Modularity Perspective on Service Business Research · 2012. 5. 4. · P.O. BOX 4600, 90014...
Transcript of Modularity Perspective on Service Business Research · 2012. 5. 4. · P.O. BOX 4600, 90014...
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
Modularity Perspective on Service Business Research
Saara Pekkarinen
ModSeC project 2008-2010 – logistics and
professional services
ModuServ Project 2011-2013 – industrial and KiBS
Starting context 2011 – health services
ModSeC Project Objectives 2008-2010 http://www.taloustieteet.oulu.fi/index.php?486
• To understand and clarify the customers' needs and role in B2B
logistics and professional service co-creation;
• To clarify the service providers' role in outsourcing relationships;
• To examine the nature and efficiency of the market structures
and organizational solutions for modular service implementation;
• To describe applicable future business models in modular
service business.
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
ModSeC – Work Package 1
Managerial implications
• By using modularity in service production, the service provider
can increase the value perceived by the customer (Figure 2).
• Service modularity can be seen as a tool for developing services
internally in a service company, i.e. a method for improving
managers´ thinking when they try to achieve efficiency in
service production.
• In modular service organization it is essential to develop means
of sharing knowledge between the organizational units and
experts.
• The research on modular services will give the companies an
understanding of the benefits of standardized and modularized
services and the role of customer interface herein.
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
Figure 2 from Rahikka, E., Ulkuniemi, P. and Pekkarinen, S. (2011) Developing the value perception of the business customer through service modularitye in Journal of Business & Industrial Marketing, 26/5, 357-367.
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
Ulkuniemi & Pekkarinen (2011) Creating value for the business service buyer through modularity, Int. J. Services and Operations Management, 8(2), 127-141
“Modularity in designing offerings and processes will make
services tradable” (Spring and Araujo, 2008) - to allow for buyers
to employ their part of the co-created value.
From the managerial perspective important to understand how service
modularity is connected to the buyer-perceived value.
Making internal processes of service firms more effective, another
underlying goal of service modularity is to support mass
customization.
However, the customers‟ perspective and experience have not yet
been thoroughly explored.
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
Managerial implications of WP3
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
• Dividing an organization´s processes into a number of
distinct modular activities and sub-processes makes the
total operation easier to conceptualize and handle.
• Modularity enhances opportunities to combine
processes and activities and identify new boundaries for
business opportunities within business networks.
• The customer has an active role in specification of
service needs and co-developing the solution that
enables the efficient and effective combination of service
modules, processes and actors for co-creation of value
(Exhibit 3.1 in ModSeC www-pages).
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
Modular-based approach advantages – Mason, Juga, Pekkarinen & Eyers, 2010, LRN Conference paper
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
operations of any organization.
• Simplicity – From the manager‟s perspective splitting an organization‟s processes into a number of distinct modular based
activities helps to make the total operation easier to conceptualize and handle. Anderson et al. (2006) place emphasis on
modularity as a key issue to manage complexity, especially where a high degree of customization is required.
• Support Standard Enhancement - Business processes within a defined module can be focused upon and standardized for
seeking cost, flexibility and effectiveness benefits. The modular based approach can also fit well within a continuous improvement
culture where efforts are focused upon reducing variability and uncertainty. To further support this, performance benchmarking of
comparable modules becomes easier to undertake.
• Support Service Enhancement – As process modularity enables the splitting of the process into standardized sub-processes,
combining these standard processes with customized processes can fulfill heterogeneous customer needs (Pekkarinen &
Ulkuniemi, 2008; Bask et al., 2010).
• Easier Outsourcing - Modular processes allow easier outsourcing of process capabilities (Davenport, 2005), e.g. outsource
logistics to LSPs. Ulkuniemi and Pekkarinen (2011) argue that modularization of service elements, especially the service process,
can help the buyer to specify the object of the exchange better, to evaluate co-creation efforts and to identify total, including non-
monetary, costs of the service.
• Enhance Opportunities to Combine Processes/Activities - Baldwin (2007) argues that modularization of a production system
creates new module boundaries (interfaces) for new exchange opportunities between the different actors within business
networks.
In summary, Worren et al. (2002) define a modular organizational structure as a composition of autonomous, loosely coupled
organizational units which benefit an organization through enhancing both flexibility and cost efficiency. For business service
providers productivity can be enhanced, Sako (2006) argues, by standardizing and consolidating processes and moving into
higher-value-adding activities when their client firms unbundle corporate functions or vertically dis-integrate”. LSPs are clearly an
example of a service provider so it would appear that modularity could be utilized by them as a way of reducing the costs of
differentiation, enhance their operational effectiveness, enable innovation and provide a useful vehicle for working in partnership
with partners both vertically and horizontally within their business networks.
This is interesting to research from an academic as well as a practical perspective. Campangolo and Camuffo (2009) see there is
a gap in the research concerning modularity in organizational design as both definitions and measures of modularity are
ambiguous and the findings controversial. Interesting topics for future research include the relationship between modularity and
outsourcing (Starr, 2010), a concept „modular production network‟ (Sturgeon, 2002 in software industry, Hoogeweegen et al.,
1999 in air cargo industry) and identifying which drivers may guide the modularization of the organizational structure.
• Simplicity – Splitting an organization‟s processes into a number of distinct
modular based activities helps to make the total operation easier to
conceptualize and handle.
• Support Standard Enhancement - Business processes within a defined module
can be focused upon and standardized for seeking cost, flexibility and
effectiveness benefits. The modular based approach can also fit well within a
continuous improvement culture where efforts are focused upon reducing
variability and uncertainty.
• Support Service Enhancement – Modularity enables the splitting of the process
into standardized sub-processes and combining them with customized
processes which can fulfill heterogeneous customer needs
• Easier Outsourcing - Modular processes allow easier outsourcing of process
capabilities
• Enhance Opportunities to Combine Processes/Activities – Modularization of a
(service) production system creates new module boundaries for new exchange
opportunities between the different actors within business network
Modularity (modularization) is interesting research
avenue both from academic and business practice
perspectives. • Campangolo and Camuffo (2009) - a gap in the research concerning
modularity in organizational design as both definitions and measures
of modularity are ambiguous and the findings controversial.
• Miraglia (2010) – modularity and integratedness as coexisting
properties of the complex systems
• Interesting topics for future research include e.g.
• Modularity in business model and ecosystem contexts
• Relationship between modularity and outsourcing
• A concept „modular production network‟ in different types of
services
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
What ModuServ is about? http://moduserv.drupal.oulu.fi/
The purpose of this research project is to describe,
analyze and evaluate how value is co-created in
business services through modularity in collaborative
business networks.
The research project conducted by Department of Marketing,
Oulu Business School, University of Oulu and Technical
Research Centre of Finland VTT financed by Tekes Serve
program 2011-2013.
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
Themes and Work Packages
We aim to enhance our company
partners in developing their service
business from three perspectives:
• Customer as a co-creator of
value in service design,
development and production
(Value Co-Creation)
• Managing network for
providing service solutions
(Collaborative Networks)
• Modularity as strategic and
operational issue in service
business
(Service Modularity)
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2923, fax (08) 553 2906 • www.oulubusinessschool.fi
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
Oulu Business School
VTT
WP1 Collaborative Value-Creation in Business
Service Networks
WP2 Modular Business Networks with
Scalable Services
WP3 Modularity in Value Co-Creation
WP4 Dissemination and Exploitation
WP
5 P
roje
ct m
anagem
ent
Kiinteistö-
huolto
Jurvelin
PCS-
Engineering
Pöyry
Finland
Cardiff Business School
Hull University Logistics Institute
Linköping University /IEI
Sirris, Belgium
Lancaster University
Georgia State University
University of Jaume and
University of Valencia Spain
Modularity Issues within ModuServ project
Aims in WP 2
•The general purpose to explore the
characteristics and processes of the
business services within networks.
•A special attention on capabilities
required for developing horizontal
collaborative relationships
•Especially modularity enhancing
collaboration within the organizations
and in the boundaries between the
organizations streamlined to the
whole process of value co-creation.
Aims in WP3
•Exploring the processes through
which modular services could
enhance value co-creation for service
providers and customers.
•Conceptual development into the on-
going discussion concerning value
co-creation eg related to importance
of knowledge sharing and utilization
capabilities.
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi
Thank you!
saara.pekkarinen(at)oulu.fi
pauliina.ulkuniemi(at)oulu.fi
jari.juga(at)oulu.fi
P.O. BOX 4600, 90014 University of Oulu • tel. (08) 553 2905, fax (08) 553 2906 • www.oulubusinessschool.fi