Management control of service innovations

Service

One study explored management control best practice related to service innovation activities. This was done by conducting qualitative in-depth interviews with managers in ten top performing firms that have an exceptional focus on service innovation. The researcher found that the management control systems implemented for service innovation activities in these firms were simplistic, one-dimensional and predominated by financial measures. This means that the service innovation management control systems the researcher identified were different from the management control systems that have been identified in empirical studies of product innovation best practice.

 

The following observations were made in the study:

-The implemented ex-ante and ex-post management control systems placed most emphasized on financial measures, while non-financial measures, for example measured by scoreboards or checklists, were only used to a limited extent

-Portfolio management was not built into the management control systems for the development stage

-Strategic management control systems measuring how well the businesses’ total service innovation portfolio performed, were rarely implemented, and when such controls were implemented, only financial impact was taken into account

-Cultural management control systems were not implemented

 

The management control practice varied somewhat between the firms studied. Some firms had implemented a relatively large number of measures and followed a structured procedure, while other firms were more unstructured and used relatively few measures. Variations were found for all dimensions of management control systems:

-Some firms had implemented either financial methods or strategic methods for ex-ante control, whereas other firms combined these methods

-Some firms had clearly defined go/kill gates built into the service development process, and other firms evaluated ongoing projects more superficially and unstructured

-Some firms evaluated financial effects, customer satisfaction effects or technical performance ex-post, whereas other firms evaluated two or three of these dimensions

-Some firms did not measure how well the firm’s total service innovation portfolio performed, while other measured its financial impact

-Some firms had not implemented any personnel or cultural controls, whereas some had implemented a few personnel controls

 

The managerial contribution of the paper is providing a snapshot of how top performing firms measure the impact of their service innovation activities, rather than providing clear managerial recommendations.

 

 

References:

Aas, T.H., 2011. Management control of service innovation activities: an exploratory investigation of best practice, International Journal of Services Technology and Management 16 (3/4), 318–336.

Available at: http://inderscience.metapress.com/content/l1322t0400p50646/

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