2013

Designing transformative services

Touchpoint magazine, January 2013
Our Managing Partner Nancy Birkhölzer and Group Design Lead at Fjord Service Design Academy Melanie Wendland delivered a keynote on transformative services at the first German National Service Design Conference. This article further explores their insights. 

Designing transformative services

English abstract

Nancy Birkhölzer and Melanie Wendland delivered a keynote at the National Service Design Conference 2013 organized by the German chapter of the International Service Design Network. The theme of the conference was “Creating value(s): Transforming business, society and individual behaviour through Service Design”.

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WHERE IS THE VALUE? WHY EVERY BUSINESS SHOULD FOCUS ON TRANSFORMATIVE SERVICES

Full article English

In our fast-changing society, we need to re-evaluate the meaning of value creation for customers and think of how businesses can deliver and gain value by providing services to them. 

What kinds of services are required to address the needs of future customers while providing a sustainable and solid business model? We see an increased discussion – both in consumer and business contexts – about the need to “transform organisations” and deliver “transformative services”, by which we mean those services that change the way individuals or groups behave in order to foster wellbeing and satisfaction. We think it will be transformative services that drive value creation and delivery in the future while delivering business value at the same time. We therefore want to take a closer look at how services need to be designed to achieve these goals.

NEED FOR CHANGE 

To better understand the context for transformative services, let’s look at the changing circumstances under which service businesses need to run today. 

First and foremost, our basic needs in life are very different to what they once were. People are becoming more creative and taking greater control over their own lives in the so-called ‘Creative Society’. With this trend comes a rise in the need for empowerment from the very services we consume. Although Maslow saw the need for self-actualisation at the top of his pyramid of basic needs, the pyramid is now being turned around, and self-actualisation can be recognised as a basic need that services must address. Alongside that, people are becoming more aware of the products they buy, seeking transparency about the origin, production and environmental impact of a product/service. Companies have to cater to this change in consumer behaviour. 

Organisations and the market they operate in are evolving, and many companies face the ‘product-to-service’ transition, requiring them to focus on finding new ways of doing business in order to compete in today’s economy. But the market is already oversaturated with products and services. Never has an economy seen a market with such a variety of specialisation and choice. At the same time there is little or no growth in a maturing market and competition becomes intense. Because consumers are knowledgeable and often see products as commodities, the need for differentiation becomes a key driver for success. 

To further complicate the landscape, many of us feel overwhelmed by the variety and complexity of offerings at hand. Rising product and service fatigue – an increasing resistance from consumers to constantly consider, buy, and use more and more new products and services – is the result. These developments make the market even more unpredictable. 

Finally, society is growing more complex. We have witnessed significant shifts in the way the world operates, from the financial crisis, to an ageing population, the growing gap between the rich and the poor and climate change. Each presents unique challenges to different types of business. In order prepare for these dramatic changes, businesses need to better understand how they can be addressed through their own offerings. 

FROM THE EXPERIENCE ECONOMY TO THE ECONOMY OF TRANSFORMATIONS

These challenges on the individual, organisational, market or societal level make it evident that services businesses need to react. Yet this observation isn’t new and has been hotly debated for a number as years, most notably in the book, The Experience Economy by Pine and Gilmore, written in the early 1990s. The book describes how we move through phases of the economy and explains that the end of the 90s marked an era of differentiation using services staged as experiences to their customers. The authors were clear to point out that in the future, experiences alone won’t be enough to make businesses succeed and fulfil people’s needs, but instead that transformations are the next phase our economy needs to move into. We see many signals that the economy of transformations – and with it the need for transformative services – is finally becoming reality. 

SIGNALS OF TRANSFORMATION

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 use of resources and conscious consumption, along with increasing costs and new methods of collaboration. As a result, the duration and nature of the way in which people want to own things is shifting to become more flexible.

Slow Living

People are becoming more conscious of the role that time plays in shaping their quality of life. They are prioritising experiences, connections with others, health, holistic well-being and creativity over the 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 over the product’s life cycle. 

Accelerators of Transformation

Furthermore, today’s technological developments and advances help accelerate this change. From social media to the Internet of Things, mobility, context-aware devices, and constant connectivity: each innovation is transforming businesses of every shape and size. 

 

THE 8 INGREDIENTS OF TRANSFORMATIVE SERVICES

Against this backdrop, we have identified a set of ingredients that have a strong influence on making a service transformative in character. These ingredients should guide both designers and businesses to create services that respond to the changes and challenges mentioned above.

1. Connect to a community

Transformative services should have social relevance, be deeply integrated into a social community and empower that community to achieve its own goals. Services should also be designed in a way that positively impacts the lives of individuals within a specific community (e.g. The middle class, women, children, etc.) for long-term business success. Wheelmap.org is a great example of catering to the need of a specific community.

2. Encourage individuals to wear many hats

In a time of prosumerism and the shift from owing to using, it is increasingly important that individuals be allowed to play the role that fits their current situation. Someone offering goods today can be the buyer or supporter tomorrow. Identifying people’s needs and wants, as well as matching the right individuals together in a specific situation will be a successful means to create services with transformational character. Kickstarter.com is already doing this very well.

3. Form new habits

Transformative services should help people establish and maintain new behaviours. If new habits are formed, then transformation happens. When designing transformative services we need to identify what kind of habits exist or need to be created in order to improve the person’s well-being. Kochhaus.de is doing this in the field of cooking and nutrition.

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 on its own. Think about partnerships for added value and to enable long lasting change. Gidsy.com is already doing this by bringing like-minded people together from all over the world.

5. Empower the individual

People want to feel empowered to take their lives into their own hands. The more transparent and semantic information is delivered through a service, the more the customer will feel empowered to take critical decisions that have a significant positive impact on their personal life, society or environment. Citibank’s iPad app is a powerful example of this that is already in the market.

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 physical and more natural interactions start to become more relevant and empowering to people in digital contexts as well. The less visible the interaction, the more powerful it is for the user. Just look at the very successful car-sharing service from DriveNow.

7. Enable responsible actions

Sustainability has been recognised by many thought leaders as the most important aspect to focus on. But sustainable services not only mean dealing with environmental issues but also taking into account economic and social wellbeing. The more a service can enable a customer to take responsible actions, the bigger the impact will be on society, the economy, or the environment. AlertMe.com is an excellent start in the right direction.

8. Foster co-creation

Last, but not least, fostering co-creation in services will empower individuals to fulfil their need for self-actualisation. Empowering individuals to co-create experiences and to be part of shaping the service o ering that they will enjoy will make the service more relevant and targeted to its audience. Spotify.com shows how well this can work in practice.

Whilst delivering experiences often means short-term engagements with customers, businesses are increasingly asking themselves how they can deliver services that establish lasting customer relationships. The eight ingredients we have identified are a step in the right direction, but they also require a complete shift in thinking. How do we get customers to go beyond ‘I love my iPhone’, to ‘I love my health insurance’, acknowledging the positive impact of that service on their lives?

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

In this sense, our ambition is to dream:

Future business success will be counted in impactful transformations rather than nancial transactions.