The amount of time a product lasts in the market before a new and improved one takes its place is shrinking. As a result, even successful products can expect to enjoy an advantage in the market for a shorter time than in the past. Companies need services to grow and develop competitive advantage, if they want to avoid the commodity trap.
However, to do this, businesses not only will have to think of their businesses as services businesses, but also to co-create with customers. Instead of treating customers as passive consumers, many companies are now involving customers in the innovation process. Opening up your innovation process can greatly advance your innovation capability. But you can go further if you open up your business model as well. Many successful services innovators have found that they need to overcome this inertia and adapt their business models in an effort to create new services offerings.
This is the way out of the commodity trap. It requires a new way of thinking about innovation, services, and business models. The winners in this new economic environment will be those firms that develop strong internal capabilities in a few areas and leverage those capabilities by enlisting the efforts of many others in support of their business. Since the world is moving to a services economy, it is time to move innovation into the services context as well. The world is ready for Open Services Innovation.
For more information, see Ch. 1 Open Services Innovation by Henry Chesbrough