Service Innovation - an overview

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Service Innovation - an overview

  1. 1. OMIIR 1 Service Innovation and Innovative Services Ian Miles Manchester Institute of Innovation Research Manchester Business School (and the Laboratory for the Economics of Innovation, HSE Moscow) Ian.Miles@mbs.ac.uk Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  2. 2. OMIIR Outline Introductory Remarks Perspectives on Services and Service Innovation Service innovation management and policy Service innovation in the twenty- first century Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  3. 3. OMIIR Traditional view of service innovation Dismissal (with very few exceptions) Service industries play little role in (technological) innovation and can thus be ignored by innovation policy Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  4. 4. OMIIR Services as Innovators? Long neglected: services seen as laggards, “supplier-driven” (by innovations from manufacturing), main focus organisational (eg. supermarkets) But (some) service industries at vanguard of IT revolution, many firms introducing technology-enabled services Service sector growth makes study – & policy – inescapable. Graphs from World Bank “Beyond Economic Growth” Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  5. 5. OMIIR Growing Attention: Publications featuring Keywords in title KEY PHRASE: Service ….. ….. ….. innovation Innovation in ….. services New service ….. …..development Innovation in …..service 2009 Source: analysis of data from Harzing’s “Publish or Perish” Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  6. 6. OMIIR Services in Innovation Surveys Innovation surveys (originally the CIS) across Europe since 1980s, including many services since 1990s. Many metrics. Sectoral differences – varying over time. Share of “innovation active” firms – those engaged in any of: 1. Introduction of a new or significantly improved product (good or service) or process; 2. innovation projects not yet complete or abandoned; 3. New & significantly improved forms of organisation, business structures or practices & marketing concepts or strategies; 4. Activities in areas such as internal R&D, training, acquisition of external knowledge or machinery & equipment linked to innovation activities . Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  7. 7. OMIIR Manufacturing Innovation is (often) Tangible Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  8. 8. OMIIR Manufacturing - Simplified Production Consumption Process Innovation Product Innovation Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  9. 9. OMIIR (Some) Services - Simplified Consumption Production / Service Innovation Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  10. 10. OMIIR Service Innovation is (often) Intangible -harder to visualise Though some things that happen can be captured Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  11. 11. OMIIR Containerisation Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  12. 12. OMIIR Offshored call centre Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  13. 13. OMIIR Financial Services Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  14. 14. OMIIR And more… Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  15. 15. OMIIR It’s relatively easy to depict services’ new use of technology Technology for delivering services – transport and information systems – platforms and devices. New infrastructures New services that have a high codified visual information content New service operations (literally in the case of surgery)/ Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  16. 16. OMIIR Innovation can be technique, rather than technology Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  17. 17. OMIIR It’s possible to represent service activities, and innovations in them, via service blueprints Source: Nadin Dörner, Oliver Gassmann, Heiko Gebauer, (2011) "Service innovation: why is it so difficult to accomplish?“ Journal of Business Strategy, Vol. 32 Iss: 3 pp. 37 - 46 Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  18. 18. OMIIR Clarifications and Distinctions Service innovation versus innovation in services Ambiguities in the words “service” and “services” Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  19. 19. OMIIR What are Services? “Intangible Statistical goods” or • Compare to • Compare to something Categories manufacturing goods - industries more?/ - Innovation Service in Services product innovations Industries Products SERVICE Relation- Journeys ships • Extended • Linkage More than process of between activities customer and SERVICE repeat supplier rather than purchases ServiceS? Services as doing things, as opposed to making things. Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  20. 20. OMIIR Service Industries - Statistics Sections NACE Rev 1 G • Hotels and Restaurants (HORECA) H • Transport, Storage Industries I • Financial Intermediation (FI... J • Real estate, Renting (…RE), Business Activities Includes KIBS • Wholesale & Retail Trade; Repair of .Motor Vehicles, Motorcycles and K Personal & Household Goods L • Public Administration and Defence; Compulsory Social Security M • Education N • Health and Social Work O • Other Community, Social and Personal Service Activities Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  21. 21. O Service Industries – New StatisticsMIIR NACE Rev 2 G • Hotels and Restaurants (HORECA) H • Transport, Storage I • Financial Intermediation (FI... J • Real estate, Renting (…RE), Business Activities Includes KIBS • Wholesale & Retail Trade; Repair of .Motor Vehicles, Motorcycles and K Personal & Household Goods Industries L • Public Administration and Defence; Compulsory Social Security M • Education N • Health and Social Work O • Other Community, Social and Personal Service Activities Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  22. 22. OMIIR Services from Manufacturing Products “Servicisation” Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  23. 23. OMIIR What are Service Activities? Service Products – getting things done Service Activities as doing things, as opposed to making physical things. Transforming people artefacts information Service innovation: New or improved “things” New or improved “ways of doing things” Different innovation patterns related to different transformations Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  24. 24. OMIIR Broad Innovation Trajectories Service Products – getting things done Service Activities as doing things, as Personal, health services Trade, repair, transport services Communication, finance, business services opposed to making physical things. Transforming people artefacts information • Bio- Psycho- and • Physical, • Data and Symbol Social Chemical Transformations Transformations Transformations • INFORMATION Service innovation: • MANY SPECIFIC • ENERGY AND AND TECHNOLOGIES MOTOR COMMUNICATION New or improved Surgery; e.g. “things” TECHNOLOGIES • TECHNOLOGIES INSTITUTIONS & MATERIALS… • ORGANISATION New or improved “ways of doing things” SOCIAL STRUCTURES ROUTINES Different innovation patterns related to different transformations Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  25. 25. OMIIR Traditional view of service innovation Approaches to Services Dismissal Increasingly hard to and as many more sustain this view as (with very few exceptions) traditional service technology-based sectors displayed services become Service industries play little considerable important to innovation in all role in (technological) technology adoption and sectors innovation innovation and can thus be ignored by innovation policy Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  26. 26. OMIIR New Perspectives on service innovation Approaches to Services A similar (not identical) Framework developed by approach had already R Coombs & I been developed in the Miles, 2000, “Innovation, 1990s by Gallouj – see Measurement and recent work like F. Services: the new Gallouj and F. Djellal problematique” in J S (eds) (2010). The Metcalfe & I Miles (eds) Dis- Dismissal Handbook of Innovation and Innovation Systems in the Service Economy missal Services, Edward Dordrecht: Kluwer Elgar: Cheltenham Syn- thesis Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  27. 27. OMIIR Assimilation Perspective ApproachesServices are to Services “Service innovation qualitatively is not distinctive; it distinctive, due to especi can be studied and ally due to INTANGIBILTY organised in ways INTANGIBILTY, IN and familiar from TERACTIVITY, etc INTERACTIVITY : .  different forms different forms of analysis of of innovation & innovation and Dis- Dismissal manufacturing” innovation missal process Tend to focus on techno- Syn- logical innovation thesis (though some theorists insist this is distinctive) Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  28. 28. OMIIR Services: Innovators like any others? Innovation in Service firms is now accepted and measured using standard tools On average, service industries are slightly less innovative than manufacturing, substantially less likely to undertake R&D or take out patents Some service sectors UK CIS 2007 are highly innovative (like high-tech?), others much less so (and so Is this a interpret in terms of policy problem “barriers” like small ? scale, difficult processes) Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  29. 29. OMIIR Services: Innovators like any others? Innovation in Service firms is now accepted and measured using standard tools On average, service industries are slightly less innovative than manufacturing, substantially less likely to undertake R&D or take out patents Maybe this suggests problems with the R&D and patent systems themselves – too restrictive in what you can count as R&D, or patent as innovation Experiments with wider definitions, new types of patent Is this a policy or innovation support tool – versus - problem ? Education and awareness raising among services Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  30. 30. OMIIR Demarcation Perspective “Services are Approaches to Services Service qualitatively innovation is not distinctive, distinctive; it can especially due to be studied and features of organised in Much INTANGIBILTY, INTERACTIVITY, ways familiar discussion of service etc.  different Dis- Dismissal from analysis of specificities forms of missal manufacturing (and the innovation & huge innovation diversity process” across services) in Syn- marketing thesis and management research as well as innovation studies Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  31. 31. OMIIR Services - Beyond Manufacturing, Not just Intangible Goods Classic distinctions - between Product and Process Innovation (as in Innovation Surveys) and Incremental and Radical Innovation - are problematic because of: Customisation & Specialisation of Service Products in Business Services like consultancy, but also in the “experience economy” (Pine and Gilmour, etc) Pine II, B., & Gilmore, J. (1998) “Welcome to the experience economy”, Harvard Business Review, 76(4), pp97-105 Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  32. 32. OMIIR Services - Beyond Manufacturing, Not just Intangible Goods Classic distinctions - between Product and Process Innovation (as in Innovation Surveys) and Incremental and Radical Innovation - are problematic because of: Customisation & Specialisation of Service Products • Manufacturer Involvement of Client/Customer: • Good Blurring of Product and Process (service • Consumer experience) Coproduction of Service and Value • Service Firm • Service Innovation in Delivery and at Supplier- -Customer Interface • Consumer Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  33. 33. OMIIR Services - Beyond Manufacturing, Not just Intangible Goods Classic distinctions - between Product and Process Innovation (as in Innovation Surveys) and Incremental and Radical Innovation - are problematic because of: Customisation & Specialisation of Service Products Involvement of Client/Customer: Blurring of Product and Process (service experience) Coproduction of Service and Value Innovation in Delivery and at Supplier-Customer Interface Technology Focus – but also innovation in business models, marketing, etc. Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  34. 34. OMIIR Different Innovation Styles (INNOVA survey) “Which of these areas are your innovation efforts focussed on?” PROCESS Max. choice = 2) Product + Process PRODUCT Services Manufacturing Organisation + Product Organisation + Process ORGANISATION 0 5 10 15 20 25 30 35 40 Howells, J. and Tether, B. (2004) Innovation in Services: Issues at Stake and Trends Inno Studies Programme (ENTR-C/2001), Brussels:.Commission of the European Communities available at: http://www.cst.gov.uk/cst/reports/files/knowledge-intensive-services/services-study.pdf Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  35. 35. OMIIR Do we need different models & metrics for service innovation? There have been some efforts to create specific models – for example the Reverse Product Cycle approach*. (This is still very popular, but mainly focus on learning processes consequent upon adoption of new IT – from back- office efficiency to new front-office services.) There have been numerous specific services innovation surveys – now largely incorporated into CIS. (Public services now * Barras, R. (1990) „Interactive Innovation In Financial under examination.) And Business Services: the vanguard of the service revolution‟, Research Policy, vol.19, pp. 215-237 Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  36. 36. OMIIR Service Production [Rob Glushko has written extensively The Service on front and back Business Partners Product: stage processes often in service design] coproduced [in the service relationship] Back Front Office User Office (wider user (back (front communities) stage) stage) The Service Organisation Employees Organisation Infrastructure Infostructure Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  37. 37. OMIIR Exploring Service Innovation 6 Dimensions from den Hertog Value Business Partners Chain/ System Revenue Customer Model Interaction Back Front Office User Office (wider user (back (front communities) stage) stage) Delivery Service (Organisation) Concept Employees Delivery Organisation Infrastructure Infostructure (Technology) Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  38. 38. OMIIR den Hertog: 6 dimensions of SI P den Hertog, W van der Aa, M W. de Jong, (2010) An "Capabilities for managing Value innovation service innovation: towards Chain/ MAY a conceptual framework" System involve just one dimension Revenue Customer Model Interaction But many innovations Delivery Service are multi- (Organisation) Concept dimensional Journal of Service Management Delivery Vol. 21 (4) pp.490–514 (Technology) Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  39. 39. OMIIR Capabilities for Service Innovation Partnering, Value M&A, procur Chain/ Marketing ement System Revenue Customer Model Interaction Sales, Finance, after strategy sales Delivery Service (Organisation) Concept HRM Delivery Technology (Technology) Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  40. 40. OMIIR How service innovation takes place R&D structures (managers, labs…) are rare outside of the high-tech services and/or very large service organisations Innovation organisation is often via project teams or similar “transient” arrangements Much innovation is “ad hoc”, on-the job, “in-practice”; such innovation is often “lost” and not replicated. (Scope for using new knowledge management approaches here.) Scaling up can be a major problem. Professional associations and similar networks often transfer innovation-relevant knowledge – but otherwise services are poorly linked to “systems of innovation”. Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  41. 41. OMIIR Features of service innovation Information Technology is pervasive, and will provide ongoing opportunities (and raise issues of heritage, standards, security, etc.) Service innovation trajectories include: self-service and coproduction (often using IT); 24 hour –isation; mobility; industrialisation (modularisation and mass customisation) but also specialisation and value-added services; Greater division of labour, use of paraprofessionals. Organisational innovation is typically especially important – but innovators tend to be active on most fronts New service design communities, methods and principles are emerging Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  42. 42. OMIIR Service Design – Communities, Networks From industrial and informatics design, using approaches developed in creative industries, interaction design, etc… Using methods such as: -Blueprinting -Storyboarding -Simulation -User engagement, ethnography.. -- Prototyping, assessment… Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  43. 43. OMIIR Approaches to Services A Synthesis? Exploration of Service Innovation has identified aspects of innovation that are generically important – not just to services Innovation analysis – and measurement and policy – needs to account for all of these aspects (or if not, to explain why some sorts of innovation are privileged) All sectors have Dismissal Dis- Services become diverse features, more technology- and many “service” missal intensive and elements “industrialised” Synthesis “Servitisation” (Knowledge of intensive) manufacturing service activities Demarc- Assim- ation ilation Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  44. 44. OMIIR Sectoral convergence and differentiation • Similar technology, some similar applications • White collar workforces and offices • Customer orientation • Customisation (“post-Fordism”) • Many ways in which manufacturing and services look more alike (1) Standardisation • Services become “productised” (2) /mass production Service package • Other sectors “servicised”. includes physical product Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  45. 45. OMIIR Services are extremely diverse Which is bound to lead to diverse innovation levels and trajectories Consultancy Temporary Labour Restaurants Entertainment Solving business problems, providing customer experiences, supporting government functions Pubic Services Administration [Markets] Transforming the state of Artefacts, of People, of Finance Repair Transport Health Symbols Telecommunications [Products and Technologies] Using the most and least knowledge-intensive employees, in tasks from the most sophisticated to Catering the most routine Cleaning Engineering Design [Skills and Work Organisation] Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  46. 46. OMIIR Services Skill Levels vary widely EU, 2000 Also high growth (skills indicative of specialisation?) More routine 100 (informational 90 activities can Low skill intensive often be 80 offshored) 70 Medium 60 skill Low skill 50 intensive share 40 Medium skill 30 share 20 The most high-skill High skill 10 intensive sectors share transformations – require 0 mobility or presence social services Education intermediation administration communication Business restaurants and households Hotels and Wholesale and services Other services Transport and More physical Health and retail trade Financial Public EU, 2000 Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  47. 47. OMIIR Roles for: • Enterprises • Government Implications • Research and Training It is time to recognise the importance of service innovation (challenge for managerial assumptions – rise of service dominant logic and SSME) Organisational and other innovations should not be neglected (challenge for innovation policy) But there is an ongoing wave of technological innovation in services (challenge for ICT sectors to reach SMEs, public services - and to build in service design principles) Both are important for the whole economy as well as for social wellbeing and confronting grand challenges Complex skills are often required, combining knowledge and capabilities for dealing with business and end-users, and integrating the competences of different professions in service systems (challenge for training) Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  48. 48. OMIIR Some additional slides follow END OF PRESENTATION Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  49. 49. OMIIR UK data CIS4 results 80 70 Computer Sers. Telecomms 60 R&D Financial sers. 50 Architecture Wholesale Manufacturing Real Estate Legal Sers. 40 Other Business Sers. Extractive, Construction, Labour Recruitment Vehicle trade Utilities 30 Other Transport sers. Retail HORECA 20 Courier + post Miles, I. (2008) “Patterns of innovation in service 10 industries” IBM Systems Journal Vol. 47 No. 1 pp 115- 128; available at http://www.research.ibm.com/journal/sj/471/miles.html 0 0 10 20 30 40 50 60 70 80 Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  50. 50. OMIIR Some types of servicisation Embedded services Software, comms, content [e.g. Kindle] Product services: Aftersales, software complementary to the sales, systems goods; aiding users; integration and adding more value; management support services, KIBS Servitising goods: Pay for service, not not rental good Process services: selling business Testing, production, processes comms, marketing Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  51. 51. OMIIR Andy Neely - services from primary and secondary sector firms OSIRIS data on >12,000 listed companies with >100 employees Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  52. 52. OMIIR “Servitised” IT firms seek to set agenda Influencing policymakers, educators and research funders: 1)Need for better skills & analysis to meet challenges of service economy and innovation; 2)Offering “solutions” to problems of service competitiveness & public service productivity issues.At: http://forums.thesrii.org/srii &http://www-304.ibm.com/jct01005c/university/scholars/skills/ssme/index.html between MBS Manchester and UNAM Mexico, Oct. 2012 Video Conference
  53. 53. OMIIR Perspectives on service innovation Approaches to Services policies Inspired by P den Hertog et al (2006) Research and Development Needs of Business Related Service Firms (RENESER Project) Delft: Dialogic innovatie & interactie Dis- Contrasted the three perspectives in terms of missal R&D, wider innovation, and non-innovation policies SYNTHESIS Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  54. 54. OMIIR Service innovation policies - Assimilation Service innovation is essentially like manufacturing innovation – but has been neglected in policies and innovation infrastructure. Thus there may well be elements of system failure to address, before “sector-neutral policies” are Dismissal genuinely so. Access is the issue. • Include service firms in R&D and innovation Synthesis surveys and support programmes – may require some new formulation and networking • Develop infrastructure and innovation systems to support service industries Dis- Demarc- • Support services (esp SMEs)in innovation ation missal develop management and entrepreneurship, Approaches to Services relevant training, etc. Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  55. 55. OMIIR Service innovation policies - Demarcation Approaches to Services Service innovation also has forms and methods very different from manufacturing innovation – overlooked in standard innovation indicators, instruments and tools. Need to address specific features of innovation (intangible, customer-interface Dismissal and interaction, and experience/content issues) and its management. Synthesis •Specific R&D and engineering programmes for service firms & public sector. Awareness raising •Adapt R&D definitions as applied in practice. •Service innovation programmes and centres, with more emphasis on user-driven innovation, etc.Dis- Assim- •New tools, techniques, communities of practice to be ilation missal supported, beyond R&D. Best practice and role models. • IP and Knowledge Management training and strategising. Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  56. 56. OMIIR Service innovation policies - Synthesis Approaches to Services SYNTHESIS All sectors liable to display multiple forms of innovation, combining technological, organisational, and business model innovation. Service activities as elements in and beneficiaries of innovation systems. Services as part of service systems, including those Dismissal constructed to confront grand challenges • Integrate nontechnological and organisational issues into R&D programmes. •Support innovation in service activities •Support KIBS in innovation systems and clusters •User-driven, open and interprofessional innovation (inc Demarc- Dis- Assim- “living labs” and demonstrators) ation ilation missal and •Regulations, standards, procurement, legal financial support (including accounting for intangibles). Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  57. 57. OMIIR There have been many recent overviews of policy rationales, approaches... Before these, SIID Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  58. 58. OMIIR Western countries have adopted various approaches Several countries (UK, Eire, Netherlands) launch studies; Sometimes specific sectors are addressed (creative industries, health, etc,) R&D and related policy initiatives for services, including “service engineering” Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  59. 59. OMIIR R&D Policy Initiatives – e.g. BMBF Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  60. 60. OMIIR Finland - TEKES Launched 2006; euro100m over 5y;‟ TEKES pays 50% Mainly B2B IPPS funded from this to explore policies Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  61. 61. OMIIR Shifting focus? Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  62. 62. OMIIR Service Innovation Policy or C21st Innovation Policy? • Technological AND organisational innovation • R&D AND wider innovation support • Supply and demand side • User driven AND professional innovation intelligence (open innovation) • Multidiisciplinary and multiprofessional innovation teams • Tackling major socieconomic challenges • From individual and narrow policies to framework conditionsKuusisto2008 Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012
  63. 63. OMIIR End of extra slides Video Conference between MBS Manchester and UNAM Mexico, Oct. 2012

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