research for smes' service innovation

Research supporting Service Innovation: a workshop for European SMEs

MIIRCentre

for Service Research

Service Innovation:doing things better and doing

new things

Ian Miles Professor of Technological Innovation & Social Change

Centre for Service Research & MIoIR

Manchester Business School


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Service Innovation

What

?

Why?

How?


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Back to basics - the PRACTICES/PROCESSES of:

Service as product (the service), as production and delivery (the service process), as philosophy (service orientation), as encounter (service journey).

Innovation as output (the innovation), as process (innovation management), as philosophy (innovation orientation).

Service innovation: new service development; service elements of innovation; innovation within service organisations; innovation through services.

Service and Innovation

DOING USEFUL THINGS (as opposed to MAKING USEFUL THINGS – goods)

DOING BETTER (products or processes…)

DOING THINGS BETTER, DOING BETTER THINGS

What? Wha

t?


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Back to basics - the PRODUCTS/OUTPUTS of:

Service as product (the service), as production and delivery (the service process), as philosophy (service orientation), as encounter (service journey).

Innovation as output (the innovation), as process (innovation management), as philosophy (innovation orientation).

Service innovation: new service development; service elements of innovation; innovation within service organisations; innovation through services.

Service and Innovation

USEFUL CHANGES in people or things (rather than selling THINGS for users to make their own

changes with)BETTER VALUE

PROPOSITIONS (quality, cost, functionality)

NEW/IMPROVED CHANGES, or WAYS OF MAKING

CHANGES, in people or things


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Services: Pervasive Uptake of Information Technology

Labour -intensive

The trend, especially since the 1980s, is for all services to become more technology-intensive – which often means

innovation in service production and delivery processes*; much back-office use of PCs, networks, etc.

The trend, especially since the 1980s, is for all services to become more technology-intensive – which often means

innovation in service production and delivery processes*; much back-office use of PCs, networks, etc.

Transaction & interaction innovations many services have to adopt: [1] electronic cash systems [2] modern communications credit and debit cards, mobile phones online transactions, etc. websites, etc.

Transaction & interaction innovations many services have to adopt: [1] electronic cash systems [2] modern communications credit and debit cards, mobile phones online transactions, etc. websites, etc. One driver of innovations is simply to keep abreast of customer expectations

(and what competitors are doing to meet them)One driver of innovations is simply to keep abreast of customer expectations

(and what competitors are doing to meet them)


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Varieties of Service 1

Labour -intensive

The trend, especially since the 1980s, is for all services to become more technology-intensive which often means

innovation in service production and delivery processes; still there are services that are evidently more or less....



Technology-intensive

People -intensive


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Labour -intensive





Some services are supporting technology (telecomms,

systems integration…) or heavily reliant on capital equipment (transport…)

Some services are supporting technology (telecomms,

systems integration…) or heavily reliant on capital equipment (transport…)

Some services are highly dependent on people

supplying the service to consumers (trade, personal,

business services)

Some services are highly dependent on people

supplying the service to consumers (trade, personal,

business services)


People -intensive


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Varieties of Service 2Some people-

intensive services involve very high levels of highly qualified labour (professional

services, social services)

Some people-intensive services involve very high levels of highly qualified labour (professional

services, social services)

Knowledge-intensive

Labour -intensive


People -intensive

Others depend on large numbers of formally unskilled

staff (retail, horeca)

Others depend on large numbers of formally unskilled

staff (retail, horeca)


People -intensive


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Typically – there are exceptions - IT-intensive require many high skills

Typically – there are exceptions - IT-intensive require many high skills

Knowledge-intensive

Labour -intensive


People -intensive

Some people-intensive services involve very high levels of highly

qualified labour – “knowledge workers” changing states of data,

information….

Some people-intensive services involve very high levels of highly

qualified labour – “knowledge workers” changing states of data,

information….

Others depend on large numbers of

formally unskilled staff often making changes in

physical states

Others depend on large numbers of

formally unskilled staff often making changes in

physical states

Typically – there are exceptions - motor-intensive use low or

mixed skill levels

Typically – there are exceptions - motor-intensive use low or

mixed skill levels


People -intensive


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Knowledge-intensive

Labour -intensive


People -intensive

standardised

specialised

standardised

specialised

Services involve their customers

Sevices may be more or less standardised,

“mass produced”

But consumer

involvement may be

more or less intense and interactive


People -intensive

Services may be specialised, bespoke, customised to specific

user requirements


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Knowledge-intensive

Labour -intensive


People -intensive

standardised

specialised

standardised

specialised

Services involve their customers

Innovation may need to build on the role of the customer in

coproducing the service

Innovation may aim to simplify, or to provide

more value-added


People -intensive

Services may be specialised, bespoke, customised to specific

user requirements


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So: what is your service?(you may even be a manufacturer supplying services)

Knowledge-intensive

Labour -intensive


People -intensive

standardised

specialised

standardised

specialised

?


People -intensive


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Networks and

systems, logistics,

mech. eng.

Specific domains –

informatics, engineering, architecture, environment

…

So: what is your service?(what knowledge might you need from R&D?)

Knowledge-intensive

Labour -intensive


People -intensive

standardised

specialised

standardised

specialised

Specific domains – financial, economic, social, legal, aesthetic, organisational, …

Social, demographic,

cultural, human

relations


People -intensive

Applications and design of technology,

systems, interfaces


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Diverse service innovations

Knowledge-intensive

Labour -intensive


People -intensive

standardised

specialised

standardised

specialised

• Physical or electronic delivery of the service

• Standardisation and modularisation: increase scale and efficiency, increase scope and flexibility (new services)

• Adding physical components to informational services, adding information and experience components to physical ones

• Apply new technology to new or improved services

• Use knowledge of (changing) organisations and customers (and their technology) to create new services

• Interaction with customers: new ways of jointly producing service


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CompetitionKeeping aheadLess sheltered markets

More satisfied customers and staffMore reliable / stable demand and retention

Demands from business or consumers, changing social circumstancesNew technological or market opportunities

Expansion, cost-reductionEnvironmental driversRegulations…

But SMEs face serious constraints:

Lack of finance, time, capacity, skills, partners

Why? DriversD

riving Innovation: see(k)ing models

elsewhere

Why?


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How? 1

Service sectors innovate in different ways -

This varies across sectors: high-tech KIBS are much like other high-tech firms (R&D and technology acquisition driving innovation).

Otherwise formal innovation management (esp. R&D management structures) is rare, outside of the biggest service firms. (Whose use of knowledge management, service design tools, etc., is worth watching)

How?


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R&D use (rather old CIS data)

0%

10%

20%

30%

40%

50%

60%

70%

80%

Intramural R&D

Acquired R&D

Utilities Whole Trans Tele Finance Computer Technical sale port comms

S= 10-49 employees

M=50-249 employees

L=250+ employees

Data for EU15


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How? and how to augment?

Professional KIBS, social and creative services are very innovative. Typically use professional networks as sources of ideas, and in-practice ad-hoc innovation dealing with problems. May create innovations for their clients to use.

Organisational change is relatively more important to services (though: technological innovators also tend to be organisational innovators; & often the two are intertwined).

Many services are “supplier-driven” – innovation from the adoption of new equipment and software – though adopters can also be creative users.

Consumers and clients, as well as staff, can be important sources of innovation – and often have to be engaged in the process of creating or rolling out new services.


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How? Skills and Knowledge

General need to combine managerial, domain (user and market knowledge), technology and service (product, process, quality) capabilities – the “T-shaped” person, cross-professional, interdisciplinary.

Many services have poor links to wider innovation systems, lack of heritage in using and performing research.

Much R&D not designed for services (this has been recognised by new programmes – to some extent)

Service firms do not know where to go – esp. SMEs

Role of specialised consultancies, professional networks


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• Physical or electronic delivery of the service

• Standardisation and modularisation: increase scale and efficiency, increase scope and flexibility (new services)

• Adding physical components to informational services, adding information and experience components to physical ones

• Apply new technology to new or improved services

• Use knowledge of (changing) organisations and customers (and their technology) to create new services

• Interaction with customers: new ways of jointly producing service

Knowledge for Diverse innovations

Interaction design, R&D into human-technology interfaces; Service design, R&D into relationship management

R&D exploiting new generations of IT – esp tags, locational services,

etc., and concerning social dimensions like privacy

additionally: R&D on experience and affect, and issues like trust

Product-service systems research (including SME roles in COPS)

Biotechnology, neurotechnology; use of IT to analyse system dynamicsR&D into market trends, foresight and similar work on new needs and demands


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So, what to do?Share experience and learning

Work together on common problems

Take care with IP!

Pay attention to employees and customers (but look beyond current needs and problems)

Build capacities to assess what’s emerging from R&D, where and how to participate

Scan beyond immediate industry

See innovation as a way of life, not a luxury or one-off event


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End of Presentation