Innovation In Services and Business Models
MBA 290T / ENG 290
2 Units
Henry Chesbrough

This course is offered during the FALL semester.
This is a Related course of the MOT program.

This is a new course, not only within Haas and the MOT Program, but within academic campuses around the world. This course is an experiment to address a burning issue in business today: most of the economic activity in developed economies is services-based. Yet most of our knowledge about innovation is based upon products, not services. A recent survey by the National Academies of Engineering found that "the academic research enterprise has not focused on or been organized to meet the needs of service businesses."¹

This is not an abstract concern for Berkeley students. More than 70% of the graduating class from Haas took jobs in knowledge-intensive, service businesses. Looking further on in one’s career, more than 63% of the INC. 500 companies in are services companies. Service businesses represent the future for the vast majority of Haas and MOT students. The course should be risky, exciting, and useful. The instructor has received great evaluations from MOT students in the past. Come check it out!

Our course will examine services innovation in two blocks. The first block will cover key concepts for services innovation, including how services innovation differs from product innovation, the role of openness in services, the role of strategy, and the role of experimentation. The second block will introduce several tools and frameworks to apply those concepts to specific services situations. These include process design, process mapping and improvement, business models, platforms, and platform innovation.

We will cover services in several industries, ranging from health care, to banking, and IT. We will also discuss whether and how product-based businesses can transition to services-based businesses. We will have some outside speakers in class as well, from Creative Commons, SAP, and perhaps other companies. Here are some of the themes for the course:

1. Innovation in services is not the same process as innovation in products. Services are intangible. They often are consumed as they are delivered. In fact, the customer often co-creates the service experience with the supplier.
2. Technology can enable new models of services businesses. Information is both the key input and the key output for many services businesses. Little wonder that more than 70% of information technology sold in the United States is purchased by service firms. The selection, deployment and management of technology in services is thus a critical element for business success.
3. Standards, architectures, and platforms are essential tools to create leverage and scalability for services businesses. When services businesses are largely people-based, their ability to grow depends on the ability to hire and retain sufficiently talented people. If, however, a firm can incorporate its knowledge so that others can build upon it, the services business can grow beyond the constraints of its internal personnel.
4. Business models are vital to realize value from services businesses. We will be quite precise about defining a business model, and explore a variety of methods for articulating, designing, and managing business models in services. Technologies are emerging to help model business processes in useful ways. They can enable a richer exploration of alternative business models that might differentiate the business from competitors.

¹ The Impact of Academic Research on Industrial Performance, National Academy of Engineering, (National Academy Press: Washington, DC) 2003; p. 8.

Course Syllabus (pdf)