Wednesday, 21 January 2009

Service Innovation Part 1: Definitions.

As a notion, Service is probably among the most undefined. But surely Innovation of Services is even worse as Innovation is undoubtedly the most (mis)used word today.

Following Schumpeter (yes, the guy from the 1930's) I'm a stubborn advocate of the following definition:

Innovation changes the values onto which the system is based 

A clear example of a changing value system, and the gale of destruction that made Schumpeter famous, is the storm that is raging today through the (American) car industry. Big = out, economic = in, design rules stronger than ever.

It is interesting to note that the changes in the customer value system are not caused by competitors but - for a large part - by a wider move in society towards green, sustainability and ofcourse the mounting pressure from relatives and the general public to act environmentally sound. So the gale has origins outside the car industry, which probably explains my stubborness to a large extend.

Now on to service. What is it? Ever since Lusch and Vargo busted four populars myths about services being intangible, heterogenous, inseparability (of production and consumption) and perishability (see JOURNAL OF SERVICE RESEARCH / May 2004)  it is clear that services involve or even consume products. Anyone who ever visited a restaurant will see that this is clearly the case. 

I must admit it remained a mistery to me too until I met two old scolars in San Fransisco last year: Joel Goldhar and Daniel Berg. I really think their definition has potential to become a classic:

It clearly is a service when the process is the product and the customer/user is in control of both the design of the output/outcome and the management of the process

To me this definition has a lot of potential to take away most of the current confusion around the services notion as it neatly defines who is responsible for what and it ends the confusion around the role of (physical) products as it clearly states that the process is the product.

I think that coming up with an even better definition for "service" would be tough nut to crack. So I won't attempt and use this definition and the one for innovation above to move on next time to the subject of Innovation in Services. 

2 comments:

Bart said...

Harold,

interesting definition, though I do not get it yet. Could you specify what you mean with the design of the output and management of the process?
Preferably with some (simple) examples?
Thanks a lot!

Bart

Samuel Driessen said...

Just wanted to let you know I'm following the series of posts on services and enjoying them. No questions yet.