Assessing Your Servitisation Capability Maturity

Assessing Your Servitisation Capability Maturity

Why deciding where you are actually trying to go matters more than climbing a maturity ladder — and how that choice turns capability assessment into a practical agenda.

Article 03 / 12Approx. 9 min read

Imagine two industrial companies.

Both have been pursuing servitisation for several years. Both have connected equipment in the field. Both offer service contracts. Both have invested significantly in digital technology. And both report growing service revenues.

Ask them where they are on their servitisation journey and they might give you very similar answers.

Look inside the organisations, however, and they may be remarkably different.

In the first company, salespeople understand how to quantify the economic impact of downtime on the customer's operation. Service, product and digital teams develop propositions together. Commercial teams are comfortable structuring multi-year agreements. Operational performance is visible throughout the lifecycle, and management understands the risks associated with the commitments it makes.

In the second company, the technology may be every bit as sophisticated, but sales is still largely product-led. Service sits downstream from the product business. Data is collected but not consistently translated into customer value. Commercial teams remain uncomfortable with performance commitments, and nobody is entirely sure who owns the customer outcome once the contract has been signed.

Which company is more mature?

The answer seems obvious. And yet a conventional servitisation maturity assessment might place them surprisingly close together.

That points to a problem with the way we sometimes think about maturity.

Maturity is not a position on a ladder

Maturity models are appealing because they make a complicated transformation understandable. We assess a number of dimensions, assign scores and place the organisation somewhere on a journey from relatively traditional to highly advanced.

That can be useful. But it can also imply that organisations move neatly from one level to another. Reality tends to be messier.

An industrial company can have highly sophisticated digital capability and relatively immature commercial capability. It can be excellent at service operations but weak at customer insight. It can have salespeople capable of discussing customer outcomes while its contracts, incentives and governance remain firmly rooted in a product business.

In other words, an organisation does not have one maturity. It has a pattern of capabilities that have developed at different speeds.

That distinction matters because servitisation depends on those capabilities working together.

The question may not be: How mature are we?

A better question is: Are our capabilities mature enough for the business model we are trying to deliver?

The harder question comes first

Before assessing capability maturity, there is a more difficult question to answer.

Where are we actually trying to go?

It is tempting to look at a servitisation journey and assume that the objective is to keep moving from left to right: from Product-Centric, through Product + Service and Managed Services, towards Smart and eventually Autonomous Services.

THE SERVITISATION.WORLD JOURNEY

01 Product-CentricEquipment and product performance

02 Product + ServiceLifecycle support and service

03 Managed ServicesAvailability and managed performance

04 Smart ServicesData-enabled optimisation

05 Autonomous ServicesOutcomes and increasing autonomy

But these are not levels to be completed. They represent different ways in which an industrial company can create value and take responsibility for customer performance.

The strategic challenge is deciding where on that journey the business should compete. That requires understanding where customers genuinely value greater supplier involvement, what problems they will pay to have solved, where the supplier has — or could develop — a distinctive advantage, how attractive the economics are, and how much additional risk the company is prepared to accept.

A manufacturer may discover that customers value exceptional lifecycle support but have little interest in transferring responsibility for outcomes. Another may find that downtime is so economically significant that customers are willing to pay for guaranteed availability. Another may have a combination of installed-base knowledge, connectivity, data and domain expertise that creates an opportunity to optimise customer performance.

The right destination is therefore unlikely to be determined by a maturity model. It emerges from the intersection of customer value, competitive advantage, economic attractiveness and acceptable risk.

The objective is not to travel as far as possible along the servitisation journey. It is to find the position where taking greater responsibility for customer performance creates compelling value for the customer and attractive economics for the provider.

Technology does not choose the destination

IoT illustrates the problem particularly well.

Industrial companies have spent years connecting products, collecting data and building remote-monitoring capabilities. The technological possibilities are exciting. We can see how equipment is being used, detect anomalies, predict failures and increasingly optimise performance.

But there is a much harder question: how do we make money from it?

The answer is rarely simply to sell the data. The economic value usually appears when connectivity and data allow the supplier to solve a more valuable customer problem.

Better data might improve preventive maintenance, reduce unplanned downtime, support guaranteed availability, improve energy efficiency or throughput, or eventually enable the supplier to take responsibility for an operational outcome.

Those are very different business models — requiring very different capabilities.

This is why investment in IoT can run ahead of commercial progress. A company can become extremely sophisticated at collecting data without becoming equally sophisticated at turning that data into customer value — and capturing some of that value commercially.

Many industrial companies know how to connect their products. Far fewer know what business they want that connectivity to enable.

The strategic task is to determine which customer problem the technology allows us to solve better, how much solving that problem is worth, and what role we want to play in delivering that value.

Only then does the destination begin to become clearer.

Once the destination becomes clearer, the capability question changes

Once leadership has a clearer destination, it can work backwards. What must the organisation be capable of doing to sell, contract, deliver and manage that business model successfully? What additional capabilities become critical, and what new risks must it understand and manage?

Capability maturity is no longer an abstract assessment. It has a purpose.

Destination

The capability question becomes: What must we become capable of doing to get there?

That does not make capability development easy. But it makes the problem tangible. Instead of becoming more “mature” across every dimension, management can concentrate investment on the capabilities critical to the business model it has chosen.

And that changes the purpose of assessment. We are no longer measuring how far an organisation has progressed towards somebody else's theoretical end state. We are assessing whether it has the capabilities required to deliver its chosen destination.

The interesting part is often the gap

Consider a manufacturer that wants to develop a significant Smart Services business.

It has invested heavily in connectivity, remote monitoring and analytics. Its equipment generates large volumes of operational data and it can identify patterns, anticipate failures and increasingly predict performance. From a technology perspective, it looks advanced.

But follow the proposition into the rest of the organisation.

Can the commercial team translate those insights into an economic case that matters to the customer? Can sales move the conversation from equipment performance to customer performance? Can the organisation price the value it creates rather than simply the cost of providing the service? Can contracts accommodate new responsibilities? Can operations consistently deliver against them? And are product, digital, service and commercial teams actually working as one system?

The company may not have a technology problem at all. It may have a capability imbalance. More investment in analytics might strengthen what it already does well while doing little about the capabilities actually constraining growth.

A score asks: “How advanced are we?” A capability profile asks: “Where are we strong, where are we exposed, and does that pattern match where we are trying to go?”

Your strongest capability may not determine how far you can go

This becomes particularly important as companies move towards performance and outcome commitments.

Imagine that our manufacturer has developed excellent predictive-maintenance technology. Its installed base is connected, its models identify potential failures accurately and its engineers understand the equipment intimately. The company decides it is ready to guarantee availability.

Technically, perhaps it is.

But can it quantify the financial exposure associated with that guarantee? Can it distinguish between risks it can control and risks it cannot? Can it price those risks appropriately? Can the contract define the customer's responsibilities as clearly as the supplier's? Can the service organisation intervene quickly enough when the data signals a problem? Can the company manage the commercial consequences when performance falls below commitment?

If the answer to one of those questions is no, then the sophistication of the predictive algorithm becomes less important.

The business model is only as robust as the capabilities required to deliver it.

The maturity of a servitised business may be determined less by its strongest capability than by its weakest critical capability.

Not its weakest capability overall. Its weakest critical capability. And what counts as critical can only be defined once the destination is understood.

No organisation needs to be world-class at everything. Nor should every capability be developed to the same level. What matters is whether the capabilities essential to the next stage of the business model are sufficiently strong — and sufficiently connected — to make that model work.

This changes what we should assess

In the previous article, we looked at the capabilities behind successful servitisation: customer and market insight, service and solution innovation, commercial and value selling, pricing and risk, digital and data, service operations, and leadership and organisation.

Those categories are useful. But the value does not come from scoring each one from one to five. It comes from putting them alongside the company's strategic ambition and looking at the shape that emerges.

Where are we today?

Suddenly the investment conversation changes. The next euro might create more value in commercial capability than in another layer of technology. That is the kind of insight a maturity assessment should produce.

Capability is what the organisation can repeatedly do

There is one final complication: organisations are not always very good at assessing themselves. Most leadership teams will describe their business as customer-centric, digitally capable and collaborative.

The problem is that aspiration can easily be mistaken for capability.

A company is not customer-centric because customer centricity appears in its strategy presentation. It is customer-centric if its people repeatedly demonstrate a deep understanding of customer operations and use that understanding to make better decisions.

It does not have strong digital capability simply because equipment is connected. It has strong digital capability when it can repeatedly turn data into decisions and customer value.

And it does not have solution-selling capability because salespeople attended a solution-selling programme. It has that capability when the organisation can repeatedly identify, quantify, sell and capture value from solutions.

Capability is not what an organisation knows it should do. It is what the organisation can repeatedly do.

That is much harder to assess with a questionnaire. It is also much closer to reality.

The purpose is clarity

This is where maturity models can distract us most. The score becomes the output: the spider chart is presented to management, red areas become amber, amber areas become green, and twelve months later the assessment is repeated.

But nobody buys a service because its supplier improved its maturity score. The most important output of the discussion may not be a score at all.

It is clarity.

Clarity about where the company intends to create value. Clarity about how much responsibility it is prepared to take for customer performance. Clarity about the capabilities that business model requires. And clarity about the few capability gaps that could prevent it from succeeding.

Once the destination becomes clearer, the capability agenda becomes easier to define: what we already do well, what needs to become stronger, what needs to be created and, eventually, whether those capabilities should be built internally, accessed through partners or brought into the organisation.

But those decisions come later.

The first — and arguably harder — question is:

Where are we actually trying to go?

Because capability maturity only becomes meaningful when we know what we are trying to become capable of.

Strategy determines the destination. Capability determines whether you can get there.

Three questions for your leadership team

01

Where on the servitisation journey could we create the greatest value for our customers — and attractive economics for ourselves?

02

What would we need to become capable of doing consistently to succeed there?

03

Which critical capabilities are furthest behind that ambition today?

NEXT IN THE SERVITISATION CAPABILITY JOURNEY · 04 / 12

Developing Customer Insight and Operational Understanding

Moving from knowing your product to understanding your customer's operation.

Coming January 2027 →

Servitisation.World · People. Capability. Transformation.From Product to Outcome · 03 / 12