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Service Innovation

Service Innovation

In industries ranging from heavy machinery to health care to financial services to consumer goods, service innovation is helping businesses find new revenue streams by satisfying their customer’s need to get things done. In the book “Service Innovation: How to Go From Customer Needs to Breakthrough Services,” these seven service innovation fundamentals are presented:

1. Customers “hire” services to get a job done.

People “hire” a credit card to make purchases, “hire” a doctor to diagnose and treat an illness, or “hire” education to develop career skills. By making the job the focus of service innovation rather than the service itself, organizations can define customer value in a way that can guide improvements to current services and create entirely new services.

2. Customers hire solutions to get distinct steps of an entire job done.

A job is a process, and any step in that process presents opportunities for service innovation. But many companies offer value to customers only for certain steps. For example, most credit card companies focus their attention on the paying step, neglecting other steps along the way (such as making purchases or tracking purchases). The result? Many companies leave valuable opportunities on the table; opportunities that are adjacent to what they currently offer.

3. Customer “outcomes” are the metrics that define success in getting a job done.

“Outcomes” are the customers’ measures of how well they are able to get the job done. When customers hire products and services to get a job done, they choose from among competing solutions based on how well the various solutions satisfy the outcomes they are looking to achieve. By capturing and prioritizing the outcomes customer are using to judge success, an organization gains a comprehensive understanding of customer value to guide service innovation.

4. Customers have unique needs that relate to the consumption of a solution.

Once a customer decides to hire a particular service to get a job done, there are tasks that customers must accomplish as part of “consuming” that service—such as making contact with the service, communicating service needs, and paying for the service. This is true whether we are having a meal at a restaurant, getting a haircut, or obtaining a mortgage. Although studying the job of obtaining service is unlikely to lead to new service innovation, successful service companies have differentiated themselves with a deep understanding of this job.

5. Organizations can approach service innovation in four ways: new service innovation, core service innovation, service delivery innovation and supplementary service innovation.

New service innovation comes from the discovery of new or related jobs that a current or new service can help the customer get done. Core service innovation comes from helping the customer get a core job done better by improving a current service or introducing new services. Service delivery innovation comes from improving how the customer obtains the benefits of a service when getting a core job done. And supplementary service innovation comes from helping the customer get jobs done related to using or consuming a product.

6. The foundations of “service innovation” and “product innovation” are the same.

Services and products are both solutions to customer needs. Before seeking a solution for a service or product, it is critical to first discover the opportunities before crafting solutions. Nearly all “solutions” include aspects of both services and products within their delivery.

7. Before innovating within a service business, consider the different design continuums.

With specific measures of customer value, an organization should consider the primary ways in which services are designed to come up with innovative services that truly differentiate them from the competition.

Each of these service innovation process steps are part of our universal innovation process, Outcome-Driven Innovation.

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