Progress Report on FRI's Research into Innovation in Services

May 19 (Friday) 2006

Previously in this column I've reported on FRI Economic Research Center's progress on research into innovation in services. Today I wish to introduce our present thoughts on this subject.

In a previous message I mentioned the small meeting of experts to be held at FRI on July 6 of this year. The participants in this workshop will include, from FRI Economic Research Center: Senior Fellow Tadahiko Abe, Senior Research Fellow Naoki Nagashima, Research Fellow Satoshi Hamaya, Research Fellow Tatsuya Kimura, Research Fellow Kazunori Minetaki, and Senior Research Associate Michiko Yoshida, as well as experts from outside FRI. The conference will include presentations and discussions.

At the present time, the order of the program will be as follows:

Opening Remarks and Purpose of the Workshop: Haruo Shimada, Chairman
Presentation: Tadahiko Abe, Senior Fellow
Presentation: Naoki Nagashima, Senior Research Fellow
Presentation: Satoshi Hamaya, Research Fellow
Presentation: Tatsuya Kimura, Research Fellow
Presentation: Kazunori Minetaki, Research Fellow, and Michiko Yoshida, Senior Research Associate
Outside Expert Panel Discussion, “The State of Services Research in Japan” (Tentative)

In considering service activities, we believe that innovation in services is essentially the creation of added value through the exchange of information between parties. Such activities can be divided by into many types, depending on the type of user (company, general, client, etc.), the way of standardizing the process of information exchange, the method of sophistication and other such elements. The simplest form of communication is the transfer of information from party A to party B. If party B accepts that information and is able to gain a certain amount of value from it, than the activity can be called a meaningful service.

In our current concept of services, the number of parties involved in communication and the method of that communication takes both two-directional and cumulative result-generating forms. One important question is how these are forms of communication are shared over time and space-the added value that is created by services will change depending on the method and mechanism of these factors.

For example, in the case of e-commerce, which has been rapidly growing in recent years, the service receiver-i.e. the customer-provides feedback on the services offered by the service provider. As a result, the quality of the services is improving in e-commerce, and a perpetual, synergistic spiral of improved added value is being developed.

Another example would be so-called Consumer Generated Media (CGM), such as Amazon.com's consumer information feedback system, or the kind of consumer information use at kakaku.com. Blogs have also been growing rapidly in recent years, and there are CGMs known as Social Networking Services (SNSs) that are being developed which incorporate blogs' freedom of communication-within certain rules-so that trustworthy members can share information with each other. These kinds of services are like member's only clubs based on mutual trust that are built over the Internet. They have the potential to be used in multiple, wide-ranging ways for marketing various products and other purposes, and it is expected that their methodology will be applicable to a great many fields. In Japan, recently the SNS “mixi” has been making use of this system, and has even been able to earn a profit from advertising revenue.

This concept of information exchange is also present in the in-house technological development of some major companies. In such companies, many researchers and developers present new ideas freely over the internal web servers. There are also a number of major companies in countries throughout the globe that are already beginning to adopt a methodology for promoting intra-company dialogue. In these companies, the internal web space is used for sifting through, screening, and evaluating ideas, with the researchers who propose the most outstanding ideas receiving monetary rewards. Put differently, through the proposal and mutual evaluation of information by a large number of participants within a corporate entity, it is possible to introduce a competitive market for technological development within companies.

In this way, the manner in which communication, information exchange and information sharing is conducted results in various differences in the methods of creating added value, depending on the time course and spatial circumstances under which they develop. Out of these various methods of communication, those that create the most added value in the shortest amount of time are a vital part of innovation in services.

We hope that the July 6 workshop will spark lively debate between the participants regarding the various kinds of innovation in services, and we anticipate that the workshop will create new kinds of added value.

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In principle this workshop is not open to the public, but I invite a limited number of those of you who are interested to join us by contacting our office (please contact Ms Maematsu at fri-webmaster@ml.jp.fujitsu.com). Individuals who wish to share in a constructive and informative debate are warmly welcomed.