The world's developed economies are oriented around services, with services comprising more than 70% of aggregate gross domestic product and employment in the Organization for Economic Cooperation and Development nations. As a result, whole economies and both individual companies confront the challenge of the best way to innovate in services. In earlier work, the writer has asserted for the idea of open innovation – that companies should both coordinate their invention processes to be more open to external wisdom and ideas as well as let more of their ideas and knowledge stream to the outside when not being used internally.
Yet it was contrasted by first discussion of open innovation to traditional R&D and product development; this had the effect of putting the focus more on product and technology innovation than on service innovation. Open innovation works somewhat differently in service companies, in part because the role of the customer is distinct; in a service business, the consumer is regularly involved in an iterative procedure with all the firm that results in a customer experience. Furthermore, invention procedures work differently in services. Few businesses have formal R&D operations for the services they provide, and the customer may need to participate throughout the service invention procedure. Some of the concepts of open innovation implement readily to service invention.
Businesses interested in going toward open service invention can try techniques such as working closely with customers to come up with new options for them; focusing offerings on utility for customers, rather than on products; and embedding the business in a customer's organization. Businesses that have traditionally been merchandise oriented may need to produce some organizational changes, such as altering service pricing, as they go to a more service-oriented strategy.
PUBLICATION DATE: January 01, 2011 PRODUCT #: SMR377-HCB-ENG
This is just an excerpt. This case is about INNOVATION & ENTREPRENEURSHIP
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