This paper initialises an effort to explore the impact of an innovative systems thinking approach for service operations design on creating innovation. A qualitative exploratory case study approach in two of the UK’s service sector departments was conducted, using face-to-face semi-structured interviews, focus groups, and extractions from both observations and documents. The results identify that operationalising service innovation is positively linked with applying the Vanguard Method for service operations design. Twelve micro-determinants for service innovation operationalisation have been identified that reside at three different levels in the service organisation, namely employees level (i.e. Micro), the functional level (i.e. Meso), and corporate level (i.e. Macro). The value of this paper is the introduction of a step-by-step guidance on how to build service operations design to operationalise service innovation, the paper also theorises service innovation with systems thinking methodology that emphasises holistic, multi-disciplinary, and integrative characteristics of the service system. © 2017 Informa UK Limited, trading as Taylor & Francis Group.