New service development relies on the complex task of understanding and anticipating latent customer needs. To facilitate proactive learning about the customer, recent findings stress customer involvement in the development process and observations of customers in real action. This paper draws on theory from market and learning orientation in conjunction with a service‐centered model, and reviews the literature on customer involvement in innovation. A field experiment was conducted in Sweden with end‐user mobile phone services. The design departures from the nature of service that precepts value‐in‐use and by borrowing from relevant techniques within product innovation that supports learning in customer co‐creation. The experiment reveals that the consumers' service ideas are found to be more innovative, in terms of originality and user value, than those of professional service developers.

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Service development lacks the level of systematisation and customer involvement that has proved important for product development. This article presents an empirical description of how service guarantees may support service development by systemising customer involvement after service failures. Thirty-one in-depth interviews and a content analysis of 41 guarantee invocations from the temporary work businesses and staffing services industry reveal that nine cases resulted in service development and 32 did not. We present explanations for these results, and identify what role a service guarantee -from a development perspective -plays in the service process, the recovery process and the development process.

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