For many years companies have been focusing their offerings to end users on their products. Today we see companies are realizing they can increase the value they deliver by also adding service innovation to their portfolio.

This trend is often associated with business model changes that enable companies to transform their proposition and better compete in today’s ever-changing environment.

The companies embarking on this new way of doing business are not afraid to experiment and even challenge their current assumptions and conventional way of doing business. They are focusing on creating services that drive growth and differentiation in increasingly competitive environments.

Companies are expanding their product-centric view and focusing not just on what they manufacture based on their current competencies. This approach is a departure from conventional product innovation and often requires a different mindset and the development of new competencies.

New value being created by service innovation does not lie in a physical product, but in the collaborative relationship being created with customers and end users. Together they co-create a new value proposition.

One type of service innovation is referred to as “on demand.”

There are many enablers today that drive the value of this type of service innovation. For example, most of us are challenged with little free time and are looking for simple and convenient ways to minimize our involvement in tasks that aren’t always a priority or are time consuming.

More on-demand service opportunities are becoming available to provide convenience and minimize the burden on customers. One example would be grocery stores adding home delivery.

English: Zip car carsharing service at downtow...Another example is Zipcar.

This company has challenged the traditional industry assumptions and introduced a business model/service that addresses an unmet need for many consumers without personal transportation.

In many urban areas and college campuses, Zipcar on-demand rental vehicles are changing the basis of competition. Consumers rent cars parked in convenient locations by the hour and now have increased access to a car of their choice, when they need it.

No waiting or reservations required. All you need is a Zipcar membership, and a card to unlock vehicles they see parked nearby. This flexibility of access has created value for consumers by minimizing planning time, and for some, even decreasing their investment in their own vehicles. In urban areas this can be quite an advantage, where owning and parking a car is often expensive and difficult.

Web-based delivery, the Cloud and social networking have create new possibilities for developing relationships, collaborating and sharing knowledge. In the future, mobile and Web-based delivery models will not only be a competitive advantage, but a necessity for service model innovations.

Innovative business model changes like these are helping companies stand out from their competition and emerge as leaders in new spaces.

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