Services Innovation

By Martin Gilliard

Services innovation can be a significant aspect of a business’s strategy.

We all know how important good service is. Good service leads to happy customers and “word of mouth” based referrals. Bad service gives the exact opposite, an unhappy customer and one who is ready to inform as many people as possible of the bad service received.

services innovation

Service innovations are defined as new services offered by organizations to meet an external user or market need. Three types have been identified.

  1. Total innovations: These provide new services to new users
  2. Existing services: Provided to a new user group and therefore expanding the reach of the service
  3. Evolutionary innovations: Delivering a new service to an existing set of users

Examples of businesses that have based much of their core strategy on an innovative service model include:

Southwest Airlines Started in Texas on March 15, 1967, by Rollin King and Herb Kelleher, WestJet transformed the airline service model by offering cheap fares, frequent service and fun for its customers. It was originally developed to compete with on-ground bus and automobile services. Its innovative service led to SouthWest being one of the most profitable airlines in the United States. Many other airlines copied their innovative ideas towards service, including Ryan Air and EasyJet in Europe and WestJet in Canada.

Dell Computers Dell revolutionized the service delivery model of computers by cutting out the middle man and selling its custom made personal computers directly to the end customer. Later they also made innovative changes to their supply chain management which ultimately led to them being one of the most successful computer manufacturers in the world.


Katz R (2009) The Innovators Toolkit – 10 Practical Strategies to Help You Develop and Implement Innovation, Boston, Harvard Business School Publishing

Walker, Richard M (2008) An Empirical Evaluation of Innovation Types and Organizational and Environmental Characteristics: Towards a Configuration Framework, Journal of Public Administration Research & Theory, Vol. 18 Issue 4, p591-615

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