Co-development: A lot of untapped potential

Co-development of advanced services took place in different forms in all cases studied. These forms included cooperation in customer pilots, joint development projects, provision of data access to service suppliers, and providing a specific role for key customers in service development. Findings demonstrated that customers could have a significant role as co-developers through service pilots and development projects, and in particular, the role of key customers was central in feedback and testing services that were under development. Nevertheless, the focal firms did not commonly apply the co-development of advanced services. Moreover,

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providing access to data emerged as a specific form of co-development that was essential within IIoT-based services.

Within the cases of SCALE and DEVICE, customer participation in service development was not particularly common. Nevertheless, at some occasions, customers had been involved as co-developers. For example, the focal firm of DEVICE had organized customer pilots for developing life-cycle analyses and equipment exchange services.

In the life-cycle audit, we have had piloting and a customer has been a little involved, and likewise in (…) equipment replacement services (…) so, we don’t first develop and then pilot. We pilot and develop at the same time (development manager, BF6, DEVICE).

Some focal firm interviewees stressed that this type of co-development should be applied more often. Pilots were seen especially important within more advanced services, where the pace of the technological development was high and customers were keen to follow the latest advancements more closely. Of the customers involved in the study, BC2 had been participating in service development through a pilot that was related to so-called smart solutions.

We have done some pilot projects (…) it’s getting more common (maintenance manager, BC2, DEVICE).

Some focal firm interviewees especially emphasized that they should recognize those key customers, such as BC2 above, who are willing to share their opinions instead of trying to engage a large group of customers.

Similarly, in the case of SCALE, a majority of the focal firm interviewees pointed out that they should engage customers in service development more regularly.

According to one interviewee, the focal firm had closely cooperated with research organizations and they should extend such collaboration to key customers.

Currently, the focal firm occasionally asked feedback from a few key customers on services that were under development.

It’s no use to develop [things] here in secrecy (…) [If] 80% of the customers’ goals are different, you have done useless work. So openly tell what we are developing (…) customers do tell their opinions (vice president, AF2, SCALE).

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Even though it was recognized as a good practice by the interviewees, gathering customer views or any other type of customer involvement in developing advanced service was neither particularly frequent nor systematic.

In the case of FLOW, the issue of customer participation in service development was addressed differently. Owing to the nature of their business (i.e., taking over customer’s logistics functions), service development was continuously linked to customers’ processes.

We develop our own activities all the time, but of course with a customer since all our own functions are customer’s functions (CEO, CF1, FLOW).

A majority of the focal firm interviewees emphasized the importance of involving customers in development projects. On the one hand, the focal firm was not able to develop things on their own. For example, the focal firm often needed permissions from customers to change processes. Moreover, different inputs from the customers’ side were often required, such as decisions, information, and access to systems.

We need better information from customer’s information systems (…) often, they cannot do it or it’s too expensive or they need permission from somewhere (development director, CF5, FLOW).

Some interviewees said that this had sometimes led to problems, such as projects that were running late.

Furthermore, the role of the key customers in co-developing advanced services was addressed in the case of FLOW. Customer CC5 had urged the focal firm to develop its portfolio as discussed previously (see, 4.4.5). The pressure from the customer side not only influenced the extensiveness of the offerings but also influenced service development. According to the participated customer:

Ideas started to come very well of how we could develop it [delivery process] so that costs could be taken off (…) both think that we do good work but then we don’t see that we do overlapping work or something that the other one doesn’t in fact need (procurement director, CC5, FLOW).

Consequently, the focal firm had launched new development initiatives that led to not only changes in the distribution of work between the parties but also the implementation of new methods and systems.

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Finally, providing data or access to data emerged as a specific form of co-development in IIoT-based services. The issue was especially topical in the case of SCALE. As described previously (see, 4.5.3), an online access to the installed base was seen as the first step toward data-enabled services. Currently, all the data generated by the equipment was stored and owned by customers. Therefore, the focal firm needed to find a solution, which would let them access and use the data.

The ownership of the data per se is by a customer, but we could have a possibility to use it. Maybe this kind of approach (…) but we need to be able to show to a customer that this is what you get when you offer that to us, added value to them (product manager, AF4, SCALE).

Accordingly, some focal firm interviewees emphasized that data-enhanced services necessitate willingness to cooperate from the customers’ side, that is, co-development.