Employee-Centric Service Innovation: A Viable Proxy for Customer-Intimacy for Product-Focused Enterprises

Servitization has received significant attention from scholars and practitioners over the last decade. However, despite substantial research contributions in the fields of new service development and service innovation, product-focused small and medium-sized enterprises struggle to develop sophisticated service offerings. This paper attempts to better understand this discrepancy and suggests ways to overcome it. We have conducted a case study with a medium-sized manufacturing company that currently undertakes first steps in the development of advanced services. In terms of a theoretical contribution, our study indicates a limited understanding of the perceived value of services during the fuzzy front end of service innovation. Therefore, companies need to adopt new ways to understand their customers (i.e. increase customer intimacy). However, they often struggle to directly involve customers in the co-development of advanced services. In terms of a practical contribution, our research suggests that employee-centric service innovation—the idea of utilizing front line employees as proxies of customers—is a viable strategy to mitigate the identified challenges.