Service Innovation

BY Fast Company staffFri Jan 21, 2005 at 1:40 PM

There's been a lot of focus on product innovation over the years, but very little discussion or thought on innovation in the service sector--despite the vast growth of that part of our economy. "It's one of those areas that is a tweener, falling between other departments in a company," says Jeneanne M. Rae, co-founder of Peer Insight.

Rae came by the other day with co-founder Tim Olgilvie to talk about the differences between product and service innovation and their search for more tools and ideas to help organizations get a lead in this area. They've formed a collaborative venture among eight companies, including Mastercard and Siebel Systems, to share data and deconstruct the successses and failures in service innovation.

It's a cool project. So far, their research has led to some fascinating insights and the creation of what they call "The Discipline of Service Innovation." Without boring you with every specific, here's some of the basic principles Tim and Jeneanne came up with to help innovate in the service arena.

Create a clear challenge statement, expressed in terms of a customer need, not a business need, that focuses on the "white space."
Do strong ideation: a well-designed, well-facilitated process that includes participation from many departments and disciplines and sources of edge-thinking.
Emphasize developing concepts that combine multiple elements of innovation (from your business model and IT platform to the channel) to increase the impact and distinctiveness of the idea.
Use techniques and structures that counter-balance the natural forces of criticism and risk-aversion.
Employ a design that is guided by a base behavioral model of the customer's underlying needs.
Communicate high aspirations for the overall customer experience to stretch the design team's thinking.
Use customer-centric analytical tools to measure the customer experience.
Make creative use of tangible artifacts to reinforced a distinctive experience, the way an ADT lawn sign signals that service or the way Mini Cooper's roadside assistance service is signalled by its window signs.

Topics:

Innovation, innovation + creativity, Jeneanne Rae, Tim Olgilvie, Siebel Systems Inc., MINI Cooper

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Recent Comments | 5 Total

January 23, 2005 at 12:53am by Zennie Abraham

If I could add what I consider innovative, it's this: call the people you provide your service to guests or clients, and not customers. In other words, use nomenclature to change how the service provider thinks of the service consumer.

I personally find that customer is used as a negative term, and not a positive one, where guest or client seems to imply a need to give personal care to that person.

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January 28, 2005 at 11:47pm by Greg McCumsey

I agree with the idea of a different word or words invoking transformation.
Along these lines, you may want to consider "partner" rather than customer, client, guest - extend also to vendor, distribution channels (in short, any group that contributes to your organization's success).

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February 23, 2005 at 6:20am by Marc Innegraeve

Why you haven't heard much about Service Innovation until now, is because it is more difficult than Product Innovation.

There are more dimensions to service innovation than there are to product innovation. Service innovation can be a new service concept, it can be a new way to interact with customers, a new way of service delivery or a technology innovation supporting either one of the three (concept, interaction or delivery).

Service innovation is very different depending on the type of organisation. There are differences between the different verticals, resulting in a "silo-approach" for service innovation, as suggested in HBR of February 2005 by Henry Chesbrough. Service innovation is also very different for government than for commercial organisations and again different for not-for-profit organisations. We need to work on a set of tools that are universal over the different silo's.

A third reason for this difficulty is that other issues are important to services. When designing and developing a new service, organisations need to think about trust, about increasing a sense of transfer of ownership and about experience. Changing the method of payment, can not impact the design of a product, but it is a major change in the development of a service.

These are only a few of the hurdles to service innovation, but I am convinced we are moving closer to solutions. More academic work, books and articles, government initiatives and small companies who work around service innovation are appearing globally. There is a future!

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June 9, 2005 at 9:52am by Armand Rousso

I agree with you, Marc. Service INNOVATION is a truly ignored area of research and implementation. If studied furthur in more serious vein, it can really help companies achieve 100% customer satisfaction.

They must call their customers periodically, conduct surveys which bring out facts clothed in consumer feedback results. They must go take that extra step, that extra effort to bring value to their services.

Armand Rousso

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September 20, 2005 at 2:26am by Alastair Ross

Service companies can learn a lot from the disciplines of Manufacturing as they create robust processes, seek to 'productise' their offerings to help in selling and implement best practices. This will drive higher value offerings at lower cost - critical as service providers face the challenges of off-shoring (just as manufacturers are).

Alastair Ross

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