Definition of service innovation

Service innovation takes place in different forms using different factor inputs such as IT hardware, knowledge, and investment in staff training, marketing and research and development (R&D). Service innovation does not necessarily take place in formalised R&D laboratories or research centres.

Service innovations are difficult to protect and can be easily imitated. This is the case with several knowledge-intensive business services such as boutique business consultancies offering creative tailored solutions to their customers.

Financial institutions invest large amounts in financial innovation and information and communications technologies that do not count as R&D or innovation in the UK. Service innovation in this case refers to the innovation and improvement of processes and delivery of financial services.

Several leading financial services firms have now realised the need for talent in service innovation, and are investing heavily in senior managers from outside the industry (most notably, from manufacturing enterprises) to drive the alignment of technology, human resource management, and strategy. In retail establishments, such as fashion boutique houses or convenience stores, service performance and productivity can be heightened through innovative use of the sales area, or improved service delivery, and strategic choice of locations.

As services contribute a huge percentage of GDP in developed economies such as the UK, US and Singapore, service innovation is important to the competitiveness of such economies.[1]

*Service Measurement and Definition: Challenges and limitations Battisti, G., Dwivedi, Y. Kuah, A.T.H., and Lages, C. (2013) In Haynes, K. and Grugulis, I (Ed.), Managing Services: Challenges and Innovations (Edited) (1st). Oxford University Press: England.

FT Articles & Analysis

No articles are associated with this term

Related Terms