Market-Based Opportunity. This approach views service development as a forward-looking response to anticipated market changes. In the vein of a venture capital model, the firm chooses among competing ideas and supports those ideas that are deemed most advantageous. Competing ideas, for example, may include modifying existing services to enter new industries or introducing completely new services. The advantage of this approach is that it can be growth-oriented especially if existing capabilities are included in the new service offering. The primary disadvantage is that it may become inordinately expensive especially if the firm chooses the wrong services to invest its resources. Building new service lines without market validation can be risky. Firms considering pursuit of market-based opportunities should explore ways to validate demand for the service line with potential customers prior to investing significant capital in the new offering.

The remainder of this chapter is organized into two sections. The first section provides rationale, context, and suggested processes and roles for supporting the creation of service offerings. The second section discusses the various types of intellectual property and its protection once it has been created.

Service Line/Service Offering Creation and Development

Each firm has differing needs both for the outcomes and associated processes for new service creation. The level of process formalization is largely dependent on the intended outcomes. In keeping with general management principles, large intended outcomes tend to require more formal processes. Process formalization has two primary benefits. First, it is useful for helping ensure successful outcomes. Second, formalization may be used as evidence to assert the firms ownership rights over its intellectual property.

This section provides a discussion of several interrelated topics-benefits, definitions, expectations, processes, and roles. Benefits associated with formality in the service offering creation are presented followed by a distinction among three terms (service lines, service offerings, and capabilities). Setting expectations for the firms service offering creation effort is then discussed. Finally, a proposed process to support the creation of new service offerings and the associated roles needed to support the creation process are discussed.

Benefits

Focusing the firms attention and resources on the underlying development process for the creation of new service offerings may provide some of the following benefits:

Improves the likelihood of successfully launching new ideas Formalizes and rewards the generation of and competition between new ideas

Reduces wasteful spending on unprofitable ideas Improves time-to-market response for new ideas Integrates new idea generation with the firms financial targets Provides a differentiating advantage as a given services market becomes more crowded and thus more competitive

The Cost of Ignoring Service Offering Development

In addition to potentially foregoing the preceding benefits, the firm that elects to underemphasize its service creation process may incur negative consequences. The application of investment dollars toward new service offerings, like all firm assets, can be an indication of a firms priorities, values, and outlook for the future. Even those firms that do make significant investments toward new service offerings take a risk if a structured process is not utilized. Without a consistently understood and applied process, the firms investment-allocation practices may be internally viewed as a form of selective favoritism between competing business units.

Defining the Terms

One of the first issues with adopting any process is the difficulty in reaching agreement on terminology. Though reaching this agreement may seem tedious and somewhat unfulfilling, it is recommended that a firm endeavoring to formalize its new service creation process make the effort to agree on the meaning of key terms. For purposes of this discussion, three terms are defined:

Service line: A combination of multiple offerings to improve organizational efficiency in sales and delivery and demonstrate comprehensiveness of services to the marketplace.

Service offering: The specific service that is marketed by the firm. Generally, clients buy the firms services at this level.

Capability: A skill possessed by individual members of the firm. Clients may elect to engage the firm for individual capabilities, but these resources tend to be viewed as staff augmentation.

In the context of these definitions, capabilities are combined with software, knowledge repositories, and other elements to create service offerings, and these service offerings are combined to create service lines.

Setting Expectations

Before adopting a service creation process, the firm should endeavor to identify its goals for new service creation. Goal setting in the following areas will increase shared perspectives among interested parties and help ensure agreement on the desired end state:

Level of desired (optimal) formalization such as investment performance hurdles and management reviews

Financial strategy (growth versus maintaining market share)

Market positioning strategy (boutique/niche services versus all purpose)

Organizational strategy (trendsetting versus following, first-in versus reactive approach to service development)

In addition to goal setting, design considerations should be evaluated, for example: (1) the preferred use of a dedicated lab for research and development versus a field-based client-engagement approach, (2) the need for evolution versus innovation of new services, (3) the firms ability to build versus buy its position, (4) the balancing of the firms delivery structure with its service creation process, and (5) whether local business unit discretionary funding of a given idea is encouraged/permitted.

The Service Creation Process

Regardless of the level of formality introduced into the creative process, four basic steps are involved: propose an idea, commit support, develop and test the market, and launch and grow. Each of these steps is described here followed by Key Deliverables and Key Questions for each step. In addition, an itemized list of suggested work steps is provided on the accompanying CD-ROM.

Propose Idea. The objective of this step is to encourage the firm to seek market-oriented information to support its idea generation, surface the largest number of ideas from across as many areas of the firm as possible, and then identify and focus on those ideas with the most perceived potential. An essential ingredient for choosing between two or more ideas is gathering information that supports a comparison. Emphasis should be placed on three elements of this step:

1. Using a standardized format to capture proposed ideas

2. Making the idea submission process as straightforward as possible