INTRODUCTION:
“Do not go where the path may lead, go
instead where there is no path and leave a trail.” - Ralph Waldo Emerson
Gaining &
sustaining competitive advantage in a knowledge intensive industry means that
the enterprises need to focus on new ways to innovate & differentiate.
[12]
The services
sector dominates the economic activity in most advanced industrial economies
today. Services have matured as a business & there is a science underlying
these services that must be explored!
SERVICE SECTOR:
The ‘Innovative
Service Concept’ has opened up opportunities for new services & revenue
streams for services firms, as outlined below:
1)
Banking:
1.
ATMs,
SMS alerts, electronic transactions have pioneered universal banking.
2.
Character
recognition has enabled enhanced security.
3.
Online
insurance sales have provided greater geographic reach.
4.
Multi-functional
smart cards have been used for nonfinancial functions.
5.
Back
office automation & branch networking has lowered the costs of information
processing.
6.
Centralized
call-centre has enabled to fulfill customer requests from various channels in
real-time.
7. New
concepts like retail banking, bancassurance, derivatives instruments,
customized financial products & micro-insurance for the poor have been
introduced.
8. Green
banking products covering various stages in life e.g. starters mortgage/estate
planning have been launched.
Innovative Brands: BoA (Bank of America),
Lehman Brothers, JP Morgan, HSBC
2)
Real estate:
1.
Databases
for property sale/purchase have reduced search costs for the customer.
2.
Electronic
land records have improved transparency in taxation.
3.
Easier
refinancing & mortgage payments options have been introduced.
4.
Architectural
innovations have provided modern luxury homes & state-of-the-art offices.
5.
Renovation/remodeling
of old buildings has increased the life.
Innovative Brands: Zillow, Redfin, Trulia,
Propsmart
3)
Wholesale, retail, FMCG, trade &commerce:
1.
Scanning
registers & stock replenishment systems have improved store operations.
2.
Green/organic
products are being accepted as modern ways of living.
3.
Customer-centric
initiatives like home delivery etc. are growing.
4.
Online
trade/e-Commerce has provided information & greater geographic reach.
5.
Bar
coding has helped reduce errors.
Innovative Brands: E-bay, Unilever, Barnes
& Nobles, Subiksha, Westside
4)
Travel, Transportation & Tourism:
1. RFID
tracking & tracing systems have enabled transport service providers to monitor
the progress of their fleet.
2. Satellite
directed navigation systems (GPS) in automobiles have helped provide directions
to a locality & report accidents.
3. Low
cost airlines have provided affordable & speedy means of travel to the
urban middle class.
4. Improved
containerization at ports has reduced damage during transit.
5. Online
hotel booking, checkout scanning, wireless communication to kitchen etc. have
improved service delivery.
Innovative Brands:
Fedex, Ritz-Carlton, SouthWest Airlines, www.tirumala.org
5)
Healthcare:
1.
HIS
(Hospital Information System) has enabled to automate work-flow.
2.
EMR
(Electronic Medical Record) has facilitated retrieval of patient's medical
history.
3.
Bioinformatics
has improved clinical research, gene mapping etc
4.
Telemedicine
has increased the scope for- self-care & online diagnostics of rural people
by specialists.
5.
Medical
Tourism is providing access to treatments at low-cost destinations.
6. Healthcare
KPO (Knowledge process outsourcing) is an emerging market viz. medical
transcription, coding & billing.
7. CME
(Continuing Medical Education) has been provided through online libraries &
virtual classrooms for physician training.
8. Medical
Imaging has helped capture digital images (tele-radiology, 3D reconstruction,
virtual endoscopy, CTA Computed Tomographic Angiography).
Innovative Brands:
Apollo, Ranbaxy Laboratories, Wockhardt, Voxiva
6)
Media & Entertainment:
1. Distribution
through CD’s, online downloads etc. have increased viewership.
2.
Complex
gaming platforms have been simulated using animation software.
3. Multiplexes
are growing which act as recreational centers for complete family
entertainment.
4.
Technological
innovation has improved the quality of film, printing etc.
5.
Online
newspapers have provided information at the doorsteps of the people.
Innovative Brands:
Disney, Sony, Nokia, PVR Cinema
7)
IT/Electronics & Telecommunications:
1.
Cellular
services have brought the world closer.
2.
New
services like electronic publishing, voice mail have changed the communication
landscape.
3.
Miniaturization
has enabled enormous information storage.
4.
Enterprise
software (ERP) has enabled centralized management of large organizations.
5.
Business
Process Outsourcing (BPO) has enabled cost-cutting.
Innovative Brands:
IBM, Infosys, I-flex, Reliance Telecom, Vodafone
8)
Public Services:
1.
E-Governance
has provided transparency & improved grievance redressal system.
2. ICT
has enabled faster processing of transactions e.g. filing electricity bills;
improved security & helped fight terrorism etc.
3.
Wireless
& satellite networks (GIS) help provide early warning signals for disaster
management.
4.
Cultural
web portal have boosted the livelihood of local & tribal artisans.
5.
Comprehensive
data-banks cover a wide variety of information/future plans on government
initiatives (RTI Right to Information Act, India).
9)
Education:
1. E-Learning
& educational CD’s have opened the scope of quality education reaching the
remote corners.
2.
Video-conferencing
has enabled exchange of leading-edge expertise with expert professors around
the globe.
3. Multimedia
presentations (audio-video) have enabled easier understanding of concepts for
school going children.
4.
Internet
kiosks/e-Kendra have provided connectivity & IT education to the rural households.
5. Computer
based repository/network compiling has helped in conserving & utilizing traditional
knowledge.
Innovative Brands: NIIT, Direcway, Google
10) KIBS
knowledge-intensive business services (professional services)
: including consulting, R&D services,
legal, advertising, labour recruitment services etc.)
1.
ICTs
have helped bridge the information gap.
2.
BI
Business Intelligence provides analytical support for decision-making.
3.
Strategic
outsourcing is increasingly sought to leverage the experience of the
consultants.
4.
Digital
media (tele & video conference) has boosted the global delivery model.
5.
Strategies
for creating new markets, improved process etc. are the focus of innovation.
Innovative Brands: McKinsey, KPMG, Ogilvy,
Ma-Foi
SERVICE INNOVATION:
Incremental
innovation:
“…offer patients a choice of drugs within the
same class, since not every patient responds to every drug in the same
manner." - Janet Woodcock, M.D. (CDER) [2]
Breakthrough,
disruptive / radical innovation:
"Shun the incremental, and look for the quantum
leap," - Jack Welch (GE)
The figure depicts
the four-dimensional model of service innovation proposed by Den Hertog (1999)
[8]
TECHNOLOGICAL:
1.
Internet as a service (or delivery) channel:
Internet
has come a long way, from spreading global presence of the firm, to enabling
online transactions & finally for devising strategies needed to derive
maximum benefit from the channel. [9]
2.
Self Service Technologies (SST):
Online
help, ATM cards & telephone-driven interactive voice response (IVR) systems
have reduced operational costs & employee involvement, so that they can
focus on strategic goals.
3.
Enterprise Content Management (ECM):
“…ECM are technologies used to Capture,
Manage, Store, Preserve, & Deliver content and documents related to
organizational processes”. - (AIIM). [4]
Records
management (RM) (archive & filing management systems on long-term storage
media), Web content management (WCM) (including web portals), Workflow/Business
process management (BPM) have improved service operations.
4.
Service Oriented Architectures (SOA)
“SOA is a paradigm for organizing &
utilizing distributed capabilities that may be under the control of different
ownership domains.” – OASIS
This
architecture links new business system, built entirely from existing software
services. Also ‘open source’ provides the source code of the software with
relaxed or non-existent intellectual property restrictions.
5.
Decision Support System (DSS):
Interactive
computerized systems gather & present data from a wide range of sources to
support business decision making.
6.
Social media:
RSS
& ATOM feeds have allowed sharing of the same content to several web
services. Wiki technology is providing the peers the option to develop others’
content further.
“…new mode of peer
production will displace traditional corporation hierarchies as the key engine
of wealth creation in the economy.” - Tapscott & Williams (www.wikinomics.com)
7.
Nanotechnology:
Technology
has radically improved formulation of drugs, diagnostics & organ
replacement; delivered nutritionally enhanced foods; provided greater information
storage & communication capacities etc. benefitting diverse service
applications.
8.
Telematics:
Integrated use of telecommunications and
informatics has helped design intelligent transportation systems, tracking
fleet vehicle locations, recovering stolen vehicles, providing automatic
collision notification, early warning for accident prevention etc.
9.
Biometrics:
Potential to be the next frontier in
service excellence, productivity & security in the service sector through
diverse applications e.g. controlling physical access to facilities, enabling
voice recognition at call-centers, controlling time and attendance of
employees, providing self-service access to safe deposit vaults at banks,
cashing checks in supermarkets etc . [15]
10.
Semantic Web (Web 2.0):
The second
generation of web-based communities & hosted services e.g.
social-networking, wiki, folksonomy (collaborative tagging) etc. facilitate
collaboration & sharing between users. The figure depicts a mind-map of the
memes of Web 2.0 with example sites:
NON-TECHNOLOGICAL:
1.
Business model innovation:
Pioneered a new generation of Strategic
Offshore Outsourcing.
Revived private rights to create public
goods by defining a new spectrum of “some rights reserved” copyright.
2.
Marketing innovation:
Pioneered marketing innovations e.g.
per-second billing & package deals.
Changing
the title from “product marketing” to “service marketing” helped employees see
their jobs as more customer-centric & the firm moved from Fortune’s
‘least-admired companies’ in 1997 to the ‘most admired companies’ in 2007 for 5th
year in a row. [11]
3.
Organizational innovation:
A well-known brand in
Europe, it developed the call centre as an idea hunting ground, than just
resolving customer complaints, through intellectual capital management
approach. [5]
The non-profit health
organization is renowned for clinical excellence & works with local church
to bring compassion & spirituality to its endeavors.
4.
Service innovation:
A leader in Europe in online digital photo
finishing, it introduced Fastlab to personalize gift items, greeting cards etc.
with customer’s photograph.
Eli-Lilly launched a subsidiary to connect
the ‘Seeker’ organizations i.e. companies, academic institutions & NPO for
breakthrough innovations by drawing upon a global network of ‘Solvers’.
5.
Process Innovation:
The global IT learning solutions
corporation pioneered the instructional design methodologies & curricula
Converts mobile phone into a mobile EFTPOS
machine to process credit card payments on the spot eliminating the need to
accept cheques.
6.
Financial innovation:
Innovated IT solutions for financial
services industry worldwide.
Pitches people who have developed an
original idea of an innovative product/service not available in the marketplace
& the companies who could finance them.
7.
Hybrid Innovation:
Provided
an innovation comprising iPod (a good) & iTunes (a service).
Business
software along with on demand consulting.
8.
Product Innovation:
Innovative body-sizing & visualisation
solutions to clothing retailers.
9.
Physicals Innovation:
Innovative environment for leisure
appealing to the entire family.
10. Service
Employess:
www.disneyworld.disney.go.com
Renowned example of great customer service
provided by their cast members.
11. Cutomer
Interface Innovation:
Harley Owners Group (H.O.G.) united the
people with a common passion.
12. Client
driven innovation:
Acceded
to clients' requests by providing their computers without pre-installed
software.
PROMOTE
INNOVATIONS THROUGH REWARDS!
To reward the
positive contributions of companies, American Business Awards ‘Stevies’ known
as ‘the business world's own Oscar Awards’ honours the ‘Most Innovative Firms’
& ‘Best New Product/Service.’ [Appendix]
INNOVATIONS IN SERVICE DELIVERY MODEL:
1.
Focused Distributors: Provide products & services related to
a specific industry or market niche.
Retailer:
ToysRus.com, Staples.com
Marketplace:
Eloan.com, InsWeb.com
Aggregator:
Autoweb.com
Exchange:
eBay.com, Freemarkets.com
2.
Portals: Provide access to
both content & service.
Horizontal
Portals: AOL.com, Yahoo.com, Quicken.com
Vertical Portals:
WebMD.com, Covisint.com
Affinity Portals:
Realtor.com, iVillage.com [14]
A LOOK INTO THE FUTURE:
Innovations for the 21st Century:
Imagine a man
driving a ‘self propelled vehicle’ to a pharmacy for purchasing a
‘psychotropic’ drug. The pharmacy’s authentication system through the ‘near-field
communication’ (NFC) technology embedded in his mobile device keeps the drug
ready for delivery. Next he visits a retail store which from his ‘buying patterns’,
knows that he likes which brand. A quick call home to his ‘RFID’ enabled
refrigerator confirms that his daughters have finished the last of the milk
& he buys one. Finally the total is automatically tabulated & sent to
his mobile device for verification. He reviews the tally and taps OK to confirm
‘payment’. [16]
DRIVERS OF INNOVATION:
The Nine Drivers
of Successful Service Innovations:
1. A scalable
business model: Hertz #1 Club Gold members, Enterprise Rent-A-Car
2. Comprehensive
customer experience management: Starbucks’ success depends on an excellent
product (functional clues), a pleasing physical environment (mechanical clues)
& service-minded employees (human clues).
3. Investment in
employee performance: Cirque du Soleil
4. Continuous
operational innovation: Fedex, Starbucks
5. Brand
differentiation: FedEx
6. An innovation
champion: Edwin Land at Polaroid Corp., Ted Turner at CNN, Ray Kroc at
McDonald’s Corp.
7. A superior
customer benefit: ATM, the online bookstore, Internet search engine
8. Affordability:
Southwest Airlines
9. Continuous
strategic innovation: Google (Googlettes & Ideas List). [10]
SWOT ANALYSIS OF SERVICE INNOVATIONS:
It is crucial to uncover the opportunities to
take advantage of the organization’s strengths & discover the threats
before they catch the firm unawares!
STRENGTHS
Improved
quality
Improved
total cost of ownership TCO
Improved
processes
Specialized
expertise
Optimize
workload
Knowledge
creation
Economic
return
Support
compliance
Increase
responsiveness
|
WEAKENESSES
Complexity
Intangibility
Lack
of access to information
Lack
of empowerment
Non-alignment
of actions to goals
Non-
participation in teams
Lack
of monitoring
Poor
leadership
Weak information
system & networking
|
OPPORTUNITIES
Service
Differentiation
Cost
Savings
Creation
of new markets
Replacement/extension
of services
Reduced
environmental damage
Outsourcing
Collaboration
Combining
different technologies
Risk management
|
THREATS
“Creative
destruction”/Disruptive technologies
Mobile
& pervasive computing
Conformance
to regulations
Copyright/patent
of new services & processes
High rate of
change of technology
Price
competition
Difficulty in
obtaining finances
Lack of skilled
personnel
Changes in
consumer demand
Social
acceptance
|
TOOL
FOR SERVICE INNOVATION:
1 SERVICE
BLUEPRINTING: It allows the firm to visualize their services from their
customers’ perspective. [11]
Service Blueprint Components
|
|
Physical Evidence
|
|
Customer Actions
|
|
Onstage Contact Employee Actions
|
Line of interaction
|
Backstage Contact Employee Actions
|
Line of visibility
|
Support Processes
|
Line of internal visibility
|
2 BRAND TOUCHPOINT WHEEL: In experiential services each customer touch-point has the potential for innovation. [13]
STRATEGY:
The concept of
Value Shop:
Stabell &
Fjeldstad proposed that service provisioning has a different value creation, as
there are no sequential activities; rather each problem is treated uniquely as
in management consultancies. [1]
Strategic
Innovation:
1.
Managed
Innovation Process: to facilitate the interplay between external perspectives
& the organization's internal capabilities/practices.
2.
Strategic
Alignment- support among key stakeholders required to galvanize an organization
around shared visions, goals and actions.
3.
Industry
Foresight: "top-down" perspective to understand the emerging &
converging trends, new technologies, competitive dynamics, potential
dislocations & alternative scenarios.
4.
Consumer/Customer
Insight: "bottom-up" perspective to understand the articulated
(explicitly stated) & unarticulated (latent/unrecognized) needs of existing
& potential customers.
5.
Core
Technologies & Competencies: internal capabilities, intellectual property,
brand equity, strategic relationships & assets to deliver value to customers.
6.
Organizational
Readiness: to act upon the new operational, political, cultural & financial
demands.
7.
Disciplined
Implementation: to align actions with the goals.
Repeatable
sustainable innovation becomes a foundation for ongoing competitive advantage.
[3]
CONCLUSION:
Change is
inevitable as they say & so service innovations have the opportunity to enable
firms to be at the right place, at the right time, with the right end-to-end
solutions, at the right price point, as a market takes off.
Convergence of
nano-bio-info-comm technologies can be a panacea for developing diverse service
applications & collaborative relationships to strengthen the service
industry.
The potential for
change in the coming years is mammoth; as the service industry seeks solutions
to our society's problems - solutions that must involve enormous cost savings, increase
the efficiency, improve the availability of vital information, provide
healthier lives, better governance & faster time-to-market for new services.
“Never before in history has innovation offered
promise of so much to so many in so short a time.” Bill gates
APPENDIX:
American Business Awards: Monday, June 11,
2007 [7]
Most Innovative Company Up to 100 Employees
|
Most Innovative Company Up to 2500 Employees
|
Most Innovative Company More Than 2500 Employees
|
Agistix Inc.
|
Crossroads Systems
|
Wingstop
|
Articulate
|
Donlen Corporation
|
|
Bit9, Inc.
|
Farbman Group
|
|
Calvert Foundation
|
Image Solutions
|
|
Catalis Inc.
|
Imagination International Corporation
|
|
CleverSet
|
Jerith Mfg. Co.
|
|
Fieldglass, Inc.
|
Kintera
|
|
Habeas
|
Mergermarket Ltd
|
|
Integrated Mobile
|
Michael C Fina
|
|
Intelius, Inc.
|
MontaVista Software
|
|
Jury Impact
|
PayCycle Inc.
|
|
Mazu Networks
|
RealtyTrac
|
|
Namco Networks Inc.
|
Salesforce.com
|
|
Ravenflow
|
Spot Runner
|
|
SecurityCoverage
|
SuccessFactors
|
|
SimpleTuition, Inc.
|
TechExcel
|
|
SkillSurvey Inc.
|
VistaPrint
|
|
SupplyScape Corporation
|
||
Terra Technology
|
||
Two Little Hands Productions
|
||
Welcomemat Services Inc.
|
BIBLIOGRAPHY & FURTHER READINGS:
[1] An ontology for e-business models’ -
Alexander Osterwalder & Yves Pigneur, University of Lausanne
[2] www.innovation.org/index.cfm/InnovationToday/KeyIssues/Incremental_Innovation Incremental
Innovation
7 Dimensions of Strategic Innovation
Enterprise Content Management
[5] Deriving Value from a Commodity
Process: A Case Study of the Strategic Planning And Management of a Call Center
- Huang, Jimmy, Nottingham University Business School.
Open Innovation
The American Business Awards
[8] Knowledge Intensive Business Services
as Co-Producers Of Innovation - Pim den Hertog, Dialogic, Utrecht, The
Netherlands
[9] eInsurance - Novel Services in the
Electronic Environment - Aki Ahonen, Jarno Salonen, Jouni Kivistö-Rahnasto,
Raija Järvinen, Kirsi Silius
[10] Creating New Markets through Service Innovation
- Leonard L. Berry, Venkatesh Shankar, Janet Turner Parish, Susan Cadwallader
& Thomas Dotzel
[11] Service Blueprinting: A Practical
Tool for Service Innovation - Mary Jo Bitner & Amy L. Ostrom, W. P. Carey
School of Business, Arizona State University
[12] Service Innovations References 2004 -
Dr. James C. Spohrer, Director, Almaden Services Research, IBM Research
[13] Innovation in Services - DTI
Occasional Paper No. 9, June 2007
[14] Topic 5: Networked Business Models
and Businesses built on the Internet (Management Information System) - R.
Subramanian IIT (M)
[15] Biometrics: the next frontier in
service excellence, productivity & security in the service sector - Loizos
Heracleous (Templeton College, Oxford University, Oxford, UK) & Jochen Wirtz
(NUS Business School, National University of Singapore, Singapore)
[16] The Next Wave of Innovation in Retail - A
Microsoft Perspective 
