This paper investigates the impact of an innovative systems thinking approach for service operations design on creating innovation. Two case studies were conducted in two of the UK’s service sector departments. The results indicate that operationalising service innovation is positively linked with applying the system thinking approach for service operations design. Twelve micro-determinants for service innovation were identified that reside at three different levels in the service organisation, namely employees’ level, the functional level, and corporate level. This research articulates a structured process of learning about a complex customer needs situation leading to deliberate employees’ actions to achieve service innovation.