An Integrated Framework for Managing Service Innovation

To create and deliver value for customers in the age of technology convergence, developing services is a major part of the high-technology product strategy. In addition, the realization of the economic value from technology depends on the firm´s choice of business model. This paper develops a new framework of managing service innovation. The framework takes into account service innovation in both industry- and firm-levels. The main emphases in the industry level are value proposition - identifying potential industry demand and earnings, value deployment - positioning the firms in the value networks or systems, and value appropriation - exploiting resources and capturing the benefits of service innovation (i.e., the 3V Innovation Model). At the firm level, the key processes are new service design - identifying customer value and proposing a scope of offerings, service development - acquiring resources and managing service innovation projects, and service delivery - enhancing service value and sustaining revenues and growth (i.e., the 3D Innovation Model). The 3V Innovation Model provides guidance to assist firms in identifying and securing their product-market positions, defining the supply chain and network relationships, and appropriating the gains from service innovation. The 3D Innovation Model presents firms specific processes for implementing service innovation. Finally, business model innovation serves as a linkage between the industrial-level 3V and business-level 3D models for implementing service innovation.