Services represent approximately 80 percent of the U.S. GDP and a growing percentage of the GDPs of countries around the world. Companies, governments, and universities worldwide have recently awakened to the realization that services dominate global economies and economic growth.1 Yet, in practice, innovation in services is less disciplined and less creative than in the manufacturing and technology sectors.2 While Business Week’s 2007 top twenty-five most innovative companies list includes a number of service businesses (e.g., Google, Walt Disney, Wal-Mart, Starbucks, Target, Amazon, and E-Bay),3 the number of innovators is not nearly reflective of the size of the service sector. A recent comprehensive review of the academic literature on product innovation also reveals little explicit coverage of research on service innovation.4
There are many reasons for this historic lack of rigorous attention to the unique aspects of service innovation. Some of these reasons are rooted in the remnants of the industrial revolution and the habitual fascination with tangible products and hard technologies as a source of product innovation, as well as an underlying belief that services have no tangible value.5 Beyond these historic reasons, however, the lack of widespread and disciplined innovation in services derives at least partially from the nature of services themselves. Services are The authors thank the Center for Services Leadership for its support of this project. They also sincerely thank the individuals who contributed to the case studies including: Greg Reid and Maynard Skarka of Yellow Transportation (YRC Worldwide); Renee Ryan, formerly of ARAMARK and currently with Best Western International; Mark Rosenbaum, consultant to Marie Stopes International and a professor at Northern Illinois University; Rick Mears of the San Francisco Giants; and Sara Moulton Reger of IBM. They also thank Lynn Shostack for the vision she provided over twenty years ago that has inspired the evolution of service blueprinting. In addition the authors thank three anonymous reviewers and the editor at California Management Review for their helpful and constructive comments on earlier drafts of this paper.
A PRACTICAL TECHNIQUE
FOR SERVICE INNOVATION
Mary Jo Bitner
Amy L. Ostrom
Felicia N. Morgan
66 CALIFORNIA MANAGEMENT REVIEW VOL. 50,NO. 3 SPRING 2008 CMR.BERKELEY.EDU based on—and in many cases dependent on—human, interpersonal delivery systems, suggesting a need to focus on process and experience innovation. Traditional product innovation tools emphasize the design of tangible, relatively static products with physical properties. Services are fluid, dynamic, and frequently co-produced in real time by customers, employees, and technology, often with few static physical properties. Thus, many of the invention protocols and prototype design techniques used for physical goods, hard technologies, and software do not work well for human and interactive services, or at least they demand significant adaptation to address service innovation challenges.6 Along with the awakening to the domination of services in the world’s economies, there is a growing emphasis in business practice on creating meaningful, memorable customer experiences.7 The fundamental premise is that firms can no longer compete solely on providing superior value through their core products, but rather they must move into the realm of customer experience management, creating long-term, emotional bonds with their customers through the co-creation of memorable experiences potentially involving a constellation of goods and services. The importance of customer experience management is not only being touted in consumer markets, but also in business-tobusiness contexts where research shows meaningful customer experiences and the resulting emotional bonds between customers and suppliers are more important than rational motivations in creating customer loyalty.8
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30. See pages 267-276 in V. Zeithaml, M. J. Bitner, and D. Gremler, Services Marketing: Integrating
Customer Focus Across the Firm, 4th edition (Boston, MA: McGraw-Hill, 2006)
32. S. Moulton Reger, Can Two Rights Make a Wrong? Insights from IBM’s Tangible Culture Approach
(Upper Saddle River, NJ: IBM Press, 2006).
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Processes,” International Journal of Service Industry Management, 16/2 (2005): 199-209.
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