Service Innovation in Industrial Contexts

Both academics and practitioners emphasize the importance for product firms of pursuing service innovation. Despite a strategic focus on service-led growth, however, many firms struggle to succeed with their service innovation initiatives. In order to inc-rease our understanding of the nature of service innovation in pro-duct firms, this chapter discusses the specificities in, and dynamics of, service offerings, service processes, and business models in in-dustrial contexts. First, it outlines key differences between new product development and new service development, and highlights issues like sales and delivery, which firms frequently fail to accom-plish. While product development is generally ‘back heavy’ with many resources required for prototyping and technology develop-ment, service development is more ‘front heavy’ with more weight placed on market introduction, pilot testing, and securing the skills, systems, and infrastructures for sales and delivery. In terms of ser-vice offering innovation, a taxonomy based on service focus and revenue model is presented. In order to better understand service process innovation, Larsson and Bowen’s (1989) service design ty-pology is then revisited. Finally, common service business model archetypes are introduced and discussed.