Information Technology Reference
In-Depth Information
treatment, referral, and the follow-up of a patient and his/her ailment incorporate
a set of processes that involve a wide range of product and service components.
Another example of the confluence of products and services is IBM's migration to
the “on-demand” strategy. As IBM realized the potential global market for inte-
grated end-user solutions, it adopted a technology strategy that focused less on
differentiating between product innovation and service innovation and more on
integrating the complementary features of products and services to address critical
market needs.
The second major shift is the rise of the Internet and the rapid digitization of
products and services (Tidd, Bessant, & Pavitt, 2001). The prevalence of Internet
creates both new opportunities and challenges for both product and service innova-
tion. The changing nature of product and service distribution to customers is one
such example. For example, topic publishers who sold hard copies of the topics
through physical retail outlets or stores now increasingly pursue distribution of dig-
itized versions through online outlets such as Amazon and which can be “read”
using digital devices such as Kindle. Similarly, the “software as service” model pur-
sued by companies such as Salesforce.com has brought about radical changes in the
enterprise software market.
Thus, as some researchers have already contended, we exist in an intertwined
product-service environment that is characterized by an overarching demand for
experience innovation (e.g., Prahalad & Ramaswamy, 2003). In such a context, com-
petition will increasingly center on personalized co-creation experiences, resulting
in value that is truly unique to each individual customer or user. This in turn trans-
lates into the need for firms to strive for new strategies and sources for innovation -
one that is achieved through partnerships with other firms that have complementary
products and/or services and by created an integrated set of offerings (Rothaermel,
2001; Tripsas, 1997).
As noted previously, several management disciplines including marketing, oper-
ations management, organizational behavior, finance and economics, and strategy
have contributed to the field of product and service innovation. Agenda-setting
articles have clarified the research issues and identified important theoretical per-
spectives that these different disciplines can contribute to this area - for example,
marketing and product development (Griffin & Hauser, 1996; Mahajan & Wind,
1992), strategy and product development (Cusumano & Nobeoka, 1992), operations
management and product development (Krishnan & Ulrich, 2001), and organization
theory and product development (Brown & Eisenhardt, 1995). Review articles that
bridge the contributions to product development of two or more disciplines have
also appeared. Tatikonda and Montoya-Weiss (2001), for instance, combine market-
ing and operations research perspectives for managing product development. These
and other such articles indicate the potential benefits from integrating theoretical
perspectives from multiple disciplines to inform on key issues on product and ser-
vice innovation. The missing link in this area so far has been perspectives related to
IT. Before we discuss the key IT-related issues in more detail, it would be appropri-
ate to develop a better understanding of the emergence of IT applications in product
and service innovation.
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