Extending the Service Innovation Concept : Realization and Productivity

Abstract: The purpose of this study is to contribute to a better understanding of service innovation by exploring realization as a part of service innovation. Service innovation can be described as something that creates value for customers through new service offerings or service processes while realization refers to the actual use or deployment of the service.My research approach is based on a multiple case study, that focuses on three international firms with origins in Sweden. Empirical material has been gathered through interviews and focus groups. A literature review that tracks the evolution of service innovation further contributes to the exploration of the service innovation concept.Innovation has traditionally been connected to new technology and new products. However the present study has found that service innovation has evolved into a multifaceted concept. Specifically, service innovation is not restricted to the development of new products and services in the shape of new offerings, it also becomes relevant to consider the actual usage of the service offerings. In order to fully understand the process of service innovation, it is important to include the usage of a service offering in the service innovation concept. This realization occurs when the service offering is introduced and used in the customer’s processes, and typically involves both the customer and the provider.This research illustrates how realization requires resources from both the provider and the customer. In general, the realization part of the service innovation process requires more participation from the customer than the development of new offerings. However, this can vary depending on the customer’s competence, intention to interact and level of commitment. Considering an active or recipient customer role and also whether the service offering is directed at the products or the customer processes, this study shows how these different service offerings will have different impacts on service innovation realization, for example, in terms of different resources being required.The extended view of the service innovation concept, includes realization, and is therefore not limited to developing new offerings. This view implies that new areas of innovation that do not necessary need to include new technology, but contribute in other ways to customer value creation must be propelled into focus. Productivity improvements in customer processes are becoming important since they help create customer value (reduced costs, improved quality, reduced down-time etc.). Empirical evidence shows how service offerings that emphasize improvements in customer processes have become more important. This thesis discusses how this view of productivity can result in important benefits for customers, as consideration is given to both customer satisfaction and the use of customer resources. In this respect, productivity becomes a part of the extended service innovation concept.Extending the service innovation concept by adding realization implies an increased emphasis on deployment, and implicitly on customer value creation. Thus, service innovation becomes critical for gaining long-term sustainable competitive advantages through service.