Service Innovation Is Different

Steve Markham, North Carolina State University
Thomas Hollmann, North Carolina State University

The differences between goods and services are well known. A substantial body of knowledge exists about how goods are developed, however, we know very little about the practice of service development. Drawing on the Best Practices data from the Product Development and Management Association this research project compares and contrasts different development methods, processes, tools, organizational structures and managerial practices used to develop goods and services. We find that services innovation practices differ in fundamental ways from goods innovation, such that service innovators focus more strongly on the front-end and back- end of innovation while goods innovators focus predominantly on the middle phase in the stage gate process. The contrast in product development techniques leads to management tools to help innovation mangers apply the appropriate tools and techniques to services development. In addition, a number of service practices are applicable to goods development with a significant reduction on development time and costs.