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Shift to services vital for UK industry

Professor Andy NeelyResearch reveals 12 steps for executives who want to follow a business model innovation approach to service provision

The economy of three quarters of the developed world relies on the standalone service sector. However, 40 per cent of manufacturers now sell ‘services’ alongside products to the extent that the income of 50 per cent of traditional manufacturing firms stems from ‘services’.

New research led by Professor Andy Neely of Cambridge Judge Business School, Director of the Cambridge Service Alliance, shows that ‘service’ offers companies significant opportunities to create and capture economic value.

He says that underlying this shift to ‘service’ is a change in the nature of service itself with firms increasingly focusing on how they can deliver services that help their customers deliver value.

Providers are progressing from ‘do-ers’ to problem ‘solvers’ and becoming capable of orchestrating the delivery of complex services.

“Understanding what is happening in the shift to services is vital to the future success of UK industry.

“Through this research into business model innovation we’ve really identified the three key elements to making successful innovation of your business model – understanding the value proposition; understanding the service value delivery system; and understanding the risk that is inherent in your new delivery system.”

In this research paper, entitled ‘Business model innovation in complex services in the 21st Century’, Professor Neely lists 12 issues which he says executives keen to pursue a business model innovation approach to service provision should follow.

They take in value propositions, value delivery and accountability spread including the range of risks a business model innovation creates.

Professor Andy Neely is a Fellow in Business Performance Measurement & Management at Cambridge Judge Business School. The research will be published as a whitepaper on 21 September 2011 at the Cambridge Service Alliance conference ‘Service Innovation: Competitive advantage through new business models’.

The Cambridge Service Alliance is a business led alliance founded in 2010 by Cambridge University, with BAE Systems and IBM as the core industrial alliances. Academically the Alliance brings together some of world’s leading scholars working on the design and delivery of complex service solutions. Academic leadership at Cambridge is provided by a core group sourced from the Institute for Manufacturing’s expertise in the servitisation of high value manufacturing and Cambridge Judge Business School’s expertise in improving business models in a range of industries.

This research paper was co-authored by Professor Andy Neely and Dr Ivanka Visnjic. Professor Andy Neely is a Fellow in Business Performance Measurement & Management at Cambridge Judge Business School. Dr Ivanka Visnjic is a Business Models Research Lead at Cambridge Service Alliance and an Assistant Professor/Lecturer at ESADE.