The document discusses innovation and service design. It provides examples of how companies like Amazon, Airbnb, Google, and Facebook have innovated through platforms, ecosystems, and by integrating multiple types of innovation at once. The document advocates for innovation that is bold, cuts across markets, and leverages open source tools. It also discusses the responsibilities of service designers to create compelling yet ethical designs and addresses concerns about large tech companies.

1. Finding the future first:
Frontiers of Sophisticated Service Design
SDN Global Conference, Madrid
November 2017

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Successful innovators innovate beyond products and integrate 5+ types...
TEN TYPES OF INNOVATION
Network
Connections
with others to
create value
Process
Signature or superior
methods for
doing your work
Product System
Complementary
products and
services
Channel
How your offerings
are delivered to
customers and users
Customer
Engagement
Distinctive
interactions
you foster
Profit Model
The way in which
you make money
Structure
Alignment
of your talent
and assets
Product
Performance
Distinguishing
features and
functionality
Service
Support and
enhancements
that surround
your offerings
Brand
Representation
of your offerings
and business
BOLDER CONCEPTS EASIER TO IMPLEMENT HARDER TO COPY

4. INNOVATE ON THE
RIGHT THINGS…
Innovation is rarely bold or effective.
Yours needs to be both.

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!All the important stuff now cuts
across companies and markets
Platforms matter…
PLATFORMS ARE THE NEW MINIMUM VIABLE SOLUTION

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Platforms amplify innovation ROI
MOST POPULAR CONSUMER PLATFORMS

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Platforms amplify innovation ROI
MOST POPULAR B2B PLATFORMS
scm

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Ecosystems build new value webs
EXAMPLES OF EXISTING ECOSYSTEMS
scm

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Bringing CRM systems to the cloud
SALESFORCE INNOVATION ASSESSMENT
7TYPES:

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INNOVATION EFFECTIVENESS
Business model-centric
innovation
Configure assets differently
to capture value
Platform-centric
innovation
Reinvent or recombine
capabilities to create value
Experience-centric
innovation
Engage customers differently
to deliver value
Balanced breakthroughs use five or more types of innovation—and all three colors

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Inventing a breakthrough business model to foster loyalty
AMAZON PRIME INNOVATION ASSESSMENT
Here’s what you get:
More members join steadily
2011 2012 2013 2017
25
10
members
(in millions)
7
4
25M
Members
6TYPES:

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The surprising benefits of being in the “club”—how Prime pays off
AMAZON PRIME INNOVATION ASSESSMENT
And get $90
worth of services
Members pay a $79
Membership fee
which suggests an
$11 loss per member
150%more purchases annually,
including many items that
they would not otherwise
buy from amazon…
2.4xand spend
more than non-members do
—$1,224 yearly vs. $505
But since members buy…
Amazon makes $78 per
member, per year—so the
entire membership fee
proves to be almost ‘pure’
profit…
This is a key reason why
Amazon stock price is up
296% in two years!
The actual ROI is surprising…On the surface it’s a loser…
6TYPES:

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Several platforms now amplify value in both dependent and independent ways…
AMAZON’S INNOVATION PREMIUM

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Several platforms now amplify value in both dependent and independent ways…
AMAZON’S INNOVATION PREMIUM

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Several platforms now amplify value in both dependent and independent ways…
AMAZON’S INNOVATION PREMIUM
RETURNS FOR SHAREHOLDERS:
Over 15-years Amazon delivers over 8,000% returns!
$1,000 invested in July 2002 = $83,000+ today
($61,000 in inflation adjusted 2002 dollars)
That same $1,000 invested elsewhere…
• In S&P 500 = $4,100
• In Walmart = $2,250
• In Sears = $1,022
This makes Amazon the single best investment of all time, one
of the 30 stocks that have generated 30% of ALL wealth
creation globally over the past 90-years!
WEALTH CREATION FOR JEFF BEZOS (HE OWNS 16.7%):
In July, 2017 he briefly became the richest person in the world
His stake in Amazon is worth more than $80 billion
His net worth is more than $90 billion
This ties him with his neighbor, Bill Gates
And yes, he too now plans to reinvent philanthropy

17. INNOVATE IN THE
RIGHT WAYS…
Innovation is always tough. It gets much easier
when you replace myths with methods.

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Modern innovation is more about elegant integration than invention…
21st Century Innovation Principle Asset light
Fast
Smart
Connected
Distributed
Decentralized
Shared
Porous
Rated
Open

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“Deep learning” to foster anticipatory computing—now opened to anyone
INNOVATION ASSESSMENT: GOOGLE TENSORFLOW
5TYPES:

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Making sense of large data sets in natural ways
INNOVATION ASSESSMENT: FACEBOOK FASTTEXT
6TYPES:
“Find me photos of friends of friends living near Brooklyn…”

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Capacity utilization meets peer-to-peer rentals
INNOVATION ASSESSMENT: AIRBNB
5TYPES:

22. 22LEARNING FROM AIRBNB…
Founded in 2008, in 2016, Airbnb passed 2.3 million rooms in inventory.
This makes it larger than the three largest global hotel chains—Hilton,
Marriott, and Intercontinental—combined.

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7 of 57apps are
(slightly) proprietary!
How to build the world’s largest “hotel” business, without any rooms!
AIRBNB TECH STACK ANALYSIS
20
Application & Data
16
Dev Ops
13
Utilities
8
Business tools

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Uber innovates by integrating many things… simply and elegantly
Learning from Uber
UBER TECH STACK ANALYSIS

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We built our cloud architecture on
open-source software, called OpenStack,
so we can leverage the community….
…and we have a hundred thousand
developers who don’t work for us – but
what they can do in a week, we
couldn’t do in a year.
- Meg Whitman, HPE
“
”
GitHub
Web-based repository hosting
service, distributed version
control and source code
management
14m users
35m repositories
Largest host of source code in
the world
Extreme modularity radically streamlines robust software development
Open source code ecosystem
for distributed storage and
processing of very large
data sets

26. LEAD WITH YOUR
DESIGN VALUES…
Designers make stuff compelling. These
days, you may also have to make it decent.

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Bedrock: some base skills of designers
Skilled designers and design teams…
~ Conceive and make stuff
~ Make things, places & messages distinctive
~ Empathize with people in situations
~ Imagine ideal usage experiences
~ Sense and value what is new
~ Grapple with ambiguity more comfortably than most
~ Systematically test and iterate concepts till they get them right
~ Simplify and clarify information
~ Dramatically affect preference and value
ROLE OF DESIGNERS IN INNOVATION

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New concerns about the “frightful five”
SHIFTING TECH CULTURE

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There are some new burdens on good designers to be truly USER centered
MODERN SERVICE DESIGN PRINCIPLES
1 JUST BECAUSE IT IS TECHNICALLY POSSIBLE DOESN’T MAKE IT RIGHT…
Many things can now be done in our digitally native, always
on, data-rich world. But beware of using data against users…
2 TEST YOUR PROTOTYPE: WITH YOUR HEAD AND YOUR HEART...
Beyond basic usability testing is a much tougher, more
important test: do you want to live in the world you’re
helping to build? Will it truly make users better off?
3 IF YOUR CLIENT DOESN’T GET THIS, BUILD YOUR OWN SERVICE…
It is the easiest time in history to build something new. Don’t
wait for your client to ask for the best ideas. Act now!
Service design is now vital. It will take great design to get
to move beyond mere technical elegance…

30. 30SDN GLOBAL CONFERENCE, MADRID, NOVEMBER 2017
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Larry.Keeley@doblin.com
A unit of Deloitte Consulting LLP
Finding the future first:
Frontiers of Sophisticated Service Design
SDN Global Conference, Madrid
November 2017