For Visitors from Korea to IBM Almaden Lab October 19th, 2011

1. Some Thoughts on Value Propositions and Service Patterns Dr. Stephen K. Kwan Professor, Service Science Management Information Systems College of Business Administration San José State University, CA, USA http://www.sjsu.edu/ssme Contact: stephen.kwan@sjsu.edu MercèMüller-Gorchs Karlsruhe Service Research Institute Karlsruhe Institute of Technology Karlsruhe, Germany For Discussion with Visitors from Korea at IBM Almaden October 19, 2011 Download these slides at: http://www.slideshare.net/StephenKwan

2. Service System Worldview1 Service Provider Customer Service Experience A Service System and Its Entities 1Kwan, S. K. & Min, J. H. (2008) “An Evolutionary Framework of Service Systems”. Presented at the International Conference on Service Science, Beijing, China, April 17-18. Kwan & Müller-Gorchs 2011 2

3. Service System Worldview Employees & Stockholders Community Service Provider Customer Service Experience Partners Competition Service System Society Kwan & Müller-Gorchs 2011 3

4. 4 Kwan & Müller-Gorchs 2011 Service System Worldview Service Management Fitzsimmons & Fitzsimmons Employees & Stockholders Capacity & Manpower Planning, Training Community Service Provider Customer Facility Location & Design Service Experience Partners Social Networking Competition Competitive Strategy Service Concept Realized Customer Flow & Service Delivery Market Segmentation Operating Strategy Society 4

5. Value Co-Creation Through Value Propositions Value Employees & Stockholders Community Service Provider Customer Value Value Value Service Experience Partners Competition Service System Governance Society Kwan & Müller-Gorchs 2011 5

6. Stages in Customer Empowerment in Value Co-Creation Stage 1: Value Chain Value Proposition* Customer Service Provider Focal Relationship Service Experience * Should be accompanied by a “Schema & Rules ” – behavior expectations 5 Kwan, S. K. & Yuan, S. T. ”Customer-Driven Value Co-Creation in Service Networks”, to appear in Demirkan, H., Spohrer, J.C. and Krishna, V. ed., The Science of Service Systems, volume in Service Science: Research and Innovation (SSRI) in the Service Economy series, Springer, 2010. Kwan & Müller-Gorchs 2011 6

7. Customer Driven Service Value Network Value Proposition Service Provider Customer Focal Relationship Value Proposition Value Proposition Provider Partner Network Customer’s Social Network Service Experience Kwan & Müller-Gorchs 2011 7

8. 8 Kwan & Müller-Gorchs 2011 Foundational Premises of Service Dominant Logic Microeconomic Considerations

9. 9 Kwan & Müller-Gorchs 2011 Value Systems and Value Dimensions Provider’s Value System            Opportunities for Value Co-Creation     Customer’s Value System ★ ★ ★ ★ ★ ★ ★ ★ FP8 His Customer’s Value System

10. Variety of Value Propositions Maslow’s Hierarchy Of Needs Value Dimensions Service Provider Society Community Employees Stockholders Partners Customers Intrinsic Hedonic Spiritual Cultural Corporal Emotional Intellectual Familial…. Social Societal Environmental Political Stakeholders Economic A point in this 3-D space is a Potential Value Proposition 1 2 4 3 Stages of Customer Empowerment FP10 Kwan & Müller-Gorchs 2011 10

11. 11 Kwan & Müller-Gorchs 2011 Constructing a Value Proposition Metrics Rules Schema Quality Probability of Success Costs Benefits Service Experience The Customer have a lot of VP’s to choose from Service Level Agreement? FP7

12. 12 Kwan & Müller-Gorchs 2011 A Customer’s Choice of Service A Service Provider’s Promised Value: Based on the Customer’s own expectations A Customer’ Choice Function:

13. 13 Kwan & Müller-Gorchs 2011 A Customer’s Realization of Value A Customer’s Realized Value: Co-Production Service Process Co-Creation of Value An Example FP6 Service Provider and His Partners’ Contributions Customer’s Contributions FP9

14. 14 Kwan & Müller-Gorchs 2011 Constructing Value Propositions: Customers and Service Providers Sc,R,M too Connecting Components of a Value Proposition to a Service Provider’s KPI’s through Feedback

15. Kwan & Müller-Gorchs 2011 Example: Social Network Service Provider Customer Customer Service Experience Service Experience Service Experience Service Experience Service Experience Vendor Vendor Service Experience 15

16. 16 Kwan & Müller-Gorchs 2011 Example: E-Commerce Customer Amazon.com Bookcloseout_us theBookGrinder nengland4

17. VP0 SE Se0 Amazon.com SP0 S0 Se1 Bookcloseout_us SP1 SP4 S1 S4 Customer Se2 theBookGrinder SP2 S2 S5 Se3 negland4 SP3 S3 S6 17 Kwan & Müller-Gorchs 2011

18. 18 Kwan & Müller-Gorchs 2011 Service Pattern 1 – Single Service Episode Customer Instantiation of the Service Experience at a particular point In time VP0 SE0 Focal Relationship Time SP0 SE0 = Service Experience provided by SP0 SP0 = Service Provider of the Focal Relationship (the basis of the Value Proposition from Kwan & Yuan 2011) VP0 = Value Proposition offered by SP0 to Customer for SE0

19. 19 Kwan & Müller-Gorchs 2011 Pattern 2 – Continuous Service over a Period of Time Customer VP0 SE0 Time SP0

20. 20 Kwan & Müller-Gorchs 2011 Service Pattern 3 – Service in Parallel Customer VP0 Se0 Se1 Se2 Time SP2 SP1 SP0 Instantiation of the Service Experience at a particular point In time

21. 21 Kwan & Müller-Gorchs 2011 Pattern 3 – Continuous Service with Occasional Service Episodes Customer VP0 Se2 Se1 Se0 Time SP0

22. 22 Kwan & Müller-Gorchs 2011 Pattern 4 – Service provided by more than one Partner Service Providers Customer VP0 SE2 SE1 SE3 SE0 Time SP3 SP1 SP2 SP0 VP1 SE4 VP3 SE6 VP2 SE5

24. More on connecting VPM with Service Provider’s KPI

25. More on Quality Dimensions and Measurement

26. Integrate VPM with Service System Design and PrototypingIntegrate with Foresight and Innovation Method © Cockayne and Carleton 23 Kwan & Müller-Gorchs 2011

27. Kwan & Müller-Gorchs 2011 Service System Framework & Service System Networks Foresight and Innovation Method Value Propositions & Service Patterns © Cockayne and Carleton Kwan & Müller-Gorchs 2011 24

28. 25 Kwan & Müller-Gorchs 2011 Service System Framework & Service System Networks Foresight and Innovation Method © Cockayne and Carleton Process Chain Network Diagram UI Prototyping UML – Use Cases Value Propositions & Service Patterns BPMN Work System MANGA Service Blueprint Story Boards 25 Kwan & Müller-Gorchs 2011

29. Some Thoughts on Value Propositions and Service Patterns Dr. Stephen K. Kwan Professor, Service Science Management Information Systems College of Business Administration San José State University, CA, USA http://www.sjsu.edu/ssme Contact: stephen.kwan@sjsu.edu MercèMüller-Gorchs Karlsruhe Service Research Institute Karlsruhe Institute of Technology Karlsruhe, Germany For Discussion with Visitors from Korea at IBM Almaden October 19, 2011 Download these slides at: http://www.slideshare.net/StephenKwan