What firms measure, they become: Performance Measurement Design in Servitized Manufacturing

Abstract

Servitization is an increasingly common strategic response among B2B manufacturers seeking to avoid commoditization. Yet many companies fail to realize the expected benefits of transitioning toward service-based offerings. Reconfiguring performance measurement systems (PMS) has been identified as a relevant but underexplored factor in understanding why servitization efforts experience challenges. There is especially a lack of empirical evidence regarding what the development of PMS looks like in practice. This study examines how PMS are designed and reconfigured in a B2B manu- facturing firm undergoing servitization. Through a qualitative single-case study at Sandvik Coromant, a global Swedish manufacturer of cutting tools and broader machining solutions, empirical data were gathered through contextual interviews, external benchmarking, and participation in workshops with key stakeholders during the design work. The study finds that PMS design during servitization is less about selecting the right metrics and more about building the organisational and data conditions under which any suitable metrics can work. The existing data proves to be the binding constraint throughout the design work, which pushes the work into an iterative cycle, contrasting with the sequential logic of traditional PMS frameworks. The study also argues that PMS design during servitization both reflects and reinforces the structural tensions at the centre of the servitization paradox. This suggests that the value of redesigning a PMS may lie as much in the organisational conversations it surfaces as in the metrics it eventually produces.