In this paper we discuss how to develop service innovation through building branding competence. We demonstrate that using relationships in a process of sharing adds value to the service innovation process. We draw upon two distinct perspectives in the literature. We agree that value in new service development comes from incorporating the consumer. Yet we also deduce that it is the firm’s core competencies that provide optimal resources for innovation. We then conceptualize how these two perspectives on service innovation can be integrated around relationships incorporating the ‘customer resource’. This process is relational, interactive service innovation. The conceptual framework we have developed offers a different approach for companies to view the new service development process in general and the building of branding competence in particular. We suggest that organizations may be able to improve their new service development process by emphasizing the internal and external linkages within the management of innovation.