Platform Innovation in Service Design

As a service design leader and business strategist, I am focused on how to deliver services to customers in increasingly volatile and uncertain times, where incumbent businesses and organisations are facing disruption from new start-ups and traditional competitors using new technology and operating models to deliver new value propositions.

McKinsey recently identified that there are a number of reasons for this; firstly customers are increasingly savvy, informed and expect more. These expectations are often characterised by radically shifting markets and trend changes. The other is that executives have to strategise for increasingly complex landscapes in technologies, operations, and processes (featuring both both regulatory and policy compliance pressures), and we are seeing seismic shifts in sectors such as energy, health and commerce. At the same time we have had unexpected disruption to social norms due to the COVID crisis.

These demand significant shifts in the way B2B and B2C businesses deliver value and is fundamentally transforming what "services” can achieve. For example, recent research by McKinsey found that 45% of employee activities can be automated by adopting current technologies. Digital technologies and transformation imperatives are calling into question how businesses operate and how they use their platform operations as enablers to deliver new products and services, while delivering best-in-class customer experiences.

Increasingly organisations, both commercial and government are looking at platform innovation as a way to deliver services and products to people and other organisations as they compete in the experience and service economy. Platform innovation refers to?changes in support structures that increase the effectiveness with which a group of activities may be performed. Product platform innovation entails changes to the common components and body of knowledge that may be redeployed to deliver new products and services where the primary concern of change initiatives in digital transformation is to unlock value in the business, exploit marketplace opportunities and deliver benefits and value adds to the customer.

Many of the world’s most successful organisations in the service economy did not exist two decades ago, while some are less than ten years old. I refer to these 'native innovators' as ‘Asymmetrical Disruptors' that often have first-mover advantage by using lean start-up principles, human centred design, service design and systems thinking.

'Asymmetrical Disruptors' do not use models rooted in expertise and silos typified by incumbents known as?'Symmetrical' organisations that are typified by centralised and highly hierarchical command and control leadership. 'Asymmetrical' organisations use decentralised leadership models that provide a decision-making mandate to teams allowing them to respond quickly to change imperatives using lean approaches and agile delivery trains. Successful digital transformation requires 'Asymmetrical' behaviours with decentralised and distributed decision-making where the organisation is able to learn quickly and reconfigure its resources and activities that together define the core of a new digital enterprise.

One approach these new disruptors use is?Service Design, an approach that has shared principles common to both systems theory and design thinking that applies them to define and solve complex challenges relating to customers needs, the experiences they seek, their interactions in an ecosystem, organisational behaviours, business processes, the use of information technology systems and the use of data to deliver services.

It is hard to separate a service from the technology that enables it, while digital technology provides a means to entirely rethink and create new value propositions and new business models. This has given users of a service unprecedented convenience, choice and control and blurs the boundaries between products and services. At the same time ever increasing customer expectations pose a huge challenge for businesses. Customer expectations now are set by the best digital experience from any industry, and companies have to conceive, design and deliver world-class, future-proof digital experiences at scale and speed. However, 'Symmetrical incumbents have to do that inter organisations that are encumbered with cultural, behavioural and technological legacy.?

Organisations create value for customers by addressing their expectations, in meeting their needs and delivering value, and in return, value is captured in the form of commercial benefits; the money people are willing to spend. As we have shifted from selling tangible products, where a business offers value-in-exchange, to now offering intangible services, where there is a shift to value-in-use. This demands new approaches to how we identify opportunities to create value and identify change candidates in the transformation of the business or organisation. This shift in value creation and capture is determined by a huge range of interdependent factors. As change agents, we must consider how best to deal with these complexities and entangled ecosystems. This is where 'Service Design' as a set of practices, using system thinking that is creative action-oriented together and generative, can be used to identify, analyse and understand these interdependencies and to maximise their potential to generate value for the business while creating highly desirable offerings we can sell to customers. At its core service design is the activity of planning and organising people, infrastructure, communication and material components of a service in order to improve its quality and the interaction between the service provider and its users. (G. Lynn Shostack, 1982). Service design may function as a way to inform changes to an existing service or create a new service entirely.?

Service Design is an approach that enables us to tackle highly complex business and organisational challenges to create user-centric and innovative solutions in the service-product continuum by applying a range of methods and processes that are different from the approaches we have used in the past to develop new value propositions and business models. Service Design takes a holistic, end-to-end, front-to-back approach by addressing more than just the ‘Front Stage’ customer experience. It also considers the re-design of the whole organisation including the platform and the ‘Back Stage’ processes, operations, technology and supporting systems as well as 'culture' required to deliver the service?experience.?

The Service Quadrants Innovation Model?(SQIM)

The Service Quadrant Innovation Model enables teams involved in designing and developing services, as part of a digital transformation process to identify change candidates based value domains in four distinct clusters. These four clusters of related activities become our focus for design and innovation where change candidates can be found and value created.?The top two quadrants are focused on the 'experience' and two lower quadrants are focused on the 'platform'.?These two halves can be mapped to the two Stage Model used in service blueprinting, an approach used in service design.?

A key part of identifying opportunity is realising value, and then identifying change candidates that unlock value, or deliver new value. The Service Value Chain is a model which identifies value domains in a model I have called the 'Service Quadrants Innovation Model' (or SQIM) where an organisation can identify change candidates in the front-stage (experience) to the back-stage(platform). In the Service Quadrant Innovation Model we focus on four value quadrants to identify change candidates.

The four quadrants consist of:

The Offering Quadrant?

The Offering Quadrant?is concerned with the value propositions, products and support you offer to customers. An offering is more than a product or service itself and includes elements that represent additional value to your customers, such as, usability, quality of content and the brand.?

The Delivery Quadrant

The Delivery Quadrant is how an organisation delivers products and services to its customers through touchpoints, support, marketing and the channels it uses to engage with, communicate and reach its customers.

The Business Quadrant?

The Business Quadrant is concerned with people and culture, management, policies, rules and ethics that drive its activities as well as its commercial mechanisms that are focused on the way the organisation generates income, incurs costs and makes profit.?

The Systems Quadrant?

The System Quadrant is concerned with the business operations, suppliers, partners and their relationships and ability to generate value for the organisation using digital and information technologies, related systems and how the organisation collects and processes uses data.

The Service Value Chain

The Service Value Chain runs end-to-end, from the back-stage to the front stage. Service design is concerned with unlocking or creating value from sets of activities that an organisations uses to deliver a desirable, viable and feasible offerings. Originally the value chain concept comes from business management and was first described by Michael Porter in 'Competitive Advantage: Creating and Sustaining Superior Performance' (1985) and using service design practices we can identify value and change candidates. The Service value chain consists of:

Usability moves from customer focused to experience led by synching business models to customer journeys while capitalizing on the explosion of real-time customer data.

Products A digital product is any product you sell online that doesn’t have physical form or substance.?

Brand is concerend with the identify, values and strategy of the brand, its relevancy and authenticity.

Touchpoints are the points of contact between the user and the service, for example the counter at the bank or an ATM machine. It is any way a consumer can interact with a business, whether it be person-to-person, through a website, an app or any form of communication

Operations are business practices to create the highest level of efficiency possible within an organization. It is concerned with converting materials and labor into goods and services as efficiently as possible to maximize the profit of an organization. Operations are continually refined and enhanced while new approaches are explored.

Enterprise Systems are large-scale software packages that are able to track and control all of the complex operations of a business. These systems are used to help automate the business and make reporting and decision making easier.?In our model quadrant innovation model we are concerned with moving from industrial to multi-speed information technology systems, by applying?agile development methods with a shift to open source solutions and born-in the cloud applications.

Suppliers are part of connected ecosystems where risk and reward is shared and there is a mutually rewarding relationship. Suppliers are contributors to the value chain that can be adapted quickly with minimal negative impact to take advantage of new opportunities and changing circumstances.?

Data is like oil and its value lies in being able to collect, process and extract insight at speed. We are moving from retrospective analysis to real time processing by capitalizing on the explosion of customer and operational data along with the availability of advanced analytics and processing power to proactively act on that data to anticipate need.?

Marketing has rapidly moved from?from imprecise mass media to precise engagement and attributable outcomes using converged media in the PESO model. Attribution marketing capitalizes on the central role of digital, the explosion of real-time customer data and the emergence of new exchange models for media buying.

Channels offer different ways to engage with the customer using an omni-channel approach that enables the customer to engage in a way that suits them depending on their context and preferences.

Support provides knowledge about, and facilitates optimal use of, products and services ensuring accessibility and maximum benefit for the customer.

People is concered with the skills, comentencies and roles in an organisation. People are hired to perform tasks and to work together in a way that esnured an organisation is able to function. There is a focus on inclusion and diversty as well as supporting people to develop in their careers.?

Culture refers to the beliefs and behaviors that determine how a company’s employees and management interact and handle outside business transactions. Often, corporate culture is implied, not expressly defined, and develops organically over time from the cumulative traits of the people the company hires.

Processes refers to the business processes, methods or business functions that are a collection of related, structured activities or tasks performed with an organisation using people or equipment in which a specific sequence produces a service or product for a customers.

Financials refers to trade and trade-related activities of the business or organisations. Commerce focuses on buying and selling activites in the business. It is concerned with profit and loss, as wellas the way cusotmers purcahse and suppliers are paid.?

These sixteen domains?are?value pools and contain change candidates that areas should be our focus in hunting for value. Importantly these 16 areas consists of their own clusters of change candidates that design, business and tech can identify, prioritise and focus effort.

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