Innovation in Service System Solutions

Abstract

Service innovations are regarded as important drivers in the Europe 2020 Strategy. They are recognized to have a powerful potential to transform entire regions and sectors in Europe. The European Union (EU) and its member states are currently launching initiatives and programs that focus on leveraging service innovation to achieve so-called smart specialization of regions. This paper explains the transformative power of service innovation, a concept introduced recently by the European commission. First, it reviews the literature on service innovation. It concludes that service innovation is a multidimensional concept that combines offering, process, and business model innovations. It focuses, in particular, on the business model approach and introduces a new taxonomy for business models of the providers of service system solutions. Then, the paper provides an overview of selected EU initiatives and programs to foster service innovation. By means of the case of electric mobility in Germany, the authors show how business models of service system solution providers can transform model regions and sectors in the EU. The Input-Throughput-Output model is drawn to explain the transformation process due to services in the case of electric mobility in Saxony, Germany.