This is service innovation

This is Service Innovation – a personal story
CEMEX Lighthouse
30 September 2020
Prof Dr Shaun West
Annick Holland (artwork)

CEMEX Lighthouse, 30 September 2020| Dr Shaun West
Purpose
To provide an insight into service innovation
The insights are based on
having developed and
delivered services in an
industrial environment and
now leading research in
product-service system
innovation.
Service innovation within product-service systems
Key concepts for service innovation
Some tools for service innovation
Reflections

We all have our own experiences of services

Three good books that can help with service innovation
Translational Systems Sciences 6
Marja Toivonen Editor
Service
InnovationNovelWays of CreatingValue in Actor
Systems

Services can be very bad….
This service scores low in
terms of service innovation.
The example is relevant to
high quality equipment
manufacturers.

Some services can really help us
https://youtu.be/kzCr3J0H-Lc
This digital service scores
highly in terms of service
innovation.
The example is relevant to
high quality equipment
manufacturers.

SERVICE INNOVATION WITHIN
PRODUCT SERVICE SYSTEMS

Service innovation within product service systems
Innovating product is different to innovation in services
Because there are many differences between the two!
Dimension Product Development Service development
Initiation Centrally initiated, structured, technology driven: new
technology or new use of existing technologies
Locally initiated, close to customers, ad hoc: new value
creation potential identified
Strategic perspective Inside-out Outside-in
Key asset Patents Customer knowledge
Development Closed process, involving R&D and production Open process, involving sales companies and service
organizations
Tools and methods Stage-gate models Service blueprinting, service engineering
Critical resources Production facilities, components, subsystems, supply
chains
Knowledge and skills, relationships and networks, including the
resources of service partners
Actors R&D and other central units and functions Local and central units, customers, partners/dealers
Marketing and sales Market to (push): management of customers and markets Market with (pull): collaboration with customers and partners
Result A tangible offering that is easy to understand An intangible service that is difficult to visualize

More of the value in services is from the intangibles
The differences between products and services?
Technology (production) based Service based
Mathieu Technocratically; Supporting product;
Efficiency based innovation
Humanistically; Supporting the customer;
Client-based innovation
Herrmann Factual/Future Emotional/Form
Bretani Separate production and delivery Combined production and delivery
Kotler Tangible goods with minor services Service with minor goods
Coppett Service is a cost Service creates value
Normman Complex structures Simple structures

Innovating product is different to innovation in services
New product development New service development
1) Pre-study and concept study
2) Development
3) Industrialization
4) Launch
5) Follow-up
Fig. 11.1 Differences in resource requirements between the stages of NPD and NSD
(Kowalkowski and Kindstr€om 2012, p. 112)
Table 11.1 Differences between product development and service development
Dimension Product development Service development
Initiation Centrally initiated, structured, tech-
nology driven: new technology or
new use of existing technologies
Locally initiated, close to customers, ad
hoc: new value creation potential
identiﬁed
238 C. Kowalkowski
Why is are the cost per phase virtual mirror images?
Kowalkowski and Kindström 2012, p. 112
With such differences between
product and service develop it is
amazing that we every are able to
innovation new product-service
system.

Why are they so important for manufacturing firms?
Bain & Comp. Wachstumsmotor Service, 2010
Why is are the cost per phase virtual mirror images?
Most firms make the margin in
services rather than in the
product.

Lifecycle analysis
Beginning of Life
Design
Product
design
Process
design
Plant
design
Manufacture
Produc-
tion
Internal
logistics
Middle of Life
Distrib-
ution
External
logistic
Use/
operate
Optimize
Support
Train Maintain Repair
End of Life
Upgrade
MOL2
Retire
Reverse
logistics
Recycle Resell
The perspective of asset management and the PLM
We need to learn to consider different perspectives

Vandermerwe and Rada’s model
Product (or service)
Product = value
Service = cost
Core product with added service
(Servicing)
Product = value
Service = differentiation
Product-service system
Product + service = value
Vandermerwe and Rada, 1988
Increasing servitisation
Service is a bolt-on
Are you able to use this to describe a product service system?

Some examples of product-service systems…
Planes, trains and automobiles…

Value
mainly in
product
content
Value
mainly in
the service
content
Pure product Pure service
Pure Product
oriented
Use oriented Results oriented
- Product related
services
- Pay per use
- Advice and
consultancy
- Leasing
- Renting /sharing
- Pooling
- Activity
management
- Pay per outcome
Service content
(intangible)
Product content
(tangible)
KEY CONCEPTS FOR SERVICE INNOVATION

Consider the boat and look at it from different perspectives
Consider the boat from the
perspective of a product…
Consider the boat from the
perspective of a service…

Value in use – what is it?
https://en.wikipedia.org/wiki/Service-dominant_logic
S-D logic axioms and foundational premises
Axiom 1/FP1 Service is the fundamental basis of exchange.
FP2 Indirect exchange masks the fundamental basis of exchange.
FP3 Goods are a distribution mechanism for service provision.
FP4 Operant resources are the fundamental source of strategic benefit.
FP5 All economies are service economies.
Axiom 2/FP6 Value is cocreated by multiple actors, always including the beneficiary.
FP7 Actors cannot deliver value but can participate in the creation and offering of value propositions.
FP8 A service-centered view is inherently customer oriented and relational.
Axiom 3/FP9 All social and economic actors are resource integrators.
Axiom 4/FP10 Value is always uniquely and phenomenologically determined by the beneficiary.
Axiom 5/FP11 Value cocreation is coordinated through actor-generated institutions and institutional arrangements.

Many production lines, many factories, many people, many firms…
How do I effectively
match demand with
capacity?
Why do we lose production
– we follow the OEM
recommendations
Why is the information
spread across so many
systems?What are the “real”
marginal costs of
production
How do I increase
capacity cost effectively
Maintenance
Operations
OEMs and system
integrators

Main and subcategories of product-service systems
Do you know where your firm is comfortable on this continuum?
(Based on Tukker, 2004)
There are (too?) many options for
service innovation in a product-
service system
Value
mainly in
product
content
Value
mainly in
the service
content
Pure product Pure service
Pure Product
oriented
Use oriented Results oriented
- Product related
services
- Pay per use
- Advice and
consultancy
- Leasing
- Renting /sharing
- Pooling
- Activity
management
- Pay per outcome
Service content
(intangible)
Product content
(tangible)

Classification of industrial services
(Kowalkowski & Ulaga, 2017)
Can you find new innovations for your firm in every quadrant?
By taking other perspectives we
can innovate new services

Types of innovation
What balance does your firm want?
Service innovation should be
incremental (close to lean) and
disruptive

The service culture in the firm
Where does your firm fit and where does it want to move to?
Mathieu, V. (2001), "Service strategies within the
manufacturing sector: benefits, costs and partnership"
Moving the culture of a product-
firm can be hard work and risky.

Where are you and where are your customers?
Do you know the match between the installed base and your service centers?
You need to understand what
assets you have and where they
are. You also need to know your
customers and the installed base
as they all impact on your service
solutions.

TOOLS FOR SERVICE INNOVATION

Tools for service innovation
Service Innovation as a process
How do you innovate services?
Vision
Persona
maps
Journey
mapping
Draft
Case Actor Matrix
26
What is it all about?
In the Customer Value Proposition turned out
that Pains and Gains are related to use
scenarios or cases. Therefore, different pains
and gains are related to different cases. This
tool helps to align different actor and
different cases, showing what kind of
dashboards (information) is needed by whom
in which case
Desired outcome
Overview of potential solutionss
How to use it?
• Fill in the actors (personas)
• Define cases
• Develop value adding dashboards for the
actor in specific case.
Service Operator
Callcentre
OPS Manager
User
Case
Actor
Case/actor
matrix
Blueprint
Values, goals
purpose, value for
guide decision
making
Direct and
indirect actors to
understand their
motivations and
behaviours
Map the current
services, identify
new touch and
new actors
List out the
different
situations and
the roles the
actors take
Create blueprints
and then use as
properties

Vision for your customers is key
Do you know what drives your customer’s businesses?
To create a sound vision for the
innovation you need to
understand their business and
what’s important for them.

Service innovation needs to focus the value creation process of the customer
Do you know what drives your customer’s job-to-be-done?
Can you describe your customer’s
businesses, how it works and how
they measure success?

Service innovation needs to focus on outcomes
Do you know what service outcomes are under or over served?
Describing and measuring
outcomes can provide a great
prompt for innovation. Ulwick’s
Outcome Driven Innovation is a
good approach to use.

Service innovation needs to focus on the people
Do you stop building personas at the “user” level?
Personas help you to understand
people in more detail. Every key
actor needs to have one.

Do you know who the people in your system are?
You need to be ready to create
empathy maps for many different
actors in the system. Consider the
both beneficiaries and
stakeholders. You will need
iterations to find everyone!

How well do you know the wider team?
Empathy maps can be adjusted so
that you know what people really
do.

Service innovation within the ecosystem
Do you know how everyone relates to each other?
Ecosystem mapping allows you to
see the connections between
different actors, within the firm
and between firms.

Service innovation needs to focus on the machines (avatars) as well
Do you understand the actors support the equipment?
The machine many not be used as
it was designed. The avatar will
help you better understand how it
is used in operations and looked
after.

Service innovation needs to focus on the machines (avatars)
Can you identify the tasks that are done and who does them?
Mapping out all the transactions
of the life cycle you will gain new
insights.

Service innovation needs to focus on the machines (avatars) as well
Can you build up a total cost of ownership for the avatars?
By understanding all of the tasks
you can learn how the total cost of
ownership builds up and what are
the cost drivers.

Service innovation needs us to understand Journey maps for different actors
Can you describe the journeys your customers make when you interact with them?
Journey mapping allows us to
understand each service
transaction in depth

Service innovation requires us to understand different situations
By identifying different cases and
connecting them with different
actors we start to understand in
detail different situations. This
helps us learn what is most
important for our customers.
Case Actor Matrix
26
urned out
se
nt pains
es. This
d
f
by whom
for the
Service Operator
Callcentre
OPS Manager
User
Case
Actor
Do you consider situational analysis when designing services?

Service Innovation requires us to consider different approaches to delivery
Do you know how to make the customer part of your “extended service team”?
Customers many move on the
continuum and may ask for one
then then insist on another. If you
design for different situations you
will cope with different requests
more successfully.

Service innovation means we need to build alterative value propositions
How often do you develop and test different value propositions?
The solution helps [persona/s] to [activity] in oder to [outcome]
By ideating different solutions to a
customer problem you will
develop better and more flexible
value propositions.

Service innovation needs clear descriptive language
How often do your customer get annoyed with “marketing speak”?
By writing in clear English with a
fixed structure you will learn to
describe problems and solutions
without ambiguity.

Service Innovation on one slide
How often do you confirm the solutions with your customers?
By describing the solution on one
sheet you can clarify quickly the
value creation and expectations
with customers

Service innovation is enhanced with service blueprint
Do you often ask customers to for their feedback on proposed services?
A blueprint can help you to
understand how the service could
be delivered. It can be used to as
an early prototype with
customers.

Service Innovation can lead to business model innovation
How often do you create alternative business models?
The busines model canvas is a
good communication tool and
helps you to ensure that you’ve
not missed (too many) important
aspects. Remember to drill down
if you need more depth in your
analysis.

Service Innovation means you need to offer flexibility
How often do you provide a “one-size-fits-all” solution?
Modularity can allow you to
provide more of what customers
value by forcing you to standardize
some aspects and allowing “pick
and mix” on other aspects. This
puts the customer in control.

Service Innovation means you need to test to get valid feedback
How do you collect feedback in a standard way?
By getting feedback on prototype
solutions you will learn to improve
the solutions through reflection.
This will allow you to improve your
value proposition.

REFLECTIONS

Reflections
Service innovation in product-service systems
The process means you need to continually learn
Build a process to understand the
problem space from different
perspectives, ideate new
solutions, create prototyping and
then test the.

Reflections
We need to put the person back into the machine
There are many different actors in
the system – they are all
important .
Treat the machine as if it were
another person in the system and

Reflections
The simplest questions provide the greatest insights
We have many actors and many
different situations in service so
confirming the context of the
problem space is critical. The same
questions can help you to describe
the solution.

Reflections
Services are NOT products and we need to embrace the differences
Service innovation in
product-service systems
works well with service
design. From the new
insights we can innovate
incrementally and more
disruptively.
Understand the problems from different perspectives
Learn to continue to evolve services and disrupt existing systems
Learn to adapt our tools to the product-service system
Use prototyping of services to test services sooner

For more information please visit slideshare.net/ShaunWest
Shaun West
This is Service Innovation – a personal story
Prof Dr Shaun West
Annick Holland (artwork)

This is service innovation

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