Digital Service Innovation: Value Network Transformation in the Vehicle Industry
Asif Akram
Advancement in digital technology is rapidly changing the contemporary landscape of business and associated networks for manufacturing firms. Many traditional physical artifacts are now being embedded with digital components, providing them digital capability. As a result, tremendous amounts of information can be captured, digitized and used in innovative ways to design digital services. During this process, firms experience a number of changes on individual, organization, and market level. Such digital service innovation includes not only a shift in technology but it also transforms the value networks and calls for rethinking existing value perceptions, value creation, relationships and so on. While this disruptive change motivated by digital technology can be observed in many industries, this thesis focuses on its influence on value networks within the vehicle industry.
The project in this study is aimed at exploring services for vehicles based on remote diagnostics technology. A digital services perspective encompasses an environment with providers, customers, information users and consumers as well as management of this environment. To design and develop digital services is not solely about developing technology; it also incorporate issues related to technology’s value creation, ownership, and customer relationships.
This thesis contributes to the existing literature on the transformation of value networks in the changing environment influenced by digital technology. The research question addressed in this thesis is: How does digital service innovation transform value networks? The results illustrate that there is a paradigm shift for such a firm as it is stretching its scope from manufacturing to solution or even service -oriented business with remote diagnostics technology. The technology provides opportunities to create value in a novel way tough some challenges and tensions emerge during the process itself. This value creation also requires the relationships to be re-structured, modified as well as establishing new ones. In general, it can be said that innovation in the digital age has a profound impact on changing the business landscape from value chain to value network.