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In this paper, we will first define the service development process and its phases andintroduce the categories of success factors which will be used as a framework lateron. Subsequently, we will explain our search methodology as well as relevant sampleinformation. Thereafter, we will present the results of the study with the most im-portant success factors and the most frequently mentioned influential factors. In con-

clusion, our paper finishes by discussing implications for managers, research limita-tions and suggestions for further research.

2. NSD success factor classification framework

In this section, we present the process of new service development in order to pro-vide a basis for understanding the classification framework for NSD success factorsand subsequently introduce the framework itself.

2.1. The NSD process

The process of developing new services can be defined and visualized in processmodels. These models specify the development phases which have to be completedfrom the initial idea until the final launch of the service (Bullinger and Schreiner,2006). Such a NSD process model is shown in Figure 1:

Fig. 1: Process Model for the Systematic Development of Services. (Bullinger and Schreiner, 2006)


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In the start phase, new service ideas are generated. These ideas are analyzed interms of the costs and time required, and the risks involved. The most promising ide-as are selected and an assessment of initial business opportunities is performed(Song et al., 2009). Thereafter, the specifications of the new service, i.e. resourcesrequired, the service delivery process, market measures, and performance expecta-

tions, are defined. After the necessary resources have been allocated to the task, afinal test of the service specifications is performed in order to detect possible weak-nesses(Bullinger and Schreiner, 2006). If the specifications pass the testing phase,the new service is finally introduced to the marketplace.

2.2. Classification framework for NSD success factors

Business processes are defined by the input provided for the process, the processitself, and the output generated from the process. Hence, it seemed appropriate toclassify the factors determining the success of the NSD process accordingly.

The impact of a companys strategic measures on its ability to generate new servicesis not well understood (Froehle et al., 2000). Hence, it was our intent to identify fac-tors which have an effect on NSD, but which originate before the actual start of thedevelopment and on a more general, organization-wide basis. We classified suchfactors as Antecedents of service success. The second group, NSD Process Suc-cess Factors, encompasses all factors which refer to the development process itself,the actions taken, and resources used. These factors are influenced by the anteced-ents and determine the success of the service being developed. In order to guideactions during the NSD process, it is important to determine which characteristicsdifferentiate a successful service from an unsuccessful one. Hence, our third group of

success factors, Service Success Factors, is targeted at such characteristics.

Figure 2 provides an overview of the identified categories of NSD success factorsand their point of emergence relative to the service development process presentedin Section 2.1.

Fig. 2: NSD Success Factor Categories


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3. Methodology

We conduct a structured literature review of articles covering NSD success factorsbased on the methodology by David and Han (2004) and modified by Newbert

(2007). In order to find a representative sample of studies in an objective way, thesearch for literature was performed in the SciVerse Science Direct database via thefollowing set of criteria:

In order to achieve substantive relevance of the search results, it was decidedthat the title, abstract, or keywords of the article had to contain the term servicedevelopment, or one of the terms which are frequently used as synonyms forNSD: service innovation and service engineering.

In order to eliminate substantially irrelevant articles and assure proximity of re-search subjects the title, abstract or keywords of the articles had to containphrases which included the term success.

The title, abstract, or keywords of the articles had to contain phrases enacting aninfluence on success.

A fourth group of methodological search terms was included in order to ensurethe occurrence of empirical data.

These results were refined to include only published journal articles.

All results providing the full text of the articles were extracted.

Unsuitable articles were excluded after screening of titles, abstracts, and full arti-cles.

Additional studies from the reference lists of the reviewed articles were included ifdeemed appropriate.

Table 1 provides a list of the keywords used in the search:

1st set: Subject-Related Keywords Service Development

Service Engineering

Service Innovation2nd set: Success-Related Keywords Performance

Efficiency

Efficacy

Quality

Result*

Excellence

Success

Outcome*

Output


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3r set: Influence-Related Keywords Variable*

Dimension*

Measure*

Criteri*

Element*

Parameter*

Factor*

Determinant*

Characteristic*

Specification*

4th set: Data-Related Keywords Data

EmpiricalFinding*

Test

Statistical

Result*

Evidence

Table 1: Keywords Used in the Search

The search resulted in a total of 48 articles. Table 2 shows the total number of re-

maining articles after every step:

STEP CRITERION NUMBER OF RESULTS

1 1st set of keywords 4,213

2 2nd set of keywords 2,128

3 3rd set of keywords 906

4 4th set of keywords 697

5 Only journal articles 455

6 Full article available 297

7 Titles screened 140

8 Abstracts screened 57

9 Full articles screened 40

10 Relevant articles added 48

Table 2: Results After Each Step

The remaining sample of articles was analyzed according to information regardingthe origin and focus of literature on NSD success factors.


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Fig. 3: Journals Represented in This Study

Figure 3 illustrates the number of articles published per specific journal. A broadrange of journals have published articles on the topic of NSD success factors. Thejournal which published the most articles on this topic is the Journal of Product Inno-vation Management. We will therefore assess the influence of articles from this jour-nal on the overall results of this study in the discussion of every success factor cate-gory.

As previously explained, we ensured that all success factors were empirically con-firmed in their respective articles. Hence, qualitative and quantitative studies were

considered. Figure 4 presents the respective amount of studies which use qualitative,quantitative or both methods in order to find relevant success factors. Overall, thisreview contains 8 qualitative and 37 quantitative studies, as well as 3 studies whichapplied both methods.


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Fig. 4: Research Methods Applied in Studies Reviewed

Previous literature reviews have mentioned a bias of NSD literature towards the fi-nancial services industry (e.g. Johne and Storey, 1998). If one industry played adominant role in this study it might have a negative influence on the generalization ofthis reviews results. Figure 5 illustrates the industries researched:

Fig. 5: Overview of Industries


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Figure 4 demonstrates that the focus is indeed on the financial services industry,which was reviewed in 11 studies. However, we generated a sample covering multi-ple sectors of the economy, including a block of 15 studies which also reviewed mul-

tiple sectors themselves. Hence, we do not expect the industry focus to bias our re-sults.

4. Results

The most frequently mentioned factors will be explained in this section. In order to beable to explain causalities connecting different categories of success factors, they willbe presented in reversed order. The success factors which emerged from the studywere categorized into three factor families according to their point of occurrence dur-

ing the process of developing new services. The first category, Antecedents of NSDSuccess, contains all factors describing pre-conditions in an organization which con-tribute to a supportive environment for developing services. These factors cannot beinfluenced during the development process. The second category, NSD ProcessSuccess Factors, includes factors which have a positive influence and can be appliedand controlled during the process of developing the new service. The third category,Service Success Factors, covers attributes describing a successful service. Due tothe fact that these aspects have to be considered and implemented during the devel-opment process, they were included in the comprehensive overview of NSD successfactors.

4.1. Service Success Factors

A service entails a unique experience between the service provider and service cus-tomer. The constellation of features and characteristics inherent in a service offeringtakes place during its development. Hence, it is important to be aware of certain ele-ments which contribute to the success of a service while designing it. In total, 13studies identified Service Success Factors. Figure 6 presents an overview of thesefactors and the number of studies which identified each factor. The most frequentlymentioned Service Success Factors are presented in this section.


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Fig. 6: Service Success Factors

According to our review, one main contributor to success is a unique or superior ser-vice. Providing a better or distinctive product can be achieved in various ways suchas making it adaptable and updatable to specific and changing customer needs, us-ing innovative technology (Cooper et al., 1994), providing superior quality(Easingwood and Storey, 1993), or offering superior core attributes and supportingservices (Melton and Hartline, 2010).

In addition to project synergy, ensuring product synergyis another crucial factor forthe success of NSD. Successful services fit their designated markets (De Brentani,1991, De Brentani, 1989) and customers (Cooper and de Brentani, 1991, DeBrentani, 2001) and are compatible with the organizations other products, marketingstrategy (Easingwood and Storey, 1993), resources (De Brentani, 1989) and capa-bilities (Ottenbacher and Harrington, 2010).

Employee expertisehas been identified as another important factor impacting NSDperformance. Service personnel should demonstrate strong behavioral competen-cies in order to gain the trust of customers (Neu and Brown, 2005). Employees are

able to make a difference whenever they are in direct contact with the customer byexuding motivation (Neu and Brown, 2005),friendliness, courtesy, and efficiency(Cooper et al., 1994). Moreover, the ability to understand the customers problemsand needs is essential in fulfilling their expectations of the service offering. Extensivetechnological knowledge (Neu and Brown, 2005) might also be required with certaintypes of services.

Tangible evidencewas identified as a success factor in two studies. Both of thesewere published in the Journal of Product Innovation Management (Cooper and deBrentani, 1991, De Brentani, 2001). Tangible evidence is the only factor in this studywhich is reviewed in detail although it was only addressed in one journal. Since ser-

vices are intangible, generating tangible cues and a clear product identity to help thecustomer visualize the offering and thus evaluate its benefits, are crucial for the suc-cess of service offerings (De Brentani, 2001).


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Service Success Factors may be understood as characteristics of a successful ser-vice. The basis for these characteristics is set during the NSD process, where theservice system is designed, target markets are determined, and employees aretrained.

4.2. NSD Process Success Factors

NSD process success factors influence the effectiveness and efficiency with whichthe service success factors are implemented. These factors have to be influencedduring the development of the service. NSD Process Success Factors are the largestgroup of success factors and are addressed in 40 of the 48 papers. Figure 7 illus-trates the number of studies in which each factor has been mentioned:

Fig. 7: NSD Process Success Factors

Two factors represent the role of employees in NSD, employee involvementandemployee expertise. Employee involvement refers to the participation of front-lineemployees in the development process. In addition to motivating front-line personnel,it is also crucial to ensure a high level of expertise among the employees conductingthe development activities (Blindenbach-Driessen and van den Ende, 2006, Neu andBrown, 2005, Leiponen, 2006, De Brentani, 2001).To foster employee expertise,training measures are conducted to inform employees about the service product andinfluence their delivery of the new service offering. Moreover, extensive internal mar-keting is conducted to raise support and enthusiasm for the product (Cooper et al.,

1994, De Brentani, 1989, Lievens et al., 1997, Melton and Hartline, 2010, Ordaniniand Parasuraman, 2011, Ottenbacher and Harrington, 2010, Song et al., 2009).


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Furthermore, the process of NSD needs to have an appropriatelevel of formalization.While there is evidence that highly formalized development processes make a posi-tive contribution to the speed of a firms NSD efforts (Froehle et al., 2000, Buganzaand Verganti, 2006, De Brentani, 2001), this does not apply to all development pro-jects. Especially in turbulent environments and for more radical innovations it seems

to be advantageous to implement non-formalized approaches, for example by adopt-ing a new process setup for every project and setting less rigid timelines (Storey andHull, 2010, Blindenbach-Driessen and van den Ende, 2006).

Management measureswhich promote the success of development projects rangefrom behavioral issues, such as the strong and visible support of innovation (Edgettand Parkinson, 1994) or the display of a risk-taking and innovation friendly attitude(Ko and Lu, 2010), to more concrete measures such as implementing a developmentcommittee and a project champion (Blindenbach-Driessen and van den Ende, 2006)or staff evaluation from a customers point of view (Ottenbacher and Gnoth, 2005).

Several authors have found a positive impact of customer involvementin variousstages of the development process (Cooper and de Brentani, 1991, Magnusson,2009, Melton and Hartline, 2010, Lin et al., 2010). Especially in the stage of ideageneration and screening customer involvement seems to make a significant contri-bution (Melton and Hartline, 2010, Magnusson, 2009, De Brentani, 1991). Moreover,the participation of customers in the development process seems to have a signifi-cant impact on service marketability (De Brentani, 1991), launch preparation (Meltonand Hartline, 2010), operational outcomes and innovation volume, but no impact oncompetitive superiority and sales performance and even a negative impact on theradicalness of innovations (Carbonell et al., 2009).

Market orientationconcerns understanding consumer-requirements and desires, aswell as taking competitors into account (Cooper et al., 1994, Ottenbacher andHarrington, 2010). Market orientation is especially important for the identification ofmarket opportunities in the process of idea evaluation and the test of already devel-oped concepts (Song et al., 2009). Planning proactively and foreseeing markettrends gives companies the ability to act as a first mover, thereby giving them an ad-vantage in market entry (Limpibunterng and Johri, 2009). The processes of infor-mation acquisition, diffusion, and utilization associated with market orientation eitherdirectly or indirectly influences the likelihood of success for a new service (Van Rielet al., 2004).

The synergybetween the development project and its environment also determinesthe success of NSD. As our review indicates, it is important to ensure a general fitwhich includes both external (market) and internal (organizational) dimensions. Theproject should respond to the demands of the marketplace, constituting a response tounderstanding and operationalizing actual changes in consumer needs (Ottenbacherand Gnoth, 2005, Ottenbacher et al., 2006). Internal synergy entails aligning the vari-ous resources of a company (De Brentani, 1991, Cooper et al., 1994, Cooper and deBrentani, 1991) and at the same time, the project must take into account corporate-internal organizational aspects, such as the service delivery system (Cooper and deBrentani, 1991), the marketing mix (Ottenbacher and Gnoth, 2005, Ottenbacher etal., 2006) or the IT system (Bardhan et al., 2007).

Cross-functional involvementis a success factor which has an impact during all stag-es of the development process: from idea generation to service launch (Avlonitis et


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al., 2001). Development teams should consist of members of different functional are-as in order to identify potentials and problems as early as possible, thereby avoidingcostly and time intensive rework. Although there might be time delays to the projectbecause the entire process becomes more complex, cross-functional work appearsto be more efficient and is more likely to achieve customer satisfaction (Froehle et al.,

2000). Cross-functional involvement seems to be important in companies which relyheavily on tacit knowledge, where the codification of information is difficult (Storeyand Hull, 2010).

The process qualityis determined by the emphasis put on the development phasesand the assiduousness with which actions within these phases are carried out. Thisfactor is important in all phases from idea generation and analysis to concept devel-opment, testing, and launch (Avlonitis et al., 2001).

4.3. Antecedents of NSD success

These success factors refer to general organizational aspects such as corporate cul-ture, structure, and organizational capabilities. A total number of 23 studies men-tioned factors which were classified as Antecedents. Figure 8 depicts the number ofarticles which identified the respective Antecedent as a success factor:

Fig. 8: Antecedents of NSD Success

Market orientationseems to be the most prominent Antecedent of successful NSD.Atuahene-Gima (1996) defines market orientation as the organization-wide collectionand dissemination of market information, as well as the organizational responsive-ness to that information. Aspects of market orientation include a strong commitmentto market research (Easingwood and Storey, 1993), the ability of the service organi-zation to correctly evaluate the competitive environment, and the capacity to antici-

pate and respond to changing expectations of customers (Menor and Roth, 2008). Ahigh degree of market orientation was stated to have a positive effect on variousmeasures of success, such as the internal innovation-marketing-fit, customer perfor-


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mance and the overall project impact (Atuahene-Gima, 1996), as well as the align-ment of strategy with a complex market (Neu and Brown, 2005) and financial perfor-mance (Lonial et al., 2008). However, there is disagreement regarding the influenceof market orientation on the degree of innovativeness of the developed services.While Atuahene-Gima (1996) concludes a negative influence, Ordanini and Par-

asuraman (2011) suggest that customer orientation fosters radical innovation.

Technologyas a success factor is characterized by a companys ability to use tech-nology in developing and delivering services (Neu and Brown, 2005). Innovation anddevelopment processes especially benefit from the use of technology when high lev-els of synergy, usability, and support are achieved (Froehle et al., 2000). For exam-ple, by applying more advanced marketing information systems based on the dataacquired from their customers, companies are able to create more service innova-tions to explore potential markets (Lin et al., 2010).

Knowledge managementis about gathering useful information internally and exter-

nally and making it available to the right people in the company. The basis for suc-cessful knowledge management is external knowledge sourcing (Leiponen, 2005). Inorder to ensure an effective diffusion of the knowledge gathered, a free flow of infor-mation (Van Riel et al., 2004) and collective ownership of knowledge (Leiponen,2006) should be promoted.

The organizational cultureis another important factor. Liu (2009) defines a supportiveculture as a construct of complementary dimensions consisting of innovative support-ive culture, market orientation culture, learning culture, and customer communicationculture. However, de Brentani (2001) describes it as a highly creative and supportiveenvironment created by management. Hence, having the right culture in a companysupports essential NSD competencies such as market orientation and customer in-volvement.

By aligning human resource management to strategic business planning and makingit flexible to changing market needs, strategic HRMconstitutes an important organi-zational capability (Ottenbacher and Gnoth, 2005). It serves as a prerequisite for thesuccessful creation of project and product synergy with the companys resources inthe latter stages of service development. Furthermore, continuous development ofemployee expertise fosters the understanding of consumer preferences and im-proves the technical and managerial skills needed for successful service develop-ment (Limpibunterng and Johri, 2009).

4.4. Influential factors

Having identified critical success factors for all three categories, it is important toknow whether the importance of these factors varies depending on certain external orinternal influences. Storey and Hull (2010) stated that it is not possible to use a onesize fits all-approach when developing services. In order to provide additional infor-mation on the influences of NSD and its success factors, we present such influentialfactors which emerged throughout our study in the next chapter.

Storey and Hull (2010) conducted a useful study which investigated the effect of dif-ferent organizational knowledge management strategieson the process of servicedevelopment. They state that for firms which rely mainly on personalized information,


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where services involve personal interactions and intangible factors, there is an in-creased need for the formation of cross-functional teams. Moreover, the fuzzy natureof most development projects also calls for a more disciplined approach. In contrast,if information within a company can easily be codified, this calls for an increased au-tomation of processes, resulting in a greater need for investments in technology.

However, there are also determinants impacting the relative importance of NSD suc-cess factors which are independent from the service strategy chosen by the organi-zation. De Brentani (2001) explained that with a high degree of innovativenessof thenew service, there is the need for the executive management to create a supportiveand creative environment for service development, hence alternating the compositionof Antecedents for NSD. Avlonitis, Papastathopoulou et al. (2001) elaborated on theinfluence of innovativeness in the various stages of service development. These au-thors state that an emphasis on business analysis and marketing helps achievemanagement expectations when developing incremental innovations, while cross-functional collaboration is especially important for radical innovations. Another con-

sequence of variations in the degree of innovativeness affects the need for formaliza-tion of the development process. Highly formalized processes seem to help improv-ing the efficiency in developing incremental innovations and innovations which arenew to the company but not to the world (De Brentani, 2001, Froehle et al., 2000,Avlonitis et al., 2001).

Process formalization should be adapted to the turbulence of the market environ-ment. According to Buganza (2006), a highly formalized approach, including prede-fined activities, phases, and timeframes, is inappropriate for developing products andservices in volatile environments. Market turbulence also impacts group collabora-tion. Such approaches are more likely to be used to coordinate innovation processes

in turbulent project environments with low structure and high uncertainty (Bardhan etal., 2007). Furthermore, firms are more likely to involve customers in the develop-ment process as perceptions of technological turbulence increase (Carbonell et al.,2009).

5. Conclusion

The aim of this paper was to provide an overview and categorization of NSD successfactors prevalent in literature.

The fragmentation of the results indicates that knowledge about the factors responsi-ble for NSD success is limited. From a total of 52 success factors, only 23 were men-tioned in more than one study. Even the most frequently mentioned factors of eachcategory were only addressed in a relatively small amount of studies. This justifiesour initial intent of providing NSD with a comprehensive overview and structure offactors leading to a high performance of service development projects. The identifiedfactors were classified into three categories according to their emergence in the de-velopment process: Antecedents, NSD Process Success Factors and Service Suc-cess Factors. However, in different development projects, these factors can vary inrelevance, depending on various influential context factors. We described the influen-

tial factors mentioned in the studies, reviewed these factors, and highlighted adjust-ments which should be made to the development process. Hereby, this study adds to


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the body of literature stating that applying measures for NSD without taking influentialfactors into account might not lead to the desired results.

There are numerous areas for further exploration of NSD success factors. There stillis a need for investigation of context dependency since not all influential factors and

their type of impact are known. Regarding the limited amount of knowledge about theappropriate situational orchestration of success factors, future research should aim atconducting qualitative and quantitative research using heterogeneous samples ofcompanies, thereby paving the way for the development of a comprehensive modellinking NSD success factors to influential context factors.

Furthermore, we did not find resilient information about the cost-benefit relations forany of the success factors mentioned. Despite our broad sample of industries somesectors were not covered in this study at all. This indicates that there is a need forfurther research regarding NSD success factors in the transport and the energy sec-tor, for example. In conclusion, there are still many steps to be taken until managers

can be provided with a toolbox for service development.There are certain limitations which have to be considered regarding the results of thiswork. Many of the identified success factors have only been mentioned in one study.Considering this fact, and taking into account that we do not claim to have includedall studies covering the topic of NSD success factors, there is a high likelihood for theexistence of additional success factors. The same limitation applies for the contextfactors mentioned in this study.

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Author Adresses

Tim PosseltFraunhofer Center for Applied Research on Supply Chain ServicesNordostpark 9390411 [email protected]

Kai Frstl, Dr.Fraunhofer Center for Applied Research on Supply Chain ServicesNordostpark 9390411 [email protected]

posselt et al

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