Sambit Lenka

Developing Global Service Innovation Capabilities: How Global Manufacturers Address the Challenges of Market Heterogeneity

OVERVIEW: As multinational manufacturing companies pursue service innovation toward global markets, their back-end development units—headquarters R&D—face immense challenges due to market heterogeneity. Our extensive studies of 13 leading multinational companies in service innovation have identified, analyzed, and ranked challenges to reveal the key steps to building necessary capabilities. Based on our analysis, we inductively identified four competencies in global service innovation capabilities (developing customer insights, integrating global knowledge, creating global service offerings, and building a digitalization capability) and the activities associated with them. Global service innovation requires companies to develop capabilities that support increased relationship intensity and interaction between headquarters R&D and local units, customers, and service partners. In developing these capabilities, the headquarters units progressively learn to collaborate, integrate, and orchestrate processes and activities across and within regional front-end units, customers, and service partners.