1.2 Outputs of innovation

Innovations work their way into reality in a variety of forms. In the preceding section, we mentioned three types of outputs of innovation: products, services and systems. Let us start by thinking about how products, services and systems differ and how they are similar. We put these questions to Tim McAloone, Professor of Product/Service-Systems at the Technical University of Denmark.

Activity 2 Describing the outputs of innovation

In the following video, Tim McAloone defines products, services and systems. Watch the video, and using Tim’s definitions identify three examples of products, of services and of systems. Use the textbox to record your answer.

Download this video clip.Video player: Video 1 Interview with Tim McAloone of the Technical University of Denmark

Show transcript|Hide transcript

Transcript: Video 1 Interview with Tim McAloone of the Technical University of Denmark

TIM MCALOONE

I’m Professor of Product Service Systems here at the Technical University of Denmark. In particular, I focus on sustainable product service systems, so both the analysis of existing service systems but also design of new, integrated, product service systems. I’m going to basically describe a little bit about, for me, the understanding of a product and a service and a system. A product, for me, is the result of a development process. And it’s typically a type of a technology, something which is designed and something which is transferred in ownership from the producer to the user or the customer.

A service, on the other hand, you could say, very simply described, is an activity which is carried out by one person on behalf of another person. So, a service could be, if I had some type of an activity which I’d prefer to have done on my behalf, then I would find another person to do it for me - very, very simply described. And the service is normally non-tangible but has a relationship, of course, to products or technology, quite often.

A system, for me, is a collection of infrastructure and lots of different people with different roles. And that system is also calling upon products and services. So there’s - the system is also a collection of this infrastructure and the people in a particular context.

Maybe if I give an example of the interrelation between products, services and systems - take a lawn mower. Most of us have one of those or have seen one of those at home. If we take the product’s dimension of a lawn mower, it’s very simple to understand the technology behind a lawn mower, or at least understand that it’s an object which has been designed and developed, and that we can purchase in a garden shop or a DIY shop. And we take it home and we cut the grass with it. And we draw out the value we need in that product ourselves as the purchaser and the user.

Let’s say that I don’t have time to cut my grass, or I’ve got a bad back, or something happens, and I’d like somebody else to cut the grass for me. I could ring to a gardener. And the gardener could come and give me the service of actually cutting the grass. He could do it with my lawn mower. He could do it with his own lawn mower, which is maybe more professional.

If you look at the system elements in that, what now if I said to the gardener, well, actually I’d like you to do my whole garden for me. And, in fact, all my neighbours would like to do that too. So they call the same gardening company.

Maybe they’ll cut the hedge. They’ll cut the grass. And they have very different demands on the products, all of a sudden, because the technology needs to be able to be used not once per week, but four, five, six hours per day. The other thing is, from a people perspective, we need to have some way of organising the different people - my neighbours, the gardener, the different ordering system, the payment system. That becomes a complex but systemic approach.

And then from the infrastructure perspective, we’d need to understand how does the gardener get the machinery out to us? And how do they store it? And what is the maintenance infrastructure, and so forth? So from a very simple lawn mower, you can see that you can build a service and you can build an integrated product service system, which necessarily needs to build some new elements of infrastructure, of different types of people we need to understand, of service elements, and then finally, also, the product.

We’re living in an interesting world at the moment because we’re digitising, we’re dematerialising, and we’re servitising all at the same time. Many companies who have, for many years, been known as product manufacturers are suddenly selling services. At the same time, many organisations which have been - we could view as service organisations - for example, a bank or an insurance company - are all of a sudden calling their offerings ‘products’.

If you take, for example, apps. We’re all using apps today on our smartphones. An app, you could say, is a type of a boundary object between the product and the service. So maybe we have some products which are for sale and some services which we’re hoping to get, and the app, for me, is one component in that. A type of a product, you could say, in order to enable the delivery of that service.

End transcript: Video 1 Interview with Tim McAloone of the Technical University of Denmark

Download

Video 1 Interview with Tim McAloone of the Technical University of Denmark

Interactive feature not available in single page view (see it in standard view).

To use this interactive functionality a free OU account is required. Sign in or register.

Interactive feature not available in single page view (see it in standard view).

Answer

These are examples that I thought of, but yours are likely to be different:

Table 2

Product	Service	System
A pair of scissors	A haircut	A beauty salon
A bicycle	Public bicycle hire scheme	A city-wide bicycle system
A movie	On-demand internet streaming	A cinema

Discussion

My answers follow Tim’s definitions for products, services and systems, which are:

A product is the result of a development process. It is something that is designed and ownership is transferred. The example Tim mentions is buying a lawnmower.

A service is an activity that is provided on your behalf. So in Tim’s example the activity would be a grass cutting service. A product is involved (the lawnmower) but this is part of the activity that is undertaken.

A system is where there is a collection of infrastructure, people with roles, which call on products and services. So grass cutting may be part of a service system that is provided to a neighbourhood or town.

Tim picked up the point that businesses often call services ‘products’. That may be just business speak, but not all products are necessarily tangible. If I buy a financial product (say an investment package), this does involve the design of the mix of investments concerned and a change of ownership.

Overall these three categories are useful, but we should not get too hung up on the boundaries between them. Indeed some really important innovations are those that take place on the boundaries of meaning between product, service and system.

Now that we have defined products, services and systems, we can move on to explore some examples of product, service and system innovation.

Product Innovation

When we think of innovation we often alight upon product innovations – objects. The vacuum cleaner and electric light bulbs are examples of such product innovations, and in general we can define the product innovation process as

Notice that the idea for the product does not have to be new. For example, when pocket calculators were introduced in the 1970s, the idea of using a machine to carry out arithmetic operations was not new. Mechanical calculating machines have been around since the invention of the abacus, around 2000 BC, and automated calculating machines were available in the 17th century. But, pocket calculators, such as the example in Figure 2a, were an innovation because they used the invention of the microprocessor to introduce new functionality, to make the design more user friendly, and to make them easier to manufacture and, eventually, cheaper to buy.

Figure 2 Innovative products: (a) early digital calculator (b) digital camera

Show description|Hide description

Figure (a) is a photo of an early pocket calculator from the 1970s. Figure (b) includes two photos of a digital camera, showing the front and back view

Figure 2 Innovative products: (a) early digital calculator (b) digital camera

Similarly, the digital camera, as illustrated in Figure 2b, took a while to become established as it initially offered little advantage over film cameras. But over time people realised they offered different functionality from a traditional camera, allowing many more pictures to be taken without the need for film. Also, improvements in computing technology allowed for reduction in size, increase in functionality and decrease in cost, which further encouraged diffusion. The inclusion of a digital camera on mobile phones accelerated this effect further, and today digital cameras are ubiquitous.

Service Innovation

Our society and economy is increasingly built on services, and so innovations in service and in service design are extremely important. Hairdressing and gardening are examples of quite traditional service offerings, but newer, more exciting examples are emerging every day, with examples such as business services, internet grocery delivery services, energy services and new transport ticketing services such as the Oyster smart card in London. In general, the service innovation process can be defined as the introduction of new or improved service offerings.

As with product innovation, a service innovation can be a new type of service but is often an improved delivery or performance of an existing service. Broadly speaking, service innovation involves (re)configuring the elements necessary to provide services and/or integrating new ones. For example, a new information system may be integrated in a service to manage bookings.

Unsurprisingly, much service innovation is undertaken in what is classified as the traditional service sector, including finance, insurance, real estate, transport, and communications. However, it is important to realise that service innovation is not confined to the traditional service sector. There is also a growing trend for manufacturers to use their products as platforms for various service innovations, such as extended warranties for household appliances and servicing (Howells, 2002). In such instances, manufactured goods are not offered to consumers in their own right but rather as part of a package that includes service components. These often focus on satisfying customer demand for outcomes and results (e.g. reliable central heating). Also, the ubiquity of the internet and mobile devices is introducing opportunities for service innovation, for example music and video internet streaming, holiday planning and booking, navigation, and information retrieval, such as Wikipedia, the free, online community-created, instantly updated encyclopaedia.

Figure 3 Wikipedia

Show description|Hide description

This is a picture of the Wikipedia icon – a globe made up of jigsaw sections each containing a letter in a script from different languages.

Figure 3 Wikipedia

System Innovation

In reality, few innovations stand alone. Most only work when they are embedded within systems. For example, cars and trains do not make much sense in the absence of roads and rails and the fuelling systems for them. That is why there are widespread problems in introducing hydrogen fuel cell cars due to the lack of a nationwide fuelling system. Systems are collections of various elements including people, products, services and infrastructures, e.g. railways, roads, IT networks. Systems include services and differ from them as they are typically based on a larger collection of elements and satisfy societal needs for functionality.

Activity 3 Identifying systems

Think about making a trip to a nearby town. What systems are involved in making this trip? The following photos may provide some clues – but work it through for yourself, and use the text box provided to record your ideas.

Maximise

Figure 4 Systems involved in making a trip

Show description|Hide description

The figure includes a variety of photos illustrating systems involved in making a trip. Figure (a) shows a motorway junction with complicated looping lanes that enable cars to efficiently move from one road to another. Figure (b) shows a petrol station with cars positioned next to petrol pumps, and the kiosk in the background. Figure (c) shows a pedestrian crossing, identified by black and white stripes painted on the ground, and controlled by a set of traffic lights. Vehicles are stationary while a group of pedestrians cross, some on foot some on bicycles. Figure (d) shows a sheltered bus stop with various groups of commuters waiting for a bus. Bus timetables are apparent and one couple is using one to plan their journey. Figure (e) shows a GPS device attached to the windscreen of a vehicle.

Figure 4 Systems involved in making a trip

To use this interactive functionality a free OU account is required. Sign in or register.

Interactive feature not available in single page view (see it in standard view).

Answer

Your answer might involve a number of systems. If you travel by road (either by car, bus or cycling) it involves the road system and its controls (traffic lights, enforcement, emergency services, etc.). There is a parallel for the rail system, e.g. tracks, signals, railway staff and the scheduling of services as shown in a timetable. For public transport there may be information and ticketing systems; for a car you may use a GPS system to guide you – and even a printed road atlas has a system behind the mapping involved.

Systems do not simply exist. Instead they were designed, introduced and developed over time. For example, to make electric lighting work, Edison set about developing an urban electricity generation and distribution system (McPherson, 2013). Generally, the system innovation process can be defined as

Systems are often quite complex. While systems include elements such as infrastructures, they also embody ways of doing things. For example, the Highway Code sets out the formal rules of the road and is needed to enable vehicles to travel safely. This helps explain why such systems are often termed socio-technical systems. Systems involve various technical elements such as products and infrastructures as well as human operators who follow social rules. Those rules may be laws, or they may just be accepted practices and behaviours. System innovation therefore often involves deep structural change, not only in things but in our everyday practices.