Service Innovation

The concept of Service Innovation was first discussed in Miles (1993) and has been developed in the past 2 decades. It is used to refer to many things. These include but not limited to:

  1. Innovation in services, in service products – new or improved service products (commodities or public services). Often this is contrasted with “technological innovation”, though service products can have technological elements. This sense of service innovation is closely related to Service design and "new service development".
  2. Innovation in service processes – new or improved ways of designing and producing services. This may include innovation in service delivery systems, though often this will be regarded instead as a service product innovation. Innovation of this sort may be technological, technique- or expertise-based,or a matter of work organization (e.g. restructuring work between professionals and paraprofessionals).
  3. Innovation in service firms, organizations, and industries – organizational innovations, as well as service product and process innovations, and the management of innovation processes, within service organizations.

Service Innovation is hard to define, one of the many helpful definitions comes from Finland’s research agency, TEKES:

Service innovation is a new or significantly improved service concept that is taken into practice. It can be for example a new customer interaction channel, a distribution system or a technological concept or a combination of them. A service innovation always includes replicable elements that can be identified and systematically reproduced in other cases or environments. The replicable element can be the service outcome or the service process as such or a part of them. A service innovation benefits both the service producer and customers and it improves its developer’s competitive edge. A service innovation is a service product or service process that is based on some technology or systematic method. In services however, the innovation does not necessarily relate to the novelty of the technology itself but the innovation often lies in the non-technological areas. Service innovations can for instance be new solutions in the customer interface, new distribution methods, novel application of technology in the service process, new forms of operation with the supply chain or new ways to organize and manage services.

One disagreement with this definition is that there are many cases of innovations whose benefit to the customer is somewhat dubious (e.g. overseas call centers). A comprehensive definition of service innovation was proposed by Van Ark et al. (2003) : Service Innovation can be defined as "a new or considerably changed service concept, client interaction channel, service delivery system or technological concept that individually, but most likely in combination, leads to one or more (re)new(ed) service functions that are new to the firm and do change the service/good offered on the market and do require structurally new technological, human or organizational capabilities of the service organization." This definition covers the notions of technological and non-technological innovation. Non-technological innovations in services mainly arise from investment in intangible inputs.

Read more about Service InnovationService Innovation Research, Service Innovation and Public Policy

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