Service Innovation for Sustainable Business

Stimulating, Realizing and Capturing the Value from Service Innovation

Per Kristensson, Peter Magnusson;Lars Witell

• Publisher: WSPC
• Year: 2019
• ISBN:
  9789813273399
• Topic: Volkswirtschaftslehre
• Subtopic: Nachhaltige Entwicklung

Service innovation is a concept that, for the last decade, has received increased attention both among academics as well as practitioners. However, service innovation is a multi-fragmented concept which often induces confusion. The main purpose of the book is to discuss and explain what service innovation is, based on contemporary research. It explains service innovation from three different perspectives: stimulation, realization, and value capture.

Stimulation: Focuses on the front-end of service innovation. It deals with structures, cultures, and processes that stimulates innovation. Idea management will be a central part of this, where the specifics with handling service ideas, both internally and externally, are illuminated.

Realization: Deals with aspects on how to realize service innovations. This includes different aspects such as specific tools to be used for developing services, and also processes such as service design which aims to receive a better understanding of the customer or user. As co-creation is an important aspect of service innovation, this will also be dealt with. Finally, as many service innovations require behavior change (internally within the organization and externally among the receiving parties), this will also be covered.

Value capture: Companies transitioning to become more service-oriented discover the need to reconsider old business models in order to capitalize on their service offerings. Services are often taken for granted and included in the price. This book will addresses the problem of going 'from free to fee'. In addition, the book also deals with the difficulties that involve moving from a traditional product-oriented logic to a more contemporary service-logic.

Contents:

• Introduction (Per Kristensson, Peter R Magnusson and Lars Witell)
• Methods and Tools for Service Innovation (Johan Netz and Peter R Magnusson)
• What is an Idea for Innovation? (Alexandre Sukhov, Peter R Magnusson and Johan Netz)
• Public Management Logics for Service Innovation (Peter Samuelsson, Alexandre Sukhov, Chaoren Lu and Johan Kaluza)
• From Customer Feedback to Innovation: The IKEA Innovation Journey from Screws to Click (Bård Tronvoll, Bo Edvardsson and Maria Möllerskov-Jonzon)
• Resource Integration Processes as a Microfoundation for Service Innovation (Rolf Findsrud and Sebastian Dehling)
• Service Teams and Understanding of Customer Value Creation (Besma Glaa, Per Kristensson and Lars Witell)
• Creating the Perfect Match: Roles and Archetypes of Open Service Innovation (Per Myhrén, Lars Witell and Maria Åkesson)
• Servitization Goes to the Psychologist (Per Kristensson and Peter R Magnusson)
• Unveiling the Hidden Aspects of Service Innovation: Using Eye Tracking to Understand and Enhance Customer Experience (Wästlund Erik, Shams Poja, Otterbring Tobias and Matos Ricardo)
• Values-Driven Service Innovation for Transformational Change (Samuel Petros Sebhatu and Bo Enquist)
• Bridging the Gap — From Great Ideas to Realized Innovations (Linda Bergkvist and Jenny Karlsson)
• Exploring the Challenges of Servitization in Manufacturing Companies (Peter R Magnusson, Christiane Hipp and Bo Edvardsson)
• Value Creation in Service-Based States of Business Relationships (Lars Witell, Peter R Magnusson, Bo Edvardsson and Helen Beckman)

Readership: Students and academics in the field of innovation, service operations and sustainable business.Service;Innovation;Creativity;Ideas;Value;Customer;Marketing00

Chapter 1

Introduction

Per Kristensson*, Peter R. Magnusson* and Lars Witell^*,†

*Karlstad University, Sweden

^†Linköping University, Sweden

Introduction

In 1977, in her landmark paper, “Breaking Free from Product Marketing” in Journal of Marketing, Lynn Shostack suggested that service marketing has to take into account the specific characteristics of services (Shostack, 1977). The emergent recognition of services formed a new research area; that is, service marketing. Even in the late 90s, services (as compared to products) were often described by their characteristics, by being inseparable, heterogeneous, intangible, and perishable, popularly abbreviated “IHIP”. In the beginning of the new millennium, researchers criticized this simplified and flawed classification of services (e.g., Lovelock and Gummesson, 2004). As a result, services and service innovation have finally shaken off their Cinderella status, in the sense of being neglected and marginal, to achieve wider recognition as a field worthy of study

(Miles, 2000).

A milestone for taking a new perspective on services was the introduction of the “service-dominant logic” (SDL) coined by Vargo and Lusch (2004). SDL, in turn, built on research ideas emanating from the Nordic School of Service Marketing (Grönroos, 2016; Gummesson, 1995; Edvardsson, 1996). This perspective on service virtually erased the borderline between physical goods and services, instead claiming the importance of the value gained from using integrated products and services. So far so good. However, ideas on how to innovate new services, which recently has arisen as a relevant and important research area, still rely on traditional service marketing that to a large extent is inherited from studies on product development.

Many early attempts to describe the development of new services were slight adaptations of established new product development (NPD) models. Commonly, these start with an idea and end with a commercialized product. The process is described as a structured rational sequential process with well-defined stages separated by gates (Wheelwright and Clark, 1992). Innovation and development is thus portrayed as a preplanned and controlled, rational process. Researchers have suggested adaptions of NPD models to services, often called new service development (NSD) models. Examples of this are Scheuing and Johnson (1989), Bowers (1989), Johnson et al. (1999), and Alam and Perry (2002). All these suggested models are sequential, encompassing from eight up to fifteen stages. Service innovation is thus regarded as a special case of product development where adjustments are made to capture the particularities of services.

An alternative perspective has developed that comes from empirical studies of service development and innovation (e.g., Fuglsang and Sørensen, 2011; Høyrup, 2012). This perspective instead recognizes that innovation may also be the outcome of unintended and informal processes. It also pinpoints that service innovations are mostly incremental, and can emanate from different types of innovation activities (e.g., Toivonen and Tuominen, 2009; Fuglsang and Sørensen, 2011; Sundbo, 1997). Gallouj and Weinstein (1997) define “ad hoc innovation” where the innovation represents “a solution to a particular problem posed by a given client.” A similar perspective on service innovation is referred to as bricolage or tinkering, a type of “do-it-yourself” problem-solving activity that creates structure from resources at hand (Fuglsang and Sørensen, 2011). These innovations are developed without an intention to innovate, but rather by employees finding a solution to an emerging problem, often in the context of their ordinary work.

Research on service innovation is at a relatively early stage of its development; there are recurrent calls for research to improve our understanding of this topic and its underlying mechanisms (e.g., Ordanini and Parasuraman, 2011; Ettlie and Rosenthal, 2011; Lages and Piercy, 2012; Rubalcaba et al., 2012; Ostrom et al., 2010; Snyder et al., 2016). Service innovation is investigated and understood from several perspectives, often referred to as assimilation, demarcation, and synthesis (Coombs and Miles, 2000). All these perspectives are used in service research, providing a rich view of service innovation in the private and public sector (Witell et al., 2016).

Service Research Center in Karlstad, Sweden

The Service Research Center, CTF (in Swedish, Centrum för tjänstefor-skning) is one of the world’s leading research centers focusing on value creation through service. CTF is a well established international research community that co-creates research together with business and public sector organizations. In 2012, external reviewers on mission for The Knowledge Foundation in Sweden ranked CTF within the top five service research centers in the world. CTF has a widespread reputation for quality research that is both academically rigorous and relevant, addressing issues related to societal problem solving.

Established by Bo Edvardsson in 1986, CTF today has around 70 researchers and doctoral students who are active researchers in business administration, informatics, working life science, psychology, engineering sciences, and sociology of religion. Since CTF was established, PhD candidates have published 46 dissertations and 22 licentiate theses. More than 500 articles have been published in scholarly journals. CTF is involved in research, undergraduate and graduate education, and close cooperation with leading business and public organizations in various areas of service research. In addition, CTF also arranges highly appreciated external seminars and conferences, both for practitioners and academics.

To live up to its excellent reputation as a leading research center, CTF builds on three pillars:

•CTF is a nationally and internationally recognized, excellent research environment at Karlstad University, characterized by high scientific quality.

•CTF’s research and education are conducted in close interaction with the surrounding society (that is, public and business organizations).

•CTF is a multidisciplinary research organization.

The overall ambition of CTF is to develop research regarding value creation through service. In doing so, CTF will strengthen its position as a national and international research environment characterized by its high scientific quality. With value creation through service as its vision, its mission is to collaborate with external organizations by doing research on complex and challenging issues relating, to some extent, to value-creating processes.

Over the years, CTF’s efforts to develop groundbreaking theoretical and actionable knowledge have developed. New service development and new service innovation represents one of the strongest research areas at CTF. During its collaboration and interaction with leading organizations in Sweden, new and challenging research questions have emerged. Studied over many years, research areas include servitization research (presented in Chapters 7–9, 13 and 14 of this book), how new business models emerge (Chapter 15), and how organizations stimulate ideas for innovation (Chapters 2–5) or manage psychological aspects in their surroundings (Chapters 9–10). Research on business models is now part of several ongoing projects at CTF. In this way, new research streams are expected to grow, and also, in combination with that, new research profiles and subjects are expected to be integrated into CTF’s activities.

External cooperation constitutes one of the hallmarks of CTF. This is visible through its vision and mission, to do research in collaboration with organizations in order to strengthen their competitiveness in terms of value creation for their users. CTF’s extensive interaction and involvement has contributed to developing partner organizations’ operations, as well as created favorable conditions for research funding, access to data collection, and access to an alternative labor market for newly graduated PhDs. Collaboration also has contributed to quality improvements within research, such as how CTF seeks, defines, and tackles research problems, and also how CTF communicates research results. External cooperation with business organizations has been present since CTF was founded, and CTF continues to have close research collaborations with business firms.

Service Innovation for Sustainable Business

The research profile Service Innovation for Sustainable Business (project financed by KK-stiftelsen) was launched in September 2011 (it continued 2011–2019) to identify the DNA of service innovation. The research profile provides new knowledge on service innovation that can contribute to building sustainable new work practices and businesses for CTF’s partners. In addition, the research profile aims to strengthen the position of CTF as a leading research center in service management. Building on its brand and recognition, CTF has taken a leading position in research on service innovation; CTF has participated in EU grant applications and organized research forums, workshops, and research network meetings.

The overall purpose of the research profile is to describe and understand the DNA of service innovation. The metaphor of DNA refers to the mechanisms in the development (process) and functioning (output) of service innovation. The research profile will unfold the generic and specific mechanisms of service innovation. DNA is often compared to a set of blueprints, like a recipe or a code, since it contains the instructions needed to put together or take apart living things; here, the living thing is service innovation.

Based on the DNA of service innovation, the research profile will develop theories, models, and methods for the management, organization, and development of service innovations. The research profile’s more specific purposes are to develop theoretical and empirically grounded knowledge on the following:

•What is and how can we describe a service innovation (output and process) and the new service development process?

•What is the role of value capture in service innovation; that is, different ways of capturing value such as new business models?

•What is the role of the service ecosystem and what are resource prerequisites for the stimulation, realization, and further development of service innovation?

•What is the role of technology, people, and data in service innovation?

•What is the role of customer and employee integration in new service development, and does integration have an effect on new service development performance?

The research of Service Innovation for Sustainable Business can best be described through a framework of research themes and research contexts. The three research themes are stimulation, realization, and value capture, and they constitute the structure of this book. The two research contexts that are studied in detail through the research profile are retailing and manufacturing. In particular, we work together with our partners Ericsson, Volvo, Valmet, IKEA, ICA, and Löfbergs to increase our knowledge on service innovation (previously Tetra Pak and Stamford also participated). In the book, we present some of the ideas and knowledge created within the research profile and CTF in general.

Some recent reviews of research on service innovation and new service development show that CTF is recognized as a leader in service innovation. In the paper, “Uncovering the structures and maturity of the new service development research field through a bibliometric study (1984–2014),” Mendes et al. (2017) identify the largest network of NSD researchers as revolving around CTF and Professor Bo Edvardsson. During the time period of the study, 59 authors coauthored 46 research papers on NSD, focusing on NSD characteristics, customer involvement, service engineering, and product-service systems and on NSD in manufacturing companies. In a similar paper titled “New service development: How the field developed, its current status and recommendations for moving the field forward,” Biemans et al. (2016) point out the CTF-led research cohort as the largest and most active researchers on new service development. In particular, they conclude that the Scandinavian researchers focus on the relationship with customers, either as providers of market information or as active collaborators in the development of new services.

Purpose of the Book

The main purpose of this book is to discuss and explain service innovation based on contemporary research. The book explains service innovation based on three core activities: stimulation, realization, and value capture. All three activities need to be considered, and as a result of these considerations, detailed activities have to be carefully implemented to accom...