I believe a key to the innovation problem is to take a service-first view of our world. Rather than start with goods and try and determine where service fits, we start the other way and see where goods fit in a service world. And it turns out, goods fit nicely into our service-first thinking. Compared to goods-first thinking where service is seen as a problem.
Our challenge is that our casual (and often academic) view of the world is goods-centric. That comes from observations starting in the industrial revolution (and before). And we can easily define goods (tangible items) and say that service is intangible, inconsistent, can’t create an inventory, etc (there are in fact 5Is).
We also tend to see value as being embedded by the manufacturing process, and exchanged at the point of sale (so called value-in-exchange).
Yet, our economies are around 80% built on service. And this is growing. And service doesn’t really have value-in-exchange. We have a more complex value-in-use; and value is co-created. This is a good thing, as value becomes an item under control, rather than fire and forget.
In this article journey, we observe there are four main causes behind the shift to service economies – economic, user behaviour, asset usage and value of data.
We look at what service is through many definitions. We find that classically we define service as a poor relative to goods. Noting that they are intangible, inconsistent, inseparable, can’t build an inventory, and need involvement. However, we further find that these attributes are actually good attributes. Inventory is expensive, inconsistent means configurable etc.
And when we start with service and see where goods fit in, we find that a beneficiary is trying to make progress in some aspect of their life. And to do so, they integrate with a service. That service is supported by people, systems and goods of service providers. Imagine being thirsty. You can either grab a bottle of water from a fridge (goods) or turn on the tap and pour yourself a glass of water (service). In reality, both are helping make the progress of removing the thirst.
Next we uncover a more formal way of describing a service – as a set of characteristics. Once we have that, we can then understand what service innovation is – improvements to those characteristics.
And we introduce den Hertog’s 4-dimension model that we can use for searching for service innovations. We enhance it to reflect the modern world that is technology and data forward. And we see how we can use the concepts in that model to manage a service innovation portfolio. As well as understand our ability to execute service innovations (and where we could improve).