Service Innovation - Introductory Session Ian Miles [email_address] 

Mission for today Introduce the course Explore what we mean by “Service” Explore what we mean by “Service innovation” Examine some cases Introduce notions and statistics of the “Service Economy” Think about what we want to get out of the course

Introduce the course

Explore what we mean by “Service”

Explore what we mean by “Service innovation”

Examine some cases

Introduce notions and statistics of the “Service Economy”

Think about what we want to get out of the course

Course Outline Service Innovation Policy and the Service Science Initiatives 10 28/4 Knowledge Intensive Business Services and Innovation Systems 9 21/4 Digital Convergence and Innovation in Media 8 24/3 Case Studies 3: Creative Industries (e.g. videogames, advertising) 7 17/3 Internationalisation and Innovation 6 10/3 Case Studies 2: Public Services (e.g. health informatics and medical innovation) 5 3/3 Service Work and Occupations- professional and service classes 4 24/2 Case Studies 1: IT-based innovation in services (e.g. videotex, ecommerce, IT in banks) 3 17/2 Service Innovation: main features and dynamics - reverse product cycle model and other approaches 2 10/2 Introduction – The rise of the Service Economy -“peculiarities” of services 1 3/2

What are Services? “Things you can buy or sell, but can’t drop on your foot” Products (not goods) or processes (not manufacturing) … or activities, workers (“nonproduction workers”), functions (including services supplied by goods and self-services), or relationships… Lets consider some examples and potential sites of service innovation

“Things you can buy or sell, but can’t drop on your foot”

Products (not goods) or processes (not manufacturing) … or activities, workers (“nonproduction workers”), functions (including services supplied by goods and self-services), or relationships…

Lets consider some examples and potential sites of service innovation

What are Services? Hotels… or doormen? Cinemas and delivery of movies (entertainment… experience economy) Dentists – false teeth, dental health Transport – moving freight and people Consultancy – advice, problem diagnosis, what else? Reflections

Hotels… or doormen?

Cinemas and delivery of movies (entertainment… experience economy)

Dentists – false teeth, dental health

Transport – moving freight and people

Consultancy – advice, problem diagnosis, what else?

Videos http://uk.youtube.com/watch?v=GEvcii1vsy4&feature=related Customer service http://uk.youtube.com/watch?v=KXcw3f2Snh4 consultancy http://uk.youtube.com/watch?v=TswE7WcCzDA&feature=related consultancy/ continuity http://uk.youtube.com/watch?v=DMOS0T8spcQ&feature=related McJobs

http://uk.youtube.com/watch?v=GEvcii1vsy4&feature=related Customer service

http://uk.youtube.com/watch?v=KXcw3f2Snh4 consultancy

http://uk.youtube.com/watch?v=TswE7WcCzDA&feature=related consultancy/ continuity

http://uk.youtube.com/watch?v=DMOS0T8spcQ&feature=related McJobs

What are Services? Reflections

Meanings of “service” Service Sectors (industries) - firms and sectors specialised in supplying services S ervice activities (functions) - particular “intangible” transformations that may be produced in these specialised service firms, in other firms (e.g. “product services”) or by other means . Service occupations - employees in all sectors involved in “service” functions within their firms ( career of the word “industry”: from work to manufacturing to sectors) ( Classically - domestic service, servants . Can services be provided by goods as well as by people? Self-services? ) (white collars, transport, SCC, etc – “nonproduction workers”)   

Service Sectors (industries) - firms and sectors specialised in supplying services

S ervice activities (functions) - particular “intangible” transformations that may be produced in these specialised service firms, in other firms (e.g. “product services”) or by other means .

Service occupations - employees in all sectors involved in “service” functions within their firms

“ The” Service Sector dominates employment…

Services Workforce Growth – a global phenomenon James Spohrer,. Michael Radnor, “ Service Innovations for the 21st C” IBM Research Service Innovations Workshop, November 2004, http://www.almaden.ibm.com/asr/events/ serviceinnovation/contacts. Top Ten countries in terms of Labour Force – these constitute more than 50% of world employment! A=agriculture, G= goods/manufacturing, S=services

What are Service Sectors? We’ve been looking at service SECTORS - sectors that do not (in general) produce goods or other tangible artefacts (raw materials, buildings, water and power…) They undertake other sorts of transformations: Transformations of goods and other physical objects e.g. repair, storage, transport (some analogies in treatment of people). Transformations of animate objects and people e.g. health and personal services, vets (not farmers!) Transformations of information e.g. communications, transactional services; and of knowledge e.g. consultancy   

We’ve been looking at service SECTORS -

sectors that do not (in general) produce goods or other tangible artefacts (raw materials, buildings, water and power…)

They undertake other sorts of transformations:

Transformations of goods and other physical objects e.g. repair, storage, transport (some analogies in treatment of people).

Transformations of animate objects and people e.g. health and personal services, vets (not farmers!)

Transformations of information e.g. communications, transactional services; and of knowledge e.g. consultancy

Services in NACE Hotels and Restaurants (HORECA) Transport, Storage Financial Intermediation (FI... Real estate, Renting (…RE), Business Activities Wholesale & Retail Trade; Repair of Motor Vehicles, Motorcycles and Personal & Household Goods Public Administration and Defence; Compulsory Social Security Education Health and Social Work Other Community, Social and Personal Service Activities Includes KIBS effects on Material Artefacts PERSONAL care & Material Comforts Both people and things Mainly informational Informational, material, plus diverse BUSINESS services, inc KIBS PUBLIC (inc knowledge activities) and PERSONAL plus some entertainment and creative industries

Hotels and Restaurants (HORECA)

Transport, Storage

Financial Intermediation (FI...

Real estate, Renting (…RE), Business Activities

Wholesale & Retail Trade; Repair of Motor Vehicles, Motorcycles and Personal & Household Goods

Public Administration and Defence; Compulsory Social Security

Education

Health and Social Work

Other Community, Social and Personal Service Activities

Percentage Shares of Employment The EU service economy sector ^ Service sectors are reported here: there are also growing shares of service activities/jobs within firms in other sectors

Service Economy as “New Thing” Daniel Bell (and others) 1960s, 1970s: “The Coming of Post-Industrial Society” – relative growth of services sectors Bell also stressed increasing role of knowledge – industries based on new knowledge, workers requiring more knowledge as compared to deskilling trend in Taylorism/Fordism In late C20th, rise of knowledge-intensive services – esp. KIBS – seen as key to Knowledge-Based Economy

Daniel Bell (and others) 1960s, 1970s: “The Coming of Post-Industrial Society” – relative growth of services sectors

Bell also stressed increasing role of knowledge – industries based on new knowledge, workers requiring more knowledge as compared to deskilling trend in Taylorism/Fordism

In late C20th, rise of knowledge-intensive services – esp. KIBS – seen as key to Knowledge-Based Economy

Gender Structure and Employment Trends Male dominated (except Japan) - Decline in all categories Male dominated - Decline in all categories Female dominated –growth 1980 ? 1998? 1980  1998  1980  1998  Agriculture “Industry” Services Proportion of workforce

But different service sectors differ widely in what they do, how they do it, who does it… Transforming things, people, information Consumer services, business services, public services “knowledge-intensive” and other services

Transforming things, people, information

Consumer services, business services, public services

“knowledge-intensive” and other services

Different Services – Different Trends 1960 1973 1984 1997 1960 1973 1984 1997 Singelmann categories – Elfring Data Analysis Distributive Services Personal Services Producer Services Social Services

Reading Triangular Plots Element A Element B Element C High A, low B and C A, B, C roughly equal Moderate A, low B, moderate C Fairly high B, fairly low A and low C Can be used where three elements add up to 100% We can often capture features of services in terms of three dimensions: so we can use triangular plots to capture and explore diversity

Diversity in Workforce skills Agriculture Manufacturing HORECA Trade Transport Pub. Admin. Other Sers. FIRE Education Business Sers._ Health & Soc. Sers. HIGH SKILL LOW SKILL MEDIUM SKILL The highest skilled parts of the economy – also highest growth! EU, 2000

Diversity in inputs (transformations) PHYSICAL SOCIAL INFORMATIONAL Trade Recreational Other Sers. HORECA Public Sers. FIRE Comms. KIBS Other Bus. Sers. Transport Construction Manufacturing Agr. Fish. Forestry Utilities Services undertake a HUGE range of transformations – as previous graphic indicated, some are more knowledge-intensive than others

Diversity in Markets Businesses NON-MARKET Consumers Public Sers. HORECA Recreational KIBS Extractive Construction Other Bus. Sers. Other Sers. Trade FIRE Manufacturing Agr. Fish. Forestry Transport Comms. Utilities

What lies behind services growth? Post-industrial argument (Bell) it’s mainly consumer demand Engel’s law: as you get richer, you spend proportionally less of your income on potatoes Shift to “superior goods” (i.e. services) Or is it?

Post-industrial argument (Bell)

it’s mainly consumer demand

Engel’s law: as you get richer, you spend proportionally less of your income on potatoes

Shift to “superior goods” (i.e. services)

Or is it?

On the whole, not shift in consumer demand (post-industrial hypothesis) What Drives Services Growth? Consumer expenditure does shift across categories – thus away from “basic needs” towards “higher needs” But this does not simply equate to shift from goods to services This much less clear in the data Gershuny: within categories, consumer demand shifts from services to goods

On the whole, not shift in consumer demand (post-industrial hypothesis)

Consumer expenditure does shift across categories – thus away from “basic needs” towards “higher needs”

But this does not simply equate to shift from goods to services

This much less clear in the data

Gershuny: within categories, consumer demand shifts from services to goods

What Drives Services Growth? On the whole, not shift in consumer demand (post-industrial hypothesis) US data

On the whole, not shift in consumer demand (post-industrial hypothesis)

What Drives Services Growth? On the whole, not shift in consumer demand (post-industrial hypothesis) Public sector growth (in many countries) – political drivers and limits? BUSINESS SERVICES

On the whole, not shift in consumer demand (post-industrial hypothesis)

Public sector growth (in many countries) – political drivers and limits?

BUSINESS SERVICES

What Drives Services Growth? On the whole, not shift in consumer demand (post-industrial hypothesis) Public sector growth (in many countries) – political drivers and limits? BUSINESS SERVICES SERVICES SERVICES

On the whole, not shift in consumer demand (post-industrial hypothesis)

Public sector growth (in many countries) – political drivers and limits?

BUSINESS SERVICES SERVICES SERVICES

With all this diversity… … is it reasonable to talk about services in general? … maybe there are some broad groups, but across these groups, is all they have in common simply that they do not make THINGS as their main characteristic? Or are there common features – even if these are a shared neglect?

… is it reasonable to talk about services in general?

… maybe there are some broad groups, but across these groups, is all they have in common simply that they do not make THINGS as their main characteristic?

Or are there common features – even if these are a shared neglect?

Services Tendencies: LESS ABOUT MATERIAL PRODUCTION OF TANGIBLE ARTEFACT: Intangibility MORE PRODUCTION OF “SERVICE”: SUPPLIER - CLIENT INTERACTION often very important: Interactivity Often this interaction meanseven when thecore service is something rather tangible (like physical health or transport) exchange of information, Information-Intensity - informational activities like design, transaction, booking, training surround many services working together to “coproduce” service These characteristics have many consequences

LESS ABOUT MATERIAL PRODUCTION OF TANGIBLE ARTEFACT: Intangibility

MORE PRODUCTION OF “SERVICE”: SUPPLIER - CLIENT INTERACTION often very important: Interactivity

Often this interaction meanseven when thecore service is something rather tangible (like physical health or transport)

exchange of information, Information-Intensity - informational activities like design, transaction, booking, training surround many services

working together to “coproduce” service

These characteristics have many consequences

So we need to think about: Meaning of service in context Implications of Intangibility – effects on demonstrability, storability, tradability, appropriability…. Implications of Interactivity – interdependence with client, assessment of value Implications of Information-Intensity – what sorts of technological solution to what sorts of service issue (customisation, standardisation, 24hourisation, etc…) Is this an Innovation agenda?

Meaning of service in context

Implications of Intangibility – effects on demonstrability, storability, tradability, appropriability….

Implications of Interactivity – interdependence with client, assessment of value

Implications of Information-Intensity – what sorts of technological solution to what sorts of service issue (customisation, standardisation, 24hourisation, etc…)

End of presentation