Service Design – another word for “R&D for the rest of us”

This is just a great post by Jeffrey Phillips from Innovate on Purpose. he points out and with support from Gary Hamel, that most companies have a product innovation pipeline covered, however few have business model or service innovation or Service Design plans underway. Which seems crazy when so much more value can be created in these areas versus product innovation.  Please enjoy his article, he makes a really important point I believe

Something happens when you put on a lab coat and safety glasses. You have the immediate ability to explore concepts and ideas that may, or may not, become new products. And your time horizon shifts dramatically. Many people in primary R&D are examining technologies or molecules that won’t become products for many years.
“R&D for the rest of us”

The question we as innovators should ask ourselves, and our companies, is: why is this kind of thinking and investment committed solely in technology R&D? Why, in a pharmaceutical company, is there a team that is actively investigating new compounds and molecules that may become new drugs, but no one that is actively investigating new business strategies, new organizational hierarchies, new management philosophies? Why is innovation confined to the “R&D” wing of the business, and walled off from all the other things we do to add value to a business?

Certainly, R&D in a pharmaceutical firm is very important. It offers the chance for the discovery of a “blockbuster” new drug that could cure diseases or extend the life of seriously ill individuals. But I think we can all agree that a pharmaceutical firm (and by extension, any firm) adds tremendous value beyond primary product or service research. There are opportunities to dramatically innovate the business model (which health care reform may require), process or service delivery, customer experience and so many other factors or functions of the business. It’s as if all critical, exploratory thinking is confined to R&D, while the rest of the business is restricted to cost-efficient, process-oriented, short term thinking.

Where are the guys and gals in lab coats who are researching the long term disruptions of their business model, or service delivery model? Who is responsible for thinking about and generating new ideas about the relationships a pharmaceutical firm has with physicians and hospitals? Don’t you think these relationships and experiences are likely to change over time? Can we safely assume that these functions will remain the same over time, and all we have to do is find ways to cut costs? Just as Travelocity and Expedia decimated the travel agent industry, could other similar offerings radically change the interaction between a pharmaceutical company and its customers?

Gary Hamel points out in The Future of Management that most firms have some measure of product innovation underway at any point in time, and may have some inkling about service innovation or customer experience. Few, if any are innovating around business models or organizational structure, yet these are the places where competitive advantage is sustained over the long run. It’s time to assign a few more people to lab coats and safety glasses, and have an R&D team investigate all the aspects of the business where we believe we can add value. Just like Festivus, innovation is R&D for the rest of us.

Why understanding Data & Service Design will be a key skill of the future CMO

I read two interesting articles about two months apart, one from livework, a leading Service Design firm in the UK who were arguing with great insight I thought how Data was the new Oil.

Both Ben Reason and Jeremy Walker from livework argue that:

“Data, whilst valuable, is a commodity, and an easily replicated one at that. Therefore as it becomes more widely available its value will drop. Businesses with data products often prop up the price with additional fields of information but this is simply another type of devaluation as the customer is getting more for the same price. We have helped our clients achieve the opposite – more revenue for less data – by developing services around the information. These services provide additional value to customers by understanding how the data fits their business.

This is where the process of refinement comes in. We need to refine the data into services. And these services need to meet the needs and issues of the businesses that information providers hope to sell to. The issue is that, whilst the geek in all of us gets very excited about raw data, business customers are more interested in the immediate challenges that they face. These challenges will be things like effective marketing campaigns, back office productivity or asset management etc.”

The other article was from Forrester Research and Dave Frankland. He also agreed with the livework team:

“According to Amazon’s former Chief Scientist, individuals will generate more data in 2009 than in the combined history of mankind. Think about the implications for your marketing and overall business. On the one hand, it is possible to know more about every prospect and customer, and to improve their customer experience based on what you know about them. On the other hand, it’s very easy to drown in the exponentially growing stream of data. Customer Intelligence (CI) professionals sit at the nexus of this data explosion, while also dealing with tectonic shifts in customer behavior, and an increased demand for marketing accountability.”

Dave goes onto say that given the strategic value of the CMO role, he believed that the next generation CMO’s will come from the Customer Intelligence discipline. That’s not to say CMO’s won’t continue to care deeply about the brand, and the emotional connection that they create with their customers. But, as they struggle to engage with empowered, connected customers who have limited tolerance for marketing, firms will elevate CI within their organizations to influence mission critical business decisions with data-driven insights. These CMOs will help their organizations to focus on customer value, and use it as the connective tissue that causes all marketers and business units to pull in the same direction.

And that’s where we tie the knot and arrive back at how Service Design can and should play a key part in this process. Its the ability to focus on customer value first and then use this data to develop new and better services that create value for both company and customer. Have a read of both articles which I have linked to above.

Customer Experience – How EBay Is Winning With Bid to Enhance CEX

Becomes More ‘Hands on’ With Better Search, Service, More Fixed Prices

How do you rejigger an $8 billion company to catch up to rising customer-experience expectations that have passed it by? That’s the task facing eBay.

ebay

In the 11 years since the dot-com darling went public, the e-commerce world grew up — but eBay looked stuck in its 1.0 past. Unlike Zappos, which built a name using customer service as marketing, and Amazon, where shoppers can log on and find virtually anything at a clear, set price, eBay didn’t control the fulfillment chain. That often leaves its customer service, a component key to branding, at the mercy of its sellers. Moreover, it was riddled with auctions, a type of transaction that has garnered less and less interest from the mainstream consumers who account for much of the $130 billion in annual online-shopping sales.

While the company’s marketplaces unit, which includes eBay.com, is in the middle of a three-year turnaround plan to fix those problems, “I doubt they can ever catch up totally [to competitors like Zappos and Amazon],” said Larry Witt, an analyst with Morningstar. “They can’t directly control the customer experience, though they can influence it.”

Yet that’s exactly what eBay has set out to do. It’s giving top buyers and sellers access to a phone service seven days a week and allowing them to submit queries online — a service being expanded throughout the holiday and 2010 to more sellers and buyers. It’s hired talent to improve its search-technology capabilities to make eBay more consumer-friendly and has begun incorporating user feedback more quickly. And it’s taking steps to add more fixed-price options for its customers.

It all adds up to what Lorrie Norrington, president of eBay marketplaces called “a sea change in customer service,” going from “an offline function to much more hands-on.”

Part of that charge is being led by Christopher Payne and Dane Glasgow, search technologists brought in from search startup Positronic, and Hugh Williams and Eric Brill, who arrived from Microsoft. They have reshaped the process in which eBay works: When you used to search eBay for an item, results would be listed by auction-expiration dates, with ones expiring soonest showing up first. Now, it’s taken a nod from Google, which pioneered the use of quality factors in its paid-search ranking system to improve the kinds of ads and offers people see.

Beyond auction
Today eBay search looks not only at auction end date but also rewards the stature of the seller, factoring in things that matter to buyers: the price of goods, the reputation of the seller and free shipping offers. The improved site functions, paired with a broader selection, will improve the overall experience, Ms. Norrington believes, which should actually end up cutting back on the need for customer service.

“You’re beginning to see some of the differences,” she said, of the upgrades eBay’s new tech-savvy hires are making. “It’s about making sure the buyers have great-quality sellers and items surface. It’s making sure the search experience is one suited to what the buyer is looking for.”

In order to increase the quality and variety of goods on its site, eBay has also lowered sellers’ fees and is focused on adding fixed-price options. Several years ago, the mix was 80% auction and 20% fixed-price sales. Today it is almost evenly split, and, in the future, eBay expects 70% to be fixed and only 30% auctioned.

Not all of these changes have rested well with sellers — an important and powerful constituency for the company. However, it has taken pains to communicate developments to sellers through e-mails, discussion boards, seller summits, web seminars, web radio Q&As and small group dinners.

“A lot of the changes were necessary. Hardcore eBay sellers are not happy with them, but they were necessary,” Mr. Witt said. “Take search, for example. You want to bring up products people are looking for. Delivering more-relevant results is the most important thing they had to attack.”

Positive results
And the changes, which have been communicated to consumers through a mix of events and media outreach, have instilled more confidence in the site. “There’s no question that eBay is safer than it was 18 months ago,” Ms. Norrington said. “Two big proof points are that our highest-quality sellers are growing substantially beyond e-commerce, up 14% in the second quarter in the U.S. And where we use a net promoter score, we’re seeing good results on trust and confidence. Our top buyers are buying more than ever.”

Wall Street is taking notice. In the past month, a number of Wall Street analysts have upgraded eBay’s stock. UBS, one of the firms issuing an upgrade, said that it believes the company’s marketplace business has “turned a corner.”

What you can learn

Remaking a business that’s as entrenched in the consumer psyche as eBay takes a lot of hard work, some risk-taking and a bit of chutzpah. Here, a few tips on how to tackle it.

Invest in talent. It’s a tough economy and eBay, like everyone else, is hurting. But that hasn’t stopped it from bringing in well-regarded tech talent.

Don’t be afraid to cut loose dead weight. Yes, eBay has angered and even lost some sellers, but the changes it’s making are rewarding its best sellers and best customers.

Look for partnerships that will upgrade your image. Teaming up with fashion icons Narciso Rodriguez and Normal Kamali on fixed-price lines instantly elevated eBay with the influential fashion crowd.

Don’t lose sight of the end customer. Both sellers and buyers are essential to eBay, so it added customer-service features to benefit both groups.

Communicate change consistently. To avoid seller confusion when it makes changes, eBay now rolls out changes twice a year, instead of on an ongoing basis. It gives sellers 60 days notice, and it reaches out in mass communications, as well as one on one.

Orange UK Open Innovation Challenge – The Next Orange Wednesday?

Have you seen this?

Orange UK Open Innovation Project

It’s a clever and innovative approach to generating service innovation and potentially Service Design for Orange in the UK. I thought readers of this blog might find using methods such as co-creation and collaboration to grow new streams of revenue of some interest. It is relatively unique and reminds me of trying to find the next “Orange Wednesday”  http://web.orange.co.uk/p/film/orange_wednesdays

Orange UK are looking for start-up businesses that they can partner with to provide more compelling online and on-phone services that increase their audience Open innovation project.

The project (OSCR) is an open innovation project that is being run as a collaboration between:

  • NESTA (The National Endowment for Science, Technology and the Arts)
  • Orange UK and
  • in partnership with live|work www.livework.co.uk ( a leading UK Service Design firm) and Wireless Innovation ( Satellite and Wireless solutions)

The project is based on the underlying concept of “shared risk and shared reward” and aims to demonstrate how Corporates can work with partners outside of their organisations on a mutually beneficial basis. As this is a call for innovations in services (which are difficult to patent), Orange are aiming for an ongoing business relationship with Orange that can embrace a range of different business models, including licensing, joint ventures or other forms of partnership.

Responses to the brief will then be submitted to the “Trusted Agent Team” (NESTA, live|work and Wireless Innovation) who will select the most promising to enter the “airlock”. It is important to note that Orange will not see any ideas at the selection stage and will not see any ideas until they leave the “airlock” (Trusted Agents will act on Orange’s behalf). Companies selected to enter the “airlock” will receive funding and support from the Trusted Agent Team to develop, protect and present their idea. After leaving the “airlock”, they will pitch their ideas to Orange who will then have 90 days to decide which ideas to pursue further. After this “right of first refusal”, those ideas that Orange rejects remain the intellectual property of the originator.

OSCR will launch on October 22nd, when companies interested in submitting ideas can meet with representatives from Orange to further understand their requirements. For more information on the project, please visit www.oscrproject.com

Enjoy! If you would like any information on leveraging Customer Experience to improve your engagement and profitability of your  customers please feel free to contact  me directly at damian.kernahan@protopartners.com.au or go to www.protopartners.com.au

Service Design Network Touchpoint Edition 2 out Now

The Service Design Network has just released its second  Service Design Journal. A great issue which landed in my inbox last week. To get the full content you will need to sign up for the Service Design Network which is well worthwhile.
The second issue of Touchpoint, the sdn’s Service Design Journal, is out now! Entitled “Health and Service Design”, this brand-new issue features articles from Service Design and/or healthcare experts such as Julia Schaeper, Lynne Maher and Helen Baxter (NHS), Lavrans Løvlie (live|work), Ben Reason (live|work), Mark Mugglestone (NHS) and John-Arne Røttingen (Norwegian Knowledge Centre for the Health Services), Tine Park (Designit) and Christine Janae-Leoniak (Mayo Clinic) as well as interviews with representatives from these areas.

SDN Touchpoint

SDN Touchpoint

This issue of Touchpoint will explore the individual, social and economic relevance of health systems and the potential for of Service Design to redesign and reinvent service offerings, service processes and service interactions. If you would like more information on SDN Journal please click here

Service Design Drinks coming to Australia 17th November

Suze Ingram and I met up today for the first time and agreed a date for the first Service Design Drinks for Australia.

I have already reserved www.servicedesigning.com.au which we will activate over the next week. Suze will design some graphics and away we go. If you would like more details, please email me damian.kernahan@protopartners.com.au or contact Suze at suze.ingram@gmail.com.

More details once we book a venue.

Stay in touch via the blog or learn more about Service Design at Proto Partners website.