Applying open innovation to a service

It is easier to trace the innovations that are present in a product than it is in a service. However, it also reflects the challenge of applying models of innovation in service contexts.

Devising a process for a new service

Devising a process for developing and testing a new service is difficult. This is because a customer is often part of the service delivery. As a result, the quality of the service may depend on the way a customer behaves within the process which in itself may be variable and therefore difficult to predict.

For example, the delivery of a patient’s experience in a hospital will depend on their experience and emotions as well. Testing it would be more difficult as the same emotions would not be easily replicated in a test environment, as would likely be the case with the testing of a product.

Open innovation does apply in service contexts

Yet research has found evidence that open innovation does apply in service contexts as well (Chesbrough, 2011). Oliveira and Canhão (2014) found cases where the development of a new service was guided by customers – indeed several where individual customers innovated.

Interestingly, many of these were in the health care sector where patients, despite the relative complexity of the underlying science and technology, were able to introduce new services to improve their overall experience.

Many of these related to simple solutions for daily routines, for example, administering drugs, but their findings confirm that such innovative behaviour is widespread.

Services are seen as a one-way offer

Oliveira and Canhão (2014) argue that services are often seen as a one-way offer, ie a provider ‘produces’ a service which is then purchased by a customer.

Think, for instance, of your experience when you visit a theme park. The theme park owner or manager is producing the service, eg by designing an exciting new ride and then by managing the process you will be experiencing. Then you purchase it every time you go to the theme park.

Although this is the experience that most of us go through, there will be a group of customers that will find ways of improving it. This group will be able to identify needs before others and, crucially, they will have the technical skills to do something to address these needs.

Lead-users

This group often referred to as ‘lead users’, has been found to have a profound effect on the way innovation is being managed. In the paper, there are several examples where this has taken place for a service.

For instance, programmers, who are also users of online banking, have developed codes to improve their own banking experience. Examples extend to the health sector where such examples of innovating, using the crowds, have been found to be more common place than might be imagined.

The point with such ‘crowd-sourcing’ cases is that the users benefit from using the innovation rather than selling it. Therefore they are better positioned to innovate, after all, information about need originates with users. Taking this further, given that they are close to the market they are also better able to identify or even drive new trends.

Finally, and given that such innovations are already developed, they are likely to also be more cost-effective.

Reference

Chesbrough, H, (2011), Open Services Innovation, Jossey-Bass, San Francisco.

Oliveira, P. and H. Canhão (2014), ‘Users as Service Innovators: Evidence Across Healthcare and Financial Services’, in K. Lakhani and D Harhoff (eds.), Revolutionizing Innovation, MIT Press, Cambridge, MA.