Service Innovation

Hamid Houshmand

The service industry

• Education• Healthcare• Utilities• Retail and wholesale trade • Finance and insurance• Real state• Hospitality (hotel and food) • Transportation• Entertainment • Consulting and product-directed services

Keys to advance understanding service innovation

• Bring together industry, academic, and government partners

• The absence of guidance on service innovation means a hole in management understanding in 80% of American enterprises (50% of Iranian enterprises)

• Get insight that meaningful service innovation has the potential to drive revenue and change the shape of entire industries

Confusions in Service Management• Service innovation and service development are not the same• Service innovation is the process of devising a new service or

improving a service concept that satisfies the customer’s unmet needs

• Service development refers to all activities involved in bringing that concept to market

• Expert may disagree where the innovation-concept ends and development begins

• It is by knowing what customers need that companies can engage in meaningful new service creation

• Don’t focus on the service itself (means), rather on the outcome for the customer

• Service innovation can be organized and is predictable

Characteristics of services

• Services are more intangible than goods• Services are produced and consumed at the

same time • Quality control is more difficult, as employees

and customers are part of the service• Services cannot be inventoried

Advantage of outcome-driven innovation

• When focus on customer job:– Your understanding of customer value is not limited to

preconceived notations. Focus on the customer trying to accomplish

– You can rely on customers to inform you of their needs . Customer knows very well what they are trying to get done

– Provides a deeper and broader understanding of customer needs. In addition to discover overlooked and underlooked service areas

– Gain better understanding of substitutes and competitive threats and how innovates against them

– Enable to discover innovation opportunities that appeal to a broader set of customers

Customer needs that drive service innovation

• How do service customers define value– Customers hire products and services to get a job done– Customers hire solutions to accomplish distinct steps in

getting an entire job done. Adjacent steps to what is already offering can offer opportunity to innovation

– Customers use outcomes to evaluate success in getting a job done

– Customers have distinct needs that arise related to the consumption of a solution (both the functional and the emotional)

How can service create value?

• The four approaches to service innovation are:– New service innovation– Core service innovation – Service delivery innovation – Supplementary service innovation

Approaches to discovering service innovation opportunities

• New service innovation:– Objective: Discover new or related jobs that a

current or new service can help the customer get done

– Focus: New or related customer jobs• Core service innovation – Discover ways to help the customer get a core job

done better with new or improved services– Focus: Outcome on a core job for which service is

hired

Approaches to discovering service innovation opportunities

• Service delivery innovation– Objective : Discover ways to improve how the

benefits of a service are obtained by the customer– Focus: Outcomes on obtaining service

• Supplementary service innovation– Objective: Discover ways to help the customer with

jobs related to product ownership and/or usage– Focus: Outcomes on a specific job related to product

usage or consumption

How is a successful service strategy developed

• A strategy is built around the unmet customer needs

• A systematic and repeatable roadmap is provided

• There are several steps in such roadmap

How is a successful service strategy developed

• Step I: Select the innovation focus – Select the discovery option to pursue– Decide who the customer is – Decide upon a job or job area to investigate

• Step II: Uncover customer needs– Talk to the customers– Ask the right questions– Ensure quality job and outcome statements

How is a successful service strategy developed

• Step III: Prioritize customer needs– Survey customers– Measure importance and satisfaction– Calculate opportunity – The opportunity algorithm: Opportunity =

importance + max (importance –satisfaction) • Step IV: Develop a service strategy – Define a unique and valuable position – Define the service concept

Discover opportunities for new service innovation

• Discover why your service is hired• Ask these questions:– What are you trying to accomplish by using this

service?– What goals /objectives does this service help you

to accomplish?– What problems does this service help you to

prevent or resolve?

Discover opportunities for new service innovation

• Uncover related jobs to your service that might be hired

• Ask these questions:– What would the ideal service help you to accomplish – What else are you trying to accomplish before, during, or

after using the current service?– What other responsibilities do you have before, during, or

after using the current service?– What other services would you like to be offered before,

during, or after using the current service? What would each allow you to accomplish?

Discover opportunities for new service innovation

• Discover other jobs of customers • Ask these questions:– What are you trying to accomplish in this job

area? What tasks and /or activates?– What are your goals and objectives?– What problems are you trying to prevent or

resolve?– What are you trying to determine or decide?

Discover experience jobs

• Question to customers:– What experience are you seeking?– What are you trying to experience by using this

service?– What would the idea solution help you to

experience?

Discover emotional jobs

• If you had the idea solution for getting this job done how would that make you feel, or how would you be perceived?

• What feelings or perceptions would be avoided?

Discover new and emerging customer jobs

• What new jobs will a customer need to accomplish as a result of a particular knowledge discovery, legal or regulatory change, or technology development?

Discover opportunities for core service innovation