Innovation in any business organization is critical in ensuring that the organization is at the forefront of competitiveness. Product innovation has been covered in the most literature, as different researchers have extensively looked into the topic. On the other hand, service innovation strategy is defined by Möller, Rajala & Westerlund (2008) as the introduction of novel ideas with the aim of providing new ways of delivering benefits through continuous operational improvement across the organization. It has been seen that new customer experience has not been covered by many researchers. This paper aims to fill the gap by exploring different literature on service innovations across different industries. The paper will seek to answer the conceptual question; is the service innovation strategy and process implementation similar across industries? The conceptual paper will be significant in enhancing the current marketing field with the different strategies as employed in different across industries.
Innovation is considered as the strategic approach that helps to attain the overall goals and objectives of the company. According to Amidon (2009) innovation within an organization is not only limited to the ability of the organizational goals to be achieved but also extends to the ability of the organization to influence the society in one way or the other. Key to ensure that organizations are able to be innovative is the organizational leadership and its culture. A leadership that is able to embrace and appreciates the role played by innovation to ensure that the organizational goals are achieved will readily employ leadership skills to ensure that innovation is achieved within the organization. Furthermore, they will realign the organizational goals to reflect and motivate other stakeholders to be innovative for the effective achievement of the organizational goals. Hence, as Carlborg, Kindström & Kowalkowski (2014) urges innovation within an organization is purposeful and goal oriented as it ensures that the organization is able to meet their goals.
Though innovation it can be evaluated that focus can be given the concept of product orientation so that demand can be enhanced in the market. Möller, Rajala & Westerlund (2008) observes that the less focus on service innovation by most researchers has been as a result of the less definitive significance that the service innovation elicits. This is even though it is a kind of innovation that has far reaching impact on the organization.
Service innovation is defined by Carlborg, Kindström & Kowalkowski (2014) as a new and effective way of delivering services by an organization to ensure that customers are served efficiently and gain satisfaction from the organization’s product. Service innovation is a wholesome concept in which it involves exploring the customer interaction channels, utilization of technology or initiating an effective distribution system. Service innovation focuses on the ability of an organization to ensure that the products it offers effectively reach out to the customer, through initiating measures to facilitate the product movement without compromising on the product quality. For successful service innovation to be realized, Witell, Snyder, Gustafsson, Fombelle & Kristensson, (2016) urges that the key aspects of innovation management need to be adopted. These aspects include; innovation process, cross-functional organization, and implementation of tools/technology. Grawe, Chen & Daugherty (2009) further urges that these aspects are essential for the success of any organization in any industry.
In a study conducted by Rahman, Taghizadeh, Ramayah & Ahmad (2015) on service innovation in the telecommunication industry, it was observed that most industry players continuously employed customer innovation strategies to achieve success. The industry players focused on continuous service innovation processes to ensure that customer satisfaction is achieved. They further utilized deployment of technological tools to enhance efficiency and reduction in costs and also the approach plays a critical role in ensuring that the telecommunication companies remain competitive in the market.
Service innovation has also been immensely witnessed in the service industry. According to Lusch & Nambisan (2015), the service industry was not prone to adopting innovations like its counterpart in the production industry, currently the service industry, in general, is embracing far reaching service innovations. The technological innovation has seen different players aspects of innovations. At the frontline, the deployment of technological tools has been quite rampant and continuous. The hotelier and transport sectors for example as Witell et al. (2016) observe that deployed technology can enhance effectiveness in the delivery of service to clients. Customers utilize internet-based technological applications to make reservations and pay for their services. Furthermore, they use technology to market their products and reach out to the clients. As a result, these sectors in the industry have been able to enhance the effectiveness through which they serve their clients, enhance transparency of its operations and reduce operational costs.
Product based industries also employ service innovation as a strategy which focuses on meeting customer satisfaction. As a result, service-based innovation is more customer oriented which demands customer involvement. The service innovation strategy design and implement which also focuses on the customers’ views. The nature of customer orientation in the service innovation design initially demanded the need for more labor for it to be successfully implemented. This made product based industries such as manufacturers to initially scale down on service innovation in their business as it made the production process to be expensive (Gallouj, & Savona, 2009). But with the continuous innovations in the information technology sector, the labor cost associated with the service innovation has been scaled down. Hence manufacturers are also key implementers of the service innovation as it serves to enhance the relationship with its customers and enhance product competitiveness in the market.
Eisingerich, Rubera & Seifert (2009) observes that service innovation is now a key cross-organizational function that plays a critical role to ensure that the organization’s goals are achieved. The employees are now considered as an important factor that ensures that service innovation is achieved. Through effective initiatives such as teamwork, good organizational leadership, and conducive environment, service innovations can only be attained through employees as they strive to ensure that organizational goals are achieved by enhancing the overall level of satisfaction. With the goal of ensuring that customer satisfaction is guaranteed across all the industries, most of the business organizations continuously employ service innovation strategies to ensure that they are able to have a competitive advantage in the marketplace.
To support this conceptual paper on service innovation strategy, two theories that relate to the topic will be explored. The customer orientation theory will be explored.
The customer orientation theory
The customer orientation theory urges that all businesses are designed towards the customer with the aim of delivering value for their money. The customer needs to appreciate the value provided by the product which is offered by the company. When the customer gets the value of their money from the product offered by a business organization, there is a high likelihood that their satisfaction would be met hence their value for the business. As a result, a business organization is able to meet its objectives and be competitive in the market (Gummesson, 2008).
To achieve goals and objectives it is necessary for the business to focus on being customer oriented. According to Amidon (2009), the customer for any business is the primary stakeholder as they determine how successful the business is in the market. With customers, the business organization product can be effectively successful and enable it to be key in the market. Profitability of the business is also anchored on the ability to meet customer satisfaction and the customer gaining value from the products offered in the market. So, companies who want to achieve success will emphasize on the approaches that will help in maximizing the overall needs of the market and also customer value can be enhanced.
To ensure that the customer is continuously able to draw value from the products offered by the business, it has become the basis for the business organization to adopt different strategies to ensure that success is accomplished. The key strategy utilized to ensure that the business together with its products is business oriented is the service innovation strategy. Business employs service innovation strategy to ensure that the customer is able to get the value as per the prevailing market demands continuously. Hence service innovation becoming a continuous process. According to Witell et al. (2016), most businesses employ service innovation strategy as a competitive approach to ensure that they have a competitive advantage in the market through creating more value to the customers when compared to the competitors. To achieve, businesses employ different approaches especially service innovation to enhance the value of the customers gets from the business.
The customer orientation theory hence effectively relates to the study topic as service innovation is utilized as a strategy to ensure that customer satisfaction which should be attained. Customer orientation does not limit to business firms within a specific industry but rather applies to every business organization. With the need to be highly competitive, continuous innovation serves to enhance the ability of the business to keep up adding value to its products for the clients to get the value of their money. The value is drawn by enhancing efficiency in serving the customer and giving after buying services to the clients (Grizzle, Zablah, Brown, Mowen & Lee, 2009).
Service innovation strategy in any organization across the industries is composed of three key components; the innovation conditions, the innovation type, and innovation process. This model critically explains the significance of service innovation across organizations in different industries within any economy.
For service innovation to be considered as a key strategy in the business processes of an organization, the internal and external environment has to either support the innovation or force the firm to adopt service innovation. According to Lightfoot & Gebauer (2011) firms that are designed to be competitive in the market tend to embrace innovations as a key strategy to ensure that they are competitively advantageous in the market. Through exploring different approaches it can be easy to enhance the value of the customers by offering the products in the market and with this the organization has more chances to stand out. Witell et al. (2016) observed that customer value is achieved by ensuring effective service delivery and it is done at no or limited cost without compromising the quality of the product. Efficiency and effectiveness in the delivery of the product can be achieved through innovations such as increased customer care and optimization of processes in regards to serve the customers in ordering of products or executing sales.
The internal environment of a firm needs to have a conducive environment that allows its employees to work as a team so that they can come up with strategies to ensure that effective service innovation strategies are composed. The conducive environment is supported by a responsive organizational leadership structure that prioritizes the need for ensuring that customer satisfaction which should be achieved. With organizational employees working as teams, they are likely to come up with innovative service strategies that will guarantee customers of the value they gain from the company. As a result, the company stands to benefit from increased sales of products and hence profitability. Grawe, Chen & Daugherty (2009) observes that with the competitive market advantage the business organizations stand to gain, businesses across industries are on a continuous drive to achieve service innovation to ensure that they are not outplayed in the market. Most market leaders in the industry focuses on general innovations with a keen interest in service innovation by ensuring that the internal environment is supportive (Lightfoot & Gebauer, 2011).
The external environment especially competitors in the market also play a key role in setting the innovation conditions. As Carlborg, Kindström & Kowalkowski (2014) urges major competitors in any market, tend to be on the lookout on what strategies their competitors are employing to be ahead in the market. As a result, they tend to adopt the strategies to achieve the competition in the market. Hence, market players will readily adopt service innovation as a strategy to enhance their competitiveness viability.
The type of service innovation strategy adopted by a firm tends to differ from one industry to the other. Lightfoot & Gebauer (2011) observes that industry is shaped by trends in that a trend aspect relates to service innovation that should be employed by all the market players. For example in the telecommunication industry, service innovation tends to be information technology oriented. In that, the service innovation is a key strategy in ensuring that market players are competitive. Service innovation strategy in the telecommunication industry is majorly focused on ensuring that customers satisfaction which enhances efficiency in the products of the market players thereby ensuring that the customer gets more value. Furthermore, industry players continuously ensure that the services are efficiently accessed by the customers hence reducing the costs of accessing the service. Salonen (2011) observes that innovative service strategy that seems to be effective in the market is quickly adopted by the market competitors to ensure that they are not left out in value creation and meeting the satisfaction of their customers.
The type of service innovation adopted by organization differs based on the service gap that the firm needs to fill. In organizations where customer care is identified as a key gap that needs to be filled, the service innovation strategy will be geared towards ensuring that the gap is filled (Amidon, 2009). Carlborg, Kindström & Kowalkowski (2014) also urges that for service innovation to be a success, there is a need to ensure that there is an evaluation within an organization to ensure that specific strategies that will guarantee positive results are in place to enhance the value the customer gets from the products offered by a business. Hence, the type of service innovation adopted by a firm operating within an industry is specific to the needs of the firm.
The implementation of a service innovation strategy is a process. For any organization to ensure that the service innovation strategy is a success, there is a need to ensure that key parameters such as the goal that the innovative service strategy needs to achieve and the cost of implementing it (Ordanini & Parasuraman, 2011).
For a service innovation strategy to be effectively implemented, there is a need for all stakeholders within any organization in any industry to support the need for the service innovation. The need might arise as a result for addressing dwindling sales or negative reviews from customers which are critical in influencing the competitiveness and profitability of the business. With the need to address the short fallings of the firm, all the stakeholders including the staff and organizational leadership have to be considered so that it can be easy to ensure that an appropriate service measure is suggested and implemented. As Ordanini & Parasuraman, (2011) observes, the success in implementing service innovation is anchored in the ability to ensure it’s owned by the organizational staff for the strategy to be dispensed with a passion to the customers. How the service innovation process is successfully implemented, differ from one industry to another depending on the product that the business offers to the customers. Customers have to get the value and fulfillment from the service innovation process for the goal to be considered accomplished (Salonen, 2011).
Service innovation, therefore, is goal oriented, and each player across the industries focuses on service need to ensure that customer satisfaction is achieved.
Theoretical implication: From the analysis of the literature and the conceptual model, this study’s theoretical implications will impact have a great impact on marketing educator. From the review, it is clear that service innovation is a critical strategy across the industries. Every business organization has to ensure that it creates value for its clients and with the highly competitive nature of the marketplace, the business firms need to undertake service innovations (Gummesson, 2008) continuously. Marketing educators hence need to instill in their learner’s skills to ensure that they embrace the significance of service innovation strategies in business as a key avenue of ensuring that the organizational goals are accomplished.
Practical implications: Marketing practitioners need to always strive in ensuring that customers are able to get value from the products offered by their firms. From the study, it is clear that firms that are unable to embrace innovative service strategies are likely to be outcompeted in the market as customers prefer competitors offering customer valued services. It is, therefore, crucial for marketing practitioners to ensure that they are able to continuously explore service innovation strategies and processes to ensure that they remain competitive in the market.
Limitations: The limitation of my proposed conceptual framework work is that it takes a service innovation strategy as a linear process. In reality, service innovation can be sporadic as per the arising need.
For future research, I would recommend that a study on the types of innovative service strategies utilized by across industries to be conducted.
Conclusion
From the review of the literature, it is clear that service innovation strategies are critical for the success of any business. Businesses need to adopt service innovation strategies to ensure that customer continuously gain value from the firm’s products and enhance their competitiveness in the market. Firms across industries utilize service innovative strategies as an avenue of ensuring that they remain relevant in the market as the value of their products continues to be appreciated by consumers. Service innovation strategies were found to be highly employed in the service-oriented industry like the hoteliers who continuously adapt a wide range of service innovative strategies, physical product-based industries like manufacturers also employed service innovations to address the needs of their customers. Hence, the significance of service innovation is recognized across industries and adopted as per the arising need in the specific organization within the industry. The successful adoption of service innovation strategy is based on the internal factors and the external market factors within the organization.
References
Amidon, D. M. (2009). Innovation strategy for the knowledge economy. Routledge.
Carlborg, P., Kindström, D., & Kowalkowski, C. (2014). The evolution of service innovation research: a critical review and synthesis. The Service Industries Journal, 34(5), 373-398.
Eisingerich, A. B., Rubera, G., & Seifert, M. (2009). Managing service innovation and inter-organizational relationships for firm performance: To commit or diversify?. Journal of Service Research, 11(4), 344-356.
Gallouj, F., & Savona, M. (2009). Innovation in services: a review of the debate and a research agenda. Journal of evolutionary economics, 19(2), 149.
Grawe, S. J., Chen, H., & Daugherty, P. J. (2009). The relationship between strategic orientation, service innovation, and performance. International Journal of Physical Distribution & Logistics Management, 39(4), 282-300.
Grizzle, J. W., Zablah, A. R., Brown, T. J., Mowen, J. C., & Lee, J. M. (2009). Employee customer orientation in context: How the environment moderates the influence of customer orientation on performance outcomes. Journal of Applied Psychology, 94(5), 1227.
Gummesson, E. (2008). Extending the service-dominant logic: from customer centricity to balanced centricity. Journal of the Academy of Marketing Science, 36(1), 15-17.
Holahan, P. J., Sullivan, Z. Z., & Markham, S. K. (2014). Product development as core competence: How formal product development practices differ for radical, more innovative, and incremental product innovations. Journal of Product Innovation Management, 31(2), 329-345.
Lightfoot, H. W., & Gebauer, H. (2011). Exploring the alignment between service strategy and service innovation. Journal of Service Management, 22(5), 664-683.
Lusch, R. F., & Nambisan, S. (2015). Service innovation: A service-dominant logic perspective. MIS quarterly, 39(1).
Möller, K., Rajala, R., & Westerlund, M. (2008). Service innovation myopia? A new recipe for client-provider value creation. California management review, 50(3), 31-48.). Service innovation myopia? A new recipe for client-provider value creation. California management review, 50(3), 31-48.
Ordanini, A., & Parasuraman, A. (2011). Service innovation viewed through a service-dominant logic lens: a conceptual framework and empirical analysis. Journal of Service Research, 14(1), 3-23.
Rahman, S. A., Taghizadeh, S. K., Ramayah, T., & Ahmad, N. H. (2015). Service innovation management practices in the telecommunications industry: what does cross-country analysis reveal?. SpringerPlus, 4(1), 810.
Salonen, A. (2011). Service transition strategies of industrial manufacturers. Industrial Marketing Management, 40(5), 683-690.
Witell, L., Snyder, H., Gustafsson, A., Fombelle, P., & Kristensson, P. (2016). Defining service innovation: A review and synthesis. Journal of Business Research, 69(8), 2863-2872.
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