I&E Lecture 2 PDF

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Full lecture notes for the second lecture of the sem....

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I&E Week 2 Lecture: Product Innovation vs. Service Innovation Innovation in manufacturing vs. Innovation in services  

Manufacturing business: Making physical things (e.g. car manufacturing). Service business: Doing things (e.g. car rentals). Innovation in physical goods/products is not the same as innovation in services

What is Service Innovation?  Service Product Innovation: New or improved things in services; innovating what is offered.  Service Process Innovation: New or improved ways of doing things in services; innovating how offerings are produced and delivered.  Service Business Model Innovation: New or improved ways of doing business; innovating how value Is created and captured in services. Service business model innovations have aspects of service products and service processes.

Service innovation differs from product/goods innovation… Services are:  Intangible: Hard to touch, feel & visualise  Inseparable: Production and consumption occur simultaneously; co-produces during delivery  Heterogeneous: Tends to vary; hard to standardise  Perishable: Cannot be stored or stockpiled. Service Innovation Through Co-Creation  In services, the locus of value creation lies in consumer-company interaction.  Co-creation: Value and innovation is co-created with consumers. Building Blocks of Co-Creation:  Dialogue: Encouraging interactions, deep sharing and new levels of understanding between consumer and company, often enabled through online technologies  Access: Exposure to new opportunities and multiple points of interaction with consumers in order to create desirable experiences  Transparency: Openness to providing information and feedback to consumers in collaborative dialogue via engagement platforms  Risks: Definition of clear role & responsibilities of consumers and company; trade-off between risks and benefits Benefits of Co-Creation:  Enhancing speed and effectiveness of innovation  Creating consumer delight and empowerment  Enhancing customer relationship, trust and retention  Stimulating work-of-mouth; reducing marketing costs  Constant generation of user insight  Creating a competitive advantage

However, there are challenges in organising and managing co-creation:  Attracting, motivating and retaining the right co-creative consumers  Building flexible, open, transparent and responsive systems  Developing user-friendly, intuitive engagement platforms  Overcoming the not-invented-here syndrome within organisations  Balance between control and openness

Open Service Innovation  Even manufacturing businesses need to re-think themselves as service businesses  Every business can implement service innovation by collaborating and co-creating value with customers. Service-Dominant Logic   

Service rather than goods is the fundamental unit of the economic exchange Service: application of competences for the benefit of another entity All businesses are service businesses...