1. Service Innovation Ian Miles Professor of Technological Innovation & Social Change Centre for Service Research & MIoIR Manchester Business School
2. Overturning received wisdom <ul><li>Innovation came to the fore from the 1970s on, as vital for competitiveness, growth, QOL… </li></ul><ul><li>Basic ideas like the linear model were rejected, and mass of knowledge created about conditions for successful innovation, diffusion processes, different types of innovation (incremental, radical, revolutionary, disruptive; product, process; etc.) and so on. </li></ul><ul><li>But most analysis remained based on certain areas of the economy – mainly private manufacturing, esp. high-tech manufacturing; and on certain types of innovation, esp. technology-based. </li></ul><ul><li>Service industries were generally written off as “supplier-driven” sectors, at best adopting innovations developed by manufacturing industry. Until the later ’80s and ’90s they were typically excluded from R&D and innovation statistics. </li></ul>
3. UK data – CIS4, 2005 Percentages reporting innovations of different types; firms with 10+ employees percentage The IT revolution saw services adopting the new technologies and doing new things with them. And from the mid 1990s the CIS included some services.
4. UK data – CIS4, 2005 Services do innovate – if somewhat less frequently than manufacturing. (Some services are well above the manufacturing average – notably T-KIBS). Manufacturers and other primary and secondary sector firms introduce new services Services introduce new goods – credit cards, goods for hire, and more – surprisingly often
5. Large variation in innovation style across sectors - CIS5 data, EU (2007) R&D Market Development “ Supplier-driven” Training
6. Also “organisational” innovation Percentages reporting innovations of different types;’ firms with 10+ employees Knowledge-based Services are particularly active organisational innovators.
7. <ul><li>Back to basics: </li></ul><ul><li>Service as product ( the service), as production and delivery (the service process), as philosophy (service orientation), as encounter (service journey). </li></ul><ul><li>Innovation as output ( the innovation), as process (innovation management), as philosophy (innovation orientation). </li></ul><ul><li>Service innovation : new service development; service elements of innovation; innovation within service organisations; innovation through services. </li></ul>Service and Innovation DOING USEFUL THINGS (as opposed to MAKING USEFUL THINGS – goods) DOING BETTER (products or processes…) DOING THINGS BETTER , DOING BETTER THINGS
8. Service and Innovation <ul><li>All the terms are highly ambiguous : </li></ul><ul><li>Service can refer to: a product ( the service), to production and delivery (service process ), to strategy (service orientation ), to encounter (service journey, relationship ). </li></ul><ul><li>Innovation can refer to: output ( the innovation), to process (innovation management), to strategy (innovation orientation ). </li></ul><ul><li>Service innovation : 1) new service development; 2) service elements of innovation; 3) innovation within service organisations; 4) innovation through services. </li></ul>DOING USEFUL THINGS DOING BETTER DOING THINGS BETTER , DOING BETTER THINGS Not to mention strategies for each and any of these
9. Varieties Of Service <ul><li>What services do: transforming people, artefacts, symbols, etc. </li></ul><ul><li>Who does it : services among highest- and lowest-skilled sectors </li></ul><ul><li>Who is it done for: consumer services, public services, business services </li></ul><ul><li>How is it organised – in-house, outsourced, offshored; large and small organisations, network organisations… </li></ul><ul><li>Differences in innovation (process) </li></ul>
10. We know that: <ul><li>Information technology is important for ALL services – and we believe that new developments will make it even more so . </li></ul><ul><li>Service sectors innovate in different ways (though there are firms with different styles in all sectors) </li></ul><ul><li>High-tech KIBS are much like other high-tech firms (R&D and technology acquisition). Large service firms often organise their R&D like manufacturers. </li></ul><ul><li>Otherwise formal innovation management (esp. R&D management structures) is rare. New product and project development team structures are most common. </li></ul><ul><li>Professional KIBS (and creative services) are also very innovative. But they rely more on professional networks and in-practice ad-hoc innovation. Problems of capturing and replicating innovations. </li></ul><ul><li>Public services have distinctive patterns. Some have elaborate R&D; others much less well-articulated. </li></ul><ul><li>Many (traditional) services are fairly low in terms of reported innovation, other than that related to new equipment and software. They have poor links to wider innovation systems. But their innovativeness is understated in standard statistics. </li></ul><ul><li>Organisational change is relatively more important for service firms. (But note that technological innovators also tend to be organisational innovators). </li></ul><ul><li>Skill needs are challenging, and changing. </li></ul><ul><li>* and R&D </li></ul>
11. We also know that: <ul><li>Service elements are important for ALL sectors: </li></ul><ul><ul><li>Production services </li></ul></ul><ul><ul><li>Product services </li></ul></ul><ul><ul><li>Servicisation </li></ul></ul><ul><ul><li>Customer service orientation </li></ul></ul><ul><li>Innovation in these elements is poorly measured and understood - with a few exceptions (Information Systems, ecommerce, logistics…) </li></ul><ul><li>Innovation management at firm level often fails to deal with these elements. Creativity and innovation management is underresearched. </li></ul><ul><li>Skill needs are, again, challenging. General need to combine managerial, domain, technology and service capabilities. </li></ul>
12. KIBS as innovation agents Client Problems Client Problems Generic Knowledge KIBS communities “Science Base” Technology and training providers Client Problems Local knowledge derived from client