1. How do service organizations innovate if there is no place for this to happen?
2. If manufacturers invest in R&D to create new ideas, what is the equivalent concept for service organizations to create new ideas?

I believe most service have not answered these questions. Perhaps, by default, marketing is expected to create new ideas. Yet this seems a poor substitute for an expertise to innovate. Service sector leaders must direct resources (people, funds and processes) to tackle their challenges just as good manufacturers must.

Instead of R&D, I suggest a model of 'Insight, Design and Execution'. It may not mean a new department. Rather, invest in developing a capacity to innovate reflected by the skills of managers and staff to create ideas and to create opportunities to innovate. Here is an overview to start your thinking of this innovation process for the service sector:

Harnessing Insights

Great ideas start with great insights into the challenges of customers and other stakeholders. This must be a proactive sophisticated search for insights that leads to new value adding ideas. Insights are often better than ideas. If you search for ideas, you will likely copy ideas that already exist. While useful, they may fall short of the type of ideas that are unique and marketable. Powerful insights lead to ideas that make you say, 'Why didn't I think of this before?' Often a great insight can be converted into a powerful idea by finishing this sentence: 'Wouldn't it be great if...'

Design Thinking

Creating an idea is the first step. It must be enhanced and designed to maximize the experience or opportunity for the customer or stakeholder. We must develop sophisticated skills for managing our insights and ideas through this stage before execution. What drives design thinking are questions such as:

• What else is possible if we try this idea?
• How can we create value in the delivery of this idea?
• How should someone experience this idea? Focus on adding value to the design of the service, its delivery, branding
• and marketing.

Execution: Conviction to Act

There is no point acting on mediocre ideas. Once we know the idea is great, its execution must be as innovative as the idea. This involves both analytical thinking and creative thinking on behalf of people to fully exploit its potential. Many problems will be identified through the design of strategies and tactics to bring the idea to life. Service businesses should define these challenges on a page in the yearly strategic plans, perhaps called, "Innovations: plans for ID&E'. After all, if new thinking is important, how can innovative ideas be conceived, designed and implemented without resources? We plan for marketing, HR and operations, and provide resources. Service improvements and innovations must be intentional.

Innovative ideas should happen by design, not by default.