Service Innovation and Management

The purpose of this chapter is to explain the basic principles, theories, process, and management of service innovation. The authors first review the basic set of customer-centric principles of service innovation. Next, the authors review the theories behind service innovation typology. The following sections focus on the service innovation process, new service development, service engineering, customer participation, and lifecycle management. Then the authors select a couple of case examples from the literature to illustrate how the interrelated core concepts of knowledge, dynamic capabilities, and service innovation that have been covered in the previous and current chapters are utilized in different types of firms.

Strategy, Process, Organization, and Systems

Building on the understanding of the theories and models of firms, this chapter reviews the basic principles of strategic management of business enterprises. Firstly, the basic principles of business strategy are explained. Secondly, the role of corporate strategy and its relationships with business unit strategies are discussed. Thirdly, this chapter describes the principles of strategy maps—a customer-centered strategic alignment model which is widely used in industry as a methodology for managing the diligent execution of strategy to deliver on the differentiating customer value propositions. Finally, because of the increasing importance of corporate governance compliance, such as Sabiane Oxley, firms must also pay due consideration to ethics in information technology deployment.

Theories and Models of Service-Oriented Firms

A general understanding of business firms is required in order to be able to develop business and IT strategies. This chapter presents the resource-based theory of the firm, the knowledge-based theory of the firm, and the activity-based theory of the firm. With the widespread adoption of Internet technologies by firms, e-business models have emerged as a significant mechanism for service business. Both business and e-business models represent the commercial implementations of the business strategies chosen by the firms. This chapter, therefore, reviews the firm with a service orientation in terms of its value configuration, business model, and e-business model.

Enterprise Processes and Architectures for Customer Value Creation

This chapter explores the underlying enterprise-wide strategic and operational fitness issues holistically from an organizational processes standpoint. It explains the theories and practices of enterprise or organizational processes and how enterprise architecture can be used to ensure the strategic and operational alignment of systems, processes, and strategies.

Strategic Alignment and IT-Enabled Value Creation

This chapter describes the principles and methods for producing a business-aligned IT strategy to enable value co-creation with customers. In particular, the authors detail the alignment method and the underlying dynamic process of alignment as they form the critical disciplines that practitioners must master. The chapter also describes the Strategic Alignment Maturity (SAM) model by which management can gauge and continuously improve their organization’s strategic alignment capabilities. Finally, the authors discuss in detail the various methods for IT-enabled value creation.

The CIO Enabling IT and Service Governance

In this chapter, the authors explore and propose the fundamental principles for designing a strategy-aligned service governance model, which is closely related to IT governance. Both IT governance and service governance can only be operationalized successfully by strong a C-level executive leadership. The role of a CIO has a good positional-fit with the enterprise-wide focus of the governance purpose. This chapter addresses the CIO’s enterprise-wide leadership role, including ownership and utilization of the governance process to create business value and competitive advantage.

Knowledge Organizations and Dynamic Organizational Capabilities

In this chapter, the authors first define a knowledge organization in the context of the knowledge-based view of the firm described in chapter 1. As business intelligence has emerged as a key pillar of highly competitive knowledge organizations, its use as a foundation for knowledge creation and application in service business is then discussed. This is followed by a discussion of the evolutionary growth model of knowledge organization, highlighting that superior innovative capabilities are closely linked to learning organization, the most mature level of knowledge organization. The second part of this chapter then describes the interrelationships between knowledge and core capabilities or competencies. Finally, the authors review example characteristics of knowledge intensive business services to prepare the groundwork for chapter 4, which will treat the basic service principles and theories in detail.

Business Innovation and Information Management

In this chapter, the authors review the various classes and types of innovation, and how IT contributes to innovation in organizations. They describe the organizational resources required to engender innovation, as well as the framework, process, and infrastructure for business innovation.

Outsourcing of IT Resources

This chapter describes the principles of IT resources and IT outsourcing. It first reviews the fundamentals of strategic resources including IT resources, then it explains the basic principles of IT outsourcing including the attendant opportunities and risks.

Strategic Alignment and Service Systems Case Examples

This chapter describes three case studies, selected from the extant literature, to illustrate how some of the key concepts such as strategic alignment, strategy map, service system, value-in-exchange, value-in-use, and value co-creation, and so on, addressed in the preceding chapters (in Sections 1 and 2 of the book) can be operationalized in real-life. The authors use the theories described in these preceding chapters to explain key case study phenomena captured by their authors.