Overcoming the Service Paradox in Manufacturing Companies

We observed that extending the service business in manufacturing companies often leads to a “service paradox.” Where there is such a paradox, substantial investment in extending the service business leads to increased service offerings and higher costs, but does not generate the expected correspondingly higher returns. We have worked with more than 30 equipment manufacturing companies to gain an understanding as to why manufacturing companies often fail to exploit the financial benefit of extending their service business. Based on this broad research, we attempt to provide guidance for managers in manufacturing companies seeking to successfully extend their service business.