4 Service Innovation Flashcards
Netflix: How was innovation created? What kind of innovation was it?
Combining elements which are already present (partly in different industries) as well as own existing assets (movies) were key -> “architectural innovation”
ICT – in particular, app and internet technology – enabled Netflix for quickly implementing and scaling its service -> “technology push”
Netflix: How were incumbents in the industry affected?
- Low entry barrier in services to enter industry
- For incumbents it would have meant to cannibalize business -> „boiling frog/investor‘s dilemma“
How did Netflix engage third-party ideas?
Contest for recommendation draws external ideas -> „open innovation“
Name 4 short definitions of innovations
- New products or processes
- New combination of need and means
- Process of new technology application
- Invention + exploitation
Give one sentence definitions of inventions, improvements and innovations
Invention
• Discovering or developing a new way to do something.
Improvement
• Making something incrementally faster, better or cheaper
Innovation
• Economic application of an invention or improvement that significantly changes the existing balance among competitors in a market, forcing other players to adapt
Name 5 “facets” of possible innovation and an example for each
§ The introduction of a new good - i.e. one with which consumers are not yet familiar – or of a new quality of a good -> IPod
§ The introduction of a new method of production, which need by no means be founded upon a discovery scientifically new, and can also exist in a new way
of handling a commodity commercially. -> Ford assembly line, 3D printing
§ The opening of a new market, i.e. a market into which the particular branch of manufacture of the country in question has not previously entered, whether or not this market has existed before. -> Mercedes, Smart: Small cars
§ The conquest of a new source of supply of raw materials or half-manufactured goods, again irrespective of whether this source already exists or
whether it has first to be created. -> Skype
§ The carrying out of the new organization of any industry, like the creation of a monopoly position (for example through trustification) or the breaking up
of a monopoly position - > mail delivery
Challenges of service innovation
- Often requires organizational change
- Industrialization vs. individualization
- Few options for patents
- Hardly any objective quality measures
- Innovation pull vs. push
- Often no dedicated R&D unit
Why may „Service Innovation“ be more
challenging to understand than goods innovation?
- Service innovations are rarely R&D
- > driven by practical experience.
- organizational changes might be needed
-> support from external stakeholders or even from a
collaboration between a network of firms. - innovation activities are less structured than in manufacturing
- employees are more involved in the innovation process.
- Innovation theory is based on the analysis of technological innovation in manufacturing
- > „fuzzy“ nature of service outputs makes them harder to understand and analyze.
Why is Measuring innovation success in services is a special challenge? Compare measures for manufacturing with their applicability to services
Counting Patents
->Services not patentable in most countries
Size of R&D Department, level of formal education, Share of revenue spent on R&D
-> Typically no formal R&D department
Share of revenue from new products
-> Share of revenue from new services
Time to market for new product
-> Time to market for new service
Survey Image/Reputation with customers
-> Survey Image/Reputation with customers
draw the Henderson and Clark innovation Framework and give examples
see page 18
y: Linkage between core concepts and components
x: core concepts
Unchanged + reinforced: Incremental
-> counselling session with computer
Unchanged + overturned: Modular
-> ATM
Changed + reinforced: Architectural
-> Mobile payment
Changed + overturned: Radical
-> Online Banking
Explain architectural innovation shortly
Architectural innovation combines technological innovations already in place in new ways
Explain architectural and radical innovation on the example of the digital camera
Architectural side: Existing components
- Low-resolution TV camera sensor
- Cassette tape to store picture (took 23 seconds)
- TV for displaying picture
Radical side: Pictures and videos can be uploaded on social networks and platforms easily to share them, access them from everywhere,…
Explain architectural innovation on the example of Mercedes Boost
transportation service designed to transport children safely and reliably to and from activities
+ Glympse: Real-time tracking of the vehicle
+ App for push notification for parents
+App to plan and schedule
Why are Services ideal candidates for architectural
innovation?
Services are typically offered as bundles whose architecture is easier to change than that of products – especially in ICT based services
ICT-based services can be rolled out on existing ICT infrastructure (Internet, etc.), bypassing physical distribution.
Example: Skype for iPhone got 1 million downloads within 2 days
New combinations can be tried out with little cost.
Example: Linkedin interface
Users may not be able to build a whole new product or a new service component, but they can link existing service components in new ways
Example: Mash-Ups
What are Mash-Ups?
Mashups are architectural innovations – they combine
existing service elements to make them more useful
Example:
- Hotel booking + map visualisation by google maps
- flight booking + get to know if there’s someone on the plane you know from your social networks LinkedIn or Facebook so you can book the seat next to each other
