Open Services Innovation: Co-creating new services with partners and customers

‘Open innovation’ assumes that organisations should use external ideas as well as internal ideas to design and develop new products and services. And companies that provide services, and whose customers are very often already part of the service-creation process, are especially well-suited to reaping the benefits of the open innovation model.

Closed versus open innovation

In the not too distant old days, companies built their own scientific divisions in order to develop all the technologies they needed to produce their products. Innovation was a tightly guarded secret, kept closed within the boundaries of the organisation.

The times – and technologies – have been evolving at a lightning pace in recent years – to the point that the boundaries between a company and its environment have become more permeable. Today, knowledge is rapidly and widely distributed, and innovations can be easily transferred into and out from a company’s boundaries.

With the pace of change and the rise of the knowledge economy, companies can no longer afford to rely solely on their own research for the elements they need to create a product. Instead, they should look outside the company and buy or license processes or inventions from other companies. Furthermore, internal inventions that a company is not using in its business should be transferred outside the company through licensing, joint ventures or spin-offs.

The new paradigm is called open innovation, and it assumes that organisations should use external ideas as well as internal ideas and that innovating with partners includes sharing risks as well as rewards. Service industries – whose ‘products’ are intangible and whose customers are very often already part of the service-creation process – are especially well-suited to reaping the benefits of the open innovation model.

How to get started

Want to launch your own design or co-produce initiative? The authors outline a 3-step process for getting started with open services innovation. Each step includes key questions companies need to ask themselves in order to identify opportunities for innovation and potential partners.

  • Step 1 – Look at the customer’s decision-making journey
    The customer’s decision-making journey entails: searching for, and selecting, the right service; making the purchase; and the service experience.
  • Step 2 – Examine your company’s value chain
    Examining your company’s value chain reveals your readiness to capitalise on the opportunities for innovation.
  • Step 3 – What ecosystem do you need to build?
    Building an ecosystem means determining who you need to involve in your service innovation initiative and how the players will need to interact.

Read the full executive summary of ‘Open Services Innovation’.

Source: Open services innovation by Marion Debruyne, Wim Vanhaverbeke & Livia Pijakova, Study by Flanders DC Knowledge Centre at Vlerick Business School

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