Services: everybody's doing it, but few are doing anything about it
Business 101: Put your resources where they will provide the biggest return.
For much of the past century, the smart investments improved manufacturing, agribusiness, and basic technologies.
A new report, "Succeeding through Service Innovation", notes that the business need has shifted faster than organizations and institutions have adapted.
Now, service systems such as transportation, communications and healthcare form the major part of the modern economy — but lack the support given to manufacturing and technology research.
This imbalance needs to be rectified, argues the report, which was produced by the University of Cambridge and IBM.
"May I help you?"
According to the UN's International Labor Organization (ILO), service jobs outnumbered agricultural and manufacturing jobs worldwide for the first time last year.
In Britain, 75 percent of the labor force works in the services sector; in the United States, the sector accounts for more than 80 percent of Gross Domestic Product (GDP).
RTI International reports that in developed economies, services typically account for less than one third of total R&D spending, while the service sector accounts for more than two thirds of the GDP and jobs. The past few years have also seen many manufacturers of engineering products, such as BAE Systems and Rolls Royce, adopt service-oriented business models.
"Business models are changing and there are enormous opportunities for companies and economies that are able to integrate science, technology, production and service," said Professor Mike Gregory, Head of the Institute for Manufacturing at Cambridge University Engineering Department. "The report captures the latest international thinking in the field and provides a rich resource for policy makers, industrialists and academics to drive their policies on service innovation."
"Where's my flight?"
Today's consumers expect service interactions to work seamlessly, but systems can and do break down, resulting in lost patient records, canceled flights, misrouted luggage and other problems.
Service interactions are equally critical between business organizations. Innovation can transform customer experience through incremental or radical changes to the service systems -- self-service machines, online shopping, performance-based service contracts and shared business services.
The report recommends that:
- Universities offer courses in the emerging field of Service Science, Management and Engineering (SSME) — teaching graduates to become "adaptive innovators," capable of working entrepreneurially across traditional boundaries.
- Researchers embrace an interdisciplinary approach to address business and societal "grand challenges."
- Governments fund SSME education and research and collaborate with industry and academia to develop service innovation roadmaps.
- Businesses establish employment policies and career paths that encourage "adaptive innovators" and provide funding and support for service research and education.
Mapping the service economy
"The growth of services economies, coupled with the evolution of businesses from multinational businesses to globally integrated enterprises, calls for a new, multidisciplinary approach in order for individuals, industries and countries to remain innovative and competitive," said Dr. James C. Spohrer, Director of Service Research at IBM. "Governments and businesses must play their part by developing and implementing service innovation roadmaps."
Learn more
- Global Leaders in Business and Academia Call for New Focus on Service Innovation (press release)
- Succeeding through Service Innovation (report)
- For further information about the SSME initiative, please visit www.research.ibm.com/ssme