CHARACTERIZING AND COMPARING SERVICE INNOVATION IN MANUFACTURING FIRMS AND SERVICE ORGANIZATIONS

One of the major trends within manufacturing industries is initiatives to expand service and aftermarket businesses. Goods and services are integrated in total solutions, and the customers pay for delivered functions rather than hardware. However, many traditional manufacturing firms have found it difficult to make decisions about what service to develop and launch. Challenges include assessing the quality of the service, customer value, and personnel and equipment requirements. Service organizations have more experience in assessing such qualities and it may be possible to transfer their approaches to manufacturing firms. This study compares processes and methods for service innovation at a manufacturing firm with those at three service organizations. Similarities and differences are identified. A framework is then constructed that proposes a basic typology of service innovations. The framework enables a firm to analyze its service innovation situation and proposes suitable methods dependent on the characteristics. The framework is applied to the situation of the studied manufacturing firm and strategic pathways for this firm are discussed.