Managing Service Innovation in an Increasingly Digitalized World - “It's more than just picking the low hanging fruits”

Abstract: The ability to manage service innovation has become more important than ever for organizations in order to stay competitive. One of the prominent drivers for this increased focus on service innovation, is the digitalization phenomenon. Thus, the digitalization implies greater pressure on organizations to deliver more value adding and customized service offerings than ever before. Evidently, a major shift has occurred from a strict product innovation focus to a greater focus on service innovation, thus even products have started to be considered how they can be transformed into services in many industries. Decisively, organizations are talented in handling more incremental service innovation rather than innovations that are radical or disruptive in its nature, which in this paper will be referred to as more innovative service projects. However, due to the new challenges in line with the digitalization phenomenon, it is crucial to consider the more innovative services to be able to satisfy new customer needs and stay competitive in the future. Though, research has shown that how to manage more innovative service innovation is a common struggle among service organizations. Because of the importance for organizations to handle more innovative service innovation projects and be able to handle the pressure stemming from digitalization phenomenon, the main purpose of this thesis is to contribute with insights regarding how organizations in a successful way can manage and relate to more innovative service projects in an increasingly digitalized world. In order to contribute with this insight a specific focus has been on the three industries, banking, accounting/consulting and insurance industry. Even though these industries are in the spotlight for this thesis, no comparison will be made. Rather the service innovation concept will be investigated based on these three industries. Numerous of studies have been conducted regarding how to manage conventional service innovation. However, this study contributes with originality in terms of new insights, by combining a conventional approach for managing the concept “service innovation” with two highly up-to-date and related concepts, “more innovative service projects”, and “the digitalization” phenomenon. Decisively, these three concepts in combination constitute the basis of this thesis. The findings in turn are based on an extensive literature review and empirical findings with a case study design. The results presented in this study suggest that in order for a service organization within the banking, accounting/consulting and insurance industry to successfully manage and relate to more innovative service innovation to spur on digitalization trends, organizations need to overcome eight challenges. These challenges are possible to overcome by following eight solutions, which in extent are permeated by an agile mindset, and agile working method. Further, these eight challenges and solutions can be considered as managerial implications regarding how to manage more innovative service projects in an increasingly digitalized world.