Creating new markets through service innovation
- ISSN: 1532-9194
- ISBN: 1532-9194
Service businesses now make Lip about 70% of the aggregate production\nand employment in the OECD nations, yet true innovation is rare in the\nservice sector. Many companies incrementally improve their offerings,\nbut few Succeed in creating service innovations that launch new markets\nor reshape existing ones.\nThe premise of this article is that by thinking about a service in terms\nof its core benefits and the separability of its use from its\nproduction, managers can more easily see how to outinnovate their\ncompetitors. Before they can do so, though, they must understand the\ndifferent types of market-creating service innovations as well as the\nfactors that enable them.\nThe authors introduce and describe a two-by-two matrix whose taxonomy\nhelps managers think strategically about service innovations that can\ncreate new markets. The dimensions of the matrix refer to the type of\nbenefit offered and the degree of service separability. The article\nreferences best-practices examples including Enterprise Rent-A-Car,\nFedEx, eBay, Starbucks, Cirque du Soleil, Google, Southwest Airlines,\nWalgreens, Netflix and Barnes & Noble to illuminate each of the four\ncells of the matrix and explain the value to managers of understanding\nthe dynamics of the cell that is most applicable to their service\ninnovation efforts.