Business Model Innovation in Services

Abstract: Services constitute three quarters of all economic activities worldwide. The growing importance of the service industry cannot be neglected and it is obvious that services can offer colossal opportunities on the way of creating and capturing economic value. The way to prosperity  for companies and economies is in their ability to rethink the existing business with the purpose to innovate. Service innovation is believed to be a source of companies’ competitiveness. Leveraging innovation of services is not an  easy task and requires a new thinking which implies the shift towards service business logic. In order to innovate services effectively, there is a need to develop new business models. A business model is a significant assistant which can help to create viable services by taking into consideration appropriate customer needs and organizational resources. However, the majority of approaches to innovation occurred from product-oriented business models. The growing tendency of services requires changing traditional approaches and developing new service-based business models. The main aim of this thesis is to study the process of transformation (innovation) of a product-oriented business model towards a service-centered one which implies stronger customer focus and to identify the main components that constitute the business model framework in the service context. The empirical data was collected from a single case study of ISS Sweden and analyzed according to the developed framework from literature findings regarding business model innovation in the service context. The most important findings reveal the fact that the business model perspective should be taken into account as more holistic approach which integrates all processes and components within the company. However, some of the components were found missing and it was not supported by the literature findings. During the transformation process the major changes were identified while looking at each component in detail and the most important components of a service business model framework were identified, specifically customer, value proposition and value delivery which comprise the  following key factors: ●   Customer is a co-creator, co-producer and a key partner ●  Employees are the main source of successful value delivery ●  Service innovation is a necessity