According to government statistics 70-85% of the GDP of Western nations, and 63% of the world GDP is service.
Traditional goods firms are emphasizing service in their offerings. So it is positively weird that intro marketing texts put a single chapter on service marketing. It also seems odd to me that most research articles on product innovation focus on new product development for goods. And that most articles on service innovation attempt to apply processes from new product development of goods to services.
Goods makers are increasing offering there products as services. GE sells hours of thrust instead of aircraft engines; truck engines and even building roofs are offered as a function.
Ball Bearings can be a service. As the linked HBR article on SKF, the leading ball bearings provider, discusses once a good becomes smart, an offering is a system of data and controls.
One thing that the four authors of Service Innovation quickly agreed on while writing the book was the “service trifecta:”
I was THRILLED when these five glossy paperbacks were delivered to my home a few weeks ago! Service Innovation, An eighteen-month collaboration with three professors from the CTF Service Research Center at Karlstad University, Sweden, was now tangible and on my coffee table! 
What was it like to collaborate on a book with researchers 6,691 km. away? With all the modern tools it was surprisingly trouble free! We posted chapters on Dropbox. The three Karlstad professors seemed to have no trouble coordinating work between them. I typically signed on after in the evening after they had finished for the day.
We had a couple of conferences on Skype but primarily communicated by email or Facebook Messenger. I remember thi
Last Friday my wife and I drove 2.5 hours to Charleston, WV, in order to purchase a 5-year pre-check pass from the TSA for $85 each. Most sites have a waiting time of a month for an appointment to buy the pre-check. There are three clear benefits from the pass:
The TSA collects $17 per year from each participant PLUS costs go down since not everyone goes through the same torture process. A true Win-win for the TSA!
I was wondering if other notorious bad service providers have similar profit opportunities…
How much would you pay annually to:
When does a firm benefit from customer co-creation?
The leading journal of product innovation, JPIM, has a cool YouTube channel to view short summaries of selected articles on innovation. I strongly recommend checking it every couple months for new posted videos. Even if, like me, you read the journal cover-to-cover every issue, it is interesting to see how the authors portray their research via video.
Readers of a blog originally titled “Service Co-creation” will undoubtedly be interested in this video – which asks when does a firm benefit from customer co-creation. The authors found that benefits from customer involvement vary based on whether the innovation is:
Watch the video to get the insights:
This full article is featured in the July issue of JPIM.
Again the video link is here.
In the middle of final editing for recently published Service Innovation we decided that we needed an illustration in Chapter 1, for our discussion of what service is. I sent a Facebook message to my talented daughter, Kiki Schirr, and asked her if she could send an illustration within 90 minutes. This is what she sent:
The illustration is on page 8 of the book, published last month.
Frame 3 catches the essence of service: the value created with the customer. The young woman, together with the airline were able to create a memorable visit with loved ones.
Frame one adds a more nuanced view. The flight was crowded and noisy, but that was not important to this consumer who was creating a visit at the end. So other customers who might focus more on the experience during the use of the service might not have been as satisfied as the young woman was.
A service provider should understand the value creation process of customers. An effective service innovation process will focus on enhancing both the customer value creation and the service experience.
A single illustration can say a lot!
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A central theme in the new book Service Innovation is that “All Products are Service” and that all businesses accordingly should focus on the value-creation and experience of users.
Over 80% of the US economy is service by traditional measures, but increasingly goods are being sold on the basis of ad-on service such Onstar or extended warranties for cars. Servicization actually converts goods into service by providing the benefit of the good not selling the good: airlines pay for hours of thrust for their vehicles instead of buying jet engines; consumers join monthly mobile phone plans that include keeping phones current. All product ARE service.
A recent post by Elke Stangl, a physicist and small businessperson in Austria, notes the phenomena “Everything as a Service” and argues that servicization bodes ill for small businesspeople.
Certainly when a customer commits to a service for an extended period or entrust another firm to effectively own assets for them, the image of financial stability or size may matter. Even more fundamentally Ms. Stangl raises the issue of the “winner take all” effect popularized by Nassim Taleb in the Black Swan. Due effective communication, globalization, network effects, and scale, services on the Internet seem to quickly have one or a small group of big winners with all other providers instantly marginalized.
