January

2010


Leading
Through
Service
Innovation

A
Whitepaper
from
Anerian,
LLC.


For
more
information
contact
Naomi
Stanford
(naomi.stanford@anerian.com)

Executive
Summary

Services
are
the
dominant
driver
of
the
US
economy.
According
to
the
Bureau
of
Labor
and

Statistics,
services
make
up
80%
of
our
economy
and
the
10
industries
with
the
most
dramatic

salary
growth
are
all
in
service‐providing
sectors.
Many
organizations
provide
services
to

internal
and/or
external
customers
but
fail
to
ever
identify
themselves
as
service
organizations

and
thus
miss
opportunities
to
lead
and
innovate
in
their
market
space.


Although
services
require
the
same
treatment
as
products:
design
and
development,
testing

and
market
research,
and
refinement
over
time,
organizations
rarely
have
formal
processes,

roles
and
practices
for
developing,
managing
or
innovating
their
services
as
a
portfolio.


Additionally,
organizations
that
offer
products
have
introduced
and
adopted
formal,
full
life‐
cycle
development
processes
for
bringing
to
market
new
products
and
implementing
new

technologies,
which
service
organizations
have,
for
the
most
part,
failed
to
do.




As
organizations
begin
to
view
themselves
as
deliverers
of
services,
the
need
for
the
same

formalities
product
organizations
have
becomes
more
apparent.
Without
a
formal,
full
life‐cycle

development
process
for
their
services,
organizations
fail
to
maximize
return
on
investment,

infuse
discipline
into
the
development
process
and
manage
expectations
and
customer
needs.


We
have
found
that
successful
service
organizations
adopt
a
few
key
practices:



 Services
Perspective
–
understand
their
business
as
a
collection
of
services
(a
portfolio),
and

have
a
clear
view
on
what
drives
service
development

 Innovation
‐
infuse
innovation
practices
throughout
the
lifecycle
to
build
unique
offerings
to

maximize
convenience,
loyalty
and
value

 Portfolio
‐
manage
their
service
offerings
as
a
portfolio,
much
as
IT
and
product
portfolios

are
managed
with
categories,
criteria,
and
key
metrics,


 Process
‐
adopt
a
full
life‐cycle
process
for
service
offerings
from
concept
innovation
and

business
cases
through
checkpoint
reviews
at
key
milestones

 Cultural
readiness
–
invest
time
and
effort
into
ensuring
their
culture
can
adapt
to
the

changes
that
innovation
requires


Consequently
these
organizations’
innovative
capacity
and
the
value
of
the
services
they
offer

depends
upon
a
strategic
mindset
that
takes
into
account
the
clarity
of
factors
such
as
the

audience,
intent,
scale,
actors
and
experience
persona
provided
by
a
service.

The
graphic

below
illustrates
how
these
elements
combine
to
build
the
service
innovation
strategy.




Leading
Through
Service
Innovation
 
 




In
conjunction
with
the
elements
outlined
above,
successful
service
providers
are
able
to

understand
how
a
portfolio
of
inward
and
outward
facing
services,
responding
to
external
and

internal
factors,

combine
to
deliver
value
to
the
customer.

As
an
organization’s
innovative

capacity
increases
so
also
can
the
value
provided
by
a
service.


We
conclude
that
adopting
a
service
portfolio
model,
using
a
full
life‐cycle
process
for

launching/improving
services
and
most
importantly
employing
innovation
techniques
improves

business
efficiency,
increases
return
on
investment
(ROI)
and
sustains
a
positive
client

experience.


Copyright
Anerian,
LLC
2010
 
 

 3

Leading
Through
Service
Innovation
 
 


Introduction

A
macroshift
is
underway,
impacting
business
and
society
at
large.

Ervin
Laszlo
defines
this

dynamic
of
global
change
in
his
book,
Macroshift,
as
"a
shift
that
is
all‐embracing,
rapid,
and

irreversible,
extending
to
the
far
corners
of
the
globe
and
involving
practically
all
aspects
of

life."1

Laszlo
believes
that
change
of
this
sort
is
driven
by
technology,
but
cannot
be
solved
by

technology.

Examples
of
this
trend
include,
but
are
not
limited
to,
organizations
moving
from

selling
products
to
delivering
experiences,
from
backroom/closed
door
innovation
to
open

innovation
along
with
an
emphasis
on
new
growth
platforms
over
new
products.


As
organizations
begin
to
respond
to
this
changing
reality,
they
must
consider
how
they
deliver

services
as
well
as
products
to
their
customers
and
stakeholders.
Based
on
an
assessment
of

dozens
of
firms
and
service
offerings,
organizations
that
are
responding
well
to
the
widening

field
of
services,
have
incorporated
five
critical
elements
into
their
service
strategy.

The

elements
and
their
relationship
appear
in
the
graphic
below.



























































1
Macroshift:
Navigating
the
Transformation
to
a
Sustainable
World,
September
2001

Copyright
Anerian,
LLC
2010
 
 

 4

Leading
Through
Service
Innovation
 
 


These
critical
elements
include:



• Intent
–
what
is
the
focus
and
purpose
of
the
service?

o The
basic
principle
of
beginning
with
the
end
in
mind
and
being
clear
on
who
the

target
customer
is,
applies
to
service
strategy
as
it
does
in
many
other

discussions
and
decisions
relating
to
general
organizational
strategy.


Surprisingly,
many
organizations
fail
to
build
shared
understanding
around
this

foundation
element
before
moving
into
service
design
and
implementation.



• Scale
–the
practices
and
processes
are
in
place
to
support
implementation
at
a
micro

and
macro
level

o Our
interviews
with
executives
across
sectors
reveal
that
even
the
organizations

invested
in
fostering
innovation
and
promoting
change
can
underestimate
the

impact
of
an
innovation.

Novel
concepts
and
approaches
to
service
delivery
are

successful
at
a
project
or
program
level
but
are
not
then
leveraged
across
an

entire
organization.

Thus,
they
are
unable
to
spur
system‐wide
changes,

hindering
the
return
on
investment.



• Actors
–
those
stakeholders
who
are
instrumental
the
service
cycle
including:

suppliers,
partners,
sponsors,
bloggers,
editors,
customers,
and
promoters
included

o A
detailed
examination
of
all
the
critical
contributors
and
recipients
of
a
service

enables
organizations
to
rethink
the
role
and
specific
function(s)
they
can
and

should
play
in
service
delivery.

This
exploration
yields
insights
into
information

exchanges,
process
hand‐offs
and
new
partnering
models
allowing,
in
some

cases,
an
organization
to
making
a
small
change
to
its
role
in
delivery,
that
can

have
a
game‐changing
impact
on
the
value
provided
to
the
customer.



• Persona
–the
unique
service
experience
based
on
a
competitive
analysis
and
a

‘character’
that
the
service
provider
wants
to
deliver

o In
line
with
this
shift
to
examining
a
customer
experience,
organizations
have
the

opportunity
to
be
intentional
and
explicit
about
what
they
want
customers
to

see,
taste,
smell,
hear
and
feel
during
their
interactions
with
service
providers.


In
an
increasingly
competitive
market,
this
detail
and
distinction
can
have
a
huge

impact
on
attracting
new
customers
and
maintaining
their
loyalty.


In
conjunction
with
the
elements
outline
above,
successful
service
providers
understand
how
a

portfolio
of
inward
facing
and
outward
facing
services

responds
effectively
to
the
operational

context
2

employing
five
principles:




























































2
A
detailed
description
of
our
approach
to
using
this
model
to
articulate
an
organization’s
service
strategy
appears


in
a
separate
white
paper
entitled,
“Our
Approach
to
Service
Innovation.”


Copyright
Anerian,
LLC
2010
 
 

 5

Leading
Through
Service
Innovation
 
 


1. A
Services
Perspective
–
understanding
their
business
as
a
collection
of
services
(a
portfolio),

and
having
a
clear
insight
into
what
drives
service
development

2. A
Portfolio
Approach
‐
managing
their
service
offerings
as
a
portfolio,
much
as
IT
and

product
portfolios
are
managed
with
categories,
criteria,
and
key
metrics

3. A
Full
Life‐Cycle
Process
‐
adopting
a
full
life‐cycle
process
for
service
offerings
from
concept

innovation
and
business
cases
through
checkpoint
reviews
at
key
milestones

4. An
Innovation
Mindset
‐
infusing
innovation
practices
to
build
unique
offerings
that

maximize
convenience,
loyalty
and
value

5. A
Cultural
Capability
–
investing
time
and
effort
into
ensuring
their
culture
can
adapt
to
the

changes
innovation
requires.



Adopting
these
principles
significantly
improves
the
overall
impact
and
value
of
the
services

delivered.



A
Services
Perspective

Services
are
the
dominant
driver
of
the
US
economy

according
to
the
Bureau
of
Labor
Statistics
services

make
up
80%
of
our
economy
and
the
10
industries

with
the
most
dramatic
salary
growth
are
all
in

service‐providing
sectors.

The
chart
to
the
right

shows
that
employment
and
GDP
has
been
driven
by

services
and
what
is
referred
to
as
the
experience

economy
(an
extension
of
services).
And
the
trend
is

global:
for
example,
in
many
countries
service
workers
now
outnumber
farmers
for
the
first

time.



Demand
continually
increases
for
private,
non‐profit
and
public
sector
organizations
to
develop

a
better
understanding
of
what
their
customers
need
and
desire.

For
example,
the
US
Postal

Service
directly
competes
with
private
sector
shipping
companies
like
UPS
and
FedEx.

In
this

competitive
field
each
company’s
differentiation
point
requires
they
pay
close
attention
to
the

services
they
provide,
the
variety
of
services
offered,
and
their
ability
to
execute
on
their

services
with
greater
and
greater
efficiency
and
customer
value.


And
within
the
US
Government,
the
Open
Government
Directive
recently
released
by
the
Office

of
Management
and
Budget
calls
for
increased
transparency,
participation
and
collaboration
on

the
part
of
all
federal
agencies.

This
directive
creates
yet
another
opportunity
for
federal

agencies
to
consider
how
they
can
meet
these
objectives
in
a
manner
that
complements
their

mission.



Driving
improved
customer
experience
are
the
opportunities
available
in,
for
example,
creating

a
web
presence
and
utilizing
social
networking
tools.

Not
only
does
technology
have
the

potential
to
enhance
customer
experience,
it
simultaneously
offers
the
possibility
of
offering

services
in
a
way
that
save
money
and/or
increase
revenue,
and
expand
an
organization’s

definition
of
services.



Copyright
Anerian,
LLC
2010
 
 

 6

Leading
Through
Service
Innovation
 
 


Thus
unique
service
offerings
are
being
developed
fueled
by
shifts
in
the
market
and
the
desire

to
continually
find
convenience,
simplicity
and
better
ways
to
improve
costs
and
the
customer

experience.

Innovation
is
the
most
critical
component
of
successful
service
firms
as
they

continually
strive
for
improvement,
differentiation
and
to
identify
the
qualities
and
service

characteristics
that
will
keep
the
customer
coming
back
for
more.


Generally
service
innovation
is
evident
in
one
(or
a
combination
of)
four
types,
examples
of

each
are
given
in
the
next
section:



•Renewing
the
types
of
interactions
with
stakeholders


•Delivering
services
in
a
unique
way

•Leading
the
pack
in
new
service
models

•Leveraging
talent
networks
to
increase
capacity



And
innovation
within
the
public
sector
has
two
notable
characteristics:






•It
successfully
addresses
an
important
problem
of
public
concern

•It
inspires
successful
replication
by
other
governmental
entities.
3



Innovative
organizations,
whether
public
or
private,
invest
time
and
effort
into
designing
their

services,
and
improving
the
customer/stakeholder
experience.

Below
are
some
service

innovation
exemplars.



























































3
The
Ash
Institute
for
Democratic
Governance
and
Innovation
at
the
John
F.
Kennedy
School
of
Government
at

Harvard
University
recognizes
the
top
50
Government
Innovations
each
year.

Representing
the
work
of
city,

county,
state,
federal
and
tribal
government
agencies,
the
top
50
are
selected
from
a
pool
of
600
applicants.
The

criterion
used
to
select
these
awardees
is
referenced
here.


Copyright
Anerian,
LLC
2010
 
 

 7

Leading
Through
Service
Innovation
 
 



Renewing
the
types
of
interactions
with
stakeholders

Civic
Banking
has
made
Caja
Navarra
(they
use
‘CAN’
as
their
US
brand)
one
of
the
fastest

growing
financial
institutions
in
Spain
as
they
have

implemented
five
rights
for
clients:



1. The
right
to
choose:
clients
are
allowed
to
allocate

30%
of
the
bank’s
profits
according
to
their
account;


2. The
right
to
know:
clients
know
how
much
the
bank

earns
from
them;


3. The
right
to
accountability:
clients
know
and
hold
the

non‐profits
and
charities
accountable
when
they

contribute;


4. The
right
to
participate:
CAN
helps
clients
who
wish
to
volunteer
find
a
suitable

organization
that
fits
their
desires;


5. The
right
to
traceability:
clients
are
given
the
knowledge
and
ability
to
decide
where

investments
are
placed.




Mapping
Evapotranspiration
from
Satellites

The
State
of
Idaho’s
Mapping
Evapotranspiration
from
Satellites

produces
detailed
images
of
evapotranspiration,
enhancing
the

understanding
of
local
and
regional
water‐demand
issues.



Water
experts
have
long
had
a
saying:
"If
you
can't
measure
it,
you

can't
manage
it."
But
they
also
have
long
known
that
determining
how
much
water
is
diverted

from
rivers
and
how
much
is
pumped
from
wells
is
an
inexact
and
expensive
science.
Now,
a

method
developed
by
the
Idaho
Department
of
Water
Resources
and
the
University
of
Idaho

that
uses
surface‐temperature
readings
from
government
satellites
is
letting
officials
measure

how
much
water
is
lost
from
a
piece
of
land
through
evaporation
and
through
transpiration,
the

release
of
water
vapor
by
plants.





Water
resource
managers
in
Idaho
and
other
states
see
the
method
as
the
best
way
to
measure

water
consumption
to
help
settle
growing
regional
disputes
over
water
supplies
without

lawsuits.
More
than
90
percent
of
the
water
used
in
Idaho's
3.4
million
acres
of
irrigated

agricultural
land
is
consumed
by
evaporation
and
transpiration.
The
data
already
have
been

used
to
help
Idaho
planners
evaluate
the
impact
of
population
growth,
protect
salmon
and

steelhead
habitat
and
settle
questions
in
the
conflict
between
groundwater
irrigators
and

surface‐water
irrigators
in
the
Magic
Valley.

Previously,
officials
had
to
look
at
well‐pumping

records
and
electricity
use
to
estimate
each
irrigation
district's
usage.
Now
they
can
measure

water
consumption
field
by
field
with
greater
precision
and
less
cost.
.4



























































4

http://www.idahostatesman.com/environment/story/901339.html


Copyright
Anerian,
LLC
2010
 
 

 8

Leading
Through
Service
Innovation
 
 



Delivering
services
in
a
new
way

Buying
health
insurance
has
become
such
a
complex

decision
that
BlueCross
and
BlueShield
Florida
is
trying

a
new
sales
tactic:
storefronts
near
big
malls.



"Today's
far
higher
deductibles
and
the
fact
that
fewer
employers
even
offer
coverage
means

we
have
to
help
people
navigate
health
decisions
face
to
face
and
balance
price
and
quality
that

fits
their
needs,"
says
Michael
Guyette,
senior
vice
president
of
sales
for
the
state's
biggest

private
health
insurer.
5




GoArmyEd





Harnessing
web‐based
technology
into
a
one‐stop
virtual
portal

enables
the
US
Army
to
provide
online,
secondary
educational

support,
tuition,
and
other
services,
while
efficiently
streamlining

administrative
functions
for
the
benefit
of
soldiers.




The
Army
Continuing
Education
System
(ACES)
launched

GoArmyEd.com
on
April
1
2006.
GoArmyEd
puts
soldiers
one
click

closer
to
obtaining
their
education
anytime,
anywhere
they
are
stationed.
Participating
schools

access
GoArmyEd
to
announce
classes
for
soldier
registration,
manage
class
enrollments,

submit
grades,
verify
and
prepare
invoices
for
Army
payment,
and
access
centralized
support

for
troubleshooting
soldier
issues—all
from
one
integrated
location.
The
primary
advantage
of

GoArmyEd
is
equal
24‐hour
access
to
tuition
assistance
(TA)
regardless
of
the
soldier’s

geographical
location
and
greater
visibility
with
improved
accuracy
in
management
of
tuition

assistance
dollars.6





























































5

Albright,
M.
(2009).
Blue
Cross
and
Blue
Shield
Florida
moves
into
high‐traffic
storefronts.
St
Petersburg
Times.

July
7,
http://www.tampabay.com/news/business/retail/article1016195.ece


6

http://www.goarmyed.com


Copyright
Anerian,
LLC
2010
 
 

 9

Leading
Through
Service
Innovation
 
 



Leading
the
pack
in
new
service
models

Just
a
few
years
ago
the
notion
that
you
could
persuade

upwardly
mobile
professionals
to
share
cars
would
have

seemed
as
far‐fetched
as
being
able
to
unlock
a
car

with
a
telephone.
But
what
started
as
a
counterculture

movement
in
places
like
Cambridge,
Massachusetts
and

Portland,
Oregon
has
gone
mainstream.



You
can
now
find
Zipcars
in
most
major
U.S.
cities,
including
Seattle,
San
Francisco,
Atlanta,

Chicago,
and
New
York,
and
in
college
towns
like
Ann
Arbor
and
Chapel
Hill,
as
well
as
in
Britain.



Zipcar's
annual
revenues
are
$130
million,
and
the
company
is
growing
about
30%
a
year.7



Wraparound
Milwaukee

Wraparound
attempts
to
reduce
costly
and
arguably
ineffective

residential
care
options
by
offering
a
host
of
individualized
treatments

that
allow
youth
to
stay
with
their
families.

Additionally,
the
program

encourages
family
members
to
play
a
more
active
role
in
the

treatment
process,
as
members
of
the
care
planning
team.


Wraparound
Milwaukee
is
a
social
service
program
that
was
launched
 

in
1995,
designed
to
serve
an
annual
1300
youth
with
diagnosable

mental
health
disorders
such
as
depression,
attention
deficit
disorder,
or
learning
impairments

that
prevent
normal
functioning
in
home,
school,
or
outside
community
settings.

Over
50%
of

these
children
come
from
families
at
or
below
the
federal
poverty
line.

Eligible
youth
are

already
being
treated
by
two
or
more
social
service
systems
and
are
often
in
the
process
of

moving
to
more
formal
residential
treatment
centers,
correctional
facilities,
or
psychiatric

hospitals.



























































7

http://www.mutual‐

funds.biz/2009/08/26/news/companies/zipcar_car_rentals.fortune/index.htm?postversion=2009082708


Copyright
Anerian,
LLC
2010
 
 

 10

Leading
Through
Service
Innovation
 
 



Leveraging
talent
networks
to
increase
capacity

The
American
Girl
Store
retail
chain
has
successfully
adopted
experiential
marketing
and

customer
experience
design
innovations
across
their
in‐store
and
direct
media
channels

(catalog
and
internet).
By
selecting
a
story
and
multiple
ways
of
bringing
that
story
to

customers,
they
have
created
a
truly
unique
and
memorable
in‐store
experience
for
their

customers.


On
average,
customers
are
willing
to
travel
3‐6
hours
to
visit

one
of
three
stores,
and
an
average
store
visit
lasts
over
2

hours
The
US
retail
average
is
less
than
20
minutes,
but

customers
pay
multiple
visits.

Services
for
the
customers
&
the
dolls
themselves
include:

• A
Doll
hair
stylist

• A
café
that
serves
sophisticated
yet
girl‐friendly
food

with
customized
doll
sized
seats

• A
theatre
that
has
2
original
live
musical
productions
written
by
Broadway
playwrights,

based
on
American
Girl
stories

• Attention
to
the
care
of
non‐consumers
with
concierges
handing
Game
Boys
to
brothers

as
they
enter
the
store

• A
focus
on
stories
–
stories
are
so
intertwined
that
American
Girl
will
not
sell
a
doll

separate
from
its
book




United
States
Department
of
Treasury
–
New
Markets
Tax
Credit
Program


The
Treasury
Department’s
New
Market
Tax
Credit

(NMTC)

Program
provides
incentives,
on
a
competitive
basis,
to
induce

private‐sector,
market‐driven
investment
in
business
and
real

estate
developments
located
in
distressed
communities.
The

NMTC
program,
established
by
Congress
in
December
2000,

permits
individual
and
corporate
taxpayers
to
receive
a
credit

against
federal
income
taxes
for
making
equity
investments
in

investment
vehicles
known
as
Community
Development
Entities



(CDEs).
The
investor
receives
a
credit
totaling
39
percent
of
the

cost
of
the
investment.
CDEs
must
apply
to
the
Treasury’s
Community
Development
Financial

Institutions
(CDFI)
Fund,
which
administers
the
NMTC
program,
to
compete
for
this
allocation

authority.
The
organizations
receiving
awards
have
identified
principal
service
areas
that
will

cover
nearly
every
state
in
the
country,
as
well
the
District
of
Columbia
and
Puerto
Rico
and

plan
to
invest
in
renewable
energy
projects,
charter
schools,
health
care
facilities,

manufacturing
companies,
and
retail
centers.


Viewing
an
organization
through
a
service
lens
and
prioritizing
innovation
to
support

sustainable
health
and
growth
in
any
sector
are
ineffective
as
stand
alone
activities.

Expanding

the
service
view
to
a
portfolio
perspective,
designing
a
service
with
a
life‐cycle
model
in
mind


Copyright
Anerian,
LLC
2010
 
 

 11

Leading
Through
Service
Innovation
 
 


and
attending
to
how
organizational
culture
supports
innovation
and
change
are
the
supporting

activities
that
make
innovation
viable.


A
Portfolio
Approach

A
service
portfolio
is
the
totality
of
formal
internal
services
and
external
services
that
comprise

much
of
the
organization’s
ultimate
value
production.

Formal
services
are
those
that
are

deemed
to
be
important
enough
to
have
budgets,
owners
and
at
least
some
level
of
consistent

approach
for
development,
delivery
and
sun
setting.


Interestingly
informal
research
and
interviews
with
service
providers
have
shown
that
formal

development
methods
are
not
applied
consistently
to
an
organization’s
service
portfolio.

For

the
most
part
new
service
offerings
are
generated
in
a
fairly
ad
hoc
way
by
marketing
or

customer
support
or
a
smart
individual
in
the
organization
with
a
lot
of
energy
and
passion
or

based
on
a
market
or
customer
event.

This
style
of
information
innovation
has
its
benefits:

teams
feel
empowered,
it
can
at
times
reduce
time
to
market
and
it
feels
like
progress
is
being

made
quickly.



This
unsystematic
approach
misses
the
mark.
Because:


• Services
are
not
viewed
as
a
portfolio

• Connections
are
not
managed
across
the
enterprise

• Formal
processes
are
not
adopted
to
manage
the
life‐cycle

• Roles
are
not
clear
as
to
who
is
ultimately
accountable
for
concept
through
sunset,

including
ROI,
design,
development,
innovation,
delivery
and
training
and
support


A
higher
value
approach
is
to
treat
services
much
like
products
‐
as
a
portfolio,
with
capital
and

information
system
investments
based
on
a
theory
of
value,
an
estimated
investment,
and
an

assumption
of
differentiation
and
or
need.


Service
Portfolio
Model

A
substantial
portion
of
the
activities
of
an
organization
relate
to
their
service
offerings.

We

see
these
service
offerings
in
a
collection
referred
to
as
a
service
portfolio
–
including
internal

services
and
client
facing
services.

There
are
four
basic
categories
of
these
service
types
those

delivered:


1. To
individuals

2. To
social
networks

3. To
the
enterprise

4. For
social
good


A
portfolio
view
of
the
services
helps
organizations
determine
where
to
focus,
where
there
are

synergies
across
the
enterprise,
where
there
are
gaps
in
offerings
and
the
scope
and
scale
of

investments
necessary
to
achieve
the
goals.

These
goals
can
be
efficiency,
productivity,
market


Copyright
Anerian,
LLC
2010
 
 

 12

Leading
Through
Service
Innovation
 
 


leadership
and
or
cost
containment.

In
the
absence
of
the
high
level
view
however,
it
is
likely

that
opportunities
may
be
missed.



Spending
the
time
to
identify
and
audit
the
portfolio
helps
the
organization
see
the
various

components
and
make
effective
strategic
decisions
and
investments.



A
Full
Life‐Cycle
Process

Companies
have
adopted
a
full
life‐cycle
development
process
for
products.

These
processes

have
been
refined
and
matured
over
the
years
to
incorporate
total
quality,
statistical
process

control,
six
sigma
and
client
centered
design
techniques.

There
are
also
similarly
very
formal

processes
for
information
systems
–
these
include
the
Software
Development
Life‐Cycle,
Spiral

Development
and
Agile
Development
techniques.




These
approaches
are
targeted
at
managing
for
results
by
way
of
teaching
the
organization
and

instilling
formal
principles,
practices
and
processes
for
the
development
effort
with
an
eye

towards
meeting
timelines,
budgets
and
expectations.

There
are
formal
methods
and
tools
for

gathering
requirements,
developing
an
overall
architecture,
detailed
designs
and
requirements

specifications.

Each
then
has
formalized
development
methods
for
managing
the
team
through

the
process.

Lately
a
lot
of
these
approaches
have
been
upgraded
to
engage
customers
and

other
participants
earlier
and
more
often
throughout
the
life‐cycle
to
ensure
effective

adoption.


Just
recently
organizations
are
starting
to
see
the
value
of
adopting
these
same
principles
and

practices
to
their
services
portfolio
and
offerings.

For
example
LRA
Worldwide
is
an

organizational
development
and
research
firm
that
focuses
on
Customer
Experience

Management
(CEM).

They
refer
to
their
process
as
“Moments
of
Truth”
–
when
a
company
and

customer
interact,
the
customer
learns
something
that
will
strengthen
or
weaken
the
future

relationship
and
the
customer’s
desire
to
return,
spend
more,
and
recommend
the
company
to

others.




Copyright
Anerian,
LLC
2010
 
 

 13

Leading
Through
Service
Innovation
 
 


The
graphic
below
illustrates
in
column
1
the
typical
stages
of
life‐cycle
management
and

compares
(in
column
2,
3,
4)
three
types
of
application.

Each
cell,
within
columns
2,
3,
and
4

gives
an
example
of
use
of
that
aspect
of
the
life
cycle




 Product
 Technology
 Service
Offerings


Development
 Implementation


Portfolio
Analysis

Many
technology
 Many
large
IT
 Few
service
firms

and
pharmaceutical
 organizations




Business
Case
 Above
a
small
 Above
a
small
 Infrequently
with


investment
threshold
 investment
 little
rigor

threshold


Feasibility
study
 Formal
and
often
 Formal
and
often
 Informally


Design
reviews
 Above
a
small
 Above
a
small
 Informally


investment
threshold
 investment

threshold


Development
plan
 All
 All
 Sometimes





Checkpoint
reviews
 All
 All
 Informally





Sunset
process
 For
hardware
 Often
handled
by
 Rarely
for
service


products
especially
 way
of
conversions,
 offerings

or
upgrades


Organizations
taking
a
systematic
life‐cycle
approach
to
their
service
portfolio
reap
several

benefits:



• It
helps
infuse
a
level
of
discipline


• It
enables
the
entire
team
to
see
the
service
in
the
context
of
the
value
chain
or
supply

chain.




• It
orients
the
entire
organization
to
a
customer‐centric
mindset,
whether
the
customer

is
internal
or
external
to
the
organization



• It
allows
for
targeted
investments
to
address
the
root
cause
of
problems
in
the
delivery

chain.

Copyright
Anerian,
LLC
2010
 
 

 14

A
Cultural
Capability

Developing
and
delivering
innovative
services
as
a
portfolio,
within
the
context
of
a
full
life‐
cycle
approach
usually
means
two
inter‐related
shifts:


1. Redirecting
a
variety
of
internal
practices,
processes,
policies,
procedures,
and

performance
measures
towards
a
targeted
customer
group
(or
groups)



2. Channeling
the
culture
to
reflect
an
outside‐in
perspective
i.e.
delivering
a
satisfying

customer
experience
based
on
customer
needs,
rather
than
delivering
from
an
inside‐
out
perspective
i.e.
delivering
what
the
organization
thinks
the
customer
wants.


Both
shifts
take
time,
commitment
and
other
resources
and,
of
the
two,
channeling
the
culture

is
the
more
challenging.

However,
trying
to
achieve
innovative
services
and
innovative
service

delivery
without
simultaneously
aligning
the
culture
to
meet
that
goal
will
result
in
less
than

optimum
success.
Equally
trying
to
channel
the
culture
without
redirecting
the
formal

infrastructures
will
not
result
in
service
innovation
success.


Ensuring
cultural
capability
to
deliver
innovative
services
is
a
four‐step
process:


1. Identifying:
determining
and
agreeing
what
the
strengths
of
the
culture
are
and
its
‘path

dependency.8


2. Understanding:
assessing
how
these
strengths
currently
add
value
to
the
services

offered
and
how
they
might
need
to
be
shaped
and
reinforced
in
line
with
changes
in

the
business
processes
and
systems.


3. Shaping:

reinforcing
through
work
process
changes,
leadership
role
modeling,
and

incentivizing
the
desired
changes
in
culture.


4. Nurturing:
responding
to
any
signs
of
‘back
tracking’,
acting
to
encourage
and
grow
the

desired
culture
through
a
range
of
formal
and
informal
methods.


Conclusion

Services
drive
our
economy,
our
employment
and
in
many
ways
have
been
a
substantial
driver

of
innovation
in
the
past
decade.

We
have
invested
hundreds
of
billions
of
dollars
in
IT

platforms
over
the
last
thirty
years
enabling
companies
to
bring
new
service
offerings
to
market

with
a
faster
time
to
value.

Adopting
a
portfolio
model,
a
full
life
cycle
process
for
launching

services
and
adapting
new
innovation
techniques
will
improve
business
efficiency,
ROI
and

impact
for
the
client
as
well
as
strengthen
long‐
term
relationships.



























































8
Path
dependency
describes
the
history
and
legacy
of
the
organization.

Culture
can
only
be
changed
within

certain
boundaries
that
relate
to
past
experiences,
contexts,
constraints,
and
capabilities.

So,
for
example,
the

culture
of
a
retail
bank
cannot
easily
be
changed
into
the
culture
of
an
investment
bank.

Leading
Through
Service
Innovation
 
 


Works
Cited:



Anthony,
Scott
D.,
Mark
W.
Johnson,
Joseph
V.
Sinfield,
and
Elizabeth
J.
Altman.
The
Innovator's

Guide
to
Growth,
Putting
Disruptive
Innovation
to
Work.
Boston,
Massachusetts:
Harvard

Business
Press,
2008.
Print.




Chesbrough,
Henry.
Open
Innovation.
Boston,
Massachusetts:
Harvard
Business
School

Publishing
Corp,
2006.


Ezell,
Stephen,
Tim
Ogilvie,
and
Jeneanne
Rae.
Seizing
the
White
Space:
Innovative
Service

Concepts
in
the
United
States
Technology
Review
205/2007.
Helsinki,
Finland:
Tekes
/
The

Finnish
Funding
Agency
for
Technology
and
Innovation,
2007.
PDF
file.



Global
Employment
Trends,
International
Labor
Office:
January
2007



Kaminer,
Aeriel.
"Queen
for
a
Day
in
Rented
Finery."
New
York
Times.
New
York
Times
Online,

11
December,
2009.
Web.
18
December,
2009.

http://www.nytimes.com/2009/12/13/nyregion/13critic.html?scp=8&sq=dress&st=cse




Pine,
Joseph,
and
Gilmore,
James.
The
Experience
Economy.
1999.


Rogers,
Everett
M.
Diffusion
of
Innovations,
Fourth
Edition.
New
York:
The
Free
Press,
1995.

Print.




Silverstein,
David,
Philip
Samuel,
and
Neil
DeCarlo.
The
Innovator's
Toolkit.
Hoboken,
New

Jersey:
John
Wiley
&
Sons,
Inc.,
2009.
Print.



Wortham,
Jenna.
"A
Netflix
Model
for
Haute
Couture."
New
York
Times.
New
York
Times

Online,
8
November
2009.
Web.
18
December,
2009.

<http://www.nytimes.com/2009/11/09/technology/09runway.html>


www.peerinsight.com
‐
The
Discipline
of
Service
Innovation.


Copyright
Anerian,
LLC
2010
 
 

 16