Service Innovation Analytics: Leveraging Existing Unstructured Data to Assess Service Innovation Capability

Service Innovation Analytics: Leveraging Existing Unstructured Data to Assess Service Innovation Capability

Marc Kohler (Karlsruhe Service Research Institute, Karlsruhe Institute of Technology, Karlsruhe, Germany), Niels Feldmann (Karlsruhe Service Research Institute, Karlsruhe Institute of Technology, Karlsruhe, Germany), Steven O. Kimbrough (The Wharton School, University of Pennsylvania, Philadelphia, PA, USA) and Hansjörg Fromm (Karlsruhe Service Research Institute, Karlsruhe Institute of Technology, Karlsruhe, Germany)
Copyright: © 2014 |Pages: 21
DOI: 10.4018/ijismd.2014040101
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Abstract

The importance of innovation for firms for gaining competitive advantage has been widely acknowledged. Innovation in services exhibits some particular challenges. In order to support formal service innovation management, several frameworks of capabilities for service innovation have been published in recent years. However, these frameworks often do not support the use of existing information to apply them to a firm's context and to guide managerial decisions. In this paper the authors aim to show that a firm's service innovation capability can be operationally diagnosed with the help of such a framework in a more concrete way, using existing unstructured data. Building on established methods in text mining, the authors are working towards an approach to realise this. The paper outlines the approach and presents the encouraging results from our exploratory study, as well as avenues for further development of the approach and its implementation in a management information system.
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Introduction

Many service ecosystems are undergoing significant changes. The banking industry was surprised by Starbucks, introducing a mobile payment programme in 2011, the same year that the BMW group, amongst other car manufacturers, introduced their car sharing service DriveNow and have begun to change the landscape of urban transportation. Starbucks, in January 2011, integrated their previously used loyalty card programme into a mobile application. Arguably thanks to seamless payment integration – the customers’ card codes got stored in the application to allow a convenient and fast checkout process – Starbucks was already processing 26 million mobile payment transactions by December 2011, a number that has been growing ever since (Mobile Commerce Daily, 2012; Starbucks Coffee Company, 2011). BMW introduced their DriveNow programme in cooperation with car rental firm Sixt in March 2011 and by the end of 2012, they had over 70,000 users in Germany, servicing Berlin, Munich, Dusseldorf, and Cologne (BMW Group, 2011, Tagesspiegel, 2013). As the first city outside of Germany, the programme had also been launched in San Francisco. Like Starbucks, they are expecting solid growth in this emerging field in the coming years.

These examples demonstrate some of the key characteristics of innovation in services (Vermeulen & van der Aa, 2003): Innovations are often introduced as a new combination of existing concepts and resources, called architectural innovation (Gadrey et al., 1995), they are typically created without the use of a research and development (R&D) department (Sundbo, 1992; Sundbo, 1997), and therefore barriers to entry for services are comparably low (Bryson et al., 1993). Taking the Starbucks mobile payment service innovation as an example, inspired by the use of barcodes to issue mobile boarding passes in the airline industry, any internal or external party, without specific expert knowledge, could have come up with the idea of integrating an existing payment card into a mobile application environment and the realisation of the innovation could be executed using readily available (IT) infrastructure.

As laid out above, the lack of an R&D department in some service firms implies an allocation problem between daily business and organised innovation that is carried out on many levels of the organisation, as opposed to the top of the organisation in the case of organised R&D (O’Reilly & Tushman, 2004; Sundbo, 1992; Sundbo, 1997). A different aspect to this is that the co-creation of value in services (Grönroos, 2006) puts these firms in an ideal position to utilise their on-going relationships and acquired customer intimacy (Chesbrough, 2003; Habryn et al., 2012) to create new offerings. Arguably though, this potential is underutilised due to a lack of methods and tools specific to the characteristics of service innovation (Ganz et al., 2012). In fact, even for more mature industries, scholars have pointed out that while firms are recognising innovation as one of the main drivers of competitive advantage, they are ill equipped to assess their own capability for realising innovation (Adams et al., 2006).

As a consequence of these characteristics of service innovation, incumbent firms are not infrequently taken by surprise by new market introductions and are increasingly trying to take a more systematic and proactive approach to innovation in services, an approach that has been termed service innovation management (Maglio & Spohrer, 2008; Tidd & Hull, 2006).

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