Service innovation is not just creating new products or service – it is improved value cocreation with customers

How can novel value cocreation be enhanced in service innovations, and what are the different archetypes of service innovation?

Our Journal of Service Research article presents the value-centric approach of service innovation, and how it combines the current archetypes of service innovation that are presented in literature (Open gold access).

Service innovation is a key source of competitive differentiation across firms and markets. But many of us still cannot really figure out what people are talking about when they talk about service innovation.

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The narrative of value-centric service innovation

We explored different approaches to service innovation and propose a typology of four archetypes, each informed by a distinct theoretical perspective and by different underlying assumptions. Process-based and output-based archetypes focus on value-adding phases and output value, respectively. Experiential and systemic archetypes have attracted less attention but become central for firms seeking to cocreate value with their customers in the service ecosystem.

For example, the output-based archetype (new service offerings) becomes relevant when an organization needs to express its performance in terms of service offerings and quantities such as units and numbers. Output-based measures are important both for the organization itself and for most of the engaged actors (including customers, partners, and authorities) for budgetary planning and reporting, statistical, and taxation purposes. The process-based archetype is important for value cocreation in settings, where the goal is to create a new process or to improve the quality, efficiency, or effectiveness of an existing one.

The experiential archetype of service innovation becomes important when practitioners look to cocreate novel value with customers, helping to identify individual experiences of value and customer motivation to adapt and use a specific service innovation. Clearly, customers tend to be more willing to pay for something they experience as valuable. Finally, the systemic archetype focuses on how available resources are integrated by engaged actors when cocreating novel value, how the business model will be restructured, and where service innovations can occur in the service ecosystem.

We encourage researchers and managers to plan service innovations systematically, deploying each archetype in value cocreation, and combining them within an integrative approach.

 

Anu Helkkula

Director of Hanken PhD Programme, Research Services Manager