Organisational conditions for service encounter-based innovation

1. Organisational conditions for service encounter-based innovation An article review by Kalle-HeikkiKoskinen Aalto University 22 Nov 2013

2. Organisational conditions for service encounter-based innovation • An article by FlemmingSørensen, Jon Sundbo and Jan Mattsson • From Roskilde University, Department of Communication, Business and Information Technologies • Published in Research Policy, volume 42 (2013) • Pages 1446-1456

3. The production and delivery of services are often based on service encounters between the service organisations’ employees and their users of customers • Service encounter-based innovation developsfromideas, knowledge, or practises derivedfrom frontline service employees’ meetings with users inthe service delivery process. Service encounter-based innovation??? INNO- VATION! Service encounter! FRONT DESK BACK OFFICE CUSTOMER

4. Background and introduction • Increased emphasis on the important role of users in innovation processes • User-driven innovation • Lack of studies of how service enounters can facilitate innovation processes • Excisting literature has no mentions about how • service encounter-based innovation occurs • service encounters and front-line employees become succesfully involved in service innovation processes • Service encounters do not by themselves support user-driven innovation, but have a huge potential to do so • The authors argue that exploitation of the potential is conditioned primarily by a number of organisational conditions.

5. Part ITheoreticalframework

6. Service encounter-based innovation in literature • Many categorisations of service innovations have been suggested • Some have to do with innovation in relation to service encounters (for example ad hoc innovation) • A comprehensive understanding of service encounter-based innovation process types has not been established • Based on the available literature and general understanding, a simple categorisation is proposed: • Directed innovation process • Practice-based change processes

7. Category comparison • Directed innovation process • A top-down, strategic, planned and well structured innovation process • Ideas arise from front-line employees as a consequence of service encounters, but… • …initiated and developed by the management, marketing and/or R&D departments • Results in intentional and significant changes of a service that can be repeated and have an economic impact • Practice-based change processes • Bottom-up, non-intentional, practise-based changes - seeds of small innovations • Initiated and developed by employees as a process of daily practices • Often recognised in the “back mirror”. Still a hidden potential! • Results in smaller, unintentional daily changes; small steps in an innovation process • In both cases, innovation depends on the creativity of front-line employees

8. General elements of the two innovation process categories • In both process categories, there are similar requirements considering the environment of service encounters: • Employees’ positive attitude towards creative problem solving needs to be facilitated • New practises and changes need to be recognised and integrated into the organisation • The three general, interdependent elements of service encounter-based innovation process: • Facilitation of the innovation process by organisation • Creativity among front-line employees • Integration of the results of creative processes in the organisation

9. Innovation process elements and the organisation structure • The two service innovation process categories lead into a dual structure in innovative organisations: • An informal social system, a front-office innovation climate that produces ideas • A management system, an organisational support system that inspires employees and selects the ideas to be developed • Both are widely found to have significant effect on innovation capabilities of an organisation

10. The theoretical framework • The theoretical part of the article results into a model of general organisational elements conditioning service encounter-based innovation

11. Part IICase study

12. Why the case study • The theory suggested that the existence of service encounter-based innovation processes is determined by two organisational elements • A front-office innovation climate • An organisational support system • The case study analysis seeks to detect the relevant aspects of these organisational elements • The goal is to create a theoretical general model of organisational characteristics enabling service encounter-based innovation • Focus on common characteristics, regardless of the differences of organisations

13. Method of the case study • Multiple comparative study of 11 Scandinavian service organisations • Diversity of case organisations was maximised • Service sector (library, engineering consultancy, café etc.) • Size (20-3000) • Professionalism • Public or private • B2C or B2B • ICT or face-to-face (from face-recognition to zoo) • Data collection mainly through semi-structured interviews • Model development based on a search of positive and negative factors

14. Three key conditions of a front office innovation climate • Entrepreneurial working values • An expression of front-line employees’ drive to changing services • Crucial for practise-based changes process • Social intelligence • Understanding what users/customers need • Primary “marketing tool” of front-line employees • Crucial for both innovation process categories • Recognition incentives • A feeling of front-line employees that their innovations, big or small, are important, heard and utilised • Crucial for direct innovation process

15. Three key conditions of an organisational support system • Organisational confidence in the creative potential of front-line employees • Incremental changes by front-line employee ideas often lead to important innovations • Lack of organisational confidence eliminates the potential for directed innovation, as no front-line employee ideas are heard • Correspondence capability • Structures, cultural elements, hierarchy and channels of communication and feedback between front and back offices • “The efficiency of communication between managers and front-line employees” • Decision capacity • Ability to choose among innovation ideas • Important, because ideas do not come from “innovation department” of an organisation! • Single manager, innovation department, cross-team groups or no-one?

16. The three elements and the six conditions • Facilitation and integration elements of service encounter-based innovation processes are affected by the organisational support system: • Organisational confidence • Correspondence capability • Decision capacity • Creativity element of service encounter-based innovation processes is affected by the front office innovation climate: • Entrepreneurial working values • Social intelligence • Recognition incentives

17. Integrative analysis and evaluation of the final model • An integrative analysis on the three elements and the six conditions was performed • Key results: • A lack of conditions leads to limited service encounter-based innovation, and vice versa • Both front and back offices must be prepared and motivated • All types of organisations can possess all the conditions and benefit from such innovation • The model meets the requirements and assumptions made in the theory • Based on the case analysis, a final model was created…

18. Model of organisationalconditions for serviceencounter-basedinnovation

19. That’s it. Please, donotaskanything. Thankyou!