model Canvas which could help manufacturers in the transition towards PSS development by articulating key business elements in developing and analyzing PSS concepts evolving from their traditional product sales situation. The paper presents preliminary findings from the aerospace industry and discusses the evolution of key business elements for PSS concepts from traditional product sales situation using the Business Model Canvas. Finally, the potential benefits of using the Business Model Canvas in a PSS context are discussed.

The manufacturing industry is going through a transition from developing of products to the provision of product-service systems (PSS). Earlier research has identified different types of PSS offers, from product offers that include services as “add-on”, to the sale of services that include tangible goods as “add-on”. This paper addresses what consequences this has on manufacturing organizations undergoing PSS transition. The purpose of the paper is to clarify key success factors for organizational changes needed in the transition process of developing different types of PSS offers. The results are based on a case study of a manufacturer in the aerospace domain; the analysis approached organizational changes from organizational theory perspective. The study identified four key areas that need to be considered in the organizational transformation to PSS development: Business strategy and decision-making, Internal organizational structure, Team composition, and External networks and customer relationship. Based on the analysis of empirical data from these four areas, the paper discusses the successful organizational changes that are required in the transition towards PSS development.

Manufacturing industries are undergoing a transition from manufacturing of products towards integration of services and providing Product-Service Systems. To support this transition, creative workshops are an example of a means to be used. A number of creative methods were tested in two actual industrial cases: one aerospace and one automotive case. The findings show that it is important to pay extra attention to certain factors when conducting creative workshops for PSS-development: visualization of time perspectives, sampling of participants, focus on customer needs and making of prototypes.

Innovation performance measurement has developed from focusing on issues of control and monitoring towards a more supportive role for managers on a strategic, informative and motivational level. Despite its potential to facilitate innovation management measuring provides a challenge in practice not the least when a company has the ambition to manage both radical and incremental innovation. This paper, based on literature review with empirical illustrations from three case studies, argues that these issues derives from the need to manage a number of dichotomies which are present due to the essential differences associated to each type of innovation. These dichotomies are related to time, uncertainty, flexibility and control. The implications on the design and use of an innovation performance measurement system are explored and analyzed through the lens of dichotomies. The study contributes to the innovation measurement theory and provides basis for an analytical framework aiming to support the design and implementation of innovation performance measurement in practice.

The transition from product development towards development of product-service systems (PSS) challenges manufacturing industry today. This paper is based on a case study of a company in the aerospace industry that turned their internal product knowledge into an external service offer, which challenged established structures of the product development process. The process and challenges of the capitalization of internal knowledge were documented as well as the capabilities needed. This case emphasizes the importance of collaboration between different areas of expertise and it also shows that PSS development enhances the need for engineers who are skilled in more than one area.

Many manufacturing industries are undergoing a transition from manufacturing of products towards integrating more services into the traditional product concepts and provide product-service systems (PSS). Development of PSS changes the focus from the product to the functionality of the product; hence it can be referred to as functional product development. PSS also puts focus on the value of the knowledge-intensive solution. This change in focus challenges the way companies innovate. When developing PSS, the solutions are not limited to the product parameters; hence PSS broadens the solution space for innovations. Innovation capability can broadly be defined as the ability to routinely achieve innovative outcomes, which is crucial for industrial companies in order to grow and be competitive on the market over time. Therefore, there is an apparent need to increase the innovation capability in order to find strengths and weaknesses, especially in the change towards PSS. However there are many factors that affect a company’s capability to create innovative products and services. The research question that has guided the work presented in the thesis is: How can the innovation capability for product-service systems be increased in a systematic way? The research study has mainly been conducted at Volvo Aero, a company in the aerospace industry, which is characterized by high technical complexity, high development cost and long product lifecycles. The industrial position has allowed close studies in the organization; hence the research approach has been participatory action research. Mainly qualitative methods have been used for data collection, such as observations and interviews. Measuring the innovation capability is one way to find ways to systematically increase the innovation capability of a company or organization. Results from this research points to areas of importance when measuring a company’s innovation capability. These regards what kinds of projects the company selects, how the customer is involved with the development of innovations, how the different functions within the company interact, what kind of climate there is within the development projects, what methodology is used in the innovation process and how the innovative work is rewarded. The results also indicate that developing product-service systems involve close internal collaboration between individuals with different skills and competences and may also require external skills and competencies that may not reside within the product focused organization. Therefore, to increase the innovation capability of product service systems companies need to reassess how they collaborate both internally and externally, throughout the value-chain and throughout the product lifecycle. Finally, this thesis presents a model of networked competence innovation that combines the designerly approach with strategic, tactic and operational dimensions. The model builds on techniques to visualize strategic planning, facilitate shared understanding in focused workshops, and visualize innovations using prototyping in networked projects.

Product development in the aerospace industry is associated with relatively long lead times and product lifecycles, which means that it takes years and even decades to find out if a novel product or technology concept fully realizes its potential and becomes an innovation on the market. How can a company in such an industry context know, preferably already in the conceptual stages, that they are on the path to innovation? How do they know how innovative they are? How can they increase their innovation capability? A project together with Volvo Aero, an aero engine manufacturer, was initiated to explore potential answers to these questions. The paper reports on an ongoing study of the company’s current state-of-practice with regard to measuring innovation capability, starting from a range of innovation indicators provided within a previous research project, which Volvo Aero contributed to. Based on interviews with project managers of advanced engineering projects within the company, six areas were found to be of importance in order to more effectively measure the innovation capability at Volvo Aero: Project selection, Customer involvement, Interaction between functions, Team climate, Innovation methodology and Innovation rewards.Within these areas a selection of preliminary metrics was established, which will be presented in this article along with a discussion on the advantages and drawbacks of combining activity and effect measures to better relate particular activities to particular outcomes.