Si4s Topical Paper

This paper provides a heuristic tool to conceptualise, map and discuss (services) innovation as part of the much wider ‘Services in Innovation, Innovation in Services’ (SI4S) project sponsored under the Targeted Socio Economic Research Programme of the European Commission. We especially focused on the role knowledge intensive business services (KIBS) play towards their clients and the knowledge flows involved in these service interactions. After briefly describing what it means to produce a service we identified three strands of approaches to innovation in services: service based approaches (1); managerial approaches (2); and integrationist or functional approaches (3). As innovations in service functions are everywhere the practical 4-d model of innovation presented in this paper is much in line with this third tradition. Basically 4 dimensions are discerned (see figure 1), namely: ‘new service concept dimension’, ‘new client interface dimension’, ‘new service delivery system dimension’ and the ‘technological options dimension’. Most (service) innovations appear to be mixtures of major and minor changes and adaptations in two or more of these dimensions. These dimensions are linked by knowledge areas such as marketing, distribution, organisation development. When this model was used to map (service) innovation automatically questions popped-up regarding: ➨ knowledge and characteristics of existing and competing service concept (business intelligence); ➨ characteristics of actual and potential clients (market intelligence); ➨ capabilities, skills and attitude of existing and competing service workers (human resource management) ➨ available and expected technological options (technological intelligence). ii Pim den Hertog and Rob Bilderbeek 6, 6 Subsequently we identified 7 innovation patterns (see figure 2), proving that a much more differentiated and careful approach as to the role of services in innovation is needed. Apart from supplier dominated, more interactive client dominated patterns are given. Further it is acknowledged that service function – including the innovation can equally be outsourced or internalised. Paradigmatic innovation pattern occurs when some radical innovations forces all actors involved to innovate. Finally we focused on the linkages between KIBS and their client firms. In addition to the three roles which were earlier identified for KIBS (namely that of facilitator, carrier and source of innovation towards the client firm) we differentiated between the various ways in which knowledge between service provider and client firm is exchanged (see table 2). Using the model of knowledge creation as introduced by Nonaka & Takeuchi the processes through which knowledge is built up are introduced and linked the various knowledge flows that are relevant in the relationship between KIBS and their client. It is concluded that KIBS do play an important role in the various knowledge conversion processes and that we should included process-oriented/intangible, non-contractual, tacit and human embodied forms of knowledge when looking at the knowledge flows induced by KIBS. It is further concluded that the knowledge flows from client firms to KIBS firms often form the basis for further refinement of existing service offerings or complete new services. In this sense it is possible to consider the link between KIBS and client firms as a symbiotic relationship. To summarize: both the soft side and the technological side of innovation are important and most often they work in combination. Sometimes technological knowledge is pivotal, but much more often having access to this knowledge and being able to built the organisation and service workers that are needed to link up to demanding customers is as challenging. Innovations in service activities are not by definition supplier dominated as is often taken for granted, but can be triggered in other ways as well. Especially the specific category of KIBS illustrate this point. Not only can they perform various roles towards their client firm, the actual knowledge exchange processes taking place between the two proved to be a multiple, complex and subtle process the dynamics of which we only slowly start to understand. iii Pim den Hertog and Rob Bilderbeek 6, 6