Strategising with Service as Business Logic / Service Design Drinks

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Service design is en vogue. These days even the most hesitating companies engage in little experiments with the ‘new discipline’. A myriad of methods and tools are taught and trained. ‘Mindsets’ we say have to be developed; philosophies shaped … And yet: Service designers still have a hard time legitimizing their ways of working to all these people in organization who do not seem to ‘get it.’ It still is hard to get really holistic service systems to work. When it comes to implementation, great experience concepts often face resistance not only from operations but also due to a lack of strategic direction. The problem is: When reasoning with top management, service designers are rarely on eye-level. This is not only because of current power structures but also because our notions of service design conceptualize the young field in a rather narrow way. Honestly, most predominant ideas of service design aren’t strategic at all.

The HPI research fellow Jan Schmiedgen gave a glimpse into Service-Dominant Logic, an admittedly abstract but extremely handy theory of service, which provides you with a strategic lens on how to run your business, (re)define your market and even your industry boundaries. Amongst scholars Service-Dominant Logic is already perceived as a new marketing paradigm; a lens to view all economic activity in the world. For you as serve designers it might be a good foundation to base your strategic conversations with top-management on. If you really want to make ‘service thinking’ central to all our business activities, there is no getting around Service-Dominant Logic.

The talk took place at the epicenter of the Berlin tech community – Factory Berlin in Mitte.

Factory is the first and largest startup campus in Germany. With over 16,000 square meters of office space, Factory brings best in class technology businesses together with early stage startups and talents by providing an outstanding work environment, a curated community of founders and quality events.

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Strategising with Service as Business Logic / Service Design Drinks

  1. 1. Service Design Berlin FAC TO RY B E R L I N / F E B R UA RY 2 4 , 2 0 1 6 Strategising with service as business logic
  2. 2. Katrin PhD Candidate, University of Potsdam Who is inviting? Olga Business Consultant, Fuxblau Manuel Service Designer, Fuxblau Mauro CEO & Designer, Boana Martin Experience Designer, HERE
  3. 3. Formats of Service Design Berlin Service Design Drinks Service Experience Camp Service Design Dinner
  4. 4. How does it work? Input Exercise Mingling
  5. 5. Broadcasting globally
  6. 6. What’s the big picture? level 3 Techniques methods and tools supporting practices and the development of mindsets level 2 MindsetsPractices influence support attitudes, ways of thinking, linked to principles ways of working, linked to principles support level 1 Principles embodiedenacted A Conceptual Model of Design Thinking (Carlgren, Rauth and Elmquist, n.d.)
  7. 7. Who is tonight’s speaker? Jan Schmiedgen Innovation Facilitator & Design Strategist
  8. 8. A Brief Glimpse Into ‘Service-Dominant Logic’ A useful rationale for more ‘strategic thinking’ in service design practice? Service Design Drinks Berlin, February 2016, Factory Berlin
  9. 9. 32 Service? Service as an activity Service as a perspective on business and marketing e.g. restaurant service, repair, maintenance, transportation, call center etc. regardless of whether your core business is a physical product (good) or a service activity Table: adapted from Grönroos, 2008
  10. 10. 32 Service? Service as an activity Service as a perspective on business and marketing e.g. restaurant service, repair, maintenance, transportation, call center etc. regardless of whether your core business is a physical product (good) or a service activity Table: adapted from Grönroos, 2008
  11. 11. 33 It’s about basic truths how our economy is really working Service as an activity Service as a perspective on business and marketing e.g. restaurant service, repair, maintenance, transportation, call center etc. regardless of whether your core business is a physical product (good) or a service activity Image Source: https://pbs.twimg.com/profile_images/1727664467/Robert_Lusch.Books_1_.jpg; https://pbs.twimg.com/profile_images/639038953/Stephen_Vargo005.jpg
  12. 12. 34 Service as an activity Service as a perspective on business and marketing e.g. restaurant service, repair, maintenance, transportation, call center etc. regardless of whether your core business is a physical product (good) or a service activity Image Source: https://pbs.twimg.com/profile_images/1727664467/Robert_Lusch.Books_1_.jpg; https://pbs.twimg.com/profile_images/639038953/Stephen_Vargo005.jpg Axioms and foundational premises
  13. 13. 35 Our »S-D logic examples« for tonight Dinner With Friends
  14. 14. A5 FP11 Value cocreation is coordinated through actor- generated institutions and institutional arrangements A4 FP10 Value is always uniquely and phenomenologically determined by the beneficiary A1 FP01 Service is the fundamental basis of exchange A2 FP06 The customer is always a co-creator of value A3 FP09 All social and economic actors are resource integrators The Four Axioms of S-D Logic Value is cocreated by multiple actors, always including the beneficiary
  15. 15. A1 FP01 Service is the fundamental basis of exchange
  16. 16. A1 FP01 Service is the fundamental basis of exchange
  17. 17. A4 FP10 Value is always uniquely and phenomenologically determined by the beneficiary A1 FP01 Service is the fundamental basis of exchange A2 FP06 The customer is always a co-creator of value A3 FP09 All social and economic actors are resource integrators Value is cocreated by multiple actors, always including the beneficiary Value? Worth?
  18. 18. “Intangible Goods” “Our Services” ‘Com m on’ Sense says A1 FP01 Service is the fundamental basis of exchange “Service Packages” “Service units” Def.: The service product is a service that can be sold and that is performed within customer service (for example, inspection of your car). “Service Product” Biased notions of ‘service’ in G-D logic
  19. 19. S-D Logic says A1 FP01 Service is the fundamental basis of exchange Image courtesy: Hipster-Barber-Flicker-by-Thierry-Bignamini.jpg The service nature of exchange is not always apparent
  20. 20. »Power by the Hour« Image courtesy: Wiki Commons, Julian Herzog (http://upload.wikimedia.org/wikipedia/commons/8/86/Rolls-Royce_Trent_900_AEDC-d0404084_USAF.jpg) A1 FP01 Service is the fundamental basis of exchange W hy that M atters
  21. 21. G-D logic // Exchange Units: S-D logic // The Jobs-to-be-done: “What we can sell you.” “Where we can enable / facilitate your JTBD.” ❖ Engine ❖ Spares ❖ Information (e.g. monitoring reports) ❖ Time (man-hours of skills, information and competencies) ❖ Through-life and obsolescence forecasting and planning recommendations ❖ Equipment configuration advice for operational and contextual capability ❖ Capability forecasting and planning recommendations ❖ Equipment operating advice ❖ Equipment repair service ❖ Equipment maintenance service ❖ Component forecasting & provisioning ❖ Equipment performance ❖ Technical query resolution speed 42Image courtesy: Wiki Commons, Julian Herzog; Table adapted from Ng et al. (2012) W hy that M atters A1 FP01 Service is the fundamental basis of exchange Goods become less decisive for company success
  22. 22. 43 ‘Service’ is the application of resources for the benefit of others or oneself. Lusch, R. F., & Vargo, S. L. (2014). „ “ Image Source: https://pbs.twimg.com/profile_images/1727664467/Robert_Lusch.Books_1_.jpg; https://pbs.twimg.com/profile_images/639038953/Stephen_Vargo005.jpg A1 FP01 Service is the fundamental basis of exchange
  23. 23. A4 FP10 Value is always uniquely and phenomenologically determined by the beneficiary A1 FP01 Service is the fundamental basis of exchange A2 FP06 The customer is always a co-creator of value A3 FP09 All social and economic actors are resource integrators FP7 The enterprise can (not deliver value, but) only make value propositions FP8 A service-centered view is inherently customer oriented and relational Value is cocreated by multiple actors, always including the beneficiary
  24. 24. A2 FP06 The customer is always a co-creator of value ‘Com m on’ Sense says Value is cocreated by multiple actors, always including the beneficiary
  25. 25. S-D Logic says A2 FP06 The customer is always a co-creator of value Value is cocreated by multiple actors, always including the beneficiary
  26. 26. S-D Logic says A2 FP06 The customer is always a co-creator of value Value is cocreated by multiple actors, always including the beneficiary
  27. 27. S-D Logic says A2 FP06 The customer is always a co-creator of value Value is cocreated by multiple actors, always including the beneficiary
  28. 28. A2 FP06 The customer is always a co-creator of value W hy that M atters Value is cocreated by multiple actors, always including the beneficiary People will ignore your value proposition!
  29. 29. A2 FP06 The customer is always a co-creator of value W hy that M atters Image Source: http://www.bldgblog.com/2010/12/ventilating-mines-with-repurposed-airplane-engines/ Value is cocreated by multiple actors, always including the beneficiary Look! It’s a hack!
  30. 30. A4 FP10 Value is always uniquely and phenomenologically determined by the beneficiary A1 FP01 Service is the fundamental basis of exchange A2 FP06 The customer is always a co-creator of value A3 FP09 All social and economic actors are resource integrators
  31. 31. A3 FP09 All social and economic actors are resource integrators ‘Com m on’ Sense says Firmeninfrastruktur (z. B. Finanzwesen, Planung, Investor Relations) Personalmanagement (z. B. Einstellung, Training, Vergütungssystem) Technologieentwicklung (z. B. Produktdesign, Test, Prozessdesign, Materialforschung, Marktforschung) Einkauf/Beschaffung (z. B. von Komponenten, Maschinen, Werbung, Dienstleistungen) Interne Logistik (z. B. Material- eingang, Lage- rung, Daten- gewinnung, Services, Kundenverkehr) Innerbetrieb- liche Abläufe (z. B. Montage, Komponenten- herstellung, Produktion, Nieder- lassungen) Marketing & Vertrieb (z. B. Vertrieb, Verkaufsförde- rung, Werbung, Angebote schreiben, Pflege der Website) Externe Logistik (z. B. Auftrags- abwicklung, Lagerung, Vorbereiten von Kunden- berichten) Kunden- dienst (z. B. Installation, Kundensupport, Beschwerde- management, Reparatur- dienst) zende esse € € € € + + + + + -----
  32. 32. ♂Ɏ S-D Logic says A3 FP09 All social and economic actors are resource integrators Structuration of service ecosystems (Vargo & Lusch, 2014 ) MICRO level ƞǦ  ♀ ♂♂ ɉ Ǐ
  33. 33. ♂ ♂ ♂ ♂ Ɏ ♂ + ♂ ♂ ♂ ♂ ♂ ♂ ♂ ♂ ♂ ♂ ♂ ♂♂ ♂ ♂ Ɏ Ɏ Ɏ Ɏ Ɏ Ɏ Institutions Resource Integrators Market S-D Logic says Structuration of service ecosystems (Vargo & Lusch, 2014 ) MESO level ♂ A3 FP09 All social and economic actors are resource integrators
  34. 34. Institutions Resource Integrators Market ♂ ♂ ♂ ♂ Ɏ ♂ + ♂ ♂ ♂ ♂ ♂ ♂ ♂ ♂ ♂ ♂ ♂ ♂♂ ♂ ♂ Ɏ Ɏ Ɏ Ɏ Ɏ Ɏ Institutions Resource Integrators Market S-D Logic says A3 FP09 All social and economic actors are resource integrators Structuration of service ecosystems (Vargo & Lusch, 2014 ) MACRO level ƃ ♂ Ȗ ǧ ǹ
  35. 35. S-D Logic says A3 FP09 All social and economic actors are resource integrators Structuration of service ecosystems (Vargo & Lusch, 2014 ) MICRO MESO MACRO Market-facing, Public, and Private Resources Market-facing, Public, and Private Resources VALUE CO-CREATION SPACE Value Co-creation Space Nested networks Value Co-creation Space Value Co-creation Space Resource Integrator / Beneficiary / (Actor) Resource Integrator / Beneficiary / (Actor)
  36. 36. A4 FP10 Value is always uniquely and phenomenologically determined by the beneficiary A1 FP01 Service is the fundamental basis of exchange A2 FP06 The customer is always a co-creator of value A3 FP09 All social and economic actors are resource integrators
  37. 37. A4 FP10 Value is always uniquely and phenomenologically determined by the beneficiary ‘Com m on’ Sense says Italian Miracle?
  38. 38. S-D Logic says A4 FP10 Value is always uniquely and phenomenologically determined by the beneficiary Image courtesy: Messy-Kitchen-by-Flickr-user-Mark-Knobil Noodles Fast & Cheap!
  39. 39. W hy that M atters Image Source: NASA-Desert-Landing-Public-Domain.jpg, Air-Malta-Pre-Flight-Inspection-Airbus-A320-Wikipedia-User-Kristoferb A4 FP10 Value is always uniquely and phenomenologically determined by the beneficiary
  40. 40. 60 Conclusion What does that mean for you as an organization? Image courtesy: Wiki Commons, Julian Herzog
  41. 41. Do you really think and talk ‘service’? 61 G-D logic S-D logic Service = services understood as packaged activities, i.e. ‘intangible goods’ and ‘units of output’ Value = value-in-exchange; ‘worth’ Service = a universal perspective on economics; a strategic lens to (re)define one’s organizational purpose, as well as market and industry boundaries Value = value-in-use; value-in-context
  42. 42. 62 Take-aways Your customer creates value; not you. You can only humbly propose to participate in their value co-creation! Value emerges differently depending on context. You better know 1) how your offering gets integrated as one of your users’ resources, and 2) make sure to collaborate in their value co-creation spaces and integrate yourself proactively! Your customers are your most precious resource. Why aren’t they on your balance sheet? And industry, why don’t you even know them … ?
  43. 43. References Bettencourt, L. A., Lusch, R. F., & Vargo, S. L. (2014). A Service Lens on Value Creation. California Management Review, 57(1), 44–66. Irene Ng, Glenn Parry, Laura Smith, Roger Maull, & Gerard Briscoe. (2012). Transitioning from a goods‐dominant to a service‐dominant logic: Visualising the value proposition of Rolls‐Royce. Journal of Service Management, 23(3), 416–439. Lusch, R. F., & Vargo, S. L. (2014). Service-Dominant Logic: Premises, Perspectives, Possibilities (1st ed.). New York: Cambridge University Press. Ojasalo, K., & Ojasalo, J. (2015). Adapting Business Model Thinking to Service Logic: An Empirical Study on Developing a Service Design Tool. In THE NORDIC SCHOOL - Service Marketing and Management for the Future (pp. 309–332). Helsinki, Finland: Hanken School of Economics www.sdlogic.net
  44. 44. “Steve Vargo and Robert Lusch” via Twitter: https:// pbs.twimg.com/profile_images/1727664467/ Robert_Lusch.Books_1_.jpg; https://pbs.twimg.com/ profile_images/639038953/Stephen_Vargo005.jpg “Desert scene” via Wikimedia Commons by Mlsra (Own work) [CC BY-SA 3.0 (http://creativecommons.org/licenses/ by-sa/3.0)], “Rolls Royce engine” via Wikimedia Commons by Julian Herzog, Julian Herzog [GFDL (http://www.gnu.org/copyleft/ fdl.html) or CC BY 4.0 (http://creativecommons.org/ licenses/by/4.0)], “Man getting a shave at barber” - Flickr by Thierry Bignamini, https://www.flickr.com/photos/ioleoso/ 19674583490 “Cotton wad and whisk” by Unknown http://ak- hdl.buzzfed.com/static/enhanced/webdr02/2013/8/5/12/ enhanced-buzz-16580-1375721473-20.jpg “Whisk, spoon and whisk fly” by Spoon Art @ Pinterest, https://de.pinterest.com/explore/spoon-art/ “Whisk, bowl and drill machine” by Unknown source “Whisk lamps” by Anja Baumgärtel (Findelkind.biz), http:// findelkind.biz/chef_de_cuisine.html “Preparing a thanksgiving meal”, Courtesy of James Jaeger, http://www.loyolaphoenix.com/2013/11/ friendsgiving-meal-family/ “Jeffrey ‘AERODYNE’ Mine Fan”, Image courtesy of Kentucky Coal Heritage, http://www.coaleducation.org/ coalhistory/tech2/e40a.htm, More info on ventilating mines @ http://www.bldgblog.com/2010/12/ventilating-mines- with-repurposed-airplane-engines “Messy Kitchen” by Messy-Kitchen-by-Flickr-user-Mark- Knobil.jpg “Engine Inspection” by Kristoferb, Air-Malta-Pre-Flight- Inspection-Airbus-A320-Wikipedia-User-Kristoferb.jpg Sources of remaining images and icons: Martin Jordan, Jan Schmiedgen, Depositphoto, Wikimedia Commons Public Domain, NounProject, FontAwesome Image Credits (in their order of appearance)
  45. 45. Exercise
  46. 46. Think & note What does it take for people to create value in daily contexts? What resources need to be integrated?
  47. 47. Example: Dinner with friends
  48. 48. Collect integrated resources in value creation processes Own operant resources (mental & physical skills) Others operant resources (mental & physical skills) Operand resources (Tools and goods) What resources has the host to integrate to create value with the service ‘AirBnB’ for himself and his guest? Resource: Benefit: R: B: R: B: R: B: R: B: Resource: Benefit: R: B: R: B: R: B: R: B: Resource: Benefit: R: B: R: B: R: B: R: B: Value creation with dynamic resources integration in daily contexts
  49. 49. Doodle Coordinate best time Cleaning service Getting flat clean before dinner Neighbour Providing olive oil as you run out PayPal Splitting bill for grocery shopping Kochhaus Providing exotic ingredients Cooking experience Ensuring dish qualities Sense for timing Ready when guests arrive Pans & pots Means for cooking Cookbook Tips & tricks and inspiration Gas supply Enabling oven to work Potato peeler Saving time in preparation Decent lighting in living room Creating right atmosphere Entertainer qualities as host Cheering everyone up Interior taste Cheering everyone up Knowledge for open bottle by hand Providing wine w/o bottle opener Example: Dinner with friends
  50. 50. Evening impressions
  51. 51. Evening impressions
  52. 52. Evening impressions
  53. 53. Evening impressions
  54. 54. Who wants to dive deeper into service-dominant logic with us? Take the survey: http://bit.ly/21pWRIC
  55. 55. Thank you! servicedesignberlin.de @SD_Berlin @Jan_Schmiedgen fb.com/servicedesignberlin Icons by Lil Squid, Edward Boatman, Gonzalo Bravo, Jeremy J Bristol, Attilio Baghino, Lorena Salagre, DesignNex, Nicholas Menghini, Joe Richardson, Guvnor Co, Mourad Mokrane, Hadi Davodpour, iconsmind.com, Luis Prado, Erwin Supriyatna, Jens Tärning

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