Reflections on course module 6 – “New Service Development”
The article “Having a strategy for new service development – does it really matter?” (Edvardsson et al, 2013) provides some interesting facts:
- The number of new services put on the market and then withdrawn because of low sales remains as high as 43 percent.
- Of the companies in the sample, 38 percent invested little or nothing in the development of new services.
- … a large proportion of service companies lack a clear service development strategy and service development process…
This is some food for thought – keeping in mind that this comes from a discussion related to service companies. What situation can then be expected in a goods-focused manufacturing firm?
Taking BillerudKorsnäs as an example, with paper and board for packaging applications as core products, a new product development (NPD) process is certainly in place. Whether an explicit new service development (NSD) process exists is more uncertain. However, looking at Anders Gustafsson’s introduction of a NSD process I think that on an overall description level the logic is quite similar to NPD – an initial phase of insight, idea and concept generation (Understand) followed by a design (orchestrate), test and launch/implement phase (Build). On a more detailed level the NSD process will be different but this has most likely not been explicitly articulated.
BillerudKorsnäs’ offer includes “Solution services”, used in a previous post as examples of servitization. How may these Solution services have emerged without an explicit NSD process?
Edvardsson et al. (2013) refer to Menor and Roth (2008) who found that formalized processes play a less important role in the success of NSD than other factors. The most important factor was market acuity, a factor capturing a firm’s ability to see the competitive environment and anticipate and respond to customers evolving needs.
This may indicate what is at play – an orientation to the market and the customers that has driven the development of the Solution services. Also noting that the Solution services are grouped by product area and that the supporting lab facilities (Box Lab, Pack Lab, Sack Lab) are in different locations and located at production sites related to the particular products. This may support that they have been developed driven by market orientation and customer dialogues in the different product segments.
Customer interaction is repeatedly stated in the literature as a key driver in new service development. Interacting with customers in and through the labs has most likely been a strong driver in adding new capabilities in the labs, and corresponding new offered services.
The Solution services and the labs I believe are good examples of developing product related services.
But continuing with some observations in Edwardson et al (2013) regarding NSD
- for a long time, NSD has failed to receive the attention it deserves
- being an ad hoc process associated with improvisation
With inspiration from theoretical frameworks and academic examples, I believe there are rich opportunities to do more in this area. Opportunities to create more value with and for customers.