From SSKE

The concept of Service Innovation was first discussed in Miles (1993) [1] and has been developed in the past 2 decades. It is used to refer to many things. These include but not limited to:

• Innovation in services, in service products – new or improved service products (commodities or public services). Often this is contrasted with “technological innovation”, though service products can have technological elements. This sense of service innovation is closely related to Service design and "new service development".
• Innovation in service processes – new or improved ways of designing and producing services. This may include innovation in service delivery systems, though often this will be regarded instead as a service product innovation. Innovation of this sort may be technological, technique- or expertise-based,or a matter of work organization (e.g. restructuring work between professionals and paraprofessionals).
• Innovation in service firms, organizations, and industries – organizational innovations, as well as service product and process innovations, and the management of innovation processes, within service organizations.