Service Design in Product Service Systems for Small and Medium Sized Enterprises

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Service Design in Product Service Systems for Small and Medium Sized Enterprises

Presentation at the 2nd Service Design Network Conference 2009.

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  • Excellent ppt. I would greatly appreciate a copy (julie.x.mayer@gmail.com). Thank you.
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  • Just a quick definition of servicedesign here, I think I dont have to explain anyone here what it is they are doing all day long. ;-)
  • Followin Shostacks approach, we can classify every product and every service along this axis somewhere from „product only with no service“ to „service without product“. (Go through the line quickly)
  • Now to create a rich user experience, we have to add the accompanying component to the respective „product“, be it a product or a service. If we look at the product of „cosmetics“, we have a strong tangible component, which we need to add the virtual, the intangible component such as image and service to. For Airline Travel, which has very few physical evidence, we need to make that physicality more visible to create a complete experience for the user.
  • „ In the enlarged European Union of 25 countries, some 23 million SMEs provide around 75 million jobs and represent 99% of all enterprises.” SMEs are difficult to define since they are a “grown organism” and are a subset of all companys. There are several definitions which all seem to have some core elements.
  • Official EU Defnition, which then is important for subsidies etc.
  • SMEs are often confronted with market deficiencies. SMEs frequently have difficulties in obtaining capital or credit, particularly in the early start-up phase. Their restricted resources may also reduce access to new technologies or innovation.
  • Now lets look at what is the problem with design for SMEs...
  • But then, why do we do all this? Why is Designing and Design Process so important? Hollins & Hollins point out the origin of costs in Product Design: What is clear here is, that, the earlier we recognize errors and mistakes and correct them, the less money we „waste“.
  • Now this what they suggest it looks like f or service design. So we can see that we can save the 50% implementation cost, or even more, if we find that our idea is a failure, or even better: optimize the design so that it becomes a success early in the process.
  • Now this what they suggest it looks like f or service design. So we can see that we can save the 50% implementation cost, or even more, if we find that our idea is a failure, or even better: optimize the design so that it becomes a success early in the process.
  • The Design Processes used by Service Design Agencies around the world imply a prototyping process and are focused on the user and the experience. All processes though have many steps in common. IMPORTANT: C ost effective F ast (t create trust)
  • They all have these steps in common. IDEO would call step 1 INSPIRATION, step 2 and 3 IDEATION and step 4 IMPLEMENTATION. The 5th step here is a resume after the project is finished, evaluation during the process happens continuously in the prototyping phases. The final evaluation phase is critical for SMEs to see the benefits of design and encourage further innovation.
  • Now who are some of the stakeholders to SMEs.
  • Lets look at some of the stakeholders with respect to their proximity to the company and information they have about and from the company
  • I have selected some parties which are fairly easily available to SMEs for co-creation. Public, Banks and Suppliers could be included with statistical information, but access to those can be very difficult.
  • Next, we need to identity tools which we can easily apply to these parties.
  • Questionnaire (customer) Interviews (employee) Observation (customer, competition) Storyboard (all) Character Profiles (professional) Personas (employee) Offering Map (all) Mock Up (customers) Blueprint (professional) U s e Cases (professional) Service Prototype (customer)
  • First I analyzed all the existing services in the company to get a status quo.
  • Those were then compiled in a matrix. On the horizontal axis we have the intent to create revenue to the left and the intent to create brand image to the right. On the vertical axis we have the net-cost to the customer upward, and net-cost to the company down. To give some examples: The repair of glasses costs money for the customer and creates revenue for the company. A contact lens consult costs money depending on the status of the customer. If he or she is a new customer, the company charges regular fees. If it is a returning customer the service might be provided for free. If the service is provided for free, the customer feels valued, increasing positive feelings toward the brand. The Satisfaction Guarantee is something which is a free service for the customer, creates cost for the company, but creates a positive image with the customer.
  • A nalysis of competitors
  • Customer Journey
  • C ustomer analysis / questionnaire
  • I nterviews and brainstormings with employees
  • Following the Brainstorming Phase with employees, the various steps of providing the service are broken down into the different views for better analysis.
  • I nterviews and brainstormings with CEO and experts.
  • How does convergence change the rules of the game in converging sectors?
  • Service Design in Product Service Systems for Small and Medium Sized Enterprises

    1. 1. Service Design in Product Service Systems for Small and Medium Sized Businesses Prof. Jürgen Faust, Thomas Schönweitz SDN Conference 2009, 27.10.2009
    2. 2. A Short Definition: <ul><li>“ Service design is simply </li></ul><ul><li>the application of </li></ul><ul><li>human-centric ideas and methods </li></ul><ul><li>of design to services.” </li></ul><ul><li>(Pinhanez, 2009, p. 3). </li></ul>Pinhanez C. 2009. Services as Customer Intensive Systems. Design Issues 25(2): 3-13 Service Design
    3. 3. Design Development Products Utility Functionality Universal aesthetics Goods, Services and Identities Marketability Symbolic diversity Folk and local aethetics Interfaces Natural interactivity Understandability Reconfigurability /adaptability Multiuser systems/ Networks Informativeness Connectivity Accessability Projects Social viability Directionality Commitment Discources Generativity Rearticulability Solidarity 20th century 21st century
    4. 4. Products vs. Services Shostack GL. 1977. Breaking Free from Product Marketing. The Journal of Marketing 41(2): 73-80
    5. 5. Products and Services Shostack GL. 1977. Breaking Free from Product Marketing. The Journal of Marketing 41(2): 73-80
    6. 6. SMEs <ul><li>Bolton Report </li></ul><ul><li>Owner Managed </li></ul><ul><li>Financially independent </li></ul><ul><li>Small market share </li></ul><ul><li>Dept. O f Trade and Industry </li></ul><ul><li>Small: 0 - 200 employees </li></ul><ul><li>Medium: 201 - 500 employees </li></ul>Bruce, D et al.: Effective design management for small businesses, Design Studies 20 (1999) 297–315
    7. 7. SMEs <ul><li>“ The category of micro, small and medium-sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro , and/or an annual balance sheet total not exceeding 43 million euro .” (European Commission, 2003) </li></ul>European Commission. 2009. The new SME definition - User guide and model declaration. Enterprise and Industry Publications: Brussels
    8. 8. Characteristics of SMEs Limited Financial Resources Limited Scope Limited Research Capabilities Flat Hierarchies Local Focus Faster Response Times More Options for Subsidies and Funding Less political influence Limited Market Share
    9. 9. Causes for Design Project Failures at SMEs <ul><li>Lack of senior management commitment to design </li></ul><ul><li>Poor financing of projects i.e. allocating insufficient funds to cover cost </li></ul><ul><li>Inappropriate sourcing of design competencies </li></ul><ul><li>Incomplete design brief i.e. the brief fails to take account of user needs, pricing strategy, etc. </li></ul>Bruce, D et al.: Effective design management for small businesses, Design Studies 20 (1999) 297–315
    10. 10. Why is it important for SMEs to build upon SD? Hollins G. & Hollins B. 1993. Total Design : Managing the design process in the service sector. Pearson Education: London 41,9% in the Concept Phase 45,6% in the Production
    11. 11. Suggested Origin of Costs in Service Design Hollins G. & Hollins B. 1993. Total Design : Managing the design process in the service sector. Pearson Education: London 50% in the Concept Phase 50% in Implementation
    12. 12. Suggested Origin of Costs in Service Design Hollins G. & Hollins B. 1993. Total Design : Managing the design process in the service sector. Pearson Education: London Investments in Analysis and Design reduce risk and the cost of failure.
    13. 13. Service Design Processes in all Shapes and Sizes
    14. 14. Service Design Process for SMEs
    15. 15. Stakeholders <ul><li>Competiton </li></ul><ul><li>Customers </li></ul><ul><li>Employees </li></ul><ul><li>CEOs </li></ul><ul><li>... </li></ul><ul><li>Public / PR </li></ul><ul><li>Public / Local community </li></ul><ul><li>Cooperating Partners </li></ul><ul><li>Suppliers </li></ul><ul><li>Banks / Financial Institutions </li></ul><ul><li>Government </li></ul>
    16. 16. Stakeholder Levels
    17. 17. Stakeholder Levels
    18. 18. Service Design Tools for SMEs
    19. 19. Service Design Tools for SMEs ANALYZE DESIGN DEVELOP IMPLEMENT Observation Interviews Questionnaire Storyboard Character Profiles Personas Offering Map Mock Up Blueprint U s e Cases Service Prototype
    20. 20. Case Study <ul><li>Retail Optometrist in Munich </li></ul><ul><li>Founded 1980 </li></ul><ul><li>Five Branches </li></ul><ul><li>37 Employees </li></ul><ul><li>< 5 Mio. Annual Revenue </li></ul><ul><li>4th largest Optometrist in Munich </li></ul>
    21. 22. Services Chart / Status Quo
    22. 23. Objects of Analysis
    23. 24. Methods used
    24. 28. The Process of Purchase and Manufacturing
    25. 30. Service Blueprint
    26. 31. Findings <ul><li>Successful Creation of a new Service </li></ul><ul><li>Company Awareness for the necessity of Design </li></ul><ul><li>High Employee Engagement and Motivation </li></ul><ul><li>Fast and Usable results on constrained budget and time </li></ul><ul><li>Many solutions to existing problems were found that were not related to the service that was to be developed </li></ul><ul><li>Many new Ideas for further development and new projects evolved </li></ul><ul><li>Changes in company procedures encouraging employee innovation </li></ul><ul><li>Improved innovation-skills in the company </li></ul>
    27. 32. Now whats the deal with SMEs? <ul><li>Problem: </li></ul><ul><li>Lack of senior management commitment to design </li></ul><ul><li>Poor financing of projects i.e. allocating insufficient funds to cover cost </li></ul><ul><li>Inappropriate sourcing of design competencies </li></ul><ul><li>Incomplete design brief i.e. the brief fails to take account of user needs, pricing strategy, etc. </li></ul><ul><li>Solutions: </li></ul><ul><li>Simplify the Design Process and enable fast prototypes </li></ul><ul><li>Use readily available stakeholders as resources </li></ul><ul><li>Use few but powerful Design Tools and Methods </li></ul>
    28. 33. More Info: www.mhmk.de and www.servicebydesign.de Find us at LinkedIn and Twitter ( @netsaver ) Thank You for the Opportunity!

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