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Improving competitiveness and performace through service production? A case

study of small KIBS companies participating in a productization project

Conference Paper · September 2007

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 IMPROVING COMPETITIVENESS AND
PERFORMANCE THROUGH SERVICE
PRODUCTIZATION?

A case study of small KIBS companies participating in a

productization project

Katriina Valminen and Marja Toivonen1

Helsinki University of Technology

ABSTRACT

This paper discusses productization in small knowledge-intensive

business service companies (KIBS). KIBS companies offer expert services
which are consultative and usually highly customized. The practice of
providing services from scratch for each client is, however, inefficient
and time-consuming. In order to improve their competitiveness, KIBS
companies need to approach their offering portfolios more systematically.
This paper describes an observational case study linked to a
productization project, which was funded by a public development
organization in Finland. The project was targeted to small KIBS which
are lagging behind in productization compared with bigger KIBS. As a
concrete result of the project, the participating companies productized
successfully one of their services. They also realized the general benefits
of productization and learned its basic procedures. The evolution of the
service offerings was promising.

RÉSUMÉ

L’objectif de cet article de conférence est de discuter de l'automatisation

du processus d'offre de services dans les sociétés de conseil. Cette étude
s'intéresse aux petites structures produisant des connaissances à haute

1
Katriina Valminen is Researcher and Marja Toivonen is Research Director at Helsinki
University of Technology, BIT Research Centre, Innovation Management Institute, P.O.
Box 5500, FI-02015 HUT, Finland; www.imi.hut.fi
 2

valeur ajoutée, ou 'knowledge-intensive business services’ (KIBS). Les

sociétés de KIBS offrent des services experts qui sont consultatifs et, dans
la plupart des cas, fortement adaptés aux besoins du client. Cependant,
fournir des services à partir de zéro pour chaque client est inefficace et
constitue une réelle perte de temps. Afin d'améliorer leur compétitivité,
les sociétés de KIBS doivent aborder leures offres de manière plus
systématique. Cette étude de cas a consisté à observer le déroulement
d'un projet financé par une organisation publique de développement en
Finlande. Ce projet visait les petites entreprises de KIBS qui, comparées
à de plus grandes structures, peinent à faire évoluer leures offres de
services grâce à une « approche produit ». Au terme du projet, les
entreprises participantes ont pu constater les progrès réalisés sur un de
leurs services. Elles ont pri conscience des bénéfices de cette approche et
également appri ses règles de base. L'évolution de leures offres de
services se révélait prométeuse pour la suite.

INTRODUCTION

In all Western countries knowledge-intensive business services (KIBS)

are among the fastest growing sectors of economy. KIBS companies are
expert companies that provide services to other companies and
organisations. Typical KIBS industries are IT services, R&D services,
technical consultancy, legal, financial and management consultancy, and
marketing communications. (Hermelin, 1997; Miles et al., 1995;
Strambach, 2001; Toivonen, 2004) Besides their growth, KIBS have
aroused interest as an essential part of the knowledge and innovation
infrastructure of national and regional economies (Gallouj, 2002; den
Hertog and Bilderbeek, 2000; Miles, 1999).
This paper discusses the issue of ‘productization’, i.e. the
development of systematised service offerings, in small KIBS companies.
As other service companies, also KIBS aim to develop their
competitiveness and performance through this practice. The paper is
based on an empirical case study carried out in Finland. The case
companies are four small KIBS that represent the sectors of legal,
marketing, architecture and training services. In autumn 2006, these
companies participated in a productization project funded by a public
developmental organization. During the project each company
productized one of their services with the help of an outside consultant.
The paper is structured as follows: The idea of productization as well
as its benefits and challenges are discussed in the first, theoretical section.
The second section describes the framework and conduct of the case
study. Empirical findings are presented in the third section and the
summary and conclusions in the fourth section.
 3

THEORETICAL BACKGROUND

What is productization in services?

A systematic development of services is becoming increasingly important

when the improvement of companies’ competitiveness is pursued. Earlier
research has shown that proficiency and effectiveness in new service
development contributes significantly to the success of the offering (de
Brentani, 1991).However, the traditional product development models
created for industrial production do not fit as such in services due to the
specificities of this part of the economy. The specificities of services
include immateriality, process nature and the co-production with the
client in the first place (Grönroos, 1990; Sundbo and Gallouj, 2000).
Productization is one possible tool to systematise both the
development and the production of services so that continuous
innovation, cost efficiency and customer orientation become a part of
everyday life (Jaakkola et al., 2007). There is not one commonly accepted
definition for the productization of services. Usually the term refers to
making the service offering more or less ‘product like’, i.e. defining the
core process and its outcome so that they become more ‘stabile’ and
visible. Individual needs of customers may be taken into account as small
variations in the core service, or through modularisation. In the latter
practice, customisation is achieved through different combinations of
modules, each component being provided in a systematic manner. Besides
the service elements that are visible to the customer, productization may
concern the service company’s internal processes. (Edvardsson, 1997;
Vaattovaara, 1999)
Productization can be restricted to the more accurate defining of
already existing services, but more commonly the term includes also
some renewal of the service. Because of this, productization can be a
factor that stimulates the service company to produce new innovations
(cf. the concept of formalisation innovation by Gallouj and Weinstein,
1997). In the present paper, we use the broad view of productization,
which covers both new and existing services. We focus on the
systematisation of the service, but include in our perspective the even
more advanced practice - modularisation.
Through productization, service companies mostly aim at improving
competitiveness and performance. Defining, systematising and
concretising a service make its production more profitable and efficient.
When the production process is well-defined, the quality of the service
becomes more stable. In addition, the possibilities to accumulate
knowledge systematically are improved. Productization often intensifies
the transfer of knowledge and enables the division of work. Finally,
productization makes the pricing of the service easier. Companies may
 4

even switch from selling experts’ time to selling value propositions with a
fixed fee. (Sipilä, 1999)
All these impacts lead not only to better competitiveness, but they
also open possibilities for better management. The producer knows better
what he is selling and the customer knows better what he is purchasing.
Thus, the customers also benefit from productization. It becomes possible
for them to compare the outcome of the service with the service promise
and to compare the benefit received with the price of the service. In other
words, productization facilitates the evaluation of the service. The
increased tangibility and concreteness - a characteristic which Edvardsson
(1997) calls ‘explicitness’ - makes the service more tempting and easier to
buy.
The focus of productization varies. It can be just a minor change of
style or appearance in the service, but it can also mean upgrading of the
existing service. Further, the idea may be to extend the company’s service
portfolio in current markets, or to develop a new service to an existing
customer need or a totally new service to a new customer need. (Jaakkola
et. al, 2007)
Each productization process is different depending on the company’s
aims as well as its strategy. Jaakkola et. al (2007) stress that companies
should plan and carry out their service development project on their own
basis and starting from their own needs. According to Jaakkola et al., the
productization process consists of seven different stages: 1) assessing the
clients’ needs and the ways in which they are answered; 2) defining the
structure, contents and process of the service; 3) specifying the degree of
standardisation; 4) concretising the service (service description, brochures
etc.), 5) selecting the principles of pricing; 6) following-up and measuring
the success of the service; 7) and anticipating the needs for continuous
development. Sipilä (1999) has emphasised marketing and piloting as
additional stages that should be included in a productization process.

Productization as a challenge in small KIBS

In the previous section the benefits of productization were presented.

However, the productization of services is not always easy nor do the
results necessarily correspond to expectations. Thus, we turn next to the
challenges of productization. Our main interest is in the challenges
experienced by small KIBS, as they are the target of our empirical study,
but we also touch the problems from a more general perspective.
The first problem which can cause productization to fail is that
customers may not be willing to pay higher price for the productized
service. They simply can not see or are not willing to see the difference
made. Good means to avoid this problem are careful piloting and testing
 5

of the service and collecting feedback from customers (Jaakkola et. al.,
2007; Sipilä, 1999). The second problem linked with productization lies
in the competitors: a well-productized service may interest competitors
and induce them to imitate and copy the idea.
In KIBS, an additional problem may emerge from the fact that
knowledge sharing, which is needed in productization, does not always
happen without friction. Experts can feel their position threatened and try
to protect their own expertise (Sipilä, 1999). Productization of services
also has the danger of simplifying things too much. Particularly in KIBS,
which often aim to solve quite complex problems of the clients,
productization requires careful consideration. For instance, productization
provides the possibility of extending self-service, and today especially the
possibility of conveying services via the Internet. However, many such
features are connected with the nature of expert activities that can only be
channelled through a human actor. Except for very simple situations,
advisory services offered via the web include considerable room for error.
(Toivonen, 2004)
In small KIBS companies, the productization of services can fail
simply because of scarce resources and lack of know-how. Small KIBS
have often too little resources to develop their own operations sufficiently
in order to answer the changing needs of customers. On the other hand,
they may also lack the possibility to use outside help, for example in the
juridical issues related to the protection of new ideas or in the design of
service brochures. (Toivonen, 2004) Thus it can be judged that
productization of services is easier in large than small KIBS.
Studies targeted specifically to productization and its challenges in
KIBS have been rare. A study carried out in Finland included also this
issue and ended up with the conclusion that productization is a topical
question in KIBS. Most of the 87 companies participating in the study had
one or more productized services at their disposal. For instance,
productized services have already long been used in management
consultancy: different management schools have their own business
development programmes. In Finland the public development
organisations have also supported the productization of consultancy
services. Productization efforts were perceived in marketing
communications and legal services, too. A profiling programme intended
for clarifying the objectives of the company’s image or brand building
can be mentioned as an example in the marketing field. Legal companies
had productized both simple service products, such as the formalities
regarding the establishment of an enterprise, and more demanding
services, like the follow-up of trademarks. (Toivonen, 2004)
Traditionally KIBS services have been highly customised. It has been
common to end up in unique situations where solutions must be strongly
based on customer needs. The challenge of productization is to maintain
 6

this customer perspective and not to loose it. Usually productization in

KIBS is carried out by developing working practices and working
processes, and by creating basic structures for those parts of the service
content which are made case-specific (Sipilä, 1999).

FRAMEWORK AND CONDUCT OF THE EMPIRICAL STUDY

The starting point for the study

The productization project examined in the present study was carried out
by Culminatum, the Regional Centre of Expertise in the Helsinki region.
Culminatum makes proposals and plans for development projects that aim
at promoting the competitiveness of this region. The proposals arise from
the needs of the partner network and from private subscribers. Some of
the projects are carried out by Culminatum with its own resources.
The need for the productization project was recognised on the basis
of a regional KIBS study where small KIBS and their clients were
interviewed. The study brought up three issues as the main challenges: the
productization of KIBS services, the internationalization of KIBS firms
and the development of (out)sourcing skills of KIBS’ clients. (Lith et al.,
2005) Public supporting activities were considered most acute in the area
of productization.
The purpose of the productization project was to help small KIBS
companies in defining their service portfolio and implementing
productization as a part of their key processes. At the same time the
project was expected to give rise to a network of companies interested in
the productization of services. From Culminatum´s standpoint, the aim
was also to find interesting companies which could function as pilots
when good practices for supporting measures in the KIBS sector were
searched. In this sense, the question was not only about an individual
project, but also about first steps in the development of a ‘regional KIBS
policy’, i.e. a policy for the advancing development of the region’s KIBS.
Similar efforts have been started in some other Finnish regions, too.
Research results of the role of KIBS as central actors in regional
innovation systems have motivated these initiatives. (Toivonen, 2007)
The productization project consisted of an opening and a closing
seminar and of four workshops and of four company-specific consultancy
sessions. The opening and the closing seminars were open for public but
the workshops were offered exclusively to the four small KIBS
companies. The structure for the productization project as well as the
themes of the workshop sessions were set by Culminatum. The first
workshop concentrated mainly on highlighting the importance of the
service promise. The second workshop’s intention was to clarify the
 7

importance of understanding the customers’ needs. The third workshop

was focused on the service concept, and the final workshop was a crash
course in selling and marketing of the service. It was originally intended
that a company-specific consultancy session would have followed each
workshop. This was not, however, always possible because of the tight
timetable of the four small KIBS companies. Thus, for some KIBS both
consultancy sessions were organized at the end of the project.

The case companies

The project started with an open call: both the companies participating in
productization and the company providing consultancy for them were
selected in this way. Four small KIBS companies were selected to
participate in the productization project. There were two selection criteria.
First, the companies had to represent small KIBS and secondly they had
to have a stable customer base. The number of employees in the firms
selected ranges from 2 to 20. Only one of the companies had productized
its services earlier. Yet, all the companies had noticed the benefits of
productization of services. The companies represent the sectors of legal,
marketing, architecture and training. In the following, the business of
each company has been shortly described.
The law firm had started as a two-man firm in 2000 but had already
grown into eight-lawyer office. It is focused on contract law, as well as
labour and privacy law, and it also provides legal advice in corporate
matters, e.g. in mergers and acquisitions. Of the client industries, it is
specialised in financing and mining in particular. Through productization
the law firm desired to achieve remarkable growth both in sales and in the
number of new clients.
The training company is older, it was established in the mid of 1980s.
This company also has a linkage to legal issues. It is specialised in the
integration of preventive law, quality, and risk management in business
transactions and business relationships. For its clients the company offers
consultancy, seminars and in-house workshops on proactive, value-added
contracting, contractual quality and risk management. In this company,
the motivation to participate in the productization project was first and
foremost reducing the dependence on individual experts in the service
production.
The architect’s office offers architectural design, interior design and
construction management services. It is specialised in the construction of
industrial buildings and power plants as well as hotels and apartment
houses. The architect’s office participated in the productization project
together with its partner company. By productization the architect’s office
 8

and its partner aimed at growth in the number of new customers and also
at standing out from their competitors.
The marketing office is a recently established company. It offers
consulting services in strategic marketing and planning. Via
productization it pursued long-term customer relationships.

Conduct of the study

As the purpose of the study was to increase the understanding of

productization in small KIBS, a qualitative approach was considered
reasonable. The methods used in the data collection were semi-structured
face-to-face interviewing and observation.
Two people from each of the four companies participated in the
project workshops and consultancy sessions. The architect’s office
participated together with a representative of its partner company. We
interviewed eight of the nine participants and the outside consultant. The
interviews lasted on average one and a half hours. Each interview was
recorded and made into transcripts.
The observational data consists of notes of two workshops and five
consultancy sessions. The observation technique was non-participatory,
i.e. the researcher was an ‘outsider’ in workshops and consultancy
sessions. The workshops, too, were recorded and observation notes were
made. In the company-specific consultancy sessions recording was not
possible, but the observation notes were carefully made. Research diary
was kept during the whole productization project.
This paper presents the findings based on the above-mentioned
material. It discusses two questions in particular: 1) how did the services
of the KIBS companies change during the productization project; and 2)
what kind of contribution can be anticipated from the productization
project to KIBS companies’ competitiveness and performance. The latter
topic can be examined only preliminarily in this context due to the short
time that has passed after the end of the project. Supplementary
information will be acquired later with follow-up interview rounds.

STUDY RESULTS

The change of the services in the productization project

Three of the four companies participating in the project had recognised an

urgent need for productization, and also the fourth company had
considered the productization of its services. When the project started,
each of the companies had selected one specific service that it wanted to
 9

productize. The companies also had a rough idea of the end result of the
project, i.e. a mental picture of the service product to be developed. The
lack of more detailed knowledge of the process of productization had,
however, led to a situation where the companies did not know how to
achieve their goal.
All services that the companies selected for productization were new,
i.e. the companies had not sold them earlier to their clients or even piloted
them. However, some preliminary development in the form of desk
studies had been done. During the project, the main working method -
besides the general lectures given in the workshops - was a dialog
between the consultant and the productizing KIBS. The participants
described their ideas to the consultant and made questions. The consultant
worked as a facilitator: he commented the ideas, answered questions,
made specifying questions and gave examples of good practices.
However, the KIBS companies had to make all decisions and solutions
themselves - the consultant did not productize services on behalf of them.
The following sub-sections describe the productization process
company by company, the focus being particularly on the change of the
service. The descriptions have been made at quite a general level in order
to protect business secrets - some of the services have not yet been
launched in the markets.

Law firm

The law firm participating in the productization project provides versatile

legal services to its clients. However, until the present project they had
not had any productized service, but the working practice had relied
solely on customisation. First concrete thoughts about productization had
emerged just before the project call, in summer 2006. The service that the
firm selected to be the target of productization differs radically from the
services provided by competitors and it also means that the firm
penetrates into a totally new market. The purpose of the service is first
and foremost the finding of new clients and an aggressive increase in
selling. An essential characteristic is the combination of the different core
competences of lawyers. The service will be launched during the coming
months.
At the beginning of the productization project, the law firm had an
idea of the content of the service and it was convinced that productization
could provide competitive advantage. However, the firm’s knowledge and
know-how regarding productization were minor, one reason being the fact
that productization is rare in the legal sector. No documents or
descriptions of the new service were available - all ideas were in the
 10

minds of the participants and these ideas were not compatible in all
respects.
Before the productization project, the law firm had started to think
about its service portfolio and the new service, which they judged to
answer a real market demand. There had also been quite much discussion
about the content of the service but no decisions had been made. Of the
more detailed issues, pricing had been dealt with but due to the lack of
consensus this point was open, too. Most productization themes -
concretising, marketing, protecting, following-up etc. (cf. Jaakkola et al.,
2007) - were totally unanalysed. Thus, great hopes were set on the
productization project.
During the project, the law firm described its new service regarding
both the content and the process. Particularly the stages of the process, as
well as the responsibilities and the division of work were analysed in
detail in order to secure an efficient and reliable delivery to clients. The
target group for the service was defined and the client perspective was
discussed profoundly. The representatives of the firm wanted to make
sure that the service really provides benefit to clients and that the clients
are ready to pay for it. In order to secure that the productized service will
succeed, the law firm made a market survey during the project.
After the project, the law firm had the documents of the content and
process of the service, and pricing models for different purposes. In
addition, the firm prepared preliminary brochures of the service and a
plan of the launching campaign. Thus, a concrete productized service was
developed - just what the law firm had pursued. In addition, the project
did not change only the target service, but the firm as a service provider
changed, too. Firstly, the participants perceived that the productization of
services is not ‘astrophysics’, but a manageable, practical task. Secondly,
the project helped the law firm to adopt the client perspective, not only in
the context of the productized service, but regarding its whole business.
On the other hand, the productization required efforts from the firm.
The combination of everyday work and productization was considered to
be the greatest challenge. In a small company nobody can totally
concentrate on productization - the clients have always to be placed first.

Training company

The training company offers its clients consultative services and training
in international contracting. The company participated in the
productization project for two reasons. Firstly, the production of its
services was time-consuming and the company wanted to ease its
workload. The productization, i.e. standardisation and systematisation, of
services was seen as an opportunity to produce services more effectively.
 11

Secondly, the company was eager to learn the productization process in

practice. It believed that the productization project helps it to better
understand its customers and the challenges they are confronting. This in
turn can result in better answering of the clients’ needs.
The starting point for productization in the training company was
quite good. The company had carefully evaluated customer needs and had
perceived a keen demand for a service which was in many respects
similar to the service that they now wanted to develop. The main
difference was that this earlier service was not productized. However, the
company had several mass-customized modules from which it planned to
formulate one productized service. This service would consist of both
standardised modules and customised elements. The training company did
not have any descriptions or documents of the service or its modules
before the project.
With the help of the consultant, the company managed to define both
the service content and service process. The service was also carefully
documented. One way in which the concretisation of the service clearly
manifests itself is a brochure, which the company worked out during the
project. Further, the company protected the productized service by
registering its trademark. Most challenging was the pricing of the service.
The company had to find a solution how to price the service so that it is
profitable and tempting at the same time. It ended up with a pricing model
which consisted of a partly fixed price; the price depends on the number
of customers participating in the lectures and workshops.
The productization project achieved its goal in the case of the training
company: it helped the company to successfully productize its target
service. After the project, the training company has a well-defined service
product in its service portfolio. The company also considered that the
project served as a testing laboratory for this service, due to which there is
not an aim to pilot the service extensively with customers. However, the
possibility to test the service in the partner network was kept open.
Extensive marketing operations have not been planned either, because it
is not common to contact customers in the legal sector which is the
special expert area of the training company - the service providers usually
trust on the ‘word of mouth’.

Architect’s office

The architect’s office has earlier been specialised in the construction of

industrial buildings but is now diversifying into workplace planning, i.e.
the planning of working environments. Through productization the office
is trying to improve its service portfolio, tempt new customers and to
stand out from its competitors. Before the project, the office did not offer
 12

any productized services and its services were highly customised. The
service selected for productization is a ‘throw-in service’ whose purpose
is to tempt customers into even more valuable services. Characteristic to
this service are multi-disciplinarity and a modular structure; the modules
have fixed prices. After the productization project, the architect’s office is
now ready to pilot its service.
Before the participation in the project, the office had developed the
idea of its service one and a half year. The service concept had been
carefully considered, and a partner network suitable to co-producing the
service had been created. The service idea had also been tested among
long-term customers in order to find out whether there was a real
customer need. Yet, the service content and service process were defined
only to some extent. Further, the idea of the service was highly
complicated and wide-ranging. The office had made long and
complicated descriptions and sketches of the service.
During the productization project the architect’s office encountered
several challenging issues, and solving these issues made its original idea
to change. Firstly, the ownership of the service was unclear and also the
service content was fuzzy. With the help of the consultant, the company
managed to clarify these points. The second issue that challenged the
architect’s office was how to make the service more standardised without
sacrificing the flexibility of the service. During the productization project
the architect’s office realised that instead of one service they would need
two: one for private and another for the public sector. The service that
they productized during the project was targeted to the private sector.
Thirdly, like the training company also the architect’s office found
pricing of the service especially challenging. In this case the challenge
derived particularly from the fact that the service was co-owned with one
partner company, and due to its complexity it was additionally co-
produced with five sub-contractors representing different fields of
expertise. After long discussions with the consultant, quite a simple
solution was found: the first three modules of the productized service
were given fixed prices. This broke down the architects’ traditional
pricing model which is based on working hours. Only the fourth module
was charged hourly. Still a challenging task was left: defining the fixed
prices for the modules so that they are both profitable and tempting for
the customers (cf. the case of the training company).
After the productization project the architect’s office had in their
hands a service product ready for piloting. Besides the carefully
documented and defined service content and service process, the
architect’s office made a service description and a presentation in order to
facilitate selling. Through the documentation and well-defined pricing,
the service became more concrete and the communication about it more
 13

consistent. Further, the architect’s office considered that it benefited from

the general knowledge concerning the marketing of KIBS offerings.

Marketing office

The marketing office is a newly established company which has been

struggling in finding a solution to a very essential question: what are the
benefits and added value that they could and should produce to their
clients. Currently the company offers strategic marketing and planning
services. The services are usually, at least in some parts, co-produced
with sub-contractors. As the company is specialised in planning, the
phases where plans are put into action are commonly outsourced.
The starting point for the participation in the productization project
was that the company had ended up with serious problems. It wanted to
productize and produce outsourced marketing services to its customers.
These services are complex and challenging and due to their long lasting
nature they also require the customer’s commitment. However, the survey
conducted by the company revealed that the customers were more
interested in simple, non-recurring marketing services - like the services
that he marketing office usually outsourced.
From the productization project the company expected an outside
opinion which could help it to refine and improve its service offerings. In
addition, it hoped that participating in the project would help in solving
the communication challenge: the company had had some difficulties in
communicating about its services to the customers. In addition, the
company was interested in the productization of services as a general
topic: what kinds of tools and procedures are needed in productization.
The company did not have the same kind of urgent need to
productize its services as the other companies participating in the project.
The company’s own opinion was that its services were ‘functional’ and
‘stabile’ even before the productization project. The company had also
actually developed many of the elements of a productized service.
Customer needs had been mapped and the customer groups had been
roughly defined. The company had also developed both the specific
service that they were planning to productize and their whole service
portfolio. However, earlier experience in actual productization or
standardisation of services was lacking.
During the productization project, the marketing office mostly
concentrated in refining and defining its whole service portfolio with the
help of the consultant. The original aim, the productization of an
outsourced marketing service, was put aside. The main reason for this was
that the company did not want to make final decisions yet, but was
balancing between different options. The company also expected that the
 14

consultant would have offered solutions to its challenges instead of the

facilitation that was his working method. Despite these problems, the
marketing office managed to develop its ad hoc operations to more
systematized procedures. It also managed to solve its communication
challenge. Further, it did not only learn how to communicate about its
services to the customers but it also changed its working style from a
‘boring scientist-like’ to more lively. Inspired by the productization
project, the company also upgraded the content and appearance of its
homepages. All the above-mentioned changes made its service offering
more practical and commonplace, which in this case was desirable. The
company itself was satisfied particularly with the development of
communication. During the project the marketing office also gave fixed
price to its services.
Summarising, the productization project benefited the marketing
office in two ways. Firstly, the company learned how to communicate
about its services to the customers. Secondly, it understood more deeply
the significance of the customer perspective. After the project the
company also has all the elements needed in productization at hand.
However, in order to take steps forward, it has first to concentrate on
decision making and keep the decisions made.

Preliminary discussion of the impacts of productization

For now it is too early to judge if the small KIBS companies participating
in the productization project achieved all the benefits that they pursued.
However, it seems that they did benefit from the project as the evolution
of the service offerings was impressive. Three of the four companies
managed to productize one of their services successfully. One company
developed their ad hoc operations to more systematised procedures.
Some other results also indicate that improvement in competitiveness
and performance can be expected. The companies not only successfully
productized one of their services, but they also gained understanding of
productization and of the development of their business more generally.
All new thoughts and ideas may not become concrete in the particular
service that was the target of productization, but the new seeds of
knowledge may contribute to other services of the participating
companies.
During the productization project, the KIBS companies both defined
and documented the service content as well as the service process. The
better the service is defined the less it is dependent on the competences of
individual experts. In small KIBS companies this is especially crucial
because of the scarce resources. The productization project was also
beneficial in the making of the service products easier to sell. Practical
 15

ways in which this was achieved was the development of brochures and
service descriptions. Also the clarification of the pricing of the service
was a key factor that facilitates selling. All these developments made the
productized services more concrete, leading to more consistent
communication and argumentation of the service. KIBS offerings are
usually complex and therefore it is vital that the experts producing the
service communicate consistently not only with each other but also when
dealing with the customers.
After the productization project the participating KIBS have at hand
all the required elements to produce competitive and profitable services.
However, productization alone does not create competitiveness nor
increase performance. Essential is that the development starts from the
recognition of customer need, i.e. from the analysis of the problem that
the service aims to solve. Also competences in the marketing of the
service product are crucial because customers will not find the service
until they at least know that it exists.

SUMMARY AND CONCLUSIONS

The findings of this study show that productization in small KIBS can be
promoted through specific development projects. In the project examined
in the present study, productization resulted in the following changes in
the target services. 1) The service developed from a (vague) idea to a
concrete service product. 2) The service was documented and described,
which facilitated common interpretations and consistent communication.
3) The needs of clients were clearly taken as the starting point of the
service. 4) Concrete means that make selling easier were developed
(brochures etc.). 5) The pricing of the service was clarified and different
pricing systems were discussed and evaluated.
In addition to the concrete changes in the services, the productization
project provided results that have a more general meaning and probably
long-lasting effects on the orientation of the companies. First of all, the
attitudes towards productization changed: it was understood to be a
demanding but manageable task that has clear benefits but does not solve
all problems. Secondly, the productization skills of the participating
companies developed. The participants gained knowledge about the basic
elements of productization and learned the basic concepts linked to it.
Thirdly, the general business skills of the companies also developed. An
increased understanding of the clients’ perspective was particularly
emphasized. The companies also learned some basics of the marketing
and pricing of expert services.
The study showed that the need for productization may be different.
Usual starting points are the desire to penetrate to new markets, to tempt
 16

new customers and to stand out from competitors. However, also the need
to ease the workload may be the motivator. An additional factor, which
probably plays a role particularly in KIBS, is the desire to combine
effectively different types of expertise.
During the project the companies went through five of the stages of
productization presented by Jaakkola et al. (2007): evaluation, definition,
standardisation, concretisation and pricing. Follow-up and measuring as
well as the continuous development were only mentioned. On the other
hand, our interviews and observations suggest some additional ideas with
which the model of Jaakkola et al. could be supplemented. These are:
protecting the service, marketing the service and piloting the service
before the launch. In Figure 1, we present the model of Jaakkola et al.
supplemented with these observations of our own.

FIGURE 1
Developing services through productization
(modified from Jaakkola et al. 2007)

Target for
Goals development Means Outputs

Evaluation
Defining Growth
Pricing Standardisation Competitive
Service content Concretising advantage
Competitive Service process Protecting Profitableness
business Service offering Piloting Knowledge sharing
Communication Follow-up and Information flow
Marketing measuring Quality
Continuous Productivity
development

Concerning the way in which the project was carried out, we can
conclude that the combination of workshops and consultancy sessions
worked well: the workshops provided new concepts and tools which were
then used in consultancy sessions where the actual productization of
individual services took place. The fact that the participating companies
were not direct competitors enabled quite an open discussion about
insights and challenges, thus creating a common learning experience. It
can be judged that company-specific working without this kind of
experience sharing would not have been equally efficient. On the other
 17

hand, workshops alone would not have resulted in such a deep and
concrete working which now was characteristic of the project.
When participating in productization project, the four small KIBS
stepped on the path of learning productization. Now it seems that they
will keep going on that path waiting that productization bears fruits. The
follow-up studies hopefully will shed some light on the issue how
productization actually improved competitiveness and performance of the
participating companies. Even though it is not possible to identify any
causal relationships here, the notions and views of the companies are
interesting and enable qualitative analysis.
From the viewpoint of the initiator - the public development
organization - the project was an encouraging pilot, on the basis of which
a subsequent project is now going on and some plans for the continuation
of the activity exists. It seems that at least small KIBS companies
experience it difficult to apply the principles of productization on the
basis of guide books alone. The role of an outside consultant was judged
to be of utmost importance. The help of the consultant was needed
particularly in the issues related to pricing, communicating and marketing
of the service. As a final, critical comment can be stated that the
participants would have desired even more support in the marketing of
their services.

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