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Design Thinking : Creating New Value by Humanization

Business today is about emotions, wants and wishes. The traditional role of business management has been to ensure the efficiency of use of resources. The world has changed, and customers don’t settle to the cheapest and most practical products and services anymore. As we already have almost everything we actually need, we are now increasingly seeking to fulfil our wishes and wants. That’s just human.

The human essence of Design Thinking

To meet these new demands, we need tools that are human-centric, cultural and social, and which keep innovation at the cord. One way to answer these needs is by applying Design Thinking.

The essence of Design Thinking is human to human. It’s a holistic process that unpacks the whole process to human touch points and takes in consideration not only the service process but also the feelings that affect to our decisions through the whole process. Experiences are not just functional, but also social, cultural and personal. They are important in value creation, because experiences are meaningful to people.

Design thinking helps to understand customer needs and create new value

Design Thinking is a way to apply tools traditionally used by designers to a problem-solving-contexts in business, services and processes. A collaborative way of working helps designers to gain mutual and holistic understanding of the problem. In the process of idea creation, 1+1 equals more than 2. Since visual perception is dominant for us, visualisation and prototypes are crucial in communication of ideas and opportunities. Applying of Design Thinking tools and methods can help business managers to identify, visualise, and solve problems in systematic and creative way.

Design Thinking considers human needs, emotions and feelings just as important as functionality and rationality. It requires from a designer capability to consider human needs, available recourses and constrains, and opportunities at the same time. Designer has to be analytical and emphatic, rational and emotional, methodological and intuitive, oriented by plans and constraints, but spontaneous, and all at the same time (Pombo & Tschimmel 2005).

Herbert Simon’s ideas of design-centric mode of thinking are foundational to the practice. He considered design as “the transformation of existing conditions into preferred ones”, and described design-centric thinking as a process of “building up” ideas, in comparison to critical thinking and analytic process of “breaking down” ideas.

fullsizerender-1Design Thinking methods can help us appreciate and understand connections between people, places, objects, events and ideas. It drives innovation that is based on future opportunities rather than past events. It focuses on human behaviour, relationships, interactions and emotions. By combining business methods with Design Thinking, organisations can establish more sensitive and comprehensive knowledge, and better understand operational environment. Design Thinking methods like ethnographic research, customer journey mapping, storytelling and rapid prototypes are tools to create understanding through empathy and collaboration. They help to identify the needs and goals and emotions of customers. And because emotions greatly affect in our decision-making, it is possible to make services and products more desirable by adding emotional elements.

Although some amount of efficiency and standardisation will always have a place in business processes, it’s the human touch points which give the greater meaning to products, services and brands. And that is where the new value is being created.

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Creating deeper understanding about the prosess with service prototype.

* This post has been inspired by the book Design Thinking for Strategic Innovation: What They Can’t Teach You at Business or Design School by Idris Mootee, and Katja Tschimmels article Design Thinking as an effective Toolkit for Innovation.

Hackathon / Day 3

Service Design Hackathon -Day 3. (30.1.2016)

It is Saturday morning and everyone in our group seems to be in need of strong coffee. Last night we ended up asking “why”, today we will give an answer; who do we want our customer to become. In today´s agenda we have one more interview and by the end of the day we will give a presentation, we will pitch the business plan of our team.

customer

Our last guest arrives for interview. He is 23 y.o student, lives by himself in the city centre of Helsinki. His life style is busy urban life. His dream is one day to own flat in city area. Our questions for him want to measure how keen he is to use services for housing and living by using Internet. We are also interested in how he sees himself in the future – does he like to use more time for his free time rather than spending time for domestic work. Our goal is still to make  “tripadvisor of services”; to make ordering of services easier than it is now. (…Our quest didn’t see extra services too important as he could do most of the daily stuff by himself. Maybe it was too early for him to think of daily life with busy family with children etc…)

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Extra tab for “living”

After interviewing the student our picture of our customer segmentation became very clear! We are focusing for parents, 40+, digital native people who can afford to spend some extra money for daily luxuries such as for cleaner or nanny, or who are in charge of their own aging parents for example.

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Potential market

Our group´s working stations for plan presentation divided naturally; visual person search pictures for power point, technical person played with power point itself, business person did the calculations of research and person who was called human, was the all over leader of our presentation and team work.

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Vision!

After working few hours we started pitching. Was amazing to hear fellow Hackathor´s presentations. So many interesting service models with great future thinking. Wasn’t easy to select the most interesting one to be best. Actual pitching last 10 minutes and we were proud of our own work. Did audience love it, this we will see on 21st of April, when Kiinteistömaailma announces their chosen project.

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Kiinteistömaailma # Twitter

 

Written by Paula Nordfors – Laurea, Helsinki, Finland

Gaps with cultural twist

The gaps model

The gaps model of service quality was developed by Zeithaml, Parasuraman and Berry in 1990. It is a useful framework for understanding service quality in an organization. The gap model consists of 5 gaps (one customer gap and four provider gaps). The most critical service quality gap is the customer gap – the difference between customer expectations and perceptions. Closing the gap between what customers expect and what they perceive is critical to delivering quality service.

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Attitude matters in lean thinking: learn to fail fast for success!

“Focus on the problem, not solution. You cannot quantify your way to the big max.” – Ola Sundell

I still remember when ‘lean’ was a buzzword in manufacturing industry years and years ago. Lean concept was originally based on production process optimisation principles invented in Toyota for automotive industry back in early seventies. Now the idea of lean has been turned into a workable philosophy in general management and other business arenas. Some time ago I was listening Ola Sundell, the CEO of Hub Helsinki, telling about the logic behind the lean market strategy. He gave a presentation in Laurea University of Applied Science based on the ideas of lean startup as an innovation method developed by Steve Blank and Eric Ries and his own experiences as lean entrepreneur.

Ola Sundell is explaining the essence of lean start-up methodology.

Ola Sundell is explaining the essence of lean philosophy.

‘Lean’ is  maximising value and minimising waste

The lean business culture have been evolving since view years aiming at solving business problems in the early phase of business set-up by using a service design approach. According to Sundell the startups mostly fail due lack of market and customers or because of a wrong mindset. Now lean thinking is challenging the old ways of thinking and doing. Lean startup methodology has evolved from customer development method highlighting the lean aspects of both product/service design and customer development. It focuses on customer value creation: everything that does not provide value for customer is considered as waste. By using lean startup methodology it is possible to maximise value and minimise waste.

As startups are considered being temporary project organisations creating new products and services under extreme uncertainty, it is learning that matters – and learning fast.

The process applied in lean startup methodology is based on a build-measure-learn cycle with six steps: What is built it based on a problem or solution hypothesis. Testing the idea is the intended learning step requiring the testing metrics to be defined. For generating metrics and testing hypothesis, the experiment has to be built.

The six step cycle of lean development process.

What does it mean to go for lean?

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Organizing Service Operations in Manufacturing – Doctoral dissertation by Taija Turunen

The service marketing literature is full of examples about servitization of products. How companies like Rolls Royce, KONE, IBM and many others have turned the game around by servitizing the traditional product oriented business. The literature has been evolving from product-related services to service orientation and new services development as areas of exploration for manufacturers. Recently the literature has been questioning why companies are servitizing and what are the benefits and related problems related to this shift (Turunen 2013).
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Taija Turunen from Aalto University found a gap in the operational implications of this phenomenon: How to actually make such transformation? Turunen’s doctoral dissertation examines and explains the process of servitization, the organizational structure characteristics assisting transformation and the operational premises allowing this revolution, like the author strongly describes the organizational change, needed in order to succeed.

The thesis explores organization’s journey from product centric business towards service orientation and servitizing. Turunen’s study is based on wide literature review together with 8 case studies and 95 interviews. Turunen defines servitizing as the transformation process of product companies towards services, including service aspects to the product. In the literature review Turunen shows the evolution of literature related to servitization from 1988 all the way to day. Thesis draws the background with literature review exploring the provider benefits associated with servitization and the market orientation as a driver for servitization. Turunen then continues discussing the challenges associated with servitization: The different logic between products and services, transforming company to service culture, service development and innovation, managing service operations, building a service strategy, and understanding the customer interface. Based on Turunen these are all factors that are yet unfamiliar to fully product oriented manufacturing firms. Turunen does not claim that much this kind of companies exists but wants to describe the contrast between the two extreme ends. Ford’s legendary T-Ford car works as an example for the extreme behavior of manufacturing firm: The whole design was based on the goal of not needing any after-sales services. The car was made so simple that any farmer could fix it with their own tools. Manufacturer had no interest about the usage of the product. This aspect of behavior has later brought challenges to the manufacturers who have tried to move towards servitization. They have had no record about their products: who bought the product, where the product is now, how the product is used, etc.? They did not have the interest before to collect this data.

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Service design case study: how to turn customer challenges into new service offerings

Author: Tuomas Suominen, tuomas.suominen@kaakelikeskus.fi

In this blog post, I present how you can turn your customers challenges into new service offerings. The most crucial thing is to gather as much information as you can about your service users daily tasks. In this case study, this was done by interviewing clients. You can be surprised how much your service users have to offer. They can sometimes suggest promising service ideas.

This case study was done as a thesis project at Laurea Service Innovation & Design Masters Program. I was inspired by CEO Lou Gerstners IBM turnaround. IBM was struggling in the 1990s. The new CEO sent his sales staff not to sell, but to ask customers what kind of challenges they faced daily. Gerstner realized that the company should concentrate on solving customer’s problems with their technology knowledge. Inspired by Gerstner, I too wanted to look into my client’s challenges. After all, a challenge is a latent need, and a possible service development case. I concentrated on architect clients, whose work I knew little about.

I decided Service-dominant logic and service design would guide my way in this thesis. Service-dominant logic would be my base theory and service design would serve as application of that theory. I combined the two, and kept their guiding principles in mind while planning my service design process.  After looking at the extant service literature, I decided to co-create the service with clients. I aimed to design a win-win service for both service provider and client.

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How to See Co-Creation of Value When Creating New Services

Review of a few related articles.

Written by Tiia-Marina and Juha

The 6th foundational proposition on service dominant logic is: “The customer is always a co-creator of value: There is no value until an offering is used – experience and perception are essential to value determination.” So the co-creation is a goal to reach. By achieving that you can highlight the customers view and clarify customer needs (Payne, Storbacka &Frow, 2008).

Grönroos and Ravald (2011) point out that customer as co-producer (participates in e.g. defining new service) differs from customer as co-creator of value. They argue that it is always the customer who creates the value for himself and that the supplier is more a value facilitator. Supplier becomes a co-creator of value if it can create value for itself at the same time with the customer. Michel, Brown and Gallan (2008) see also that companies cannot fulfill all the needs but only create value propositions for the consumer to choose from. The goal is to mobilize customers to take advantage of the offerings. One of the challenges for the future will be to create business models that successfully integrate the service provider’s processes with the customer’s process of value creation.

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