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Rogelio Oliva, Robert Kallenberg, (2003),"Managing the transition from products to services", International Journal of Service
Industry Management, Vol. 14 Iss 2 pp. 160-172 http://dx.doi.org/10.1108/09564230310474138
Daniel Kindström, Christian Kowalkowski, (2014),"Service innovation in product-centric firms: a multidimensional business
model perspective", Journal of Business & Industrial Marketing, Vol. 29 Iss 2 pp. 96-111 http://dx.doi.org/10.1108/
JBIM-08-2013-0165
T.S. Baines, H.W. Lightfoot, O. Benedettini, J.M. Kay, (2009),"The servitization of manufacturing: A review of literature
and reflection on future challenges", Journal of Manufacturing Technology Management, Vol. 20 Iss 5 pp. 547-567 http://
dx.doi.org/10.1108/17410380910960984
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Abstract
Purpose – The paper aims to provide a better understanding of the interrelatedness of customer and service orientations in the organizational
structures of capital goods manufacturing companies.
Design/methodology/approach – A qualitative, multi-case research design was employed using 36 European capital goods manufacturing
companies.
Findings – This article explored four different patterns of how companies move from being product-focused to service-focused, and from having an
organizational structure that is geographically focused to one that is customer-focused. The four patterns are termed as follows: emphasizing service
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orientation, service-focused organizational structure, emphasizing customer orientation, and customer-focused organizational structure.
Research limitations/implications – Although the study is based on 36 case studies, the external validity (generalizability) of the findings could not
be assessed accurately.
Practical implications – The description of the four organizational approaches offers guidance for managers to restructure their companies towards
service and customer orientations.
Originality/value – The article links the relatively independent discussions of service and customer orientations in the context of organizational
structures. The four patterns provide a better understanding of how capital goods manufacturers integrate increased customer and service focuses in
their organizational structures.
Keywords Service orientation, Customer orientation, Organizational structures, Services in manufacturing companies, Manufacturing industries,
Case studies
Motivation capital goods and services, rather than only supplying the
product (Kowalkowski et al., 2011; Tuli et al., 2007). As a
Organizational structures of manufacturing companies are result, companies are not only extending their total offering
currently subject to major change (Antioco et al., 2008, towards integrated solutions that combine products and
Davies, 2004; Galbraith, 2002; Gebauer et al., 2005; services to customer-specific solutions, but they are also
Kowalkowski, 2011). Many capital goods manufacturing jeopardizing their existing organizational structures.
companies have changed their organizational structures in In this context, “jeopardizing” means that companies are
order to become more responsive to customer needs or to looking for more service-focused and customer-focused
expand into the service business. In this context, researchers organizational structures. Oliva and Kallenberg (2003)
have questioned whether classical product-focused and suggested that moving into the provision of services would
geographically focused organizational forms are still be more successful if companies created a separate service
adequate (Homburg et al., 2000). Tuli et al. (2007), for organization. Neu and Brown (2005) argued that integrating
example, argued that companies still tend to have a product- product and service organizations is a determinant of success
centric view of organizational structures, whereas customers for the development of business-to-business services and for
tend to focus on the relational processes with their suppliers. moving towards a more customer-centric organizational
Often, manufacturers existing organizational structures do approach. Whether a capital goods manufacturer should
not actively support the setting up of such relational processes integrate or separate its product and service organizations
depends on the service strategy the company has chosen to
with customers. Such relational processes concentrate on
use in order to move into the integrated solutions business
value creation and increasingly focus on bundles including
(Baveja et al., 2004; Gebauer et al., 2010; Sandberg and Werr,
2003). In order to gain a better understanding of whether it
The current issue and full text archive of this journal is available at should integrate or separate its service organization, a
www.emeraldinsight.com/0885-8624.htm company should consider detailed organizational functions
(R&D, manufacturing, sales, marketing, human resources,
etc.) associated with single strategic business units (SBUs),
Journal of Business & Industrial Marketing rather than having the change take place at the overall level of
27/7 (2012) 527– 537
q Emerald Group Publishing Limited [ISSN 0885-8624] the organization (Auguste et al., 2006). Furthermore,
[DOI 10.1108/08858621211257293] Homburg et al. (2000) argued that companies that are
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Customer-focused and service-focused orientation Journal of Business & Industrial Marketing
Heiko Gebauer and Christian Kowalkowski Volume 27 · Number 7 · 2012 · 527 –537
structured with multiple product-focused and service-focused focused organizational structure uses geographical territories
SBUs tend to move toward customer-focused SBUs. as the primary basis for structuring mechanisms (Homburg
However, despite the increasing number of academic et al., 2000). Such geographic arrangements are advantageous
contributions that examine customer-focused and service- because the physical disconnection of activities makes it
focused organizational structures, they are rarely linked to difficult to create centralized organizational structures
each other. Given the interrelated nature of customer and (Bartlett and Ghoshal, 2000; Gibson et al., 2006). A typical
service orientations in the organizational structure, there is a example involves sales regions in North America, Europe and
clear need for systematic research into the common patterns Asia that are broken down further into different countries and
that underlie the organizational changes. Against this regions. In customer-focused organizational structures,
background, this article focuses on three primary objectives. customers form the basis for structuring the whole
Firstly, it looks for common patterns in the organizational organization (Homburg et al., 2000). The rationale for
structure when increasing the service orientation. Secondly, it setting up customer-focused organizational structures
seeks common themes underlying various aspects of customer emphasizes the increasing importance of customer
orientation in the organizational structure. Thirdly, the article satisfaction and loyalty, which have stimulated firms to
explores the interrelatedness of customer and service search for organizational ways to better serve their customers.
orientations in the organizational structure. There are four different types of organizational structures:
This article is organized as follows. The next section 1 product-focused;
discusses the relevant literature and develops a conceptual 2 service-focused;
framework. Section 3 explains the research method and 3 geographically focused; and
Section 4 contains the results. Finally, section five includes a 4 customer-focused.
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Customer-focused and service-focused orientation Journal of Business & Industrial Marketing
Heiko Gebauer and Christian Kowalkowski Volume 27 · Number 7 · 2012 · 527 –537
structure towards a service focus due to the need to offer statistical representativeness, which meant it was natural to
more advanced and specialized services. carry out fewer in-depth case studies. The total number of 36
cases was considered as the point at which theoretical
saturation is reached. Following Bowen’s (2008) argument
Research methodology that it is insufficient to state that sampling was concluded
Because the exploration of organizational structures is a once saturation was reached, the following guidelines were
context-bound organizational issue, this study employed a employed. The emerging categories of the organizational
qualitative, multi-case research design involving 36 European structure were considered saturated because they were upheld
capital goods manufacturing companies (Eisenhardt, 1989). in 34 of the 36 case studies; this was confirmed by interviewee
All of the companies offer increasingly complex solutions, feedback on the analyzed data and made sense on the basis of
including products and services. The services include prior research (Bowen, 2008).
product-related services such as maintenance services, and The primary data for the case studies was based on interviews
more advanced value-added services such as business with selected managers who were involved in specifically chosen
consulting, R&D-oriented services or operational services. internal projects related to restructuring their organizations. A
Table I summarizes the characteristics of the participating total of 94 executives from the management boards were
companies. interviewed (between two and five for each case study). The first
Countries and company sizes are especially important for
part of each interview concentrated on historical organizational
analyzing various industries because they influence the ways
development because it is important to understand the
in which firms structure their organizations (Homburg et al.,
companies’ backgrounds as well as where they are trying to
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Customer-focused and service-focused orientation Journal of Business & Industrial Marketing
Heiko Gebauer and Christian Kowalkowski Volume 27 · Number 7 · 2012 · 527 –537
Along with secondary data sources such as internal importance of service in their organizational structures, two
organizational charts and press releases on organizational different patterns emerged. The first pattern of organizational
changes, the interview transcripts were used to create case changes is interpreted as emphasizing a service orientation
studies for each participating company. Each complete case within the product SBUs, while the second pattern is
was reviewed by at least one of the interviewees in order to understood as changing towards a service-focused
validate the description of the organizational structures. organizational structure. The next two sections describe
Inaccuracies and discrepancies were discussed, and changes these patterns in more detail. The two subsequent sections
were made accordingly. describe the two customer-centric patterns.
To support the data analysis, most case studies were coded
in NVivoq following procedures outlined in the literature Pattern 1: emphasizing service orientation
(Miles and Huberman, 1994). Only two case studies were Pattern 1 illustrates the first organizational change, which can
coded and analyzed manually without using NVivoq. The best be interpreted as emphasizing service orientation. The
data analysis was organized as follows. Firstly, the case studies companies that followed pattern 1 re-structured their
were positioned according to their past and present historical product focus with a greater service orientation.
organizational structures. Secondly, similarities and However, these companies did not restructure themselves into
differences between the case studies were determined service-focused and customer-focused organizations.
through a pattern-matching logic. Using this type of logic,
Emphasizing service orientation meant that these companies
each empirical pattern was compared with the predicted ones
did not set up a distinctive SBU for services in order to move
drawn from theory. Internal validity was enhanced because
towards service orientation. Although the companies did
the patterns indicate coincidence (Yin, 1989).
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Customer-focused and service-focused orientation Journal of Business & Industrial Marketing
Heiko Gebauer and Christian Kowalkowski Volume 27 · Number 7 · 2012 · 527 –537
Pattern 2: service-focused organizational structure profit center, but also an investment center because it is also
Wärtsilä, the Finnish provider of lifecycle power solutions, is responsible for business development, focusing on the
an example of pattern 2 – moving towards a service-focused exploitation of future service business opportunities. Voith is
organizational structure. Wärtsilä saw its product-focused a provider of products and services for the paper, energy, and
organizational structure have diminishing importance. By mobility markets. When the company established the Voith
setting up a specific Wärtsilä Service division, the company Industrial Services SBU, it gave the new SBU the freedom
de-emphasized the product-focused perspective of its Power and opportunity to develop the service business in its own
Solution and Ship Power SBUs. A key result of removing the direction. Voith Industrial Services exploited several business
emphasis on both product-focused SBUs is that 40 percent opportunities by buying specialized but supplementary service
share of the company’s revenue was attributed to services in companies, or even competitors, such as DIW, Hörmann and
2007. Companies following pattern 2, such as Wärtsilä, Premier, and integrating them. The exploitation of these
bundle all their service functions within a distinctive service business opportunities increased the share of revenue
SBU. The service SBU is highly complex and interdependent attributed to Voith Industrial Services from nine percent to
with the remaining product SBUs and requires intra-business 23 percent. The average growth rate in the service business
collaboration between the service and product SBUs. was on 37 percent over the last four years, which was higher
In this pattern, the service SBU takes over full profit-and- than the growth rate in Voith’s product-focused SBUs.
loss responsibility for the service business. Unlike pattern 1, Pattern 2 differs from pattern 1 in its service focus, even
the service-focused organizational structure is not only a though the degree of geographical focus is similar. Pattern 2
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adds an additional sales channel for services to the existing Another example of a company illustrating pattern 2 is ITT
sales channels for products in each region and/or country. Water & Wastewater, a manufacturer of submersible pumps
Consequently, product sales teams that are geographically and mixers. In 2006, having been part of one of the
organized are no longer responsible for service sales, which company’s product SBUs for several years, a separate service
are handled by a dedicated team of service salespeople. The SBU (Aftermarket & Service) was formed centrally. Locally,
only exceptions are services provided during the product the company also has distinct service organizations
warranty period, which are included in the product prices and responsible for developing, selling, and delivering services.
sold together with the new product. The service costs are In many small and emerging markets, however, the service
charged internally between the product and service SBUs. organizations (still) have no dedicated service sales force, and
The dedicated service sales teams are also structured the services are sold by the traditional product sales force.
according to regions. A typical example is DMG, which has Pattern 2 does not seem to represent a straight road to
a distinct business unit for services (DMG Services) that success. Two companies – Unaxis, a manufacturer of
targets its customers with its own geographically structured equipment for the semiconductor industry, and Saurer, a
service subsidiaries. Over the last five years, the share of Swiss-German textile machine manufacturer – had set up
service revenue relative to total service has increased from 26 service SBUs. These companies both argued for reintegrating
percent to 30 percent. Even more dramatic is the change in the distinctive service SBU by setting up a dedicated service
DMG’s profits attributed to services. In 2002, the profit share function in the product-focused SBUs. Due to strong changes
generated through services was 39 percent, but this number in sales to Asia, both companies were increasingly confronted
increased to 53 percent in 2007. with customers demanding services that were free or
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integrated into the product price. Specifically, customers in geographically driven sales organization and product and
China, Taiwan, and Hong Kong argued that services should service SBUs with customer-focused SBUs. This
be free because of the higher prices of their machines and organizational change can be described in matrix form: on
equipment. As a result of these customer expectations, both the horizontal axis, companies distinguish between product
companies reintegrated services into the product SBUs. Dürr, and service SBUs, while the vertical axis describes different
a painting and assembling system manufacturer, was even customer-focused SBUs. A typical illustration is Bosch
forced to sell its service business because of a lack of synergy Packaging. On one hand, Bosch Packaging is structured
between the product and service SBUs. After selling the into three SBUs, responsible for machines, systems, and
service business, the remaining services related to the painting services. On the other hand, Bosch Packaging is structured
assembling systems were reintegrated into Dürr’s product into two SBUs that focus on customers in the pharmaceutical
SBUs. and chocolate and confectionary industries. The two
The majority of companies, however, remained with pattern industries differ essentially in their customer needs and
2 or moved forward to pattern 4. However, before examining require different sales competencies. In the pharmaceutical
this transition, we return to pattern 1 and explain how industry, the packaging process is rather stable because
companies that have successfully implemented that pattern pharmaceutical products have long life cycles. The packaging
continue as geographically focused and customer-focused process for chocolate changes rapidly and often because of the
organizations. high number of new confectionery products being introduced.
Because only salespeople with specific competencies in one of
Pattern 3: emphasize customer orientation the two industries will be successful, Bosch has set up two
Companies that have successfully implemented pattern 1 do customer-focused SBUs that concentrate on the different
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not consider the movement towards customer orientation by industries. Similarly, Mettler-Toledo restructured their
setting up customer-specific SBUs to be an option. These organization from a structure based on different types of
companies argued for setting up only a medium-level precision measurement instruments and services to customer-
customer orientation by establishing dedicated teams for key focused business units that concentrate on different
customers or specific customer segments. A typical example is measurement applications, such as industrial, laboratory or
that of Mikron, described above. The product unit for retail.
assembly technology reorganized itself partly in order to place In both cases, the customer-focused business units have
greater emphasis on customers. The unit defined following strong resource flexibility for providing products and services.
customer segments (medical/personal care, automotive The customer-focused units share product and service
components, and electrical/electronics), and salespeople functions, including pricing, marketing, R&D, human
became increasingly specialized in each customer segment. resources, and controlling. In the case of Mettler-Toledo,
It is no longer possible to have a general salesperson who sells for example, the product and service units and the customer-
products to every customer in one geographical market. focused unit negotiate the prices for products and services.
Instead, these companies opted for salespeople who specialize The product and service units typically define price range
in a particular customer segment. recommendations and the customer-focused units have
A similar example is Heidelberg, a manufacturer of printing flexibility in finding the appropriate price for their
machines. Heidelberg was historically organized around customers within this price range. As result, companies
achieving product leadership and competence. In 2000, the setting up a customer-focused organizational structure must
company announced it would concentrate on customer be able to track the profitability of products and services as
understanding in terms of customer orientation. The main well as individual customers or customer groups.
triggers for this development were that the company was A specific application of pattern 4 is the setting up of key
offering product solutions, marketing applications instead of account-focused units, which are most significant within
products, and business consulting. As a result, the companies with very large historical price differences across
organizational structure focused more on service and countries, from which globally dispersed customers are
customer orientations, although Heidelberg did not fully set increasingly trying to benefit. In such a situation, it is risky
up service-focused and customer-focused SBUs. Heidelberg’s having geographically uncoordinated prices due to buying
organizational approach includes two product-focused SBUs, firms’ increasing tendency to emphasize synergies across
namely Press and Post-press, which emphasize a service countries in their procurement operations. For example, one
orientation by integrating services into both SBUs. The Press participating company argued that many multinational
division, for example, offers all of the products and services customers have placed order requests to multiple sales
related to offset, packaging, and flexo printing. Within the regions/countries. Sales regions/countries then send
sales organization, dedicated sales teams concentrate on uncoordinated proposals and quotes to the multinational
different printing applications, such as offset, packaging and customers, which leads to competition between their own
flexo printing. As result, salespeople who specialized in those sales subsidiaries and price reduction.
types of customer printing applications replaced general The rational response, to avoid these internal price
salespeople. competitions, lies in setting up a key account management
system. Firms assign key account managers to be the single
Pattern 4: customer-focused organizational structure point of contact for major accounts, selling the entire range of
Pattern 4 captures the situation in which companies that have products and services produced by their firm. Ericsson
successfully implemented pattern 2 move towards a customer- Operating Systems, for example, established key account
focused organizational structure. Moving towards pattern 4 managers for its global accounts, such as Telefonica,
involves companies adding a stronger customer focus to their Vodafone, Deutsche Telekom, and Orange. The key account
organizational structures and increasingly replacing the management teams serve as single contact points for these
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Customer-focused and service-focused orientation Journal of Business & Industrial Marketing
Heiko Gebauer and Christian Kowalkowski Volume 27 · Number 7 · 2012 · 527 –537
global customers and offer the products and services of all boards and repairing failures during their usage. The
three product and service SBUs (network infrastructure, engineering and repair functions are both still attached to
professional services, and multimedia solutions). the product functions. There is no service SBU that sells and
Toyota Material Handling is the world’s leading supplier of provides engineering and repair services. Despite these
counterbalanced trucks and warehouse trucks. Driven by the exceptions, the majority of investigated companies follow
consolidation and centralization of its major customers, the the four patterns outlined above.
company is also experiencing a continuous increase in the
number of key account-focused units, both nationally and Discussion
regionally, as well as globally. It is becoming increasingly rare
for agreements to be signed that do not include at least a full- Theory replication and extension
service agreement, and it is very rare for agreements to be for As explained at the start of this paper, the study makes three
trucks only. The company therefore finds it vital both to have main contributions to the existing research. Firstly, the
a broad spectrum of services and financing alternatives descriptions of the four patterns of changes in the potential
available and to have the same service levels and terms and organizational structures are considered to enlighten the
conditions regardless of local market. This is particularly existing discussion on changes in organizational structures
important for international customers, such as IKEA. As a towards a service orientation (Auguste et al., 2006). The
result, Toyota’s customer-focused SBUs have become more increasing importance of service orientation follows Neu and
important and have greater internal leverage than they did Brown’s (2005) argumentation that companies should
previously. integrate services into the product organization, as opposed
to Oliva and Kallenberg’s (2003) argument that companies
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Analyzing changes in the organizational structures should set up a distinctive service organization. Oliva and
Figure 1 depicts all four patterns of organizational changes, Kallenberg (2003, p. 166) argued that “the creation of a
while Figure 2 summarizes the number of companies separate organization to handle the service offering” is a
changing their organizational structures. Restructuring the determinant of success. However, Oliva and Kallenberg’s
organization towards a service orientation (patterns 1 and 2) (2003) definition of a separate service organization might also
dominates the sample. Restructuring organizations towards include what we call emphasizing a service orientation by
service and customer orientations begins with a company setting up service management functions within product
emphasizing services by setting up a service management SBUs. Although the finding of the present study might be in
function within the product-focused SBU (pattern 1). line with this part of Oliva and Kallenberg’s (2003)
Implementing pattern 1 seems to be a starting point for argumentation, we could not fully support the second part
either moving more into customer orientation or towards a of their argumentation that these newly created units had a
service-focused organizational structure. A total of 32 dedicated sales force. In the case of pattern 1, there is no
companies had a product-focused and geographically dedicated sales force selling service products. Specific sales
focused organization as their point of origin for channels and forces for services are only established for
restructuring the company. All of these companies have pattern 2, with a distinctive service SBU.
restructured their organizations towards emphasizing a service In addition, the findings for patterns 1 and 2 reinforce Neu
orientation (pattern 1). Fifteen of the 32 companies that were and Brown’s (2005) argumentation for increasing the
structured as pattern 1 continued to pursue a service-focused importance of collaborations between organizational units.
approach and set up a distinctive service SBU, while six Pattern 1 requires intra-business unit collaboration across
moved towards customer orientations (pattern 3). These six organizational functions that are responsible for products and
companies did not set up customer-focused SBUs, instead services. The key element of this type of intra-business unit
defining customer-specific teams within the existing product collaboration is the degree to which resources are shared
SBUs. In addition, three companies reverted from a service- between product and service functions. Pattern 2, on the
focused organizational structure (pattern 2) to an emphasis other hand, requires inter-business unit collaboration, which
on service orientation (pattern 1). This means that 11 includes linkages between service and product SBUs. A key
companies have successfully implemented pattern 2, while 15 element of these linkages is to develop a shared understanding
companies found pattern 1 to be stable and did not move of the market conditions and the complex needs and wants of
further towards service and customer orientations. Five of the business customers. Close collaboration between the different
11 companies that implemented pattern 2 stated that they had sales channels of service and product SBUs helps clarify
moved from pattern 2 towards pattern 4. That means that five common approaches to address customer needs and prevents
companies are structured in a service-focused and customer- conflicts between the product and service businesses.
focused organizational approach (pattern 4), and six are Secondly, the results offer a complementary perspective on
structured in a service-focused and geographically focused customer orientation in organizational structures. Companies
organizational approach. that want to create customer orientation have two ways to
Only two companies cannot be integrated into the four align their organizational structures. The first involves setting
explained patterns. These two companies combine what we up customer teams in the sales organizations of product SBUs
call an emphasis on service orientation with customer-focused and the second includes establishing customer-focused SBUs.
organizational structures. As Figure 2 shows, these two Both options require resource flexibility and profit-and-loss
companies are the exceptions mentioned earlier. For example, account systems for customers. Thus, metrics such as
Wiltronic (renamed Escatec in 2004) is still organized into customer equity (Rust et al., 2004) or return on
customer-focused SBUs. Within the customer-focused SBUs, relationships (Gummesson, 2004) must complement
Escatec extended its breadth of total offerings from pure traditional marketing metrics. Interestingly, the findings of
manufacturing of electronic boards to engineering electronic the present study do not suggest pure customer-focused
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Customer-focused and service-focused orientation Journal of Business & Industrial Marketing
Heiko Gebauer and Christian Kowalkowski Volume 27 · Number 7 · 2012 · 527 –537
SBUs; companies seem to favor hybrid organizational substantive areas and would benefit from insights obtained
approaches (Galbraith, 2002) that combine service and from quantitative data. This is beyond the scope of this
customer orientations. Furthermore, despite the increasing research.
need to manage major customers through customer-focused The study is also limited by the fact that it concentrates on
SBUs, the needs of many smaller customers can often be met the service and customer orientations in the organizational
adequately through product and service SBUs. structures, but neglects the potential interaction between
Thirdly, and most importantly, the findings link the organizational structures and corporate culture and human
relatively independent discussions of service and customer resource management. Such interactions may exist that
orientations in the context of organizational structures. The strengthen or weaken the effects of the four patterns on
four patterns provide a better understanding of how capital organizational performance. Therefore, an interesting future
goods manufacturers integrate increased customer and service research field would be the extension of organizational
focuses within their organizational structures. The results structures by key issues arising from corporate culture and
suggest that managers and researchers should consider that human resource management (Bowen et al., 1989). This
movements towards service-focused and customer-focused would revitalize Bowen et al.’s (1989) and Galbraith’s (2002)
organizational structures are interrelated. Managers argument that service and customer orientations cannot be
confronted with the decision of whether their companies attributed to individual organizational factors, but are specific
should move towards a customer or service focus must configurations of different organizational factors. The term
understand that moving towards a customer orientation “configuration” describes a coalescence of the organizational
requires greater emphasis on a service orientation in the factors, where they are internally consistent, complementary,
organizational structure. This means that companies typically and mutually reinforcing. Bowen et al. (1989) argued that the
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begin restructuring by de-emphasizing their product focus coalescence among the organizational factors, as opposed to
and increasing the importance of services. the individual contribution of one organizational factor,
Interestingly, not all combinations of service and customer determines whether a manufacturing company achieves a
orientations in an organization seem possible. Setting up a sufficient degree of service orientation. Galbraith (2002)
service function in a product SBU only offers companies the highlighted the fact that movement towards customer-centric
opportunity to define customer-specific teams in the sales organizational units requires modifications in human
organization. A complete customer-focused approach, in resources, processes, rewards and structures. The success of
terms of setting up customer-focused SBUs, does not seem customer-centric units depends on the alignment among these
possible. The service-focused organizational structures, on four elements (Neu and Brown, 2008; Shah et al., 2006).
the other hand, seem to be an antecedent to the customer- Another avenue for future research would be to analyze the
focused organizational approaches. One possible explanation internal and external motivators of the different changes in
for this is the rethinking of customer solutions from tailored organizational structures. This would both extend the findings
product and service bundles to relational processes (Tuli et al., of this study and complement previous research on motivators
2007). The only way to design relational processes with for extending the service business in manufacturing
customers in situations where companies run distinctive companies (Gebauer et al., 2005; Penttinen and Palmer,
product and service SBUs is by implementing customer- 2007). For example, it would be interesting to examine which
focused SBUs. Therefore, despite the interrelatedness motivators can be linked to specific patterns of organizational
between service and customer orientations, an orthogonal change and which motivators are context-specific rather than
development from a product-focused to a service-focused pattern-specific.
approach, and then from a geographically focused to a
customer-focused approach, is the most likely organizational Managerial implications
trajectory for providers of advances services and solutions, The findings offer a complementary perspective to existing
rather than concurrent development. ideas advocated by managers; the key managerial implications
The strength of the three contributions discussed above and recommendations are interpreted as follows. Our findings
stems from their ability to extend theories rather than simply suggest that structural changes are needed in order to make
replicate them. The four organizational approaches offer a manufacturing companies more customer- and service-
complementary perspective to the existing classification oriented. Managers should be aware of the tendency to
system of either integrating the service into the product depart from pure product- and geographically-oriented
business or separating the two. In addition, the four organizational structures. The description of the four
organizational approaches broaden the literature on organizational approaches offers guidance for managers
customer orientation in the context of organizational seeking to restructure their companies towards service and
structures and emphasize the interactions between service customer orientations. The four approaches describe
and customer orientations. organizational structures, which makes it relatively easy to
develop an action list with which to implement one of the four
Limitations and future research organizational structures. The results suggest that managers
This study has certain limitations. Firstly, although the study should start to increase the service orientations of their
is based on 36 case studies, the external validity organizational structures. For example, managers can
(generalizability) of the four organizational approaches could enhance the service orientation of organizational structures
not be accurately assessed. Within qualitative research, by increasing the emphasis on services. The emphasis placed
however, the number of cases is not relevant as long as the on services relates to actively offering services to its
patterns observed in the data are not incidental (Normann, customers. Further managerial actions refer to service
1970; Yin, 1989). In order for generalization of the four orientation in employee behavior and roles, as well as in
specific patterns to be valid, it must be tested in other human resources. By stressing the value of providing and
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Customer-focused and service-focused orientation Journal of Business & Industrial Marketing
Heiko Gebauer and Christian Kowalkowski Volume 27 · Number 7 · 2012 · 527 –537
living out the value of services, managers can increase the Baveja, S.S., Gilbert, J. and Ledingham, D. (2004), “From
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Customer-focused and service-focused orientation Journal of Business & Industrial Marketing
Heiko Gebauer and Christian Kowalkowski Volume 27 · Number 7 · 2012 · 527 –537
Narver, J.C. and Slater, S.E. (1990), “The effect of a market Yin, R. (1989), Case Study Research: Design and Methods, Sage
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Service Industry Management, Vol. 19 No. 2, pp. 232-51. About the authors
Miles, M.B. and Huberman, A.M. (1994), Qualitative Data
Analysis, Sage Publications, London. Heiko Gebauer is an Associate Professor of Service
Normann, R. (1970), A Personal Quest for Methodology, Management at the Center for Innovation Research in
Scandinavian Institute for Administrative Research, Utility Sectors (CIRUS). CIRUS is part of the Swiss Federal
Stockholm. Institute of Aquatic Science and Technology (EAWAG).
Oliva, R. and Kallenberg, R. (2003), “Managing the Heiko Gebauer has conducted research on service business
transition from products to services”, International Journal development in manufacturing companies. Since 2010, he has
of Service Industry Management, Vol. 14 No. 2, pp. 160-72. conducted research on innovation in utility sectors. He is also
Penttinen, E. and Palmer, J. (2007), “Improving firm an Adjunct Professor at the Service Research Center (see
positioning through enhanced offerings and buyer-seller www.ctf.kau.se) at Karlstad University in Sweden. He has
Downloaded by Anelis Plus Association At 04:42 27 February 2016 (PT)
relationships”, Industrial Marketing Management, Vol. 36 published academic articles, books, book chapters, and
No. 5, pp. 552-64. articles for the industry. Heiko Gebauer is the
Rust, R.T., Lemon, K.N. and Zeithaml, V.A. (2004), “Return corresponding author and can be contacted at:
on marketing: using customer equity to focus marketing heiko.gebauer@eawag.ch
strategy”, Journal of Marketing, Vol. 68 No. 1, pp. 109-27. Christian Kowalkowski is Assistant Professor of Marketing
Sandberg, R. and Werr, A. (2003), “The three challenges of at the CERS – Centre for Relationship Marketing and Service
corporate consulting”, MIT Sloan Management Review, Management at Hanken School of Economics in Helsinki,
Vol. 44 No. 3, pp. 59-66. Finland. He also holds a position as Associate Professor of
Shah, D., Rust, R.T., Parasuraman, A., Staelin, R. and Day, Industrial Marketing at Linköping University. His current
G.S. (2006), “The path to customer centricity”, Journal of research deals with service infusion in manufacturing,
Service Research, Vol. 9 No. 2, pp. 113-24. dynamics of value propositions, and service innovation. He
Tuli, K.R., Kohli, A.K. and Bharadwaj, S.G. (2007), has published articles in such journals as European Journal of
“Rethinking customer solutions: from product bundles to Marketing, Industrial Marketing Management, Journal of
relational processes”, Journal of Marketing, Vol. 71 No. 3, Business Research, Journal of Business & Industrial Marketing,
pp. 1-17. and Journal of Service Management.
537
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