wiI: Innovation, Cooperation, Leadership

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Hybrid Value Creation

Hybrid value creation is the process of generating additional value by innovatively combining products (tangible component) and services (intangible component).

Different Strands

This strategic importance of combining products and services has led to an increase of academic literature dealing with phenomenon. By systematically combing through literature I have identified many different strands and sub-strands of research that deal with this concept. They are listed below.


Term Definition Citation
Complex Product Systems “Complex product systems” (CoPS) can be defined as high cost, engineering and information technology intensive, customised products having large numbers of tailored subsystems and components. (Hansen and Rush 1998)
Customer Solutions “Customer Solutions”, are high value solutions by integrating various products and services – even merging supplier’s and customer’s operations – to solve a complete customer problem. (Foote, Galbraith et al. 2001)
Dematerialization “Dematerialization” indicates a focus on functions and needs instead of the product. (Dobers and Wolff 1999)
Functional Product “Functional Products”, also known as ‘total care products’, are integrated systems comprising of hardware and support services. The functional product supplier provides all the supports systems that are required to keep the hardware in operation. (Alonso-Rasgado, Thompson et al. 2004)
Hybrid Product “Hybrid Products” are defined as an intentional combination of products and services to meet customer requirements. (Reichwald, Goecke et al. 2000)
Integrated Solution “Integrated Solutions” are defined as unique combinations of products and services that address a customer’s specific business problem or operational needs, and distinguished from traditional bundling strategies. (Davies 2003)
Product Service Systems A Product Service system (PS system) is a marketable set of products and services capable of jointly fulfilling a user’s need. (Goedkoop, van Halen et al. 1999)
Servitization “Servitization” is the process of looking at customers needs as a whole. It is moving from the old and outdated focus on product or service to integrated “bundles” or systems, as they are referred to, with services in the lead role. (Vandermerwe and Rada 1988)

Main advantages

  • Gain a competitive advantage that is difficult to imitate
  • Meet customer needs better
  • Increase in revenues
  • Positive impact on the environment

Main Challenges

  • Firms may lack required competencies
  • Existing firm culture may hinder the development of hybrid offerings
  • Customers may not be open to hybrid offering