Brief introduction to service innovation, trends, challenges, managerial implications

1. 429 Service Innovation
Introduction to Service Innovation
Per Egil Pedersen
Center for Service Innovation (CSI)
Norges handelshøyskole

2. Outline
1. The interest in services – why?
2. Services – definitions, characteristics and
perspectives
3. Service innovation – challenges and characteristics
4. Innovation management implications
2

3. 1. Background and recent interest
• Fundamentals
– Service industries represent about 60-70% of gross
domestic product and 70-80% of employment in most
western countries/economies
– In addition, services in manufacturing industries should
be added
– Service industries receive only about 30% of financial
government support of innovation… why is that?
• Potential
– Demand for services grows faster that the demand for
manufactured goods (Government proposition on
Innovation, p. 82)
– Productivity growth in European service industries is
low. In US almost all productivity growth can be
explained by the productivity growth in the service
sector
– KIBS among the most innovative industries of all (self
reported)
– In open programs, service innovation projects
represent app. 50% of projects (not funding)
3

4. Recent interest in these issues…
4

5. Outline
1. The interest in services – why?
2. Services – definitions, characteristics and
perspectives
3. Service innovation – challenges and characteristics
4. Innovation management implications
5

6. 2.1 Services and service – different meanings
• Service and services – definitions:
– Economics … A service is the intangible equivalent of an economic good. Service
provision is often an economic activity where the buyer does not generally, except
by exclusive contract, obtain exclusive ownership of the thing purchased.
– Grønroos (1990): A service is an activity or a series of activities of a more or less
intangible nature that normally, but not necessarily, take place in interaction
between the customer and service employees and/or physical resources or goods
and/or systems of the services provider, which are provided as solutions to
customer problems.
• Service and services- services first:
– Services as service industries – the traditional meaning focused in
service marketing and in service studies in the 90’s
– Services as knowledge intensive services – the late-90’s interpretation
of “important” service providers focused in the KIBS and KISA literature
– Services as value added services – the interpretation of services as
value added services and service encapsulation used in studies of
manufacturing industries. Renewed interest in 20’s
6

7. Services as service industries 1
7

8. Services as service industries 2
• Service industries are represented by all industries with NACE-codes above 45
(Norway), that is ”wholesale trade and up”…
– Consumer services: Services to domestic consumers (banking, insurance, travel
and tourism, leisure, telecommunications, etc…)
– Industrial services: Services to business customers (including some of the above
if serving both segments, but also business services)
– Business services: Services provided by specialized firms to other firms (e.g.
accounting, legal, design, maintenance, personnell)
– Market vs. non-market services:
Services produced for sale on the
market at a price vs. provided to
the community as a whole free of
charge
– Public services: services provided
by government to its citizens,
either directly (through the public
sector) or by financing private
provision of services
• Why the interest in this sector, the
traditional figure (Copyright IBM):
• Norway…. 8

9. Categorizing services in research 1 – service
characteristics
9

10. Categorizing services in research 2 – service
industry characteristics
• Soete and Miozzo (from Pavitt, 2001):
– Supplier dominated (e.g. public
and personal services)
– Scale intensive physical networks
(e.g. transport)
– Network services (e.g. telecoms
and banks)
– Specialized services (e.g. KIBS)
• In a study in 2005, Pedersen and
Nysveen (2005) identified at least
40 different industry classifications
applied in services
10

11. Think – Example, when does an industry
become a service industry?
J - Information and communication
J58 - Publishing activities
J58.1 - Publishing of books, periodicals and other publishing activities
J58.1.1 - Book publishing
J58.1.2 - Publishing of directories and mailing lists • In previous NACE
categories J58 was
J58.1.3 - Publishing of newspapers
J58.1.4 - Publishing of journals and periodicals
J58.1.9 - Other publishing activities
J58.2 - Software publishing
J58.2.1 - Publishing of computer games
part of C18 Printing
• What about the other
J58.2.9 - Other software publishing
J59 - Motion picture, video and television programme production, sound recording and music publishing
activities
J59.1 - Motion picture, video and television programme activities
J59.1.1 - Motion picture, video and television programme production activities
sectors that will be
J59.1.2 - Motion picture, video and television programme post-production activities
J59.1.3 - Motion picture, video and television programme distribution activities transformed by
J59.1.4 - Motion picture projection activities
J59.2 - Sound recording and music publishing activities digitization? Will they
J59.2.0 - Sound recording and music publishing activities
J60 - Programming and broadcasting activities
J60.1 - Radio broadcasting
also gradually be
J60.1.0 - Radio broadcasting
J60.2 - Television programming and broadcasting activities
Information and
J60.2.0 - Television programming and broadcasting activities
J61 - Telecommunications communication
services?
J61.1 - Wired telecommunications activities
J61.1.0 - Wired telecommunications activities
J61.2 - Wireless telecommunications activities
J61.2.0 - Wireless telecommunications activities
J61.3 - Satellite telecommunications activities • How about
manufacturing
J61.3.0 - Satellite telecommunications activities
J61.9 - Other telecommunications activities
J61.9.0 - Other telecommunications activities
J62 - Computer programming, consultancy and related activities
J62.0 - Computer programming, consultancy and related activities
sectors? Are they
J62.0.1 - Computer programming activities
J62.0.2 - Computer consultancy activities already, e.g. oil and
gas?
J62.0.3 - Computer facilities management activities
J62.0.9 - Other information technology and computer service activities
J63 - Information service activities
J63.1 - Data processing, hosting and related activities; web portals
J63.1.1 - Data processing, hosting and related activities
J63.1.2 - Web portals
J63.9 - Other information service activities
J63.9.1 - News agency activities
J63.9.9 - Other information service activities n.e.c. 11

12. Service industry characteristics - employment
Primary
Manufacturing
Services
Employment, share of persons employed
Source SSB
12

13. Gross domestic product
Primary
Manufacturing
Services
GDP (fixed proces mill NOK)
Source SSB
13

14. Productivity
Baumol’s
disease
still relevant?
Primary
Manufacturing
Services
Accumulated change in GDP pr. hour (1970=100)
Source SSB
14

15. Maroto and Rubalcaba (2008)
• Baumol: In some sectors work is the ends
(required in the offering not to produce the
offering), and demand in many such sectors is
less affected by prices – increasing labour and
low productivity growth
• Productivity paradox: Low productivity growth
despite investments in technology
• Large differences between services, some
contribute negatively (e.g. hotels, personal
services, business services… ends and low
technology…) to productivity growth, some
positively (communications, financial, public …
means and high technology….)
• Large cross sectoral productivity effecs of
services (e.g. outsourcing, business services)
15

16. Industries differ…..
Retail trade
Post and telecom
Financial services
KIBS
Manufacturing
Accumulated change in GDP pr. hour (1970=100)
16

17. Development- US versus Europe
Cause(van Ark et al, 2008):
Much stronger growth in
service productivity in
US than in EU since
1995
… it is possible…
… with innovation …
Source Van Ark et al,
2008
17

18. Innovation costs …
Costs manufacturing
Public funding (man.)
Costs services
Public funding (serv)
Share of costs for and public funding of innovation (FoU/R&D, RDI)
Source SSB
18

19. Services as knowledge intensive services 1
• KIBS – Knowledge intensive business services: Research in late
90’s suggested that some services where unique:
– With respect to growth
– With respect to their innovativeness
– With respect to their importance to innovation
(in other sectors)
– These were termed KIBS - Wikipedia: knowledge-intensive support for
the business processes of other organizations. T-KIBS, (those with high
use of scientific and technological knowledge - R&D services,
engineering services, computer services, etc.), and P-KIBS, who are
more traditional professional services - legal, accountancy, and many
management consultancy and marketing services.
– Aslesen and Isaksen (2007): it is a paradox that the large, supposed
importance of KIBS does not show up more explicitly in quantitative
innovation studies…
• KISA – Knowledge intensive service activities
19

20. Industries differ…..
Retail trade
Post and telecom
Financial services
KIBS
Manufacturing
Accumulated change in GDP pr. hour (1970=100)
20

21. Maroto and Rubalcaba (2008)
• Baumol: In some sectors work is the ends
(required in the offering not to produce the
offering), and demand in many such sectors is
less affected by prices – increasing labour and
low productivity growth
• Productivity paradox: Low productivity growth
despite investments in technology
• Large differences between services, some
contribute negatively (e.g. hotels, personal
services, business services… ends and low
technology…) to productivity growth, some
positively (communications, financial, public …
means and high technology….)
• Large cross sectoral productivity effecs of
services (e.g. outsourcing, business services)
21

22. Services as knowledge intensive services 2
• KISA – Knowledge intensive service activities
– Activities that can be carried out by external, specialized KIBS
(Knowledge-Intensive Business Service firms) or in-house by
employees of the firms using the KISA in question. They are all
“knowledge-intensive” in terms of various indicators (Jones and
Miles, 2008)
– Differences (Aslesen
and Isaksen, 2007):
• Wider set of players
• Market and non-market
exchange
• Co-production of knowledge
(between provider and client)
– Seem to play a significant role in innovation, but difficult to manage
due to a combination of internal and external knowledge sources
and various forms of exchange (e.g. innovation policy)
22

23. Think – Outsourcing KISA in manufacturing
• Examples:
– Accounting
– Personnel services /HR
– Payroll
– Cleaning services
– Property management and maintenance
– Customer support services
– IT services
• Why are they outsourced?
• How does it affect effectivity?
• How does it affect productivity?
23

24. Services as value added services
• Maintenance…. but….
• GPS correction signal
• Tractor software
• JDOffice Agricultural Accounting
• Stellar support education
• John Deere Credit Company
• John Deere Health
• FoodOrigins (food tracking services)
• Etc…
24

25. Servitization (Oliva and Kallenberg, 2003)
and product-service systems
• A Product-Service System is an integrated product and service offering that
delivers value in use (to be explained later).
• Typical steps (for all goods producing firms):
– Consolidating product-related services (internal efficiency)
– Entering the installed base service market (define profit opportunity in services
market itself)
– Expanding to relationship-based services (co-production of client services)
• or
– Expanding to process-centered services (consulting, cover al brands etc.)
– Taking over end-users operations (from paint producer to OEM paintline
operations paid pr. car painted, Rolls-Royce’s “Power By The Hour”)
25

26. Examples
• Rolls-Royce’s “Power By The Hour”:
– Extensions:
– Mission Ready Management Solutions (MRMS ®)
– MissionCare™
– TotalCare®
– Etc…
• From paint producer to
paint service provider
– Incentives to reduce
spill and minimize use
of dangerous chemicals
– Servicizing/servitization it is
argued is a means
to sustainability
26

27. From value added services to service logic
• Value added
services:
• Service logic:
The product becomes
a platform for capturing
value from service
co-creation
27

28. 2.2 Characteristics of services
• Ref… definition in previous slides….
• A service is the non-ownership equivalent of a good. Service
provision has been defined as an economic activity that does not
result in ownership and is claimed to be a process that creates
benefits by facilitating either a change in customers, a change in
their physical possessions, or a change in their intangible assets.
• Typically characterized by the following (Zeithaml, Parasuraman
and Berry, 1985):
– Intangibility
– Heterogeneity
– Inseparability
– Perishability
– The IHIP characteristics…
28

29. Characteristics 1 (From the Service Science initiative - Copyright IBM,
Almaden)
• Intangibility
 Services are ideas and concepts that are part of a process
 The client typically relies on the service providers’ reputation and the
trust they have with them to help predict quality-of-service and make
service choices
 Regulations and governance are means to assuring some acceptable
level of quality-of-service
– Consideration: Do most services processes involve some goods?
• Heterogeneity
 From the client’s perspective, there is typically a wide variation in
service offerings
 Personalization of services increases their heterogeneous nature
 Perceived quality-of-service varies from one client to the next
– Consideration: Can a homogeneous perception of quality due to
customer preference idiosyncrasies (or due to customization) also
benefit the goods manufacturer?
29

30. Characteristics 2 (Copyright IBM, Almaden)
• Inseparability
 Services are created and consumed at the same time
 Services cannot be inventoried
 Demand fluctuations cannot be solved by inventory processes
 Quality control cannot be achieved before consumption
– Consideration: Does the ability to tailor and customize goods to the
customers’ demands and preferences mean that these goods also have
an inseparability characteristic?
• Perishability
 Any service capacity that goes unused is perished
 Services cannot be stored so that when not used to maximum capacity
the service provider is losing opportunities
 Service capability estimation and planning are key aspects for service
management
– Consideration: Do clients who participate in some service process
acquire knowledge which represents some form of “stored service”?
What might the impact be? 30

31. Critique (Lovelock and Gummesson, 2004)
31

32. IHIP of some service brands…
• We use Brand Finance (Interbrand more product oriented)…
• http://www.brandfinance.com/images/upload/top_100_global_bra
nds_2011_results.pdf
– Google
– Apple?
– Microsoft?
– IBM?
– WalMart
– Vodafone
– AT&T
– HSBC
– WellsFargo
– Band of America
– Verizon
– Santander
32

33. IHIP
Intangible Heterogeneity Inseparability Perishability
Google
Online Service
Apple?
PS-system
Microsoft
Software
IBM
Bus.Services
WalMart
Retail Trade
Vodafone ++
Telecom
HSBC++
Finan. services
33

34. Tangibility a prerequisite for brand value and
brand experience?
• Brand experience dimensions (Brakus, Schmitt +++)
• Sense, Feel, Think, Act, Relate
• Intangibility…. Sense
Telecom now Telecom new
See
Hear
Smell
Taste
Touch
34

35. Lack of characteristics …. continued ……
ownership
• A service is the intangible equivalent of an economic good. Service provision is often
an economic activity where the buyer does not generally, except by exclusive
contract, obtain exclusive ownership of the thing purchased.
• Revenue models, value creation, value capture and ownership:
Value of ownership versus
burden of ownership?
35

36. Lawson (2011) citations….
36

37. Outline
1. The interest in services – why?
2. Services – definitions, characteristics and
perspectives
3. Service innovation – challenges and characteristics
4. Innovation management implications
37

38. 3. Service innovation
• Approaches to service innovation and innovation in services/service:
• Transfer – assimilation (Sampson, 2004):
• Product and service innovation share so many characteristics that theories, models and
empirical results may be transferred from product innovation to service innovation.
• Demarcation (Menor et al, 2002):
• Product and service characteristics differ so much in their characteristics that it is also
likely that innovation processes will differ too significantly for knowledge transfer to
occur. Thus, specific theories, models and studies of service innovation are required.
• Synthesis (Drejer, 2004; Coombs and Miles, 2000):
• The blurring of products and services has come so far that even though products and
services differ, it will be more fruitful to develop synthesized approaches to product and
service innovation that both product and service innovation processes may profit from.
Thus, synthesis theories, models and studies of innovation are required.
1. Service innovation as innovations in service industries
2. Service innovation as innovation in knowledge intensive services
3. Service innovation in goods producing industries
38

39. 3.1 Service innovation as innovations in
service industries
• Some results from analysis of data from Statistics Norway (CIS
Survey)
• Comparing service industries to manufacturing industries:
– The service sector as a whole has traditionally been less innovative than
the manufacturing sector, but this is no longer consistent in latest CIS
– The innovation processes of the service sector have traditionally been
different from the manufacturing sector, but this is no longer consistent
in latest CIS
– The conditions for innovation in the service sector have traditionally
been different from those of the manufacturing sector, but this is no
longer consistent in CIS
– The effects of innovations in the service sector still differs from those in
the manufacturing sector (typically more qualitative and more customer
oriented)
– Differences exist but seem to diminish ….
39

40. Service innovation as innovations in service
industries, cont…
• Comparing different services using data from the Norwegian
version of recent CIS indicates:
– The service sector is a heterogenous collection of industries when it
comes to innovation intensity/ degree of innovation (trade as the
second lowest in innovation intensity and KIBS as the second highest)
– These differences are even greater in most recent CIS
– For indicators of innovation processes, conditions etc., statistics are
somewhat incomplete and also, some parts of the service sector are not
included in the statistics
– Over- and underreporting of innovation is a bigger problem in service
sectors:
• Low innovation intensity, e.g. trade: ”We don’t innovate, we develop and
change”
• High innovation intensity, e.g. programming: ”All the time I use on
programming/coding is reported as R&D”
– Intra sector differences grater than inter-sector…, do we have to look
for the differences at the firm level…..?
40

41. 3.2 Characteristics of services – implications
for innovation
Service characteristics Impact on organization of innovation process
Intangibility Need for intensive communication between people involved
in innovation, because new product cannot be felt or
touched. Creating shared understanding is of highest
importance
Simultaneous production and consumption Close involvement of front and back office personnel is
needed, largely due to simultaneous development of
production process
Heterogeneity No impact; physical products may also be heterogeneous
Perishability No impact; new services can be developed in advance
41

42. Challenges – service characteristics 1
• Intangible – immaterial:
– Ex. Underinvestments in SI due to
lack of protection (IPR)?
– Ex. Underinvestments in SI due to
difficulties in describing and
measuring effects?
• Heterogeneity– customization:
– Ex. Underinvestment in SI that
scales well because it conflicts
with customization?
vs
42

43. How can you combine heterogeneity and
scale?
• Personalization?
• Dematerialization?
• Lets take a look at one example…:
43

44. Challenges – service characteristics 2
• Inseparable– co-produced/co-created with provider and customer:
– Ex. Are SI’s created by customers more than
by providers?
– Ex. Is demand side economies of scale a
precondition for successful SI?
• Perishable– cannot be stored:
– Ex. Is it possible to apply
traditional principles for
product innovation to SI? Do their
application lead to dysfunctional
SI’s?
44

45. Perishability, tangibility and ownership
• Products are manufactured (work as means) and value is
transferred through transfer of ownership
– Powerful model
– Stored and be easily available
– Single point of value transfer
– Separation of responsibility for customer value
• Wrong incentives for services?
45

46. 3.3 Challenges from service industry
characteristics 1 Innovativeness
• Service industry heterogeneity:
– Difficult to design innovation
policy addressing the diversity of
challenges in different SI’s?
• Strict regulation: Productivity
– Does regulation approproately
address innovation ?
46

47. Challenges from service industry
characteristics 2
• Infrastructure:
– Do service innovation require
access to infrastructures?
– Does the entrepreneurship model
break down?
• Size and scale:
– Are service innovations rather a
question of implementation and
organizational change?
47

48. Challenges from service industry
characteristics 3
• Not cluster organized and mobile:
– Do the principles for understanding
and facilitation regional innovation apply
to services (at all)?
– Are large urban regions a precondition for SI?
– Is the innovation system completely different?
• Other sources of innovation:
– Are technology and research driven innovation-
systems less relevant for SI’`s?
– Does research fit the innovation needs of
service firms?
48

49. A traditional view of the innovation system…
49

50. Market and systemic failures in service
innovation
• The basic argument for innovation policy is market and systemic failures
• Some of these are represented in previous challenges (e.g. immobility, IPR
and network effects)
• Additional challenges:
– Market power in service markets, Lack of common service markets (EU)
– Many services are offered ”common goods”, e.g. transportation,
information and financial infrastructure
• But systemic failures:
– Soft institutional failure (Lack of SI understanding in institutions)
– Strong network failures (Too strong
social networks and too coherent
thinking in some services)
– Weak network failures (Difficult to create
knowledge clusters in some services)
– Capabilities’ failure (Low innovation,
low competition service industries, see
Richard Florida on Economist conference a coupe of months ago)
50

51. 3.4 Challenges in servitization
• Challenges at the industry level
• Firm level challenges
51

52. Industry level challenges - product / service
systems/ecologies
• Lower consumption pr. km… • Products may be treated as parts
of prod. /
serv. ecologies
• The product is treated in isolation • Requires simultaneous change in
products, services and user
• Users and services are unaltered behavior
• Great challenge…
52

53. Firm level challenges in servitization
Neely,
2009
53

54. Madshus or Madhouse?
54

55. Mindset and business
model challenge
Source: Pine and Gilmore (1998)
55

56. Outline
1. The interest in services – why?
2. Services – definitions, characteristics and
perspectives
3. Service innovation – challenges and characteristics
4. Innovation management implications
56

57. 4. Managing service innovation at the firm
level
Process- Affected by firm level
conditions: management
•People
•Structure
•Resources
•Networking
Climate-related Service innovation:
Service- Effects :
conditions: •Service concept
innovation process •Financial benefits
•Culture •Client interface
•Search •Customer value
•Strategy •Delivery system
•Implementation •Strategic success
•Company characteristics •Technology
External
conditions: Only partly affected by firm level
•Market management
•Knowledge
•Government policy
57

58. Measurement
Examples and KPI’s
Partner networking Business model
innovation
Firm level control
Process conditions
• e.g. People
Brand strategy • e.g. Networking
• e.g. Organization
‘Living the
brand’ Innovations
• Innovation type
Climate conditions Innovation prosess Innovation effects
• e.g. Culture • Search • e.g. Financial benefit
...
• e.g. Strategy • Implementation • e.g. Customer value
• Source of value
Customer
Innovation culture creation
co-creation
External conditions
• e.g. Market
• e.g. Government
policy
Only partly firm
Soft regulation level control
58

59. Conditions characteristics
• Research suggests the service innovations conditions differ from other
forms of innovation:
– Less driven by R&D
– More driven by customers
– Climate a more important condition
– People and multiple competences a more important
determinant, knowledge driven – heterogeneity of the industry?
– Much service innovation driven by structural/
infrastructural regulation?
• Example, explanations of the US/EU productivity differences:
– Productivity difference explained by US service sector productivity
– Biggest explanatory factor ”multifactor productivity” in
market services (e.g. trade, transportation, financial,
business services, hotels, restaurants, personal services)
– “complex interactions between productivity,
investment, and regulations.” (van Ark et al., 2008)
– E.g. regulation of retail trade (superstores etc.),
liberalization of service trade, cultural differences
(cultural heritage) etc.
59

60. Managing SI conditions
Process-
conditions: • Process conditions – example actions…
•People
•Structure – Design cross disciplinary teams
•Resources
•Networking
– Allow less formal structures
– Value intangible resources (knowledge)
– Stimulate open networking, control?
Climate-related
conditions: • Climate conditions – example
•Culture
•Strategy
actions…
•Company characteristics – Facilitate customer oriented culture
– Use brand strategy as the ”mother
of all strategies”
External
• External conditions – example actions…
conditions: – Engage in public/private cooperation influencing
•Market
•Knowledge
regulation
•Government policy
60

61. Process characteristics
• Research suggests the service innovations processes differ from other
forms of innovation:
– Less formal (are less formal or should be less formal?)
– Less stage-gated and more parallel
– More trial and error
– Blurring boundaries between search and implementation
• More open and customer driven…
Just for Serious
fun… business…
61

62. Managing SI processes
• Search – example • Implementation -example
actions: actions:
– Use creativity – Modify NPD-processes
techniques that fit to enable less stage
service characteristics, gating and less
Service -
e.g. jobs instead of innovation process formalization of steps
functionalities •
•
Search
Implementation (e.g. initiate and
– Involve customers in observe, e.g.
search – co-creation, mobilstart.telenor.se))
and customer – Use more
involvement experimentation at the
– Use more experimental commercialization stage
methodologies (e.g. no discrete
launch)
62

63. Service design methodology and
experimentation
Mobilstart an open mobile service
platform for all (in Swedish)
ServLab a ”theatre” environment
at Fraunhofer for service design
63

64. Innovation type characterstics
• Research suggests the service innovations types differ from other
forms of innovation:
– Does not fit the traditional product/process typology (product,
process, organizational)
– More often
simultaneously involves
organizational innovations
– Incremental rather than
radical (alternative types,
see Alam, 2006)
• Alternative typologies (e.g.
den Hertog, 2000,
modified by deJong, 2003):
64

65. Example, path of
innovation for a
service innovation–
Aker Well Service
Product Service
• Standardize the technology for • Specialize production for service
economies of scale performance (scope?)
• Establish production units (network) • Establish service units (knowledge
• Sell products and establish simple intensive?)
support services (free?) • Sell only services in a relational
perspective
• Further developments? • Further developments?
– Capital intensive – Labor intensive (KI)
– Grow, control, capitalize, exit – Continues growth, stay?
– Innovation in new technology leaps – Innovation driven by service personnel (we control
the source of innovation))
– Easy to copy (reverse engineering)? – Difficult to copy knowledge?
65

66. Managing SI types
• Traditional management of:
– Service concept innovations (by
innovations in value propositions)
– Client interface innovations (by
innovations in self-service channels)
– Delivery system innovations (by
understanding dematerialization and Service innovation:
digitalization) •Service concept
•Client interface
• Managing innovation types not •Delivery system
•Technology
covered by this typology
– Product-service system
innovations vs
– Customer innovations (more later)
– Business model innovations
– Combined product, service,
organization innovations
66

67. Business model innovations as an innovation
type
67

68. Results/effects characteristics
• Research suggests the effects of service innovations differ from
other forms of innovation:
– More qualitative
– Longer term effects
– More oriented towards the customer
– Less focused on (short term) financial effects
– But still much focus on cost/productivity
• No systematic review of potential effects until Aas and Pedersen,
2009: Business process
effects
Financial
Capability performance
effects effects
Service innovation
process Relationship
effects Competitiveness
effects
External effects
68

69. Managing SI effects
• Measuring
– Financial benefits
– Customer value
– Strategic success
• Manage both ex ante and ex post
measurement
Effects :
• Apply more complex ex ante •Financial benefits
•Customer value
value assessment methods •Strategic success
• Apply more qualitative
ex post value essessment
methods
Business process
effects
Financial
Capability performance
effects effects
Service innovation
process Relationship
effects Competitiveness
effects
External effects
69

70. Summary
1. The interest in services – why?
2. Services – definitions, characteristics and perspectives
3. Service innovation – challenges and characteristics
4. Innovation management implications
70