Service Innovation is a need in the economic downturn

Indeed, innovation is a need everytime. That is the discourse since more than 25 years ago. According to Rosabeth Moss Kanter (Change Masters, 1983) "innovation refers to the process of bringing any new, problem-solving idea into use."

However, in the economic downturn is needed even more. Financial sector and Automotive industry have suffered a painful crisis worldwide with many companies going to bankruptcy.

What should they learn about Service Innovation? (What to do?)

First of all, Banks are well known as rigid cathedrals where innovation is difficult to get flourished. Entrepreneurial innovators (R. Moss Kanter, 1983) are needed in any company to boost innovation inside. However, on this time where service industry is becoming more and more important worldwide, companies need T-shaped people to lead innovation inside.
Banks should pursue consumer loyalty bringing them a valuable service experience. Gartner Inc. says that "Banks should be ready for the emergence of the social-banking services model".
Secondly, in this crisis Banks should learn from the most innovative organizations of the world: Team Obama, Google, Hulu, Apple, Cisco Systems, etc. (see list here), realizing that innovation is important and technology brings lots of opportunities and competitive advantages.

On the other hand, Automotive industry has to change the dominant logic of goods to services.
Adding services to their products, they make new value propositions for consumers (see Figure 1) and co-create value between manufacturers and providers.

An example could be CaaS: Car a a Service (another discussion post in Spanish), which is an innovative idea where manufacturers sell the transportation service to consumers by subscriptions.

Figure 1. Car manufacturers should pursue consumer loyalty.

Moreover, this industry has to learn much more from other successful business models like Dell in which "its direct way of working delivers industry-leading value to customers";
or Amazon in which "growth is core for its business strategy, and that has had a significant impact on the way they use technology: growth through more categories, a larger selection, more services, more buying customers, more sellers, more merchants, more developers, increasing the different access methods, and expanding delivery mechanisms."
These two successful companies lead innovation, pursuing innovation everytime.

Therefore, Financial sector and Automotive industry have to engage Disruptive Innovation: "a phase starts where leaders ask which parts of their business model are weak (and perhaps unsustainable) and that, in turn, can lead to restructuring and reinvention".


What are the benefits to invest in innovation plans during the crisis? (Why do it?)

According to Nielsen:

"Companies that continue to invest in their new product innovations during challenging economic times emerge from recessions with much higher growth rates than companies who cut back."
..."growth rates that are two or three times higher (five to 10 times higher in some cases) than the growth rates of companies that cut back on innovation during a recession."

On the other hand, governments should do four things "for the long term so their countries can emerge from this crisis as winners: inject capital, think global, focus on public programs, and support talent" since "while many businesses simply won't be able to afford further investment in innovation, governments should recognize that innovation systems".


Which methodology could they use? (How to do it?)

Broadeep has designed the Services life-cycle which allows continuous service innovation and service improvement (see Figure 2). This has four essential phases: Strategic Design and Planning of Services, Engineering and Development of Services, Execution and Monitoring of Services, and Controlling and Diagnosis of Services. These phases have four strong relations: Service Alignment, Process Management, Service Government and Service Redesign; which define either a method or an approach for consistently using the output of one phase as an input of the other.

Figure 2: Service life-cycle as a basis of
Continuous Service Innovation and Service Improvement.