Renu Agarwal · Willem Selen Göran Roos · Roy Green Editors The Handbook of Service Innovation The Handbook of Service Innovation Renu Agarwal Willem Selen (cid:129) ö G ran Roos Roy Green (cid:129) Editors The Handbook of Service Innovation 123 Editors RenuAgarwal GöranRoos Universityof TechnologySydney Universityof TechnologySydney UTS BusinessSchool UTS BusinessSchool Ultimo, NSW Ultimo, NSW Australia Australia WillemSelen RoyGreen School ofBusiness Universityof TechnologySydney Faculty ofArts andBusiness UTS BusinessSchool Universityof theSunshine Coast Ultimo, NSW Maroochydore, QLD Australia Australia ISBN 978-1-4471-6589-7 ISBN 978-1-4471-6590-3 (eBook) DOI 10.1007/978-1-4471-6590-3 LibraryofCongressControlNumber:2014951143 SpringerLondonHeidelbergNewYorkDordrecht ©Springer-VerlagLondon2015 Thisworkissubjecttocopyright.AllrightsarereservedbythePublisher,whetherthewholeorpartof the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation,broadcasting,reproductiononmicrofilmsorinanyotherphysicalway,andtransmissionor informationstorageandretrieval,electronicadaptation,computersoftware,orbysimilarordissimilar methodology now known or hereafter developed. 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While the advice and information in this book are believed to be true and accurate at the date of publication,neithertheauthorsnortheeditorsnorthepublishercanacceptanylegalresponsibilityfor anyerrorsoromissionsthatmaybemade.Thepublishermakesnowarranty,expressorimplied,with respecttothematerialcontainedherein. Printedonacid-freepaper SpringerispartofSpringerScience+BusinessMedia(www.springer.com) Endorsements Bringing together the wide and diverse field of service innovation into a single, comprehensiveandinsightfultextisadauntingchallenge.Yetthisisexactlywhat the Handbook of Service Innovation does. A great and compelling read, which I wholeheartedly recommend. Professor Andy Neely Director, Cambridge Service Alliance University of Cambridge, UK Thisisahugelyimportanttopicandthishandbookcontainingchaptersfromsome of the leading academics and practitioner in the field. Service innovation encapsulatesmuchoftheworkonmanagementpracticesandproductivity.Asthe modern world increasingly focuses on services long-run growth is going to come frominnovationintheirdelivery,bothproductandprocessinnovation.Thisbook provides an ideal map for researchers to get up to speed on the latest work and thinking. Professor Nicholas Bloom Professor of Economics, Stanford University, California, USA Senior Associate of the Centre for Economic Performance London School of Economics, London, UK Thenatureofserviceinnovationcontinuestoevolveasserviceofferingsdominate over product offerings in developed economies around the world. Today making senseofserviceinnovationisatoppriorityinindustry,academia,government,and v vi Endorsements thesocialsectors.TheHandbookofServiceInnovationprovidesaup-to-datesetof concepts, examples, and perspectives on this intellectual deep and economic significant area of research, practice, education, and policy. Dr. James (“Jim”) C. Spohrer Director, IBM University Programs (IBM UP) and Cognitive Systems Institute IBM Research—Almaden, San Jose, USA The mechanismsbywhich servicescan innovate seem almost asnumerous as the arrayofservicesthemselves.And,thenumbersofeacharedestinedtogrowasthe percent of the workforce in service jobs continues to increase. The editors of this volume have ranged far and wide to provide us with some of the best current thinkingonserviceinnovation—howithappens,whereithappens,andhowitcan be managed most appropriately. These articles illustrate the many ways in which services interact with our lives and the ways our lives interact with services—to change them and to improve them. Professor Roger W. Schmenner Professor Emeritus of Operations Management Kelley School of Business, Indiana University, USA In this era of unparalleled service innovation, it is more vital than ever that we understandhowtoinnovateandwhatmakesserviceinnovationssuccessful.From high-tech services to hospitality to industrial and mass services, innovation is the key to competitive success, and this book is testimony to its importance and complexity.Thiscollectionofinterestingnewresearchprovidesmanycompelling insights and managerial prescriptions that should help both academic and practitioneraudiencesbetterappreciatethedesign,development,andmanagement of service innovation, and improvement of service businesses and processes. Professor Craig Froehle Professor, Operations & Business Analytics University of Cincinnati, Ohio, USA Inmanyeconomies,theservicesectoraccountsforthemajorityofeconomicvalue addedtoday.Andwhileservices’economicimportanceisgrowing,thenumberof settings in which they are delivered is increasing as well. This means that no longer only pure service firms have to think about their capabilities for service innovation, but also government agencies and many industrial firms that are developing explicit service offerings and product service bundles. In addition, services are increasingly created and offered within complex networks and “eco- systems”—often across industry borders and applying advanced information and Endorsements vii communication technology. This adds additional challenges and complexity for today’sservicemanagers.Akeystrengthofthe‘HandbookofServiceInnovation’ is its integration of numerous perspectives and backgrounds in the discussion of service innovation. Aspects covered include managerial challenges and capability building, the interplay of service innovation and technology, the roles of design andcreativity,andcollaborativeinnovation.Thisintegrativeandpractice-oriented approach make the handbook an important asset for managers in any kind of service organisation. Dr. Gerhard Satzger Director, Karlsruhe Service Research Institute Karlsruhe Institute of Technology (KIT) Englerstrasse, Karlsruhe, Germany This Handbook deals with a most elusive yet real and important issue of innovationinservices.Itcoversawidearrayofissuesandtopicalthemes,notleast open innovation, servitisation, frugal service innovation and co-creation. It looks at a wide variety of sectors in the private sphere but also at the public sector and Universities. It combines theory, practice, prescription, capability requirements and design. Despite its apparent diversity, the volume is coherent and well integrated. Overall this is quite impressive feat, in general and given the importance of services and intangible assets in today’s semi-global economy, in particular.Amustreadforstudents,scholarsandpractitionersalike,theeditorsare to be congratulated for making this happen. Professor Chris Pitelis University of Bath, and Queens’ College University of Cambridge, UK As a product developer, and as an educator of future product developers, I’m truly delighted to learn about the Handbook of Service Innovation. Service design and innovation aspects have become more and more important component of any new product development initiative. Without exception, our partners in manufacturing industry with B2B products are showing strong interest in services. The Handbook of Service Innovation will be warmly welcomed by a wide audience. Professor Ekman Kalevi Director, Design Factory and Professor Aalto University School of Science and Technology Finland viii Endorsements Services innovation is an important field of study. This Handbook contributes to thegrowingliteraturethatexplainsinnovationinservices,itsnature,processesand outcomes. Professor Mark Dodgson Director, Technology and Innovation Management Centre University of Queensland Business School Brisbane, Australia This is a comprehensive and stimulating compilation devoted to service innovation. It gives an excellent overview of the current state of underpinning Service Innovation for global economy. Professor Haluk Demirkan Professor of Digital Service Innovation & Business Analytics Founder & Executive Director of Center for Information Based Management Milgard School of Business University of Washington—Tacoma, USA Co-Founder & Board of Director International Society of Service Innovation Professionals (www.issip.org); Track Chair for Analytics Mobile & Service Science at HICSS (www.hicss.hawaii.edu/) The field of service innovation and services sciences is expanding at a rapid rate. Theacademicworkandresearchishelpingbringclaritytotheneweconomiclogic ofaservicesbasedeconomy.Thisnewlogicisprovingtobedramaticallydifferent from a product and consumption based economy. The Handbook of Service Innovationisanexcellentcollectionofthelatestthinkinginthefield.Thediverse and cross-discipline nature of the topics covered in the handbooks reflects the expanding scope and breadth of service innovation. Greg Oxton Executive Director, Consortium for Service Innovation California, USA TheAustralianServicesRoundtable(ASR)applaudsthecreationoftheHandbook of Service Innovation which provides a comprehensive update and set of insights aroundtheveryimportantissueofdrivinghigherlevelsofinnovativeoutcomesin theserviceseconomy.ASRnotesthatserviceindustriesaccountfor70%ofworld Endorsements ix gross domestic product (GDP) and employ about 3.2 billion people. The detailed studyofinnovationinserviceshashistoricallybeenlackingandthisHandbookisa highly significant resource for private and public sector services professionals alike. Services is ultimately a “people-to-people” endeavour and this important dimension is explored extensively in the Handbook. ASR is very pleased to endorse this important work and hopes that it provides a springboard for further research developments and improved outcomes. Ian Birks CEO, Australian Services Roundtable Canberra, Australia The Handbook of Service Innovation is a must read for service managers and senior executives. It provides a comprehensive perspective on the challenge of service innovation. The book carefully addresses each aspect of service innovation. It addresses the true import of service innovation, provides an extensive literature review, identifies the skills and capabilities underpinning serviceinnovation,exploresgovernanceandorganizationalstructurethatimpinge onthischallenge,andpresentsnovelthinkingondesigningandmanagingservice innovation. For the astute reader, this book will also open up new avenues for thinking about the application for service innovation thinking. The book spans organizational settings in both the public and private sectors, while also drawing on international experience. Professor Aditya Ghose FIEAust, President, Service Science Society of Australia Director, Decision Systems Lab School of Computer Science and Software Engineering University of Wollongong Wollongong, Australia Productivity growth in the service sector has lagged far behind manufacturing despite its growing dominance in terms of GDP and employment in a vast many of the leading national economies. It is well understood that the key to service productivitygrowthisinnovationandnewmodelsofdesigning,implementing,and delivering services. This handbook of service innovation edited by Dr. Agarwal, and Professor Selen, Roos, and Green is put together in this spirit. It addresses a rangeofimportantthemesthatbearstronglyonserviceinnovation.Theseinclude open innovation and crowdsourcing, servitization, semantic and service web, sustainable and frugal service design, and creativity and community engagement, x Endorsements among others. The chapters in this volume taken together provide an original perspectiveonserviceinnovationandofferusefulguidelinesforpromotinggreater innovativeness at every stage ofthe service life cycle. Professor Joseph G. Davis Professor of Information Systems and Services The University of Sydney Sydney, Australia In this book, Agarwal, Selen, Roos and Green present a breadth of diverse topics necessarytogainpracticalinsightintodesigning,managingandgrowingcomplex innovative services that benefits businesses and society. Drawing on latest research, and best practices, The Handbook of Service Innovation is a must read for those seeking to learn more about skills and capabilities needed to stay competitive in our growing service economy in the 21st century. Yassi Moghaddam Executive Director, International Society of Service Innovation Professionals California, USA