Productization

Productization is one part of the Product Service Systems. Traditionally productization has been thought as a method or process to improve the repetitiveness of products in production and in sales. This means basically that the product could be sold as close the same as for previous customer – minimizing the changes yet still keeping the possibility to customize. In this approach there is an issue because it all starts from the product and producing the product. Thus the starting point is already misleading, looking things from internal perspective, but the total larger content from the customer point of view is left out. Often there are services related, especially if we think about the industrial investment type of products – these are often given very little space in the productization discussion.

Figure 1 Corner stones of traditional productization

Productization focuses on packaging the product or service into a similar box, always. Documentation and production processes are tuned to be the same. In terms of cost estimation this is of course good. The cost is known and relatively easy to forecast. But what if the main thing that you sell is service and not any tangible product at all. What does productization then mean? Taking the look into corner stones, it means that the processes are well tuned and the service is always the same. Products, service and processes are well documented and clear to communicate. Everyone involved knows exactly how the things are moved forward when producing the service. In investment products, this is the way to take customer view in count as well. It may mean for example the annual service for some machine. It can be some other company than the one originally manufactured the equipment. Sometimes the service and the product are so tightly bonded together that those can´t be separated. Machines and other investment products have usually room for some customization, those are modular. Restaurants are perfect examples of those in the field of the productization. Furthermore, they are usually very well productized and service is in good level. Several items on the list, probably ordered into same table expected to be served at the same time, warm food for the whole table. And they make it happen mostly without major mistakes in process. Differential value is a key thing in productization. In the productization process one task is to find out the key differential value for the product or service and make sure that it is communicated in external communications well and repeatedly.

I think restaurants should be thought as Product Service Systems rather than productized products. There are both tangible and intangible elements so tightly included. Also, the good ones start the service and offering planning from the customer experience, not from the menu. Yet the pricing of the restaurant is still usually product based and I believe cost based. Customer value is relatively difficult to estimate in restaurant. In industrial context, it is often much easier but still the pricing is based on costs. Highly productized products, tuned processes, good documentation and repeatability etc. may still be priced according to cost of production. The main difference between well productized product and true Product Service System is the fundamental starting point: true PSS is produced on to real need and priced according to the value for customer and sold as service invoiced per use or time of use.

Productization is a part of true PSS. When starting the PSS development, it has to start from customer need and giving monetized value for that need. After that process the productized product and service with servitized business models come into play.

Keywords: productization, PSS, customer value