Service innovation is often viewed as the main source of growth in the modern economy. There is a general agreement that service innovation can provide a positive change for the environment, creating new types of jobs and making consumers’ lives easier. In this chapter, we challenge the positive view and provide arguments against service innovation. While service innovation might seem positive, there are negative effects on the financial development, the social development, and the environment. Service innovations do not replace existing services, but create complementary services and as a consequence most positive effects do not appear, which results in increased use of resources and negative effects on the environment. The lack of critical studies on service innovation has resulted in a flawed and somewhat overpromising picture of service innovations and what they can do.

The book chapter discusses the research on service innovation, covering what a service innovation is and what a sustainable service innovation is. A key insight is that service research has taken a customer perspective on service innovation, and we ask if this is enough for service innovation research to stay relevant. Research on service innovation needs to address transparency and open the line of visibilities toward value creation, the environment, social, financial, and privacy to further our understanding and to increase the managerial relevance. The book chapter ends by directing research on service innovation in a sustainable direction.

As the marketing literature increasingly construes markets as malleable entities, research studies of ‘marketshaping’strategies have gained increasing attention in recent years. Those are proactive, deliberate initiativeswhich a firm takes with the aim of re-shaping an operating environment comprising direct customers, customers'customers, and other actors such as its competitors. Our study derives a theoretical framework for marketshapingfrom the existing literature and an in-depth case study of one market-leading firm in the steel industry,which has been working actively in the shaping of a market. Analysis of the responses of a range of experiencedexecutive staff to unstructured and semi-structured interviews shows, among other things, that in order to shapethe market, the firm performed many individual and aggregated activities at three levels of influence – system,market offer and technology – with various actors in the market in focus. These findings are the basis of aproposed activity framework for the proactive shaping of a market: that is, what firms can do in order to shapean existing market, drive growth and create sustainable competitive advantage.

Value propositions are reciprocal resource-integration promises and value alignment mechanisms, operating to and from actors seeking an equitable exchange. In a business triad any change between two of the actors will also affect the relationships with the third actor, thus influencing resource integration and value creation on a value constellation level. The objective of this paper is to conceptualize a triadic value proposition and analyze how service innovation changes the structural, economic, and social ties between the actors in the triad. Through a qualitative empirical enquiry, we study a six-year process in which a multinational industry incumbent enters the service business. Data comes primarily from interviews with respondents from the manufacturer, dealers, and users. As the value proposition evolves over time, the network ties and thus the interdependence between manufacturer, dealer, and user are strengthened. The findings provide firms a better understand of how to involve and collaborate with key actors in order to initiate a discontinuous change on a firm and network level. This is particularly timely given the major difficulties product firms face when intermediaries play a decisive role for the success of their service innovation initiatives.

Service innovation is increasingly becoming a basis for manufacturing firms to reach and sustain competitive advantages. While traditional product innovation typically includes how new technology can be utilized in new products, service innovation spans a broader area that is not exclusively focused on new technology, but rather how resources can be developed into value propositions and then integrated in the customer’s process in order to support customer value creation through realization. However, manufacturing firms that infuse services struggle with service innovation; this becomes especially evident in the realization phase.

This thesis is a compilation of five papers discussing different aspects of service innovation realization and the inherited challenges. The study builds upon empirical data from four Swedish manufacturing firms that infuse services and develop new value propositions that include both products and services to support customer processes.

The thesis illustrates realization as a phase in service innovation where the firm interacts with its customer in order to adjust, revise and further find new ways of improving the customer’s processes through for example customer training. Realization is characterized by a deployment phase and a post-deployment phase that represent the ongoing relationship between the customer and the firm.

Depending on who has the competencies or ability to integrate the resources that are needed for service innovation, different interaction patterns are identified. Through indirect interaction, the firm facilitates the customer’s value creation through, for example, preventive maintenance, while through direct interaction the firm acts as a co-creator in the service innovation process and hence work jointly together with the customer in order to improve customer value creation.

This thesis contributes to the literature by characterizing service innovation realization and by increasing the understanding for different interaction patterns in the service innovation process.

Purpose: Collaboration with customers and the involvement of a customer’s resources have been regarded as a key issues in the service innovation process. However, research that covers collaboration in service innovation tends to have a one-sided focus, as it especially concentrates on the involvement of customer resources in the firm’s development of the offering per se and hence foresees the firm’s involvement of resources in the later part of the service innovation. Therefore, the purpose of this study is to analyze resource involvement from both the firm and the customer in the service innovation process.

Design/methodology/approach: The study used an exploratory case study approach, focusing on two Swedish manufacturing firms in a business-to-business context that add services to their core product offerings (service infusion). Data was collected through interviews and focus groups.

Findings: The study found that different types of interaction modes are related to the integration of varying key resources from both the firm and the customer. A typology of interaction modes in service innovation, based on different levels of involvement, is developed.

Managerial implications: Increased and more specific knowledge of the customer’s resources is required in order to manage and coordinate how and with what resources the customer and the firm should contribute to the service innovation process.

Originality/Value: The previous service innovation literature tends to focus on how the customer can be involved in the firm’s development of offerings per se. This article suggests that focus should also include the firm’s involvement in the later phases of the service innovation process. The study contributes to the research on involvement in service innovation by showing how resources from both the customer and the firm are integrated in the service innovation process.

Purpose - This paper aims to investigate the role of service modularity in developing and deploying efficient services, while at the same time meeting diverse customer needs. The analysis distinguishes between different service types and sets forth key issues for service modularization, identifying supporting resources (both internal and customer) and associated modular strategies for the different types. Design/methodology/approach - The study design used an exploratory case study approach, focusing on three Swedish manufacturing firms that are moving toward an increased service focus (service infusion). Data were collected through interviews and focus groups, and the collected data were analyzed independently, before being merged and synthesized in a cross-case analysis. Themes and patterns were extracted and linked to the theoretical framework following a systematic combining process. Findings - This study contributes insights to the emerging field of service modularity by investigating process modularization and modular strategies. A framework is put forward outlining modular strategies for four different service types covering both a passive and an active role for a customer. From a theoretical point of view, the role of the customer is added to the discussion to advocate for the necessity of a co-creative perspective in service modularity. Originality/value - This article contributes to the emerging research field of service modularity by providing empirical insights into how modularization and modular strategies can enable more efficient services. Depending on service type, different modular strategies are set forth. This study also highlights the need to recognize customer-specific activities, resources and competencies as pivotal parts of the modular service processes. Such insights are particularly relevant given the established view of service modules as functions of intra-firm activities.

The number of service innovation articles has increased dramatically in the past 25 years. By reviewing 128 articles published between 1986 and 2010, primarily in leading marketing and innovation journals, this study analyzes the progression of service innovation research according to topicality and perspective. The authors summarize prior research by clustering it into three evolutional phases and drawing parallels with the evolution of the wider services marketing field. Overall, the view of service innovation has evolved, from a complement of traditional product innovation to a multidimensional, all-encompassing notion that entails several functions, both within and outside the firm.

Purpose – Service productivity continues to receive ever-greater amounts of attention as service covers a greater portion of the economy. As competition increases, service productivity becomes increasingly important. This study aims to explore the applicability of lean principles in a service context and to conceptualize how these principles impact service productivity.

Design/methodology/approach – This paper presents a conceptual analysis of the six most commonly used lean principles in manufacturing and their applicability to a service context for different types of services. Using this analysis, six propositions are developed to examine the influence of lean on service productivity.

Findings – This study suggests promising synergies, as well as important obstacles, for applying lean principles in services. Standardizing services and increasing reliability in service processes through lean principles can increase efficiency. However, the customer's active role in certain services and, simultaneously, high diversity make the application of lean principles increasingly difficult. Also, customer satisfaction must be considered when improving service productivity, otherwise the positive long-term effects of a lean approach in service will be absent.

Practical implications – These findings are useful for organizations aiming to improve their service productivity. Particularly, lean principles are invaluable to increase efficiency and customer satisfaction for services with low diversity and low customer participation. This paper suggests a direction for the proper use of lean principles for different service types, and how efficiency and customer satisfaction are affected through a lean approach.

Originality/value – This study contributes to the research on service productivity and continues the discussion on prototypic characteristics of service and manufacturing orientations.

The purpose of this study is to contribute to a better understanding of service innovation by exploring realization as a part of service innovation. Service innovation can be described as something that creates value for customers through new service offerings or service processes while realization refers to the actual use or deployment of the service.

My research approach is based on a multiple case study, that focuses on three international firms with origins in Sweden. Empirical material has been gathered through interviews and focus groups. A literature review that tracks the evolution of service innovation further contributes to the exploration of the service innovation concept.

Innovation has traditionally been connected to new technology and new products. However the present study has found that service innovation has evolved into a multifaceted concept. Specifically, service innovation is not restricted to the development of new products and services in the shape of new offerings, it also becomes relevant to consider the actual usage of the service offerings. In order to fully understand the process of service innovation, it is important to include the usage of a service offering in the service innovation concept. This realization occurs when the service offering is introduced and used in the customer’s processes, and typically involves both the customer and the provider.

This research illustrates how realization requires resources from both the provider and the customer. In general, the realization part of the service innovation process requires more participation from the customer than the development of new offerings. However, this can vary depending on the customer’s competence, intention to interact and level of commitment. Considering an active or recipient customer role and also whether the service offering is directed at the products or the customer processes, this study shows how these different service offerings will have different impacts on service innovation realization, for example, in terms of different resources being required.

The extended view of the service innovation concept, includes realization, and is therefore not limited to developing new offerings. This view implies that new areas of innovation that do not necessary need to include new technology, but contribute in other ways to customer value creation must be propelled into focus. Productivity improvements in customer processes are becoming important since they help create customer value (reduced costs, improved quality, reduced down-time etc.). Empirical evidence shows how service offerings that emphasize improvements in customer processes have become more important. This thesis discusses how this view of productivity can result in important benefits for customers, as consideration is given to both customer satisfaction and the use of customer resources. In this respect, productivity becomes a part of the extended service innovation concept.

Extending the service innovation concept by adding realization implies an increased emphasis on deployment, and implicitly on customer value creation. Thus, service innovation becomes critical for gaining long-term sustainable competitive advantages through service.

Syftet med denna studie är att bidra till en ökad förståelse av tjänsteinnovation genom att utforska realiseringsdelen av tjänsteinnovation. Tjänsteinnovation kan beskrivas som något som skapar värde för kunden genom nya erbjudanden eller processer. Realisering syftar till det faktiska användandet av tjänsten.

Denna studie är baserad på en multipel fallstudie av tre globala företag med sina rötter i svensk industri. Det empiriska materialet har samlats in med hjälp av intervjuer och fokusgrupper och till detta har även en litteraturstudie genomförts där tjänsteinnovationsbegreppets utveckling spårats med syfte att bidra till förståelsen av begreppet och dess innebörd.

Traditionellt sett har innovationsbegreppet ofta kopplats samman med ny teknologi och nya produkter. Denna studie har emellertid funnit belägg för att tjänsteinnovation har utvecklats mot ett mer mångfacetterat begrepp som även inkluderar det faktiska användandet av tjänsteerbjudanden. Enligt denna studie, inkluderar användandet av tjänsteerbjudandet en viktig aspekt för förståelsen av tjänsteinnovationsbegreppet. Att se på tjänsteinnovation enligt ett vidare perspektiv föranleder nya innebörder och här blir realisering en viktig del för förståelsen. Realisering framträder när tjänsteerbjudandet inträder kundens processer, innebär ofta engagemang från både kunden och leverantören.

Denna studie visar att realisering kräver resurser från både leverantören och kunden. Generellt kräver realisering ett aktivt kunddeltagande Dock kan detta deltagande variera beroende på kundens kompetens, vilja samt engagemang. Även typ av tjänsteerbjudande spelar en roll, och i denna studie åtskiljs tjänsteerbjudanden som är riktade mot leverantörens installerade bas av produkter från tjänsteerbjudanden som är riktade mot kundens processer. Lägg där till kundens aktiva eller mottagande roll, så visar denna studie hur dessa olika typer av tjänsteerbjudanden har olika inverkan på realiseringsdelen av tjänsteinnovation, exempelvis kräver de olika resurser i anspråk.

En vidare syn på tjänsteinnovationsbegreppet, en syn som inte begränsas till att enbart beakta utvecklandet av nya erbjudanden utan även realisering, medför nya områden för tjänsteinnovation som inte nödvändigtvis innefattar ny teknologi, men som på andra sätt bidrar till skapandet av kundvärde. Produktivitetsförbättringar i kundens processer är ett område som blir intressant då detta i hög grad kan medföra ökat kundvärde i form av minskade kostnader, förbättrad kvalitet, maximerad körtid etcetera. Empiriska inblickar visar även hur olika typer av tjänsteerbjudanden som framhäver kundens processer, och hur förbättringar här kan erhållas, får en allt viktigare roll inom företagen. Denna studie avhandlar hur produktivitet kan åstadkomma stora fördelar för kunden då hänsyn till kundnöjdhet såväl som användandet av kundens egna resurser tas i beaktande. I detta avseende så blir produktivitet en viktig del at det utökade tjänsteinnovationsbegreppet.

Genom att utöka begreppet tjänsteinnovation till att också inkludera realisering, så ges användandet ett större fokus och implicit också kundens värdeskapande. Därmed blir tjänsteinnovation kritiskt för att uppnå framtida konkurrensfördelar med tjänster.