In global markets, gaining a competitive edge requires more than just traditional products. It takes service-related innovations: new solutions, new products and new practices. It could be about, say, made-to-measure jeans.
— A company’s service innovations can consist of novel ways to organise business, more efficient processes or new kinds of distribution and customer interface solutions, says Tiina Tanninen-Ahonen, Director of the Service Innovation unit at Tekes – the Finnish Funding Agency for Technology and Innovation.
Service innovations are created in both the service and industrial sector. What is key is to inventively bring together various competencies.
— Quite often, a service innovation is a combination of service, physical products and software.
From everyday life to ‘wow’ experiences
Service innovations are based on immaterial value creation, which means helping customers and making their lives or business easier. It is all about creating benefits that customers are willing to pay for.
— In immaterial value creation, the promise made to the customer can be, for example, a smooth and carefree everyday life, a positive spirit and a better conscience, humane practices, cost-effectiveness, productivity or, say, a ‘wow’ experience, Tanninen-Ahonen explains.
What is essential is to understand and envision what the customer or the end user wants right now and in the future. Customers are not necessarily interested in a smartphone as such, but rather in the meaning and benefits that they can gain from it.
— The customer is not buying a product or a service – they’re buying convenience, cost-effectiveness, reliability, better business or a happier life.
Made-to-measure jeans as an innovation
Finland’s strengths are considered to be built on an industrial core and strong technological know-how. A high level of education provides fertile ground for service innovations that bring knowledge and expertise to the forefront.
— Expertise in production technology creates a solid foundation, but success also requires competence in human and social sciences, in design and in cultural research. Service innovations have the potential to increase growth and strengthen competitiveness and, through improved customer understanding, to offer better competitiveness in the markets for traditional products too.
A good example of a service innovation is NOMO Jeans, a concept born out of one woman’s struggle to find a pair of fitting jeans. Founded in 2010, the company, which produces individually customizable, made-to-measure jeans came up with the idea to utilise 3D body scanner technology in production. The first store was opened in Helsinki, followed by one in Germany and a third in Dubai.
As is typical of service innovations, the implementation of the concept, headed by Managing Director Mari Silvennoinen, required combining competencies in a number of fields. The technology put forward remains invisible to customers but is an essential link in delivering on the value proposition: making people feel good and satisfied.