For a long time, companies have struggled to promote technology and boost production. But amid overheated market competition, innovations in the service sector may be the key to success.

Even manufacturers should now shift their emphasis from conventional manufacturing and sales to comprehensive management services, according to the Institute for International Trade, a think tank affiliated with the Korea International Trade Association.

“Service is not just an optional part of a business but an extensive business model in itself which may attract customers and yield profits on a sustainable basis,” Park Pil-jae, a senior researcher of the IIT, said in a report.

Small- and medium-sized companies, in particular, can visibly boost their productivity in the overseas market just by adopting innovative service ideas, he claimed.

But despite the fast growth of its economy and leadership in the field of technology, Korea is a late mover in the service innovation sector, he added.

“In terms of manufacturing innovation, Korea is almost as advanced as most European countries, but when it comes to service, it ranks at the bottom among OECD states,” Park said.

Unless it makes a leap forward in service research and development, the country will at some point be faced with obstacles, he added.

The lag in the service sector is attributable both to the government’s lack of investment and to individual companies’ negligence in information gathering, according to the researcher.

“In the service field, the development of technology usually comes after the corresponding business model is mapped out,” he said.

So, it is as crucial to keep a close watch on the market and exemplary innovation models as it is to keep up with global trends and new ideas.

Conventional manufacturers are no exception to this new service-oriented trend, he claimed, citing the examples of automaker Rolls-Royce, IT provider Hewlett-Packard and Korea’s Hyundai Heavy Industries.

“As of 2012, Rolls-Royce made almost 30 percent of its total sales in the service sector,” he explained.

The company provided its customers with a long range control service through which it could monitor some 3,500 engines worldwide and improve their performance on a real-time basis.

“In the long-term, it is not just the quality or the price of the engine but also the content of such service that determines the sales,” Park said.

As for HP, it launched the MAG CLOUD service, allowing customers to choose their favorite magazine content through a cloud system and download or print them selectively.

“In the Korean industrial circles, Hyundai Heavy Industries took the lead by creating a satellite-based monitoring system for its excavators and other construction equipment,” the IIT official said.

By Bae Hyun-jung (tellme@heraldcorp.com)