Service Innovation: A Data Scientist on the Payroll Is Not Enough

A STUDY HIGHLIGHTS HOW INCUMBENT SERVICE COMPANIES MUST CHANGE TO FULLY EXPLOIT BIG DATA. NEW DATA SCIENTISTS MUST KNOW BUSINESS AND THEIR PRESENCE CANNOT BE RELEGATED TO CENTRAL MANAGEMENT, BUT ORGANIZED IN A HUB AND SPOKE FASHION

The managerial literature on big data has mainly covered the successes of digital-native firms such as Amazon, Airbnb, Uber or Foodora. Incumbent service companies, which developed an organizational model and a corporate culture in the pre-digital age, were left under the radar. Until recently, a study on how they can adopt a new approach that takes into account big data management was missing. This gap was filled by Gabriele Troilo (Bocconi), Luigi M. De Luca (Cardiff University) and Paolo Guenzi (Bocconi) in Linking Data-Rich Environments with Service Innovation in Incumbent Firms: A Conceptual Framework and Research Propositions (doi: 10.1111/jpim.12395). The research was funded by a grant of the Marketing Science Institute and awarded as Best Runner Up Paper in a Journal of Product Innovation Management special issue on big data. “The impact of big data on innovation is not only driven by technology,” Troilo says, “but also by a transformation of the organizational structure, culture, processes, roles and capabilities.”
 
The authors have carried out interviews with top managers of large Italian, British, and American service firms pre-existing big data and operating in various industries, from telecommunications to insurance, from banking to utilities. These interviews allowed them to identify the factors that enable data-driven innovation. “Firms must change their decision-making model by promoting a data-oriented culture. Their decisions should be supported by data, not by intuition or experience. Another organizational change has to do with a very fashionable word today: customer-centricity,” i.e. the business philosophy that puts customers at the heart of every decision. This ensures that decisions based on big data have a unique focus for each corporate function, thus optimizing both the efficiency and the effectiveness of decisions.
 
There are other organizational enablers of service innovation such as Marketing-IT integration, two units that could become increasingly similar in the future, and the creation of roles that encourage a diffused data culture. “There is much talk about data scientists. All interviewees said that a data scientist should not possess only technical, but also business and relational skills. He should take on an educational role, communicate with other functions, help decision-makers to understand the value of data.” The most advanced organizations have a hub-and-spoke structure, with data scientists in a centralized hub, but also in decentralized spokes that support business units.
 
“The biggest challenge posed by big data is not technological, but managerial and organizational,” Troilo says. “This is why investments in technology do not automatically produce service innovation. Today, many are wondering whether pre-digital companies will survive the big data revolution. The answer is: yes, they will survive if they are able to align their organizational model. This process of transformation is changing the way we work and make decisions.”

by Claudio Todesco