Transformation of provider and customer organisations to achieve co‐capability in outcome‐based contracts: a viable service systems approach

This paper reports on a research investigating organisational transformation of equipment‐based service providers and customers which are establishing joint capabilities to achieve combined equipment and service outcomes based upon outcome‐based contracts. The viable systems theory and the viable system model provide the theoretical ground for investigation of communication processes between key personnel, main activities, organisational structures and the systemic viability of both the provider and the customer to co‐create activities to achieve equipment performance, as well as the transformation required by both provider and customer to achieve co‐capability in terms of achieving contract performance. Initial findings confirm that contextual variety threatens the stability of the system and challenges co‐creation. The findings also suggest that intervening in the customer‐controlled supra‐system to ensure its structural and systemic stability reduces variability in the system‐in‐focus. Assisting the customer organisation to transformalso impliesthe provider’s participation in supra‐systemactivities.