How Service Firms Manage Innovation: Development Process and Factors of Success

How Service Firms Manage Innovation: Development Process and Factors of Success

Frederic Jallat (European School of Management, France)
DOI: 10.4018/978-1-4666-0077-5.ch007
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By acknowledging the strategic importance of developing and managing new activities in the service sector, the chapter studies the key business dimensions and performance drivers of innovation, and the determinants of new service success. Therefore, this chapter seeks to address three objectives: (1) yield a critical synthesis of research linked to managing innovation in the service industry, (2) provide a detailed study of innovation management and success factors within the service sector, and (3) determine the links between the service development process and how new services perform.
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In euphoric times, innovation appeared as an end unto itself. Progressively however, innovation has become a major strategic tool, and service business leaders have recognized the importance of innovation in providing a company with a competitive advantage. Today, new services are critical to the success, growth and prosperity of the service corporation (Bourgois & Jallat, 1994; Ostrom, Bitner, Brown, Burkhard, Goul, Smith-Daniel, ... Rabinovich, 2010; Rust, 2004). This change in perspective took informal approaches and statements out of the back seat and put more functional and efficiency-focused ideas in the driver’s seat.

Without overlooking the service industry’s pioneering and landmark micro-initiatives (Virgin Atlantic Airways, Federal Express, Club Mediterranée, Médecins sans Frontières, First Direct…) and while underlining the major impetus some innovative entrepreneurs have played in the service industry (Guyaz, 1981), it would be hard to imagine the managerial approaches of (major) innovation doing anything but developing in the future (Colarelli O’Connor, 2008; Smith, Fischbacher, & Wilson, 2007). On the one hand, second-generation managers are now taking the reins from the founding fathers and, on the other hand, businesses in the services industry are concentrating, thereby favoring collective decisions over individual ones.

In its first part, this chapter sought to define and set out the boundaries of the study by examining the academic works which have been written on the process of managing innovation and its specific dimensions within service firms. Then, using the results of a qualitative survey carried out amongst four major service industries (budget hotels, specialty restaurants, retail financial services, capital life insurance), corporate practices are discussed and analyzed. At the end of this study, the chapter provides a number of management-focused operational recommendations and some conclusions.

For reference, Table 1 synthesizes the various aspects of the complete research from which this chapter is drawn, and the sources and the key objectives in each phase of the study.

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