Service Innovation Using Actor Network Theory

Introduction

Over 80% of jobs in the US are now in the service sectors. This is evident in the current list of Fortune 500 companies, in which a greater share of large companies’ revenue comes from services than it did in previous decades (Möller., Rajala, & Westerlund, 2007). Many of these service jobs are highly skilled and technology-intensive, including outsourcing, consulting and process re-engineering. Service plays a key role in developed economies (Sheehan, 2006). Market-based services are the main drivers of productivity and economic growth in OECD countries. IT services and R&D services provide more than half of all employment growth in many developed countries. The service sectors also help improve competitive performance of firms in our modern economies.

According to Maglio, Srinivasan, Kreulea and Spohrer, J (2006), the formal representation and modelling of service systems is nascent, because of the complexity of modelling people, their knowledge, activities and intentions. Service system design cannot be achieved by traditional approaches such as product design. Firstly, customers are not typically present in R&D and product engineering processes. Secondly, the traditional product engineering approach based on a manufacturing model is not good at providing intangible, value-based services. It is therefore necessary to develop a new model for service innovation. The model should be an adaptive organisational model that enables dynamic evolution of the service system. It is important to integrate the customer perspective, learning and innovation into the development process of service systems.

A service system is defined as a dynamic configuration of resources (people, technology, organisations and shared information) that creates and delivers value between the provider and the customer through service (IfM & IBM, 2008). According to the report (IfM & IBM, 2008), a service system is a complex system having a front stage and a back stage. The front stage is about provider-customer interaction: how can customer satisfaction be ensured in the presence of multiple customer touch points and various channels of contact? The back stage is about operational efficiency: how can productivity be improved through skilled employees, streamlined processes and robust relationships with partners and suppliers (the service networks). Performance of the service depends on both the front and the back stage.

Spohrer, Golinelli, Piciocchi, and Bassano, C. (2010) argue that each service system entity is able to co-create value with other entities if its component resources can be appropriately coordinated to contribute to the purpose of the value proposition that defines the expected outcomes of the interaction. They further pointed out that in a service system network the coordination of the entities is fundamental to guarantee that the right interaction, the right agreement, the right communication takes place to realize a value co-creation outcome.

According to these authors, foundations of service systems are:

• 1.

  A dynamic configuration of resources;

• 2.

  A set of value co-creation mechanisms between suitable entities;

• 3.

  A application of competencies-skills-knowledge any person(s) in job or stakeholder roles;

• 4.

  A adaptive internal organization responding to the dynamic external environment;

• 5.

  Learning and feedback to ensure mutual benefits or value co-creation outcomes.

Service systems are also open systems capable of improving:

• 1.

  The state of another system through sharing or applying its resources;

• 2.

  Its own state by acquiring external resources” (Spohrer et al., 2010).