Service Innovation

As an update to the post about Starbucks having to reinvent the coffee experience in its stores, the New York Times has an article that sums it up much better than I can, titled “Overhaul, Make it a Venti” (link).  They highlight the fact that the coffee experience has developed since the inception of Starbucks, and how user expectations have changed.  Geoff Vuleta from Fahrenheit 212, an innovation consultancy, is quoted in the article, saying:

“We all remember our initial encounters with Starbucks: the exoticism of new language, space, sounds and smells. Fast-forward a decade, and the first thing that jumps out is that the mystique that so thoroughly defined the initial experience is conspicuously absent — trampled in the stampede of proliferation.”  

As part of the course about Design as a Service to Industry, we held a workshop together with Norsk Filminstitutt to try out AT-ONE in a very compressed format. We ran through all letters within 4 hours with a goal to unearth the relevant issues before the student runs a more formalised AT-ONE process later during the Spring. Simon from AT-ONE took part to get some more experience from using AT-ONE in a scaled down version. The results were positive, and reinforce the idea we gained from the Autumn that AT-ONE should be run as a compressed session to unearth issues before the formal workshops that cover each letter. 

Judith has had her paper accepted for the Design Management conference in Paris in April. Her paper will focus upon design leadership and some of the terms that it has evolved from (design thinking, design management, strategic design etc).  More information about the conference (here). Judiths abstract is available by mail from her.Simon has submitted a paper on the AT-ONE process to the Design and Emotion conference in Hong Kong in the Autumn (link). This paper will focus upon the AT-ONE method, specifically the part that relates to Experience. 

Simons abstract is available by mail.  

Tags: Design leadership, Design Thinking, Experience

Starbucks, champion of the experience economy (link), is having to rethink its user experience. This is interesting, because in the late 1990’s Starbucks was the iconic example of how you could extract value from staging experiences rather than selling commodities. Coffee beans could only command 1-2 cents a cup, while the Starbucks experience could command up to $5 a cup. It seems that the experience of coffee has been commodotised by Starbucks itself as it raced to become the McDonalds of coffee. The original manual coffee machines have been replaced by automatic machines. Many think that these don’t make coffee  that is as good, but the main effect has been to deskill the jobs of the baristas to such en extent that they prefer to work elsewhere. The interiors have become standardised, and have lost the intimacy they once had, and the food that was added, was not considered by very many to be a “good experience”Judged by todays search for authenticity, Starbucks loses out on all counts. I think Starbucks will have great problems rekindling the feel that they now have lost. The competitive lead they had has been lost. McDonalds is  biting at their heels on the one side, and exclusive coffee houses have sprung up on the other. This leaves Starbucks in the middle of the road, and as a politician once said “The only thing you get from being in the middle of the road is run over”.  

Tags: Experience, Offering

Kevin Kelly has an interesting reflection about what happens when digital copies of content become freely available and how value can be generated elsewhere. The blog post is titled “Better than free” (link) and asks the important question about what we can do when the traditional business model for content no longer works. Things that can freely be distributed will tend toward zero in monetary value, so: 

When copies are free, you need to sell things that cant be copied.           

According to Kelly, the following things are incredibly difficult to copy (his terms, my interpretations):

1. Immediacy – getting it straight away (reminds me of the instant gratification society that was described in the late 90’s)
2. Personalisation – making something individual for you
3. Interpretation – making meaning from freely available content
4. Accessibility – alowing access accross channels and terminals
5. Embodiment – converting bits to atoms
6. Patronage – allowing individuals to contribute through free will
7. Authenticity – trust, truth and reliability
8. Findability – making things available where people will lookI think these are interesting terms, but I think that his focus in these terms is content centric rather than customer centric (or user centric).  

Many of the things he comments are related to user behaviour and not just the qualities of the media itself. For example, authenticity is a new desire from the market  (link), findability is often related to word of mouth and trusted sources (eg: reviewers), embodiment relates to a need to simplify through known interfaces rather than new ones, and accessibility relates to our disinterest in where and what we access things on, we just want them.
I think Kelly has identified some important trends, but I would really like him to look at this from a consumer behaviour perspective rather than from a content perspective. 

Tags: Authenticity, Content, User-needs

Livework recently presented some great evidencing of the AT-ONE project in our monthly researchers meeting. Evidencing stands for tangible evidence, and is a means of rapidly producing service experiences at a very early stage of a project. Another term for evidencing is to produce archeology of the future, a means of looking back at something that hasn’t yet been created. More information about evidencing can be found here. Evidencing is related to paper prototyping but has several important differences. Firstly, evidencing has to look finished and convincing, whereas often a paper prototype is designed to look like a rough first draft. This is because the aim is to provide a convincing example of something ‘in the future’. Secondly, evidencing aims to give the experience of how the service will be experienced when completed. It is therefore strong on contextual information regarding its use. Thirdly, evidencing aims to lead by example, or pull a project, by making tangible the end point of the process. Finally, evidencing presents a solution in a holistic way, including branding elements, design elements, interaction elements and behavioural elements. A paper prototype is often product-focussed and therefore deliberately does not include non product elements.The photo above evidences the input to the Actor workshop and the output from the workshop. In addition, it shows similar document structures for the other letters of the AT-ONE method. Together they form the structure of the whole AT-ONE workshop process and show how they relate together.In a project consisting of multiple stake-holders, each focussed upon a different discipline, the evidencing gave us all a target to work towards, and was a great success.Sometimes it helps to start at the end!

Tags: Evidencing, Experience, Prototyping

The sixth Design and Emotion conference will be held in Hong Kong  from the 6th to the 9th of October 2008. Aspects that will be covered are: Values & Culture, Usage & Interaction, Modeling Experience, Technology & Materials, Brands & Consumption, Methodological issues and Theoretical issues  We have submitted a paper to present the AT-ONE method and are crossing our fingers that it will be accepted. More information here (link)

Tags: Desire, Emotion, Experience

We have submitted an abstract for the Design Management Institute  academic conference this spring in Paris. There is strong competition to present papers, and we are hopeful that we will be accepted. The suggested paper we wish to present will critically review terms that are used to describe the role of design in strategic decision making, such as Design Thinking, Design Management, Strategic Design and Design Leadership. We will review the history of each term and look at their differences and similarities. More information on the conference here (link).

Tags: Design leadership, Design Management, Design Thinking, Strategic Design

After writing the last post about Jonathan Reynolds presentation about Service Innovation I started to think of great examples of service innovation in Norway. One which I admire greatly is the Statoil coffee deal. This is a deal from one of the leading petrol station chains in which you buy a coffee cup for 99NOK (about 12 Euro) and then fill the cup as many times as you like during 2008 for free.

The deal has become an incredible success. The magazine FAST FOOD (link) gives some facts about the deal: They expect 800 000 people to buy into the deal this year (the cup design is changed each year), and filling coffee is a main motivation for 28% people to choose Statoil. From a population under 5 million people, a penetration of 800 000 is an incredible number.

The coffee deal encourages loyalty and gives a boost in the sales of products other than petrol. At the same time, it gives an improved customer experience. Filling petrol is not the most exciting experience in the world, particularly in winter-cold Norway. The reward of a good, tasty, hot cup of coffee takes the focus away from this (and the ever-spiralling amount that you pay for your petrol). It gives a great conclusion to the whole service journey, an experience that continues many minutes after leaving the station itself. And ‘finishing strong’ is a key part of service delivery.

Not only that, there are probably over a million pieces of advertising merchandise in circulation in which people willingly advertise Statoil.

Tags: Experience, Service Innovation

Jonathan Reynolds from SAID Oxford held a very interesting presentation at BI last week. His theme was Service-Innovation and he took a broad look at the field. He showed that Norway is not in the top league of service innovations, but is not trailing by much either and gave some interesting updates on facts:
1. Services account for almost 54% of total value added in EU-25 economies compared to 18.3% in Manufacturing (Eurostat info).
2. Growth in services has outpaced overall economic growth in the EU-25 areas.

He presented an intersting continuum of services along a scale ranging from Tangible-dominant services to Intangible-dominant, explaining why some services are closer to products and others are purely intangible. He also showed that service thinking is invading traditional product areas such as mining, construction, agriculture and mining.

However there were two very interesting things that he mentioned:
1.The importance of customers as co-creators of value
2.The importance of the customer experience

In fact, most of the success stories that he talked about were innovations in customer experience. This was very interesting, since more and more I seem to see examples that show that innovations in the customer experience give great payoffs for small costs. An underlying message here is: talk to your customers, understand their needs and reflect this by introducing quick, simple and incremental changes in the customer experience to reflect this.

Tags: Experience, Service Innovation, User