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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.

Näyttökuva 2013-01-01 kohteessa 10.31.25

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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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Involving Customers in New Service Development – Avoiding Common Pitfalls

When developing new services or products, interaction with the customers can, at best, result unique, functional innovations, beneficial to both the company and the customer. Still many companies fail either involving customers or achieving the benefits of the customer involvement. (Research suggests that more than 50% of the companies involve customers in B2C context, but their scope is limited to traditional market research techniques (customers as informants), only 6% of the companies involve customers as sole developers, the deepest level of involvement.)

The background for this blog post is the book “Involving Customers In New Service Development” edited by Bo Edvardsson et al. The Book is a collection of some breakthrough researches on customer’s involvement in various industries.

Involving Customers In New Service Development - Book Cover Picture

Roles of the Development Team – Management & Choosing the Right Customers

Successful management of different development process stages enables integrating customer involvement in company’s innovation system. Continue reading

Book Review: Mobile Service Innovation and Business Models

Current trends that shape the western economies are the growing importance of services, the need for innovation, changes in consumer and business markets, and the advancements in information and communication technology. Technological developments like the digitalization of information, the increased processing capacity of computer chips, miniaturization and increased mobility of devices, the use of sensors and location technologies, increased interoperability between services, security, and natural interfaces (Brouwman, Van den Hooff, Van de Wijngaert, & Van Dijk, 2005) enable mature architectures and platforms for knowledge sharing, collaboration, and electronic commerce transactions, anywhere, anytime.

Nowadays development of the new innovative services is an important driver for economic growth. In the book Mobile Service Innovation and Business Models, the authors present a theoretically grounded yet practical approach to designing business models for electronic services, including mobile ones. The book consists of two parts.

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User-based Innovation in Services : Book Review

User Ecosystem: Pathway to Innovation

“The effective service innovation happens if entrepreneurial innovation group with technical capabilities can unite material, service and experience to provide market accepted new service. “

The subsequent blog post peeks into the book “User-based innovation in Services” by Jon Sundbo and Marja Toivonen and takes you to insight concepts as to how and why these concepts are useful. The subsequent sections will discuss about the interesting concepts and topics from the literature.

Before we start it’s important to understand the term ‘Users’. Let’s quickly make our understanding, users or receivers of the services are generally termed as customers, clients or consumers. The customer is the One that buys goods or services and can still resale after processing. The consumer is the one that acquires goods or services for direct use or ownership rather than resale. The client is a party for which professional services are rendered.. The “Users”  is used as super set, has full blown ecosystem which is driven socially, culturally or individually. Now when we understand users’ as the driving force for service innovation and users’ various distinctions, let’s move towards various concepts.

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Book review: New Service Development and Innovation in the New Economy

  

“New service development: the process from idea to launch of a new service”

 “New service development is a modification of current services and or adaptation of the service that is already offered in another geographical market.” (Edvardsson, Gustafsson, Johnson, Sanden 2000).

 

 

 

 

 

 

Why is new service development so important?

Today´s business life is all about competition and Innovative service is the means that companies differentiate themselves from the current intense competitive market.  Companies are constantly trying to differentiate themselves from other players in market field. Previously markets have been really product/manufacturing oriented. Mainly all the tools are then developed towards this manufacturing idea so service innovation and new service development are poorly researched and understood areas.  But today´s business needs to take these things into consideration in order to survive. In order to develop new ideas companies need new tools for their work.

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Book Review: Services Marketing, Integrating Customer Focus Across the Firm

The heart of the book is to develop strong customer relationships through quality service by integrating customer focus across the firm.  Services marketing is different from goods marketing in significant ways and it requires strategies and tactics that traditional marketing do not  fully reflect.

There are many techniques and methods discussed  in the book by the authors, but we are concentrating this review on Relationship Marketing and Service Blueprint. These form the bedrock of any service marketing, because for services to be well marketed, good relationship with customers is of high importance  which requires strategies that will make it happen alongside with the blueprint of the services that will enable customers to have a clearer picture of  the firm’s offerings. The authors described the two highlights extensively and are reviewed below.

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