What Is Service Innovation?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 01 October 2019
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"Service innovation" is a broad term that has to do with making changes in the direction, organization and even the product line of a business in order to anticipate demand and keep the company in the forefront of an industry. Sometimes referred to as anticipatory thinking or anticipatory innovation, the idea is to accurately project upcoming trends within the marketplace and make changes in the way the company does business in order to ride the wave of those trends to greater financial rewards. Considered a hallmark of true entrepreneurship, service innovation will often involve a combination of changes that affect various levels of the operation, depending on what is required to produce the desired result.

In some cases, service innovation will focus on making changes to a product line in order to attract more attention from consumers. This may involve enhancements to existing products that are likely to increase demand from a wider range of customers, or the introduction of new products to an existing line that allows the company to move into consumer niche markets that were previously unexplored. Both approaches tend to focus on adding value to consumers that the competition cannot supply.


The process of service innovation can also focus more on making a company more efficient in terms of its operational structure. Here, the idea may be to change the internal structure so that waste is eliminated, production is increased, and customer orders can be processed in less time. The end result in this scenario is a company with lower operating costs and a reputation for delivering the goods quickly and reliably. As a result, consumers are more likely to buy products over and over, which in turn increases revenue generation for the business.

A third example of service innovation relates to providing customer support before, during, and after a sale. This is often accomplished by creating mechanisms that allow easy communication between customers and those in the organization that can assist with questions or concerns. To this end, many companies will provide multiple means of communication that include the use of traditional customer service telephone numbers, augmented with the possibility of email communications and even online support by way of a customer forum or a real-time chat feature. The idea is to be accessible to the customer and provide clear and concise support that is delivered in a time frame the customer perceives as being beneficial.

The general idea of service innovation is to take something that is good and make it better. In order to accomplish this, careful scrutiny of how things are done today, and why those procedures are in place, is vital. From there, evaluating the relevancy of those processes and procedures in light of today’s marketplace can commence, hopefully identifying at least a few ways the company can change and present a greater value to consumers. When managed responsibly, service innovation enhances the general operation of the company and increases customer loyalty and demand for the products offered in the marketplace.


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