Service: innovation, performance and public policy

Modern economies are inescapably service economies. For several decades now, services have been our main source of wealth and jobs. In fact, services represent more than 70 % of employment, and value added. The process of deindustrialisation began a long time ago in all the developed countries. While it is hardly surprising that the profound economic and social upheavals linked to deindustrialisation have given rise to anxieties, both legitimate and fantastical, the persistence of these anxieties in certain cases is, on the other hand, quite difficult to understand. After all, the service society is still quite frequently associated with negative images of servitude, state bureaucracy and industrial decline. Thus despite some changes of attitude, it is still sometimes regarded with a certain degree of suspicion, in both academic studies and political discourse . These academic and political concerns which are recurrent in periods of crisis are based on a number of particularly hardy myths about the service economy and its performance, the quality of its jobs and its capacity for innovation. Thus the relationship between services, on the one hand, and innovation and performance, on the other, continues to be a matter of considerable debate. In the still influential industrialist or technologist approach to this relationship, innovation efforts and performance levels in services are underestimated. It is this approach that is responsible for the existence of two gaps: an innovation gap and a performance gap. The innovation gap indicates that our economies contain invisible or hidden innovations that are not captured by the traditional indicators of innovation, while the performance gap is reflected in an underestimation of the efforts directed towards improving performance in those economies. These gaps have their origin in the more or less ancient myths about the fundamental nature of services and the errors of measurement associated with them. They may have harmful consequences for the validity of the public policies implemented at national or European level. Since they are based on imperfect or even erroneous forecasts, these policies may also prove to be inappropriate. The aim of this work is to help fill the innovation and performance gaps, or in other words to rescue these invisible innovations and forms of performance from the relative oblivion to which they have been consigned. This work is organized into four sections. The first section is a framing section devoted to a discussion of the main myths about services and innovation in services and to the real or supposed specificities of these activities. It also addresses the hypothesis of the convergence between goods and services and the blurring of their boundaries. The second section is devoted to an account of the notion of service innovation, from the point of view of its nature, and its organisation processes. The third section addresses, in a prospective way, a certain number of megatrends of the innovation dynamics in services. In the fourth section we analyze how the innovation gap and the performance gap interact and may lead to a policy gap.