Modularity and customization in service production: service innovations perspective: a case study of Itella

The purpose of this thesis is to address the challenge of systematism in service innovation in the context of Itella (current Posti). The theoretical framework for the thesis is built upon literature review on service modularity and service innovations research. Most of the existing modularity literature is focused on studying product modularity and mass customization in manufacturing of products. Research in service modularity has been scarce, and more research is needed to study modularity from services point of view. The method of the study is a single case study. Qualitative method was selected as it has been recognized as an efficient method to gain deeper insights and to provide understanding to "what" and "how" questions. Theme interviews and semi-structured interviews were used to enable the most efficient collection of perceptions and provide an understanding of the case company. The interviews were conducted at Itella in the end of 2014. Understanding the service architecture of a company is important when trying to understand innovation in an organizational context. Modularity is a framework to describe systems from products or services, to processes and organizational structures in a structured way. Service modularity provides a systematic framework for achieving deeper understanding of service (product) innovation, service production innovation, and finally organizational innovation. The framework can be used to assess the different levels of service architecture, and may provide a better understanding in customer involvement in service production. In the case company analysis approaches to modularity and customization in service production are studied and a model for service modularity is proposed. The findings of the research also suggest that many different service innovation mechanisms could be appointed at the case company context. Moreover, the findings proposed that those innovation mechanisms, which imply that services are modular, played a central role in Itella's innovative environment. Therefore, service modularity provides a suitable framework for studying innovation