Ieva Martinkenaite, Vice-President, Telenor Research – Telenor ASA, Snarøyveien 30, N-1331 Fornebu, Norway, e-mail: This email address is being protected from spambots. You need JavaScript enabled to view it..
Karl Joachim Breunig, Professor, Oslo Business School – Oslo and Akershus University College, PB 4 St. Olavs Pl., N-0130 Oslo, Norway, e-mail: This email address is being protected from spambots. You need JavaScript enabled to view it..
Annita Fjuk, Fellow. Telenor Research – Telenor ASA, Snarøyveien 30, N-1331 Fornebu, Norway, e-mail: annita.fjuk@ telenor.no.

Abstract

This empirical paper examines a process, starting with the managerial decision to make service design an organizational capability, and follows it as it unfolds over time within one organization. Service design has become an established business practice of how firms create new products and services to promote differentiation in an increasingly uncertain business landscape. Implicit in the literature on service design are assumptions about strategic implications of adopting the prescribed innovation methods and tools. However, little is known about how service design evolves into an organizational capability enabling firms to transform their existing businesses and sustain competitiveness. Through a longitudinal, exploratory case study of service design practices in one of the world’s largest telecommunications companies, we explicate mechanisms through which service design evolves into an organizational capability by exploring the research question: what are the mechanisms through which service design develops into an organizational capability? Our study reveals the effect of an initial introduction of service design tools, identification of boundaryspanning actors and co-alignment of dedicated resources between internal functions, as well as through co-creation with customers. Over time, these activities lead to the adoption of service design practices, and subsequently these practices spark incremental learning throughout the organization, alter managerial decisions and influence multiple paths for the development of new capabilities. Reporting on this process, we are able to describe how service design practices were disseminated and institutionalized within the organization we observed. This study thus contributes by informing how service design can evolve into an organizational capability, as well as by bridging the emerging literature on service design and design thinking with established strategy theory. Further research will have to be conducted to confirm if the same mechanisms are observable across contexts and in other firms, and several future research directions are identified. In addition, the study also has implications for practice as it demonstrates how service design methodology can be implemented and has strategic implications for organizations.