Why brands are at the heart of service innovation

If you want to develop innovative services, a new report says you have to start with your brand...

Last Updated: 31 Aug 2010

There’s no question that service innovation is a big issue for businesses in the developed world. Now that ever-increasing competition and the rise of low-cost manufacturing in the East mean that products can quickly become commoditised, knowledge and services are going to be the major drivers of growth for many Western companies. But it’s all about finding ways to stand out from the crowd…

Branding consultancy Wolff Olins (along with some willing MBA types from the Said Business School in Oxford) has just completed a study into how companies can create innovative services that will drive growth. The key, argues consultant Ije Nwokorie, is to think about how you can move into services and experiences in a way that your competitors can’t. He cites the example of the credit card market, which became increasingly commoditised in the 1990s as new entrants joined the fray. But American Express was able to succeed with its Black card by thinking about what the AmEx brand represented, and using that to create a service that was tacked onto the basic product.

In other words, says Nwokorie, you need to use your brand as a starting point. ‘These days, lots of companies are thinking hard about their brand and how they can make it a source of competitive advantage,’ he says. And this is crucial for service innovation. ‘You have to be absolutely clear about what the brand is trying to achieve. Then you ask: how can I create services inspired by the brand that nobody else can copy?’

There are apparently a few mistakes that people commonly make. One is to see service innovation in terms of copying best practice in the category – but that leaves you always playing catch-up. Another is to try and tweak your existing service – but then you might miss the big picture. And a third is to be too ambitious – to try and introduce a hugely over-sexed service, when that’s not really what your customers want.

Wolff Olins’ solution is a framework that allows you to plot the level of interaction (i.e. passive or active) you want between the brand and the user, so you can develop a service that’s pitched correctly for your audience. The correct level will depend on your offering, but one increasingly important category is the idea of ‘crafted experiences’, where you make use of feedback from the user to customise their experience. ‘These days it’s a criminal waste not to involve your customer to help you evolve your interactions and to be a source of ideas,’ says Nwokorie.

He breaks it down into three parts: be very clear on the function of your service (which all starts from the brand), be creative about its form (since this is what engages people) and use feeds to improve it. Get these right, and you’ll be one of the winners in the service economy...

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