How to navigate different areas of your organisation in service innovation: A memo for senior executives.
Service innovation is a complex and heterogeneous concept involving different areas of an organisation. It can manifest itself in relation to marketing, sales, interactions with customers, suppliers and competitors, human resources, organisational culture, financial models, etc. In your report to senior executives you may address, among other questions, the following:What area(s) of service innovation should an organisation engage in to create and sustain competitive advantage? What factors (size, industry, technology, product, service, markets, human and other resources, etc) matter? What strategic, operational and environmental issues should be taken into consideration? What frameworks for identifying and executing possible service propositions could be relevant?
Recently, service innovation has been widely recognized as a fundamental driver for success in long-term businesses from internal to external of a firm. In the competitive circumstance, it is more essential for the role of new service development (NSD) in creating continuous value along with new product development (Menor, Tatikonda & Sampson, 2002; Duverger, 2012). This article will discuss the areas of service innovation to be created and sustained the competitive advantage in an organisation and the factors which matter it. The strategic, operational and environmental issues should be taken into consideration. Also the frameworks related to identify and execute possible service propositions.
Among the various phases of NSD, the ideation and concept development of initiation or ‘front-end’ stage has been recognized as the most critical, as its outcome will have signiﬁcant inﬂuence on future company competitiveness and ﬁnancial performance (Johne & Storey, 1998; Alam & Perry, 2002). The frontend process starts with the identiﬁcation of opportunities, which can lead to the generation of new ideas (Brem & Voigt, 2009); so identifying the right opportunities for new businesses and exploring the promising ideas are core elements of successful entrepreneurship (Ardichvili, Cardozo & Ray, 2003). Traditionally, the main sources of opportunity in product and service innovation are the customer needs of market-oriented companies. The most distinctive characteristic of services – as compared to products – is the interaction with customers that occurs as the customer experiences the service (Jaw, Lo & Lin, 2010; Duverger, 2012). The ideation of service is user-oriented rather than maker-oriented, and thus understanding customer needs is essential to successful service innovation (Enkel, Perez-Freije & Gassmann, 2005; Sandmeier, Morrison & Gassmann, 2010).
While service ﬁrms aim to gain higher customer value by discovering and satisfying both customers’ expressed and potential needs, and although the importance of recognizing potential needs to identifying new opportunities is growing (Narver, Slater & MacLachlan, 2004; Duverger, 2012), the main focus has hitherto been on discovering expressed needs, typically by using such techniques as focus groups, surveys and interviews (Narver, Slater & MacLachlan, 2004; Witell et al., 2011). Though these techniques are known to be quite useful in understanding customer needs, they will be more limited in the context of innovative services or technology-based innovations. When it comes to developing completely new and innovative services – ones that have not existed before – these custom