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  • 1. The service imperativeInnovation as the core The increasing importance and growth ofcompetency of a service services as a major global industry Shugan,organisation: the role of 1994) have been of interest to academics and practitioners alike. There is a consensus thattechnology, knowledge economic growth, a higher disposable incomeand networks and technological advances have contributed to the rapid growth of service-sector enterprises Mattsson, 1995; Patterson,Jay Kandampully 1995), and have substantially increased theirThe author economic importance. According to Gronroos 2000), today firms compete on the ¨Jay Kandampully is Associate Professor at the UQ Business basis of services, and not on the basis ofSchool, The University of Queensland, Ipswich, Australia. physical products. The competitive advantage of services has become increasingly evident, asKeywords there is little to differentiate competingService, Core competences, Innovation, Networks products from the customer’ s perspective. For example, to a customer, there is noAbstract apparent difference between a Sony television and a JVC television; it is the service offeredServices lie at the very hub of the economic activity of all by the retail store that manifests true value.societies, and interlink closely with all other sectors of the The global dissemination of knowledgeeconomy. The exponential growth of services through information technology IT) hasinternationally has not only intensified competition, but has limited benefit with regard to productalso simultaneously posed a challenge and an opportunity differentiation. Advances in IT have reducedfor the managers of services. This study examines the the life-cycle of products and, in addition,factors underlying the growth of services, and emerging have revolutionised the way in which businessviews on what constitutes a ’’resource’’ for service is conducted in the new economy. Billions oforganisations. To this end, the roles of technology, people worldwide are currently connected toknowledge and networks are examined as interdependen t the Internet, and exponential growth in thisfactors. It is argued here that today’s ’’resources’’ are the international network means that millionsculmination of various advances in knowledge. Technologyfacilitates the maintenanc e of networks with customers more are being connected annually. Theand partners inside and outside the firm. The network of Internet enables customers to engage in arelationships renders the firm’s capabilities ’’amorphous’’ in higher degree of self-service Hallowell,nature. This study suggests that this amorphous knowledge 2001). Moreover, the nature of businessrepresent s the true ’’resource’’ in a service firm, and today demands that firms interact with theirultimately provides the creative potential for ’’innovation’’ ± customers and business partners usingthe so-called ’’core competency’’. However, innovation per technology to provide servicesse does not benefit the firm unless it manifests superior instantaneously across international borders.value in the customer-driven marketplace. Moreover, this Essentially therefore, service encounters relatestudy argues that service innovation results only when a to ’’ high-touch’’ traditional face-to-facefirm is able to focus its entire energies to think on behalf of interaction) and ’’ high-tech’’ thosethe customer. encounters that take place over a long distance via a technology interface). Thus advances in technology have meant that theElectronic access provision of services has become the businessThe research register for this journal is available at imperative in today’ s competitive marketplace.The current issue and full text archive of this journal is Moreover, services have become theavailable at uncompromisable core component of business and, from a management perspective, they have evolved to assume aEuropean Journal of Innovation Management strategic function. A firm’ s service functionVolume 5 . Number 1 . 2002 . pp. 18±26# MCB UP Limited . ISSN 1460-1060 concerns and interacts with almost everyDOI 10.1108/14601060210415144 activity or component of the firm. These 18
  • 2. Innovation as the core competency of a service organisation European Journal of Innovation Management Jay Kandampully Volume 5 . Number 1 . 2002 . 18±26include people, process, or physical evidence ultimately improve its efficiency and both tangible and intangible evidence effectiveness.representative of the firm from the customer’ s Hence, it can be argued that the value of aperspective); internal and external customers; resource is dependent on present informationand the various networks, alliances and or knowledge. The important words here arepartners. External relationship networks have ’’ present knowledge’’ , as new knowledge hasbecome an essential prerequisite if a firm is to the ability to transform anything in this worldachieve the capabilities and knowledge including humans) into a resource. This alsorequired to serve the holistic needs of implies that resources deemed valuable todaycustomers. might have limited value tomorrow if new Service leaders successfully introduce knowledge develops a superior substitute. Inproducts and services to the market far in the past, Ohmae 1989, p. 153) points out,advance of customer expectation. Moreover, there were gross inefficiencies ­ somein the customer’ s mind, a firm maintains its purposeful, some not ­ in the flow ofmarket leadership position by continuing to information around the world. For example,operate at the cutting-edge and by extending although the Chinese developed theconventional parameters. Service firms today knowledge of looming in the thirteenthare expected to delight customers with their century, it was the British who built thatcreativity and innovation. Thus, in knowledge into a commercial business in theoperational terms, innovation can be eighteenth century. However, with thetranslated as a firm’ s foresight to ’’ think for increase in knowledge, its globalthe customer’’ by creating services that dissemination through networks and’’ drive’’ the marketplace offer superior value non-restrictive media such as the Internet),to the customer). The ongoing dominance of and its creative adaptation, many existingservices in the developed and developing resources will diminish in value. For example,economies around the world has raised a the value of natural rubber decreased in thechallenging question for service enterprises ­ world market following the invention ofas to what constitutes ’’ resource’’ . This is a synthetic rubber made from crude oil.fundamental issue, which will invariably affect Similarly, the production of semi-conductorsstrategic decisions and subsequent high knowledge component product) wasmanagement activities in service previously the economic strength oforganisations. computing science in Taiwan and Korea. Today semi-conductors represent just another mass-production item.’’Resource’’ in the new millennium Moreover, in this age of technology, Porter 1985, p. 166) argues that a firm is actually aThe study of resources has been a focus of collection of technologies, and it is theinterest to economists for many years. A technologies embodied in a firm’ s knowledge,firm’ s or a nation’ s resources have manifested as product or service, that profferconsistently been recognised as important, a potential competitive advantage. It isand many studies have been conducted to therefore the knowledge that has the potentialdetermine ways of rendering them more to add value to the offer of a product oreffective Andrews, 1971). However, the service by a firm. The true focus has thusconceptual definition as to what constitutes a shifted from natural resources physical) tofirm’ s or a country’ s ’’ resources’’ has changed knowledge resources mental). There aredramatically with the advent of technology. numerous factors that have contributed toToday it incorporates a spectrum of this paradigm shift, one of the most importantcomponents never previously considered in of which is IT. The advent of computers ineconomic or management theory Pilzer, the workplace dates back to the early 1950s.1990). Moreover, Barney 1991, p. 101) However, because computers wereexpands the common notion of a firm’ s predominantly utilised to hasten paper-basedresources to encompass ’’ all assets, processing, they failed to effect anycapabilities, organisational processes, firm fundamental changes in the business process.attributes, information, knowledge, etc.’’ , and It was not until the 1990s ­ with the comingindicates how such resources enable the firm together of low-cost computers and IT in theto conceive of, and implement, strategies that form of a universally accessible phenomenon 19
  • 3. Innovation as the core competency of a service organisation European Journal of Innovation Management Jay Kandampully Volume 5 . Number 1 . 2002 . 18±26 Internet) ­ that computers had a example, the automobile industry. Fifteentransforming impact Mendelowitz, 1999). years ago, we were able to attend to minor It is, indeed, the advance of technology engine problems in our cars: adjusting thethrough mechanisation and mass production carburettor, for example. Today’ s technologythat has given rise to the economic prosperity has replaced carburettors with fuel-injectors,of Western countries following the and we are obliged to take our cars totechnological revolution in industry in the mechanics for tuning ­ we no longer have aearly part of the twentieth century. In choice. Similarly, when we buy a washing-economic terms, technology directly cuts machine or dishwasher, our concerns nowcosts; more importantly, however, its most extend to the various support servicesradical impact has been on conceptual provided by the seller in the event ofthinking, in terms of the designation of something going wrong. The service’’ resources’’ by a firm or country. This can be component not only has become an integrallikened to the hunter-gatherers of the past, for part of most manufactured products but alsowhom land did not manifest itself as a has become the source of sustainable andresource until the human mind developed the strategic competitive advantage Gronroos, ¨methods and the know-how technology) of 2000, p. 6). In this hyper-competitivefarming Pilzer, 1990). environment, it is imperative that firms The creative utilisation of distance and understand the values that customerstime, referred to as the ’’ death of distance’’ attribute to the service package ­ a combinedthrough the impact of technology, possibly product and service offering Kandampullyconstitutes the single most-important and Duddy, 1999a, p. 54).economic force that will shape society and the Technology has similarly augmented theservice industry in the first half of this century knowledge required in almost every type of The Economist, 1995). Services today are all- labour in industry. Knowledge ­ throughpervasive, and we are dependent on those training ­ has become a prerequisite forservices to maintain our lives. For example, success in the job market. For example,services such as: telephone, television, radio, secretaries who were once required to typetaxi, bus, electricity, water, sewerage, and answer the telephone are now expected tosecurity, restaurant, library, gym, bank, demonstrate equal proficiency in variousgrocer, post, hairdressing, health care, and so computer programs, and to possess theon, are required by almost every citizen. In aptitude to learn new programs when thesefact, technology and its capacity to affect are introduced. Moreover, the increasing useevery aspect of our lives have always been and incessant update) of technology inmajor determinants of human progress almost every field has added a knowledge Pilzer, 1990). component to every manual job, and has It is proposed here that, on a macro level, required firms to seek employees who arethe ’’ resources’’ of the service organisation can willing and able to update their knowledge onbe attributed to three interrelated factors of an ongoing basis. In addition, technologymodern business, namely: technology, displaces low-skilled labour from theknowledge, and networks. The following traditional workplace and offers newsections will discuss these three factors opportunities for skilled labour with higherindividually and will examine how they levels of knowledge. Within this newcontribute to ’’ service innovation’’ ­ the core technology paradigm, experience is of limitedcompetency of any firm. value because new knowledge is essential to make oneself productive with the adoption of new technology. Thus, knowledge and theImpact of technology on services increasing service component have significant implications for both the labour market inAdvances in technology have directly terms of ongoing learning) and for theinfluenced the growth and importance of industry in terms of continuous upskilling).services, in terms of independent service- In the past, labour represented, and wasofferings, and as components of product and considered by management to be, theservice packages. Service has become a inevitable cost incurred in the production ofbusiness essential in manufacturing Zeithaml goods and services. However, under theand Bitner, 1996, p. 10). Consider, for present extended definition of ’’ resources’’ , 20
  • 4. Innovation as the core competency of a service organisation European Journal of Innovation Management Jay Kandampully Volume 5 . Number 1 . 2002 . 18±26labour is valued not in terms of physical As the foundation of economies shifts fromassistance, but in terms of mental natural resources to intellectual assets,contribution. The labour within an managers will be compelled to examine notorganisation or country is no longer a only the knowledge underlying theirdesignated cost but a valuable resource. The organisation’ s success and competitivetrue economic value of a person is primarily advantage but also, more importantly, theattributed to his or her knowledge and management of this knowledge Hansen et al.,creative skills. This view is highlighted by 1999). Moreover, in an age in which businessMoody 1991) in the New York Times operates within networks and alliances,Magazine with his assertion that ’’ Microsoft’ s international boundaries pose no realonly factory asset is the human imagination’’ . limitation.Hamel and Prahalad 1989, p. 67) suggest Historically, many countries and industriesthat managers nurture and develop prohibited the emigration of skilled workerscompetitive intelligence at every level of the for example, carpet-weavers in Persia, paperorganisation in order to build the firm’ s and pottery craftsmen in China, silk-weaverscompetitive advantage. A similar view is held in India). In those days, a worker’ s skill in aby SONY’ s chairman, Morita 1988), who particular trade or craft represented specialistindicated that it is not the manual labour of knowledge, capability and competence.employees that allows a company to dominate Today, however, even if a particular worker’ sthe global market, but the contributions of the knowledge is deemed valuable to theemployees’ minds. company, it is seldom accorded the status More recently, it has been recognised that accorded to a physical asset in the firm’ s bookthe contribution of the human mind of accounts. Moreover, in the present ever- knowledge) will play a major role in changing world of global business,tomorrow’ s service industries Peters, 1994). technology, competence, and capability, each,Indeed, talent-based enterprises have become in its own way, is a manifestation of a firm’ scommonplace in the innovative world of knowledge assets operating at different levelsbusiness. Business success will depend on an of the organisation Boisot, 1998, p. 4).organisation’ s ability to imagine and/or create According to Drucker 1993, p. 38),a need Pilzer, 1990). Thus, it can be argued knowledge represents a key personal andthat innovation in services reflects the primary economic resource. He argues thatcreativity of the human mind knowledge). It traditional factors of production ­ such asis, indeed, progress into the unknown ­ land, labour and capital ­ have becomethrough new knowledge ­ that will enable an secondary. He asserts that ’’ knowledge is theorganisation to attain wealth and the all- only meaningful resource today’’ . Hence, aimportant competitive advantage Kelley, worker with knowledge commands a leading1997). It is the people within a service role and status, as his or her knowledgeorganisation that create and innovate an represents the firm’ s single greatest asset.organisation’ s service offer. According to Moreover, the aptitude of the worker and thePeters and Austin 1994, p. 98), irrespective firm to seek new and up-to-date knowledgeof where technology leads, service the concept of the ’’ learning organisation’’ ) isdifferentiation comes from people and their the only means of sustaining the value of thecontribution to the infinite field of knowledge. firm’ s knowledge resource. However, this new primacy of knowledge requires managers to rethink the fundamental practices ofContribution of knowledge management. Webber 1993) asserts that managers not only must invest in theDeveloping, using and leveraging knowledge necessary information tools to support andare essential for all organisations and/or enhance the productivity of the knowledgecountries to sustain economic progress. workers), but also need to nurture a’’ Knowledge is indisputably the primary basis partnering relationship with them. In essence,for value-added in today’ s companies’’ , claims a firm’ s strategy for knowledge managementmanagement consultant Peters 1994). It has should reflect its competitive strategybecome an accepted fact that, in the new Hansen et al., 1999). In this competitivemillennium, we will encounter advances in environment, knowledge is progressivelytechnology-information-knowledge services. being perceived as the core driver of 21
  • 5. Innovation as the core competency of a service organisation European Journal of Innovation Management Jay Kandampully Volume 5 . Number 1 . 2002 . 18±26competitiveness; more importantly, benefit of the customer ­ by creating strategicknowledge extends beyond individuals, alliances both horizontally and verticallygroups, or corporations to mutually internal and external relationships) withsupporting groups Gummesson, 1999, individuals and firms Peppers and Rogers,p. 132). It is this extended network of 1997).relationships that, Gummesson argues, will Horizontal strategy, according to Porterreap the creative potential of knowledge. 1985, p. 319), is the essence of corporate Products and services offered in the strategy as it seeks to gain competitivemarketplace today have become increasingly advantage by creating links among distinctcomplex, with most organisations offering not but interrelated businesses. It is suggestedone product or service, but a collection of here that the core competency of the firm asproducts and services Albrecht and Zemke, valued by the customer) is creatively1985). Hence, most companies are nothing developed by the firm’ s ability to nurturebut a ’’ chain of services’’ Quinn et al., 1990). enduring relationships with various partiesIt is the firm’ s service package that augments inside and outside the organisation. Thethe value of both product and service offerings collective competency of the firm is thus Chase and Garvin, 1990). Moreover, it is the derived from the various networks ofspecific configuration of the different stakeholders of the firm ­ for example:components in the firm’ s service package customer, employee, retailer, supplier, and competence) that communicates added shareholder see Figure 1, Kandampully andvalue to the customer. Management literature Duddy, 1999b). Although various otherattributes a firm’ s competitive advantage to stakeholders can be included in the network,the firm’ s capabilities or core competencies the above five stakeholders partners) Prahalad and Hamel, 1990; Stalk et al., constitute those participants that are essential1992; Teece and Piscano, 1994). A firm’ s to a service firm’ s basic operation. Throughcore competency is dependent on its capacity network partners, the firm essentially aims toto combine core skills creatively Prahalad, enhance the value of its offerings ­ to the1993), from both within and outside the benefit of customer, firm and stakeholderorganisation. However, ’’ what matters is the simultaneously.creative bundling’’ of a firm’ s core Developed as networks, the variouscompetency Prahalad, 1993) and, thus, the relationships that the firm nurtures andneed for a focus on the factors that signal maintains frequently constitute the life sourcevalue to the customer. for many leading-edge firms Kandampully and Duddy, 1999a); indeed, most large and small projects invariably involve numerousContribution of networks of alliances and partners. This is particularlyrelationships Figure 1 Service relationshipsIn this competitive global market, customerfocus requires a firm to gain a comprehensiveunderstanding of the buyer’ s entire valuechain holistic needs), not only as it is oftoday, but also as it will evolve over time Slater and Narver, 1994, p. 22). Moreover,in most cases, customers’ holisticrequirements frequently extend beyond thatcapable of being effectively fulfilled by a singlefirm’ s product or service Kandampully andDuddy, 1999b). Thus, firms whichunderstand customers’ holistic needs will beable to mix and match various products andservices commensurate with customers’specific needs. If customers require productsor services that are not within the realm of afirm’ s core competency, the firm should findways to procure those competencies ­ for the 22
  • 6. Innovation as the core competency of a service organisation European Journal of Innovation Management Jay Kandampully Volume 5 . Number 1 . 2002 . 18±26pertinent to services, as networks are endemic Figure 2 Core competency in servicesto most service businesses Heskett et al.,1990, p. 160). The competitive advantage ofFederal Express over its competition wasattributed to advanced technology networksthat offered customers the means of’’ tracking’’ their package during transit.Today’ s service organisations traverseconventional boundaries. Firms that seekassistance and enter into alliances withvarious individuals and suppliers do so, not asa cost-saving exercise, but to seek outspecialist know-how to extend their corecompetency. In modern business, the term’’ out-sourcing’’ has been accorded a newmeaning and has subsequently been replacedwith ’’ out-partnering’’ Peters, 1994). The experts inside and outside the firm cantherefore essentially be deemed the firm’ s’’ competency-contributing partners’’ , becauseit is with their assistance that the design anddelivery of the service are realised. Mostoften, the experts inside and outside the firmundertake projects that require them to work firms such as General Electric and Britishin very close relationships. It is technology Airways set up their call centres in India tothat renders it possible for these amorphous handle a daily barrage of customer enquiriesnetworks of expertise to come together in that originate in North America and Europecyberspace and work in very close Landler, 2001). Thus resourcing servicesrelationships, although they might be through networks beyond national boundariesthousands of miles apart physically. has become a common feature in the globalTechnology thus acts as an unparalleled tool marketplace. Moreover, the ongoingthat makes it possible for service firms to dependence on network relationships, and theextend their core capacity competency or effective maintenance of such networks, willcapability) and to forge networks of dictate the core survival strategy ofrelationships across the globe Figure 2). tomorrow’ s service firms. Thus the firm’ s core competency is Furthermore, the ability of a service firm torepresented by the knowledge base, realised interact with its customer, and the ability tothrough the effective use of internal and maintain an ongoing relationship with thatexternal partnerships utilising technology. It customer, have become increasinglyis argued here that it is this continuously important strategies. This relationshipupdated ’’ amorphous knowledge resource’’ , imperative, referred to as ’’ relationshipresulting from the network of partners, that marketing’’ in marketing literature, has gainedrepresents the firm’ s core competency. widespread acceptance with practitioners andMoreover, it is the firm’ s subsequent ability to academics alike. One of the many benefitsremain at the forefront that nurtures the associated with the adoption of relationshipfirm’ s image as a service leader, and that marketing is its potential to gain timelyprovides the feature that differentiates the information on the changing needs,firm from its competition. The recognition of expectations and spending patterns ofthe non-conforming amorphous) nature of customers. Customer information thus playsknowledge provides firms with the mindset to a significant role in the amorphous structureseek for sources of knowledge beyond the of the firm’ s knowledge resource. Forobvious. Peters 1994) argues that example, booking 355,000 hotel rooms acrosscorporations are becoming amorphous as they the planet gives Marriott the opportunity toexpand their resource base to people and collect the world’ s most extensive store offirms around the world. For example, call information about the characteristics, habitscentres are a booming business in India, as and preferences of people who travel Wired, 23
  • 7. Innovation as the core competency of a service organisation European Journal of Innovation Management Jay Kandampully Volume 5 . Number 1 . 2002 . 18±262000). This in-depth customer information industry. For example, the displacement ofproves invaluable for the firm to ’’ think for the the multimillion-dollar music recordscustomer’’ and to create products and services industry by the introduction of CDs stands asthat manifest superior value to the customer, testimony to this phenomenon. Moreover,thus gaining ultimate advantage in the innovated products and services indirectlymarketplace. destroy the demand for the old, as the latter The growing importance of relationships prove less valuable to the customer.and alliances can be attributed to the global Innovation or creativity per se are of limitedaccessibility of the IT digital networks that significance in today’ s evolving businesslink individuals and organisations around the continuum, as it is the value of the innovationworld. The collective impact of various as perceived by the customer that renders anfactors ­ including the availability of low-cost advantage to a product or service. Servicecomputers, recent advances in digital innovation results when a firm is able to focuscommunications, applications of the easy-to- its entire energies to think on behalf of theuse graphical-interface Web-browsers and the customer ­ for an outcome that surpassesevolution of the Internet as a universally customers’ present expectation of superioraccessible phenomenon ­ has enhanced the value. Innovation, however small, has aaccessibility and exchange of knowledge. compounding cumulative) strength that isFrom a global perspective, it is the capable of creating the new and of distortingaccessibility of knowledge, and how that the old.knowledge is creatively transformed and Innovation, therefore, nurtures a culture inmarketed, that provides an individual firm or which there are fewer hindrances to thea country with its competitive advantage. The creation of a synergy of thoughts and actionsInternet offers access to the global on behalf of the customer. This, of course, ismarketplace, in which border and time pose conceptually and philosophically alien fromno limitations for the amorphous extension of conventional business wisdom. Entertainingthe firm’ s competency ­ the only limitation the old mindset) inevitably affects thebeing human imagination. present and future actions of a firm, and hence it is imperative to eradicate the old simultaneously with the introduction of theService innovation: the core new. As Peters 1997) suggests, it is essentialcompetency to destroy the old so as to give way to new thoughts and subsequent new action.Success stories of firms and individuals in Moreover, every enterprise shouldvarious parts of the world are often featured in systematically undertake the tasks of creation,business magazines and books. In most cases, preservation and destruction of theirtheir advances in their chosen fields have not philosophy, systems and processes.been the result of hard work, but can be This new mindset also recognises the factassigned to their capacity to utilise creatively that the firm’ s extrinsic requirementthe benefits of advances in technology, new enhancement of customer value) is the all-knowledge, and networks of relationships. important factor in the firm’ s intrinsicTechnology thus serves firms as they create preferences. The firm might thus choose toand maintain networks of relationships in the use various technologies and to forgepursuit of new knowledge. Thus the incessant networks of relationships to extend itsfocus of firms will be on knowledge ­ the competency knowledge) base, and to offer’’ resource’’ that, with its creative potential for higher value to the customer. The focus oninnovation, offers the firm its core customer-perceived value might require thecompetency. firm to forgo their intrinsic ego and to seek Service leaders have not only developed competencies outside the firm. A firm mightnew services as collective packages but, in the thus join in partnership with other enterprisesprocess, have created new markets ­ often ­ including those they might previously haveinitiating the growth of a new industry. viewed as competitors. The 13-partner ’’ StarToday’ s managers are not concerned about Alliance Network’’ in the airline industry, forthe challenges caused by the short life-cycle of example, illustrates the numerous benefits toproducts and services but, rather, by the be gained by competing airlines, and by theirpossibility of the disappearance of an entire customers, as a result of operating within a 24
  • 8. Innovation as the core competency of a service organisation European Journal of Innovation Management Jay Kandampully Volume 5 . Number 1 . 2002 . 18±26network. Star Alliance Network partners challenges previously posed by distance andenjoy the facilities to serve their customers time, and to convert them into potentialwith more than 815 destinations in more than opportunities. Time differences can be130 countries in a reputable and customer- creatively utilised to serve internal andservice-led environment. This unparalleled external customers around the clock. Manyworld-class service would have been an US firms strategically locate their supportimpossible dream for any one airline services across international borders ­ withoperating alone. the aim of providing support services during off-business hours. For example, India is being recognised as the ’’ back office’’ of theConclusion and discussion world Landler, 2001). Marquee businesses ­ such as Nordstrom, Visa, Xerox, GeneralFirms undertake a myriad projects. However, Electric, Reebok, AT&T, Motorola, Cisco,creative innovation necessitates that these Thomas Cook, and British Airways ­ provideprojects and actions be synchronised to their firm’ s support services such asproduce value-enhancement for the customer computer help-desks, accountants, call­ the firm’ s ultimate goal. In the competitive centres, transcribers, and so on) from India.marketplace, it is those factors that render This conceptual shift ­ in recognising thegreater value to customers that command value of people and their knowledge as ademand. Hence, customer-focused firms are resource ­ thus broadens the globalamenable to new and better ways of doing opportunity for individuals, firms andthings for the benefit of their customers. countries, and has major implications forTechnology, knowledge and networks thus gaining success in the marketplace. Thisrepresent a unique set of factors that can fuelinnovation in service organisations. It is the quantum shift in the attitude of firmscombined effect of technology, knowledge demands that they reassess what constitutesand network that gives a firm the ability to ’’ resource’’ for them, and demands that theyfocus its amorphous resource on the future reassess what has to be done to attract, as yet unexpressed) needs of customers ­ the nurture and manage the ever-changingtrue innovative feature. knowledge-resource pool. In fact, it is this Customers today expect firms to delight knowledge-resource pool that will bethem with creativity. Hence, continuous and attractive to both internal and externalcreative innovation undertaken by a firm on customers.behalf of the customer is, indeed, the onlystrategy that can sustain the long-term successof the firm. However, service innovation Referencesinitiates increasing expectations amongcustomers and, hence, can constitute a self- Albrecht, K. and Zemke, R. (1985), Service America: Doingcreated challenge. In fact, it is this self- Business in the New Economy, Dow Jones Irwin, Homewood, IL.inflicted challenge ­ to excel beyond the norm Andrews, K.R. (1971), The Concept of Corporate Strategy,­ that has made Steven Spielberg, Michael Dow Jones Irwin, Homewood, IL.Jordan, Disney, CNN, Microsoft, and Barney, J. (1991), ’’Firm resources and sustainedMarriott unchallenged leaders in their various competitive advantage’’, Journal of Management,marketplaces. Their passion for delighting Vol. 17 No. 1, pp. and customers far beyond expectations Boisot, M.H. (1998), Knowledge Assets: Securing Competitive Advantage in the Informationhas propelled them to unchallenged heights of Economy, Oxford University Press, London.recognition. Chase, R.B. and Garvin, D. (1990), ’’The service factory: a In today’ s global marketplace, the factors future vision’’, paper presented at the Quality inthat constituted success in the past might be Services Conference QUIS-2, St John’s University,of limited relevance in the future. It is not just Service Research Center, New York, NY, pp. 91-100.the capabilities and knowledge base of a firm Drucker, P.F. (1993), Post-Capitalist Society,that have assumed amorphous states but, HarperCollins, New York, NY. (The) Economist (1995), ’’The death of distance’’,more importantly, the practice of conducting 30 September, pp. itself. The quantum advances in Gronroos, C. (2000), Service Management and Marketing: Ètechnology, communication and digital A Customer Relationship Management Approach,science have enabled firms to transcend the 2nd ed., Wiley, London. 25
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