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A Framework for Services Innovation

A Framework for Services Innovation. Henry M. Kim, PhD. Associate Professor Schulich School of Business York University, Toronto, Ontario, Canada Visiting Fellow IBM Centres for Advanced Studies Markham, Ontario, Canada February 27, 2007. Agenda. Talk adapted from:

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A Framework for Services Innovation

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  1. A Framework for Services Innovation Henry M. Kim, PhD. Associate Professor Schulich School of Business York University, Toronto, Ontario, Canada Visiting Fellow IBM Centres for Advanced Studies Markham, Ontario, Canada February 27, 2007

  2. Agenda • Talk adapted from: • Berry, L.L.; Shankar, V.; Parish. J.T.; Cadwallader, S.; and Dotzel, T. (2006), “Creating New Markets through Service Innovation”, MIT Sloan Management Review, Vol. 47, No. 2, Winter 2006, pp. 56-63. • Services: Often Improved, Not Innovated • Four Types of Market-Creating Service Innovations • Nine Drivers of Successful Service Innovations

  3. Services: Improvement vs. Innovation • Most improvements to services activities are incremental: • Stores stay open longer • Websites enhance functionalities • Supermarkets improve loyalty programs • Other Examples? • Only rarely, companies develop services that create new markets or reshape markets • Enterprise Rent-a-Car • Other Examples?

  4. Service Innovation vs. Product Innovation • Key Differences • For labour-intensive, interactive services, service delivery staff are part of the innovation • Services requiring customer’s physical presence need “local” decentralized production capacity • Often, innovations don’t have brand names like iPod or Blackberry • Because services may entail co-production, source of innovation is often the customer

  5. Arriving at a Taxonomy of Services Innovations • Type of Benefit: Is this innovation an important core benefit or a new way of delivering a benefit? • Cirque du Soleil (new core benefit) • Athabasca University (new delivery) • Separability: Is this innovation for a service that is produced and consumed simultaneously? • Telemedicine (create separable services) • Loblaws (create inseparable services)

  6. Separable Type of Service Inseparable Core Delivery Type of Benefit Four Types of Market-Creating Services Innovations Flexible Solutions Core benefit can be enjoyed free of constraints of time and space Controllable Convenience Benefit can be delivered free of constraints of time and space Comfortable Gains Provides substantially new experiences that provide customers with emotional or physical comfort Respectful Access Demonstrating respect for customer’s time and physical Presence in using services

  7. What Type of Innovators Are These Companies? • Netflix • Chapter’s • Cirque du Soleil • eBay • Movenpick Marche; Korean BBQ Restaurants • CNN • Skype

  8. Nine Drivers of Successful Service Innovations • Successful Innovations have… • A scalable business model • Comprehensive customer experience management • Investments in employee performance • Continuous operational innovation • Brand differentiation • An innovative champion • A superior customer benefit • Affordability • Continuous strategic innovation

  9. A “Respectful Access” Innovation Scenario • How do/will I watch video content? • Via… • Blockbuster • Netflix • Roger’s cable on-demand • Amazon or Apple download • On… • TV • Computer • iPod or other PDA’s • From • Feature films • Television programming • Amateurs and independent programming (YouTube) • Can judge these innovations as per • Scalable business model • Comprehensive customer experience management • Brand differentiation • Superior customer benefit • affordability

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