Summary of findings

The problem space that is related to new service development in knowledge-intensive business service organizations is complex, ambiguous and usually withholds various, wicked managerial issues. It was argued by the interviewees that the process of new service development and innovation is usually ad-hoc and generally not managed as such, even though the more technologically driven companies did have some insight and generalized processes that were used to manage innovation. In relation to this, the interviewees stated that a generalized methodology for innovation would increase the potential of success and that such a process would be a significant improvement for the managers involved in new service development. Even the few companies that did have some methodology in place stated that it needs to be developed further and that it is only

at a pilot stage when the interviews were conducted. For the most part, the development of innovative new services was seen by the interviewees as a consequence of innovative knowledge workers, constant customer involvement, and learning from business partners and other actors, as well as a result of strategic alignments and evolving corporate goals.

In addition to the problems related with new service development processes, a number of managerial issues were identified by the interviewees. These were mainly related to problems in managing strategy in a knowledge-intensive business service organization, managing service delivery processes and commercialization activities, and managing customer involvement. In relation to these broad problems, all of the interviewees acknowledged that it is much different to manage innovativeness and new service development in a knowledge-intensive firm than it is to manage new product development in an industrialized company. As such, even the technologically driven larger companies saw that their technology development processes did not fit into a service context that well.

It was acknowledged by the interviewees in all types of firms that strategic management should always steer new service development, even if strategy is not as normative or comprehensive as it may have been in early strategic management literature and practice. Managers in both smaller and larger firms agreed that strategy is about identity management, since knowledge workers are best managed inherently, not explicitly and normatively. Moreover, strategy was perceived to be an umbrella concept that creates boundaries as well as possibilities for innovative employees to create and design new, successful services. Furthermore, it was said that since strategy should inherently guide the efforts of the company’s employees, it should not hinder the innovative capability with an overkill of procedures and norms. Here one might be persuaded to think that larger firms need to have procedures and norms, which is true to some extent, but in this research all firms were unanimous that knowledge workers should only have generalized processes and best practices, not bureaucratic, overwhelming operating procedures.

Moving from strategy to operations, the main issue in new service development identified by the interviewees was the customization-standardization paradox. It relates to the notion that customers require tailored, custom services but managers should strive to standardize operating procedures and service delivery in order to gain efficiency, productivity and quality. Moreover, standardization was seen to be harmful, if it was done in a way that hinders innovativeness and/or flexibility. The solution for this, in all firms interviewed, was said to be the right amount of standardization behind the line of customer visibility, completed with a set of “spices” that make customer-perceived customization possible when delivered through interaction. This was possible by using best practices, detailed service concepts and standard operating procedures, which also

enabled knowledge sharing, scaling of services, and the duplication of expert knowledge.

In addition to the standardization-customization paradox, another managerial issue that was constantly brought up by interviewees was that innovation itself lies in the capabilities of individuals and their self-actualization needs. This promoted the notion of self-actualized innovation, which was seen as both an opportunity and a nuisance for management. The solution for managers was said to be the aforementioned inherent strategy and a pilot/prototype-centered way of creating new services. Both smaller and larger firms and even the neo-PSFs agreed that piloting is the best way to develop a rough service concept to a market-ready state. Piloting is then not just a method for smaller, usually technology-driven flexible companies, but for larger professional service firms as well.

Pilots and prototype services were seen to be of utmost importance, since professional services are usually best commercialized with previous cases done with notable clients and customers. Furthermore, it was argued by the interviewees that piloting and prototyping in an early stage would give valuable market information and enable customer involvement without extensive processes and investments. This was summarized well by a few of the interviewees:

“When you do things with pilots, you get standards on how things should be done. It’s extremely valuable to get that pilot.” (Chief Executive Officer, Finnish Consulting

Group)

“It all comes down to doing the first project with a low budget, getting that reference case and then reaping the benefits.” (Principal Consultant, Rongo)

Given the quotations above, new service development was seen as most beneficial when done rapidly, piloting with a real customer in a real-world environment. The ideas that were to be piloted were said to be found in social settings and networks, ranging from radical new ideas found from business partners, academic literature and competitors (both apparent and non-apparent) to incremental ideas usually discovered through interaction with customers and employees. Furthermore, knowledge-intensive business service organizations were said to be on a constant state of learning that forced to use informal, rapid development processes that could transform ideas to working customer pilot programs in a short period of time.

“When you have good ideas, they need to be commercialized to some extent. However, if you commercialize everything to a consumer product -level, you will soon notice that you are both anchoring your own innovativeness and not really understanding what the

customer really wants.” (Service Portfolio Director, Fountain Park)

Last, the interviewees stated that commercialization was to be taken on with caution and that relying on commercialization itself would not yield a set of successful services.

Instead, the interviewees stated that commercialization should be used to manage customer expectations and to find concepts that seem to become apparent through the constant testing and evaluation of new, innovative services.