The PDMA Handbook of Innovation and New Product Development, 4th Edition

CHAPTER TWENTY-FOUR INNOVATION WHEN ALL PRODUCTS ARE SERVICES

Anders Gustafsson, Per Kristensson, Gary R. Schirr and Lars Witell

All products are services. This message from “Service Dominant Logic of Marketing,” (Vargo and Lusch 2004) nearly two decades ago, has had a major impact on marketing theory and practice. A shift to a service dominant logic paradigm affects new product development (“NPD”) theory and practice going forward. As we shall establish, highlighted trends in the use and delivery of goods have reinforced the need to consider service innovation ideas in NPD.

Before Vargo and Lusch (2004), the study of service innovation had often been framed by the factors said to distinguish services from goods: intangibility, heterogeneity, inseparability of production and consumption, and perishability (Zeithaml et al. 1985). The inseparability of production and consumption meant that service innovation needed to focus on both (Johne and Storey 1998). In contrast, NPD often focused on goods, traditionally treating product innovation and process innovation as separate processes (Page and Schirr 2008). Changes in product features could mandate changes in production processes, but otherwise, product and process were distinct.

A recurring theme of this chapter will be that products are increasingly services as offerings are “servitized.” Responding to the inseparability of production ...