Innovating Business Models for Servitisation: Driving Customer-Centric Success

That was the central insight delivered by Professor Tim Baines at the Field Service Forum UK 2025. Drawing on over a decade of research at Aston University’s Advanced Services Group, Baines offered a clear-eyed view into why service-led business models are no longer optional for manufacturers and how their impact goes far beyond internal KPIs.

More than a talk on business strategy, it was a call to rethink what growth looks like in a productivity-driven economy.

The Bigger Picture: Servitisation as a National Priority

Baines began by zooming out. Servitisation isn’t just a firm-level innovation but rather tied directly to national industrial policy. With the UK’s latest economic strategy focused on increasing productivity, the government is doubling down on high-impact sectors like clean energy, healthcare, and advanced manufacturing. 

Across all of them, service-based models are playing a vital role.

From energy-efficient heat pumps in homes to imaging-as-a-service in the NHS, businesses are beginning to generate revenue not from the sale of equipment, but from the outcomes those tools enable.

As industries evolve under mounting pressure to grow and decarbonise, this shift has become structural, not optional.

Defining the Shift: From Outputs to Outcomes

So what is servitisation, really?

At its core, it’s the move from selling products to delivering long-term outcomes. In financial terms, it’s a transition from ownership to usership. In business terms, it’s about evolving from outputs to results.

Baines used familiar examples to illustrate the point. Rolls-Royce’s “Power by the Hour” model now accounts for over half of its total revenue and was critical to the company’s financial resilience during the pandemic. Similarly, Goodyear has moved from simply selling tyres to selling uptime, ensuring that commercial vehicles stay on the road.

These success stories represent a larger movement where value is created through reliability and service-based outcomes rather than one-off product sales.

400 Firms, One Direction

Through the Advanced Services Group, Baines and his colleagues have worked with more than 400 firms over the past decade. The question isn’t just how to offer services but also how to innovate the business model behind them.

This means helping companies reimagine:

• Their value proposition (what they promise customers)
• Their revenue model (how that promise is monetised)
• Their internal processes (how the organisation must adapt)

The group’s ongoing collaboration with industrial partners has led to practical frameworks for transformation, many of which are now being adopted internationally. Yet, despite the space’s growing maturity, one challenge keeps surfacing.

The Business Case Barrier

For many companies, the desire to embrace servitisation is real, but the justification is hard to quantify.

Unlike Finland, China, or the United States, UK companies rarely break out service revenue from product revenue in financial disclosures. This lack of transparency makes it difficult for stakeholders to understand the long-term return on investment. 

Economists don’t help either, Baines noted, as they often categorise firms as either product-based or service-based with no recognition of hybrid models like Rolls-Royce.

To illustrate this gap, Baines pointed to a West Midlands study involving 77 manufacturers. Those that embraced servitisation saw a 16% increase in productivity. But while the results were audited and verified, the sample was small. Broader, more representative data were needed.

A National Study: Evidence at Scale

In response, the UK government commissioned the Advanced Services Group to conduct a nationwide survey of industrial firms. The goal was to measure the actual impact of servitisation on productivity and sustainability.

Unlike previous studies, this one connects verified company performance data with a detailed breakdown of revenue from products and services. It also examines companies across the full adoption spectrum, from firms offering only physical goods to those delivering their entire product portfolio as a service.

The results are still early, but already revealing.

Firms that are more service-oriented report stronger productivity outcomes. However, a surprising trend emerged: productivity gains are often seen not within the provider but at the customer level.

When the Customer Wins

This finding reshapes the narrative. The firms delivering services aren’t necessarily the ones reaping the largest performance improvements—it’s their customers.

Those benefits include:

• Increased asset reliability
• Reduced operational risk
• Lower total cost of ownership
• The ability to innovate their own business models

In other words, by providing services, companies are helping their clients become more competitive. And that, Baines argued, is the real lever. If the customer is the biggest beneficiary, they can also be the loudest advocate, driving demand and influencing internal buy-in.

It flips the conversation from “Why should we invest?” to “How fast can we respond to what our customers are asking for?”

Real Momentum: NHS and Beyond

The NHS offers a strong example. Based on early findings from the survey, the Advanced Services Group secured a £5.5 million contract to help drive decarbonisation in public healthcare through service-led innovation.

Hospitals aren’t just being supplied with new equipment but enabled to run more efficiently, reduce risk, and meet net-zero goals. It’s a powerful case for how services can support both customer success and national targets.

And it’s likely just the beginning.

A Year of Impact

Looking ahead, Baines and the team plan to continue refining their findings and working with firms to turn insight into investment.

The path forward includes:

• Publishing detailed sector benchmarks
• Supporting companies with data-driven business case development
• Engaging customers as active participants in service innovation

For manufacturers still on the fence, this research provides more than theoretical validation but a practical toolkit for change.

Redefining Success Through Service

Baines closed with a challenge and an opportunity. Servitisation is no longer a niche strategy; it’s becoming a competitive necessity.

But the most successful companies won’t be the ones that talk about transformation. They’ll be the ones that align with customer outcomes, prove their impact with data, and build business models that support long-term value.

In a world chasing productivity and sustainability, service isn’t just another revenue stream. It’s how the future is delivered.