Key Competencies for Promoting Service Innovation: What are Implications for the Health Sector?

ABSTRACTThe aim of the paper is to identify the essential competencies required to promote service innovation. The paper is based on a systematic literature review of published studies on service innovation competencies, from which seventeen competencies which aided service innovation were identified. A framework was then developed in which the competencies are classified into five organisational practices: knowledge management, employee engagement and user empowerment, cooperation and collaboration, effective leadership and agility. The paper discusses the implications of the findings for the health sector and future research.Keywords: service innovation, competencies, systematic literature review, health sectorIntroductionThe health sector represents almost 10 percent of the global economy and comprises a variety of stakeholders, including patients, regulators, providers, payers and suppliers (Kennedy and Berk, 2011). The challenges facing this sector are growing, especially because when the aging population increases, more people will need sustainable healthcare. The reduction of expenditure in the public sector has affected healthcare financing, leading to an inadequate health budget for current population levels. In addition, healthcare consumers have increasing expectations. Other problems facing the health sector are variable patient needs, skills shortages, variations in treatment options, cost and quality (Varkey, Horne and Bennet, 2008; Omachonu and Einspruch, 2010). Innovation has been identified as a key step towards addressing the existing problems of healthcare (Govindarajan, 2007). However, most innovation in the health sector is focused on clinical products and medical technology. Medical research has brought about extraordinary advances in diagnosis and treatments (Grose, 2008). For example, the advent of various smart medical technologies means that doctors can detect major illnesses earlier without facing the risk of complications. In addition, the use of computerised equipment has made it possible to deliver home based treatments for patients with major illnesses such as hypertension, stroke and renal diseases (Clark, 2008). Despite the fact that policy makers are paying increasing attention to innovation in the health sector, service innovation is a critically neglected area of healthcare research (Adams, 2003). This may be due to the fact that product and technological innovation has captured the attention of researchers. Unlike product innovation, service innovation is less radical and tends to implement incremental changes in organizational processes (Bernardt, 2000: Menor et al., 2002). Considering the aging population and reductions in health budgets, service innovation is a necessary response to the diverse challenges facing the health sector (Peckham, 2000). Successful service innovation has been associated with organisational competencies and capabilities (Stevens and Dimitriadis, 2005). According to Schilling (2011), competencies supporting service innovation can be defined as a combination of the knowledge, skills and organisational procedures which would assist individuals to perform their tasks collectively. The aim of this paper is to identify some fundamental competencies and practices that are used to promote service innovation in the literature.Based on this, lessons and suggestions will be drawn for the health sector. The following questions will be addressed: (1) Which competencies are referred to in the literature as supporting service innovation? (2) Which management or organisational practices are related to these competencies? (3) What are the implications of these competencies and their corresponding management practices for the health sector? The paper is structured as follows. Initially, we will conduct a systematic review of the literature to identify the competencies and capabilities of service innovation. We will then summarise these competencies into five key practices or areas of focus for promoting service innovation. …