Business model

Service innovation: integrating design thinking into the business model

As Professor Christopher Tucci of EHL’s Executive MBA program would like to tell us, “whatever sector you are in, whatever type of business you have, services are increasingly important, but they are messy”. It is in this difficult context that companies are turning to service innovation to stand out from the competition. Even if companies are able to tame the complexities of service delivery, it is no longer enough to simply develop a new product-service package. Today’s market demands that services be thoughtful and human-centric. Rethinking their business models gives companies the opportunity to step back from how things have been done so far and embrace the principles of design thinking to shape their future.

The challenges of service delivery and service innovation

Compared to product-focused businesses, those more dependent on service delivery face a unique set of challenges. Without claiming to be exhaustive, these issues can be summarized as:

In the absence of any palpable or tactile property of service offerings, assessing the value of a service is more difficult compared to product offerings. In this sense, services are evaluated on the basis of their performance rather than product characteristics. Therefore, customers must have confidence in a service to feel encouraged to commit to a service purchase.

The supply and consumption of the service occupy the same duration. This means that it is impossible to dissociate supply and consumption, the service provider being inseparably linked to the customer at this precise moment. This not only increases the responsibility of the staff (or, if applicable, the technology interface) to represent the business well, but also makes the customer an integral part of the concept and delivery of the service.

Services are available for a predefined window of time, after which prerequisite resources, processes, and systems may no longer be available. Think about train travel: once the train leaves the station, this connection is no longer an option for potential travellers. When it comes to service delivery, you only have one chance to make a good impression.

Even if a customer were to request the exact same service they received the previous week, this week’s service would be slightly different due to the inevitable variations in peripheral factors. In this context, companies must strive to provide excellent service at all times. They can even accept this lack of absolute replicability by offering personalized services.

Cherif Mamdouh
External Communication Manager
EHL