MORE SUPPORT FOR FOCUSING ON SERVICE INNOVATION

The nation’s service industries suffered a slowdown in activity in April as inflation put a squeeze on businesses already pressured by falling demand, according to a private survey released Monday by the Institute for Supply Management. But service companies also appeared to add jobs....(via the NYT)

We sum up the attraction of new services with this often used chart:

Product-only businesses face new challenges:

• Increasing global competition
• Mounting product price pressure
• Decreasing product margins

Service Innovation

• Meet wider set of related customer needs
• Create new sources of competitive differentiation
• Diversify revenue stream
• Higher margins
• Longer contracts
• Higher barrier to competition
• Internet - key distribution channel