ENTR 820 | Session 4 | Architectures of Service Innovation

Summary:

Service innovation is defined as improving an existing product or service and serves as a vital economic driver in advanced nations, where the service sector can account for approximately 80% of employment. Because services possess unique characteristics such as intangibility, heterogeneity, customer contact, and perishability, they are often more difficult to conceptualize and evaluate than physical goods. To manage these complexities, organizations use structured models like the Pentathlon Framework and tools such as service blueprints to map customer journeys and close the gap between customer expectations and actual delivery. While innovation styles vary by sector—ranging from servitization in manufacturing to social innovation in the nonprofit world—successful implementation requires a shift toward outside-in thinking and a clearly defined business model to ensure profitability. However, a significant barrier remains the reluctance of senior executives, who may view innovation as a financial risk. Innovators must therefore use strategic language about upselling, cross-selling, and customer retention to justify investment and secure necessary support.