On Service Innovation and Realization in Manufacturing Firms

Abstract: Service innovation is increasingly becoming a basis for manufacturing firms to reach and sustain competitive advantages. While traditional product innovation typically includes how new technology can be utilized in new products, service innovation spans a broader area that is not exclusively focused on new technology, but rather how resources can be developed into value propositions and then integrated in the customer’s process in order to support customer value creation through realization. However, manufacturing firms that infuse services struggle with service innovation; this becomes especially evident in the realization phase.This thesis is a compilation of five papers discussing different aspects of service innovation realization and the inherited challenges. The study builds upon empirical data from four Swedish manufacturing firms that infuse services and develop new value propositions that include both products and services to support customer processes.The thesis illustrates realization as a phase in service innovation where the firm interacts with its customer in order to adjust, revise and further find new ways of improving the customer’s processes through for example customer training. Realization is characterized by a deployment phase and a post-deployment phase that represent the ongoing relationship between the customer and the firm.Depending on who has the competencies or ability to integrate the resources that are needed for service innovation, different interaction patterns are identified. Through indirect interaction, the firm facilitates the customer’s value creation through, for example, preventive maintenance, while through direct interaction the firm acts as a co-creator in the service innovation process and hence work jointly together with the customer in order to improve customer value creation.This thesis contributes to the literature by characterizing service innovation realization and by increasing the understanding for different interaction patterns in the service innovation process.