Service-Logic Innovations:

HOW TO INNOVATE CUSTOMERS, NOT PRODUCTS

Why Is a New Approach to Innovation Mandatory?

All innovation, whether a service process or a tangible product, should be viewed as a service-logic innovation. This challenge to traditional, attribute- based views of innovation stems from the understanding that any innovation (or change) in product or process requires changes in customer thinking, participation, and capabilities to create and realize value. Altering value as it is de?ned and used by the customer, not value in production and exchange, de?nes innovation.

In the case of a rendered service, the provider applies its knowledge directly to the customer need; with tangible products, ?rms embed knowledge in goods that the customer later combines with his or her skill to realize value. For example, glucose monitoring systems enable diabetes patients to self-diagnose their blood sugar levels several times a day, a task that previously could be per- formed only by doctors. Knowing his or her glucose level immediately and with great accuracy, the patient can apply the most effective dose of insulin, which lowers the risk of both hyper- and hypoglycemia.

The service-logic perspective is based on the recognition that innovative new products enable customers to ?nd new ways to service their personal needs, or as Clayton Christensen has argued, "when people ?nd themselves needing to get a job done, they essentially hire products to do that job for them."4 After all,

customers do not seek products; they seek satisfaction. Products thus represent vehicles for service, because they enable customers to productively pursue their individualized satisfaction. Thus, we consider the designations of "products" and "services" limiting and instead refer to both, individually and collectively, as offerings.

In this way, we subsume any discussion of product- and attribute-level innovation under a more general discussion of what, at its core, innovation really is: ?nding new ways of co-solving customer problems, whether they are fully recognized or completely latent to the customer. Whether customers have recognized or unrecognized needs, the disruption to their behavior and to the way they recognize and realize value actually presents the opportunity to man- age discontinuous innovation better. More and more, offerings cannot be repre- sented accurately by points on either end of a tangibility continuum. Rather, offerings are complex mixes of concrete objects, rendered services, and customer participation.