This research examines service innovation in a large-scale manufacturing firm. It explores how co-creation, a foundational premise of the emerging field of service science, is operationalised as a competitive strategy. Globally, manufacturing firms, including those in the defence sector resistant to change, are embracing service innovation as source of differentiation and advantage. Central to this approach is the notion of value co-creation. Therefore, this thesis seeks to better understand how a manufacturing company embraces service innovation by exploring: 1) What factors (enablers and barriers) influence co-creation (CoC); and 2) How do firms design collaborative and open innovation (OI) service systems to co-create value through customer collaboration and innovative partnerships with new stakeholders? This thesis adopts an in-depth qualitative inquiry to answer these research questions. It explores changes within organisations, identifies new forms of outreach and engagement with customers, and assesses the value of strategic alliances with other firms. It develops a tailored research methodology and summarises the results of analysis, key findings, and conclusions in a generalizable manner to build on the body of scholarship associated with service innovation. The thesis is based on case studies that help better understand the UK’s largest manufacturing company, BAE, as it servitizes. It draws upon a diverse set of maritime, ground, air, and joint force cases across distinct military domains, weapons platforms, geographies, cultures, and programme scales to provide a comprehensive look at service transformation. It also examines how private and public sector organisations co-create value across a myriad of MoD agencies, military forces, service providers, and suppliers innovatively networked to improve service outcomes. The thesis traces how the focal firm adopts service strategies to meet changing customer demands through more open service design and delivery processes reliant on increased collaboration and integrated systems. The Research Aim of this work is to examine how value is co-created across networks of diverse stakeholders (technical, business, military, and manufacturing) to develop a co-creation framework. Research Objectives are focused on: • the discovery of insights how firms, design more open and collaborative service systems • the identification of drivers, barriers, and enablers to co-creation as part of servitization • the development of a framework, models, and tools to guide service innovation in manufacturing / defence While derived from a defence context, these outputs are deliberately generalizable to contribute to theory and to inform practitioner efforts to support a manufacturing shift away from purely product-based businesses. This work applies and seeks to contribute to service, strategy, and systems theory. The theory of Service Dominant Logic helps underpin design while Unified Service Theory (UST) helps better explain systemic service implementation. Case studies at the enterprise, business unit, and programme level contributed to the identification of drivers, barriers and opportunities associated with service innovation in different contexts. The data reveals that a defence specific form of Open Innovation (OI) emerges as a strategy to infuse agility, integrate resources, and adapt competencies. Case analysis identifies two factors that emerge as essential to the successful design and delivery of advanced service: context and capabilities. Firms must gain an understanding of the complexities of the context (needs and requirements), and capabilities (skills and resources) integrated to produce a co-creative firmwide competency that is a powerful performance enabler. A multi-echelon approach strengthened the generalisability of research findings by facilitating the comparison of key enabling elements. Findings differed by domain, illustrating the importance of context. In summary, research contributions associated with this work include 1) a holistic co-creation framework to describe complex service design, 2) a co-creation service model, and 3) a tool to support co-creation and open innovation service improvements. This work develops visualizations of collaborative business models, novel organisational forms, key performance measures that support new human capital skillsets and improved decision making. These constructs expand the understanding of how complex service systems are designed, managed, and improved through applied co-creation, which ultimately builds theory and increases knowledge.