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This book asks: (1) How is the service sector growing; (2) what is service innovation; (3) what are the drivers of service innovation; and (4) how can organizations innovate service in a structured way? The book views service as the value-creating activity of customers. The role of a company is to provide the resources and knowledge to enable value creation. We develop a model of service innovation. We also develop guidelines for what is required from the organizational perspective: how should an organization view its customers to be successful, what does a service development process look like, and how to transform an organization that has a product focus to a service orientation. Chapter 6 covers service innovation in firms with a goods-centric mindset. Even some traditional service organizations view their standardized services like goods and can be considered goods-centric. In health care, goods-centricity is often used to produce care as efficient and profitable as possible. The authors briefly discuss why and how these "goods-centric" or "product focused" firms try to increase the share of services and how they use service innovation to differentiate their offerings. They also consider various service strategies and how firms can change their business models to charge for services that they previously offered for free.

This book asks: (1) How is the service sector growing; (2) what is service innovation; (3) what are the drivers of service innovation; and (4) how can organizations innovate service in a structured way? The book views service as the value-creating activity of customers. The role of a company is to provide the resources and knowledge to enable value creation. We develop a model of service innovation. We also develop guidelines for what is required from the organizational perspective: how should an organization view its customers to be successful, what does a service development process look like, and how to transform an organization that has a product focus to a service orientation. Chapter 7 summarizes many of the key insights from Chapters 1 through 6. Service innovation is different from new product development for goods. It is iterative and less structured than NPD for goods. Scientific inquiry and true experimentation are built into a good service innovation process. A deep understanding of customer needs and the value-creation process can be obtained only through direct observation and participation. Important customer knowledge cannot easily be shared; it becomes second nature and is contextual, tacit, or sticky knowledge that is not communicated even within an organization.

In June 2012, the Kingston, Frontenac, Lennox, and Addington chapter of the United Way had the opportunity to present its views at an upcoming public forum on a proposal to build a casino in Kingston, Ontario. The possibility of a casino in Kingston was a controversial and emotional topic; it was supported by influential business and government leaders but also had many detractors. Pro-casino advocates said a casino would create jobs, spur local business, and contribute millions of tax dollars to municipal coffers. Opponents contended that the social costs of a casino would outweigh the touted economic benefits and that a casino would lead to an increase in problem gambling. City councillors were evenly divided on the issue. For the United Way, many of the proponents and opponents alike were active and financially supportive of the organization. The United Way was asked to take a stand, and yet was hesitant to enter into a political debate. Was it possible for the United Way to uphold its values without alienating pro-business donors and local government officials?

The American clothing retailer American Apparel recently experienced a loss of $106 million and faced huge debt repayments. In addition, the chief executive officer (CEO) and founder was dismissed because of personal misconduct. Students must evaluate the financial status of the company and address the impact of the CEO's termination on the financial performance of the company.

Student spreadsheet for case W16208.

In 2002, a joint venture, Hess LNG, proposed a liquid natural gas import terminal in the city of Fall River, Massachusetts. The community led by the city's mayor, who built a coalition comprising concerned citizens, non-governmental organizations, and politicians at multiple levels opposed the project. From early 2002 to June 2004, multiple issues emerged, and the opponents used various tactics to challenge their adversaries. Hess LNG's chief executive officer needed to deal with the community opposition, which was further complicated by the need for regulatory approval from the U.S. Federal Energy Regulatory Commission.

By 2014, iFLYTEK was a proven leader in the Chinese speech technology industry with over 70 per cent of the domestic market; however, the company's growth had become stagnant. As competitive pressures were rising, iFLYTEK's chief executive officer needed to determine whether the company should continue to pursue its current business-to-business strategy or instead adopt new opportunities in the business-to-consumer market.

In 2008, British Columbia became one of the few jurisdictions in the world to successfully implement a comprehensive carbon tax. The architect of the tax, Premier Gordon Campbell, championed the broad-based carbon tax that applied to nearly all fossil fuels and made it "revenue neutral." Every dollar raised from the tax would be returned to BC residents and businesses in the form of personal income and corporate tax cuts. Campbell was an unlikely proponent of the carbon tax. As the leader of the traditionally conservative BC Liberal Party, he had cut taxes in the past, but now he had reason to believe a revenue neutral carbon tax could be a winner for both the environment and the economy. But with elections just months away and growing public distrust of the tax, combined with a noisy campaign against the tax mounted by the opposition New Democratic Party, the tax's fate, and that of Campbell's political career was far from certain. This case provides an insider's account of how the carbon tax was designed, with the strong role Premier Gordon Campbell played in its creation. It also explores political and other challenges the government faced when designing and implementing the tax.

This sequel accompanies case KS1170. In 2008, British Columbia became one of the few jurisdictions in the world to successfully implement a comprehensive carbon tax. The architect of the tax, Premier Gordon Campbell, championed the broad-based carbon tax that applied to nearly all fossil fuels and made it "revenue neutral." Every dollar raised from the tax would be returned to BC residents and businesses in the form of personal income and corporate tax cuts. Campbell was an unlikely proponent of the carbon tax. As the leader of the traditionally conservative BC Liberal Party, he had cut taxes in the past, but now he had reason to believe a revenue neutral carbon tax could be a winner for both the environment and the economy. But with elections just months away and growing public distrust of the tax, combined with a noisy campaign against the tax mounted by the opposition New Democratic Party, the tax's fate, and that of Campbell's political career was far from certain. This case provides an insider's account of how the carbon tax was designed, with the strong role Premier Gordon Campbell played in its creation. It also explores political and other challenges the government faced when designing and implementing the tax.

On January 1, 2011, the Valle del Lili Foundation, a university hospital in Cali, Colombia, went from using paper for medical records and all associated clinical and administrative processes to managing everything electronically. This was a significant deviation from the industry norm since it was unusual for a hospital to simultaneously implement electronic medical records, computerized physician order entry, and enterprise resource planning. If they are implemented at all, they are generally done so independently. Also, hospitals that rise to the challenge of adopting information technology face a high failure rate, mainly for staff-related reasons, especially when medical staff resist its use. VLF's management team knew it had to achieve the buy-in of doctors as well as of clinical and clerical staff if it was to successfully implement SAP, a system that would reformulate workflows throughout the hospital. This case documents how the hospital achieved this ambitious goal. In doing so, it illustrates how organizations can manage large-scale change processes.

The SAP Design Thinking case follows the path of Sam Yen, Chief Design Officer at SAP, on his quest to infuse design thinking into the SAP organization. Through a series of programs and events, Yen discovered that while employees of the multinational conglomerate expressed interest in leveraging design thinking in their work, they never seemed to follow through with it. Yen and his design team experimented with a plethora of tactics-ranging from grassroots campaigns meant to engage the employee base, to top-down approaches intended to excite the company's executives, with the hopes that this enthusiasm would trickle down throughout the rest of the organization. On a trail rife with challenges, Yen and his team struggled to continuously develop new approaches until suddenly the metaphorical storm cleared, and he could clearly see a path to scale design thinking throughout SAP.

Supplement to case SM250B. The SAP Design Thinking case follows the path of Sam Yen, Chief Design Officer at SAP, on his quest to infuse design thinking into the SAP organization. Through a series of programs and events, Yen discovered that while employees of the multinational conglomerate expressed interest in leveraging design thinking in their work, they never seemed to follow through with it. Yen and his design team experimented with a plethora of tactics-ranging from grassroots campaigns meant to engage the employee base, to top-down approaches intended to excite the company's executives, with the hopes that this enthusiasm would trickle down throughout the rest of the organization. On a trail rife with challenges, Yen and his team struggled to continuously develop new approaches until suddenly the metaphorical storm cleared, and he could clearly see a path to scale design thinking throughout SAP.

When Margaret A. Cargill passed away in 2006, her 17.5 per cent stake in Cargill went to Margaret A. Cargill Philanthropies (MAC). MAC lobbied for her stake to be liquidated. Cargill proceeded to shed its 64 per cent stake in Mosaic, North America's second-largest fertilizer company, in exchange for Margaret Cargill's stake in the company, in order to maintain control over the company. Like many second- and third-generation family businesses, Cargill's current family owners were not actively involved in the day-to-day running of the company. Was spinning off Mosaic in the best long-term interests of Cargill? Were there other feasible ways in which Cargill could have better facilitated the liquidation of Margaret Cargill's stake?

In 2011, the chief executive officer of Singh Security Systems Limited, an Indian company that designed and manufactured security systems, wanted to expand the scale of operations. He located a partner, the business leader of a construction company that specialized in security systems, in Doha, Qatar. Together, they drew a lucrative plan to execute turnkey projects in security systems in Qatar. However, the best candidate to lead the partnership in Qatar was a woman, who was keen to pursue the position, but would be the only woman in a position of authority in a 180-member organization, in a male-dominated country. The business leader of the Qatari firm was hesitant to hire a woman to run the project. Should the company reconsider assigning a woman project manager to Qatar?

In 2014, China's leading domestic Internet-based ride-hailing company, Didi, claimed more than 50 per cent of the Chinese ride-hailing market, followed closely by a major local competitor, Kuaidi. As Didi and Kuaidi actively competed against each other, U.S.-based Uber entered the battle with a different strategy. In the face of the increasingly complex and constantly changing landscape of China's ride-hailing market, Didi's founders wondered what their next steps should be. What should the company do to sustain and strengthen its leadership in the nascent ride-hailing market?

In 2015, Didi and Kuaidi, the two leading players in China's Internet-based ride-hailing industry, merged to form Didi Kuaidi. The combined firm represented one of the world's largest Internet- and smartphone-based transport service companies, valued at about $6 billion. In its home market of China, Didi Kuaidi left its biggest competitor, Uber, a distant second. Meanwhile, Didi Kuaidi actively pursued global growth. For example, it invested in and partnered with Lyft, Uber's major competitor in the United States. However, the business and policy environment of the Internet transport service market was constantly evolving. The merged Didi Kuaidi needed to carefully create a portfolio of strategies to sustainably compete in both local and global markets.

This case is used in a Darden second-year elective in corporate finance, "Corporate Financial Policies." It asks students to analyze the cash flows estimated for a production sharing agreement (PSA) between BP and the Azerbaijan government targeted for signing by year-end 2014. The primary relationship is a joint venture (JV) between BP and the State Oil Company of the Azerbaijan Republic (SOCAR). The JV is entitled to recover operating costs and capital costs from the proceeds of sales of the early production of the project and share profits earned from production, called the profit petroleum (PP), with Azerbaijan after the cost recoveries. Students are provided a detailed cash flow model for the project and for BP's equity investment and are asked to explain how the value estimates correlate with the risks assumed by the respective parties. This case is appropriate for students who have studied the principles of discounted cash flow and cost of capital. It is best positioned as part of a first-year MBA finance course as the last case in a module related to cash flow analysis. The case can also be taught in an MBA elective containing advanced corporate finance topics. It would be of special interest to students planning for a career related to energy, banking, or consulting, and also relevant for students interested in international business.

Spreadsheet supplement for case UV7135.

In early 2014, the family leadership of Bush Brothers & Company, a leading player in canned vegetables (its Bush's Best line dominated the canned-beans market), faced questions about the family's vision for the future in light of an imminent leadership transition: third-generation member, longtime board chair, and, until recently, CEO Jim Ethier planned to leave his role as early as 2015. The family was into its sixth generation, with nearly sixty family shareholders spread across four branches. On the business side, the first non-family CEO was overseeing development of a growth strategy, including ongoing ventures into competitive new markets such as Hispanic foods. Its fourth-generation leaders-including Drew Everett (vice president of human resources and shareholder relations, and likely board chair successor), Sarah (chair of the family senate), and Tony (chair of the family's private trust company)-faced questions about whom to involve in developing a future vision, how to formulate the vision effectively, and what vision would best serve business and family interests. These questions represented underlying strategic dilemmas, such as whether to have a select group of leaders craft the vision or to solicit input from a wider range of shareholders, and how much to allow the business vision to drive the "people" vision-all framed by recent unsuccessful attempts to develop a shared vision. Resolving these dilemmas successfully would help the family frame and advance its established traditions of leadership, governance, and culture within a truly shared vision that boosted unity and long-term commitment. Students working on the case will gain insights into the framework, process, and challenges associated with developing a shared vision for a complex, multigeneration family enterprise.

In January 2013, Irish authorities were the first to uncover the year's first food sourcing scandal: horsemeat sold as beef on supermarket shelves. It was not long before regulators and retailers realized the problem was truly a continental one. The incident involved French exporters, Luxembourger production facilities, Cypriot and Dutch meat traders, British and Swedish retailers, and Romanian horsemeat. Food service providers and retailers were forced to test beef products to ensure they were horse-free, pulling products that contained traces of equine meat. British supermarkets alone disposed of an estimated 10 million "beef" burgers in the wake of the scandal. This case is an example of the challenges of managing the complex global supply chains that make up the modern food industry. In this class discussion, students will use concepts from management, economics, and public policy to assess the damage of this event and to analyze strategies for preventing similar incidents in the future.