Innovation in Services. For a FREE downloadable version please visit www.incrementa.co.uk

1. Innovation in services
Finding the competitive edge

3. Benefits of Innovation

4. Overview
• Primary industries specialise in extracting things (raw materials, etc.) from
the natural world (and change and manage parts of that world).
• Secondary industries specialise in making things (from other things):
Manufacturing makes goods, Construction makes buildings, etc.
• Tertiary industries specialise in doing things: Services (service industries)
produce ... services (service products).
• And services can be produced by other industries, and consumers

5. Innovation
• Goods innovation – product and process – making new things, making
things in new ways. (Largely technological innovation.)
• Service innovation then: doing new things, doing things in new ways.
• Whether in service industries (“innovation in services” or other service
suppliers.
• ... or is it more complicated?
− Product and process entangled
− User involvement in coproduction; role of service relationships; organisational
innovation

6. Innovation

7. The Starbucks Innovation
Page
7

8. Examples of innovation in services
Subscription service Freemium service
No frills service
Crowdsourcing
Crowdfunding

9. What do services do?
• They effect transformations
− physical, chemical, biological, psychological, informational (etc.)
−of Entities
− Material artefacts (goods, buildings, etc.)
− Living entities (especially human beings)
− Signals and Symbols
• to achieve Effects
− Maintenance, Movement, Matching...
− Problem-solving (versus) Providing Experiences

10. •Examples: Cleaning, Transport
•Features: Manual, low skilled work
•Challenges: Self service
•Trends: Business model change
Physical
Transformations
•Examples: Health professionals
•Features: High involvement of the customer
•Challenges: Interpersonal relationships
•Trends: Changing role of public sector involvement
Human
Transformations
•Examples: Finance, Marketing
•Features: Range of mass and customised services
•Challenges: IP, keeping pace with changes
•Trends: New functionality and knowledge - DIY
Information
Transformations

11. Characteristics of a service
Service
Inseparabil
ity
Intangibilit
y
Perishability
Variability

12. Service
• Intangibility
− Cannot be tasted, touched or smelled before they are bought
− Customer may find it difficult to evaluate before they purchase
− Display testimonials, case studies, referrals, brand consistency
− Innovation comes through introducing the experience prior to purchase
• Inseparability
− Simultaneous consumption and production
− How service providers conduct themselves make effect future business
− The people are the company
− Innovation comes in how the service is consumed – online seminars etc

13. Service
• Variability
− Service quality may vary depending on staff delivery
− Service faults (i.e. staff poor performance) cannot be quality checked and
corrected between production and consumption
− Innovation comes with ability to monitor customer feedback for example
• Perish ability
− Services cannot be stored for future use like a product, i.e. if a hotel room is
empty for a night its lost revenue. If a product is not sold it can be stored and
sold tomorrow
− Service providers have the problem of being able to cater for peak demand and
staff appropriately
− Innovation comes with the ability to provide flash sales, instant marketing

14. Service Innovation
Service Characteristics Impact on organisation 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
Inseparability Close involvement of front and back
office personnel is needed, largely due to
simultaneous development of production
and delivery
Variability No impact
Perishability No impact, new services can be
developed in advance

15. Consumer
Communities
Back Office
Front Office
Services
Service Consumer
ElementsofBusiness
Model
• Management of suppliers
• Office systems
• Service work organisation, scripts
• Service Value Proposition (Concept and
Content)
• Service Delivery Systems
• Interface with, relation to, consumers
and their platforms
• Role of consumers (and communities) in
coproduction
• Target Markets and Marketing Techniques
Locations of service innovation

16. Managing Innovation
• A Managed Innovation Process
Combining Non-Traditional and Traditional Approaches to Business Strategy
• Strategic Alignment
Garnering Internal Support
• Industry Foresight
Understanding Emerging Trends
• Customer Insight
Understanding Articulated and Unarticulated Customer Needs
• Core Technologies and Competencies
Leveraging & Extending Corporate Assets
• Organizational Readiness
The Ability to Take Action
• Disciplined Implementation
Managing the Path from Inspiration to Impact

17. Initiation
Ideation
Integration
Implementation
Application of innovation in services

18. Initiation
• What is the problem?
• Where is it happening?
• When is it happening?
• How can we overcome the problem?
• When do you need to get involved?
• How do you know when the problem is fixed?

19. Ideation
Analyse against existing 55 business model
patterns
What can be
• Learnt?
• Copied?
• Adapted?

20. What more can you do?
• What can you take out from your service offerings in order to save cost and
simplify operations?
− Can you unbundle your service offering into separate components?
− Can we strip the deliverables that not all customers want?
− Can you deliver in a different way
−Training face to face vs training online via live feeds
− Can you look at a different way of charging
−Membership scheme vs retainer vs pay as you go
− Can you maximise the way you charge to take advantage of non chargeable
days
−Last minute flash sales for empty diary days – demand led pricing

21. Implementation
• Only implement one business model at a time
• Clearly communicate the new business model and the need for change
• Don’t overemphasise short term KPI’s
• Get management buy in – if required

22. Benefits of Innovation
• The rewards of innovation are many including:
− empowering employees;
− eliminating waste, unnecessary management overhead, and obsolete or
inefficient processes;
− producing often significant reductions in cost and cycle times;
− enabling revolutionary improvements in many business processes as measured
by quality and customer service; and
− helping top organizations stay on top and low-achievers to become effective
competitors.

23. Top tips
Overcome the usual
impediments to
innovation - by
partnering with a
strategic + creative
professional for fresh
perspective + new
ideas.
Blind
spots
Inward
Focus
Fatigue
Operatio
nal
Priorities