THE FORGOTTEN SOURCE : EMPLOYEES AS A SOURCE OF CUSTOMER INSIGHTS

Abstract: The service economy is flourishing and due to high competition, manufacturers are turning to service innovation as way to distinguish and meet their customers increasing and changing demands. Service design and an increased utilization of employees are seen as way of improving the innovative capabilities. The aim of this thesis is to explore in a manufacturing company undergoing servitization, what is the role of front-line-employees (FLE) for service innovation and in what ways can front-line-employees be leveraged to enhance a firm’s service innovation capability? To do so, a hermeneutical research approach was adopted to interpret both FLEs collective customer understanding and the strategic view from management and service design within a company. Results reveal an encountered complexity and unstructured development of customer knowledge through long ongoing relations where the continuous identification of customer needs is a unformalized process and FLEs are relying on experience and tacit knowledge to do so. The study identifies FLEs as a resource to innovation, with aggregated customer knowledge, product knowledge and practice knowledge and are mainly contributing as a supporting actor in the innovation process. The study makes a contribution by emphasizing the needed support to empower FLEs as contributors to service innovation. Service design tools and techniques are a suggested way to provide structure and formalization in the involvement of FLEs into the innovation process. Future studies should aim to validate and explore the suggestions further through a comprehensive study of the inter-organizational customer knowledge creation and dissemination and its effect on service innovation.