Innovation in the service sector


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Dr Palie Smart, Senior Lecturer in Strategic Innovation Management at Cranfield University, speaking at a workshop on innovation hosted by the West Midlands Regional Observatory in Birmingham on 19 March 2009.

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Innovation in the service sector

  1. 1. Innovation in the service sector Dr Palie Smart, Cranfield University A presentation given at Innovation Day, 19th March 2009. This presentation forms part of the Observatory’s ongoing State of the Region dialogue between policy makers and researchers on the theme of innovation.
  2. 2. Service Innovation Dr Palie Smart Senior Lecturer in Strategic Innovation Management
  3. 3. Innovation • Innovation driving UK economy • 2003 Innovation Review • Focus on manufacturers • NESTA Hidden Innovation • 2003 Innovation Nation • Innovating in a recession
  4. 4. Defining Innovation R B ER s, the first step ea “innovation is often confused with invention - but the latter is only id of in a long process of bringing a good idea to widespread and effective use.” on Tidd et al (1997:24) “invention refers to the development ta tinew idea or an act of creation” whereby, “innovation refers toplo i of a ex the commercialising of the invention” ul Ahuja & Lampert (2001:522) sf conception + technical invention + commercial es “ innovation = theoretical cc Su exploitation Trott (1998:12) “innovation is one percent inspiration and ninety-nine percent perspiration” Norville Barnes “The Hudsucker Proxy”
  5. 5. Service innovation What do we know already? • Product centric innovation and manufacturing • Product Service Systems (Product-service bundles) • Generic innovation management models • Trends e.g. customisation • Services are different
  6. 6. Multi-dimensional innovation Taxonomy Most innovation research focuses on ‘product’ Continuous Discontinuous • Product* • Process • Placement • Proposition *Good or Service
  7. 7. Innovation management process Core renewal strategy market creativity process execution product profit culture inter-organisational network
  8. 8. What are services? • Service is a verb • Primary offerings are intangibles: experience-based products that can not be touched • Services are something that can be bought and sold but which you cannot drop on your foot (Gummersson, 1987) • Different types of services and wide range of sectors
  9. 9. Service Characteristics • Intangibility • Inseparability / jointness • Variability • Perishability
  10. 10. Service augmentation Storey and Eastwood, 1998 • Greater service provision • For both product and services innovators • Core good/service product • Production and delivery of the service • Servicescape ambient conditions, spatial layouts, symbols • Role of design
  11. 11. Servitization of manufacturing Augmentation • Rolls Royce • Earned more revenue from services operations • Power by the hour • Integrated Vehicle Health Management (IVHM) • Business model innovation
  12. 12. From closed to open innovation • Re-thinking idea generation and channels to market • Harnessing external idea, while leveraging their in-house R&D outside their current operations PROFESSOR, UC BERKELEY HAAS BUSINESS SCHOOL • ‘Closed’ to ‘Open’
  13. 13. Open Innovation P&G • Connect & Develop (C&D) • Head of External Innovation • Discontinuity Boot Camp • 50% of ideas for new products and technologies must come from outside the firm • Communities of Practice • Technology entrepreneurs
  14. 14. Open innovation In services • Manufacturing: supply side, co-development • Services: demand side • Multiple touch points • Broad scope and potential • Highly experiential • User labs, on and off-line • Experimentation, prototyping; BBC Backstage
  15. 15. Open Innovation with Not for Profit • M&S and Breakthrough Breast Cancer UK • 2006 launch of a range of lingerie for those who have had breast cancer surgery • Developed with post-operative women • Scope for social innovation • Social legitimacy as acting innovation capital
  16. 16. e-R&D Networks
  17. 17. e-R&D You Tube
  18. 18. User Involvement Miele • Focusing on ‘Hidden Needs’ • Allergy market products
  19. 19. User Involvement AXA • Removing barriers to innovation
  20. 20. Trends and Drivers • Customisation in goods • My car • Customisation in services • iPod • Personal shopping • Healthcare (self care) • Fitness • Personal banking / financing
  21. 21. Organisational Vigiliance Search •Horizon scanning, Foresight, DTI
  22. 22. Search for synergies • What could Flymo learn from biotech sector • What could Direct line Insurance learn from NHS • Platform, generic technologies/know-how? • LED lighting • Stem cells
  23. 23. Challenges • Designing services • Link to science and technology base • Technology • Total immersion in user experience (laboratory) • Social innovation • Broaden scope for innovation dimensions • Investing in the Innovation Nation
  24. 24. Contact details Dr Palie Smart Senior Lecturer in Strategic Innovation Management Cranfield University E T +44 (0)1234 754757 Web Brian MacAulay Senior Intelligence Analyst West Midlands Regional Observatory E T +44 (0)121 202 3247 Web Blog