A business case for transformative services

Melanie Wendland
Nancy Birkhölzer and Melanie Wendland from Fjord’s Service Design Academy delivered a keynote at the Service Design Conference organized by the German chapter of the International Service Design Network. Theme of the conference was Creating value(s): Transforming business, society and individual behavior through Service Design.

Check out the full presentation here.
 
What kind of services will we need to offer that will create both value in a changing society and a changing business environment? And what does value mean for individuals in a service context?
In the following we want to look at ‘transformative services’ and the potential they offer for businesses.  With transformative services we mean those services that change the way individuals or groups behave in order to foster wellbeing and satisfaction of the individual or group while providing sustainable business value.
 
 Firstly, let’s look at the changing circumstances under which service businesses need to run today:

Individuals change…People are becoming more aware of the products they buy, they seek for transparency about the origin, the production and the environmental impact of a product/service. Companies have to cater to this change of consumer behavior.
Yet, the needs of individuals also change
People are becoming more creative and taking greater control over their own lives. With this trend comes a rise in the need for empowerment from the very services we buy. While Maslow saw the need for self-actualization at the top of his pyramid, the pyramid is now being turned around and self-actualization can be recognized as a basic need services need to address.Organizations are evolving
Companies are facing the “product to service” change and need to adapt new ways of doing businessin order to compete in the rising “service & experience economy”. Trends like globalization add additional challenges in the business environment. These internal earthquakes put many companies at risk.Markets change

The market is saturated with products and services. Never has an economy seen a market with such a variety of specialization and choice. At the same time there is little or no growth in a maturing market and competition becomes hugely difficult. Since consumers are knowledgeable and oftentimes see products as commodities the need for differentiation becomes a key driver to success.

Market opportunities for new services and products change, too.
In such a complex world with too many choices, individuals feel overwhelmed with the variety and complexity of offerings at hand. The rising product and service fatigue among consumers resulting from these developments makes the market even more unpredictable.

Society changes
Finally global challenges such as financial crisis, aging population, poor rich gap or climate change are the type of challenges no business can ignore. In order to face these dramatic changes and be prepared, businesses need to identify ways of dealing with these challenges through their offerings. No single business can address the challenges in society on its own but needs to participate in finding creative solutions in collaboration with other companies.

From experience economy to the economy of transformations

These challenges on the individual, organizational, market or societal level make it evident that our economy is changing and evolving and that services businesses need to react. Pine and Gilmore describe in their book ‘The Experience Economy’ that we move through different phases of the economy.According to the authors we are in the experience economy, where businesses differentiate themselves with services staged as experiences to their customers. The better an experience is staged and performed to its audience, the more successful that service business will be. But Pine is seeing already the transition into the economy of transformations. Experiences alone won’t be enough to make businesses succeed and fulfill people’s needs if we look at the challenges stated above.A few signals can be detected that the change into the economy of transformation is underway. Several societal trends show how services can become more relevant to people and that the change is happening.Reputation capital:
Reputation becomes a major factor in how individuals can influence groups and societies. Individuals are motivated by non-monetary rewards and go the extra mile to contribute time, skills and intellect for personal satisfaction and social goodwill.Crowdsourcing:
Groups become increasingly open to gather physically or virtually to generate and implement ideas in a bottom-up, ad hoc and hierarchy-free manner to solve complex, multi-dimensional problems.

New forms of ownership:
The idea of ‘ownership’ is changing: driven by new motivations like environmentalism, optimum resource use and conscious consumption along with increasing costs and new ways of collaboration. As a result, the duration and nature of how people want to own things is shifting to be more flexible.

Slow living:
People are becoming more conscious of the role that time plays in shaping life quality. They are prioritizing experiences, connection with others, health, holistic well-being and creativity in place of speed and pace of life.

Prosumerism:
The line between producers and consumers blurs as people harness new ways to influence, design and produce the products and services that they consume, continuously during the product life cycle.

Now, what does all this mean for the design of services? How can these challenges be mastered and the signals be used to create services with transformative character? Here are 8 ingredients that are inherent to transformative services. For each ingredient one example service is highlighted (slideshare presentation only) that showcases that specific service aspect. Applying these ingredients to your service offer will help design services that can have a real impact on its users:

8 ingredients of transformative service

1. Connect to a community
Services in order to be transformative in character should have social relevance. This means that they are deeply integrated into a social community and empower this community to achieve their goals. Design services that positively impact the lives of individuals within a specific community (e.g. middle class, elderly, women, children etc.) for long-term business success.
2. Match wants & needsIn a time of prosumerism and the shift from owing to using, it becomes increasingly important to help people find what they are looking for. Identifying people’s needs and wants and matching the right individuals together will be a successful means to create services with transformational character.

 

3. Form new habits

Switching of the alarm while sleeping is an example of how automated and integrated certain behavioral patterns can become in our life.

If services can help people to establish and maintain new behaviors, new habits are formed and transformation happens. When designing transformative services we need to identify what kind of habits exists or need to be created in order to improve the person’s wellbeing.

 

4. Establish Platforms

Rather than offering the solution from start to finish, it is more valuable to establish a platform where individuals and businesses can collaborate. No one expects a single company to solve a social challenge stand-alone. Think about partnerships for added value and to enable long lasting change. The more open your platform is and the more people you enable to participate the more likely you will establish a transformative service. Apple’s app store is one example of an open platform that has changed a whole industry.

 

5. Empower the individual

People want to feel empowered to take their lives into their hands. The more transparent and semantic information is delivered through a service, the more the customer will feel empowered to take valuable decisions that have an impact on her personal life, society or environment.

 

6. Embed services seamlessly

Through the synergy of digital and physical services new interaction paradigms emerge. Interactions with digital systems become more embedded into our real world and vice versa physical and more natural interactions start to become more relevant and empowering to people also in digital contexts. Smart services can offer contextual help with as little interaction as possible. The less visible the interaction, the more powerful for the user.

 

7. Enable responsible actions

Sustainability is the capacity to endure. Sustainability has been recognized by many thought leaders as the most important aspect to focus on. But sustainable services do not only mean dealing with environmental issues but also take into account economic and social wellbeing. The more a service can enable a customer to take responsible actions, the bigger the impact on society, economy or environment will be.

 

8. Foster co-creation

Last but not least fostering co-creation in services will empower individuals to move up the Maslow pyramid and help fulfill their needs of self-actualization. Empowering individuals to co-create experiences and be part of shaping the service offering they will enjoy, will make the service more relevant and targeted to its audience.

 

Whilst in the experience economy delivering experiences often means short-term engagements with customers, business are faced with the question more and more as to how we can deliver services that establish lasting customer relationships? How can we engage customers over a longer period of time and provide them with meaning and satisfaction?

The 8 ingredients of transformative services are one answer to this.

After stating love relationships like “I love my iPhone” for the past years now, wouldn’t it be time we could say “I love my health insurance”?

Business success of the future should be measured not only in attention, interest or desire of a service in the market but through its impact it has on society.

In this sense our ambition is to dream:

Future revenue will be counted in number of transformations rather than financial transactions.

Melanie Wendland

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