What is Service Design? How does it support innovation and change?

Deloitte Digital Blog

Switzerland, Sweden and The Netherlands have been ranked in top ten of the newest Global Innovation Index. Among the 127 surveyed economies, Poland holds the 38th place, up by eight places compared to 2013. From the EU perspective, though, Poland still lacks innovation and is ranked 25th among the 28 member states, lower than Bulgaria, Slovakia or the Czech Republic, our regional leader.

Despite recent law amendments, Polish firms are lagging behind in terms of funding R&D expenses. They prefer importing innovations from abroad and implementing them in Poland instead of working on their own. Their understanding of innovation is limited to technology and focused on products alone, missing the entire ecosystem, ignoring the need of searching for comprehensive, holistic solutions

How to support innovations?

Businesses need to learn innovating, although implementation of new solutions may be risky, difficult and bring unpredictable effects. In the beginning, performance may be lower than expected, or different, but mistakes are good teachers. Using proven methods, we can mitigate risks and learn faster.

Innovation does not “happen”; it is not the question of money, either. In order to prepare ground for innovation, an organization should focus on changing its own business and make it client-centric, developing creativity-fostering environment for its employees, at the same time giving them enough time and relevant tools.

Innovation stems from actual needs of people, which are defined based on observation, research, brainstorming and on testing of new ideas. The approach reduces the risk related to new solutions and increases the probability of success.

Adopting a broader perspective

Client needs should be balanced with what is technologically viable and feasible for an organization, what can bring value and open up new market opportunities. Technologies and products alone, though, will not result in truly competitive solutions. What we need is a broader approach, providing clients with comprehensive, friendly and useful services with products being just a stage in the entire process. The Service Design, being such a comprehensive methodology, refers to such disciplines as Design Thinking or Human-Centered Design, which are focused on clients’ needs and adopt a broad view of the entire organization.

What is Service Design?

It is an approach invented after WWII and fully developed in the 1980s, whose purpose is to design and improve the relation between service suppliers and clients. It focuses on understanding of client’s needs, planning of activities and proper organizing of all human and non-human resources. It is founded on the assumption that the entire organization is involved in the process; the holistic approach, integrated with corporate strategy, allows providing top quality services to clients.

Product/service dependence

In principle, Service Design does not separate products from services, treating the former as an integral part of the entire process. Therefore, it may support all innovative solutions, both in the form of products and services. When assessing a restaurant, we do not focus on the quality of food only, paying attention to the entire experience, from the moment of booking a table all the way through paying the bill and leaving, considering waiter’s behavior, interior design, taste of food and the time we waited to be served. The complete service includes all these elements, the product (in this case, our meal), being just one of them.

No products occur in a void; their success is contributed to by a number of accompanying factors. Knowing the rule is the prerequisite of winning long-term competitive advantage. A well-designed service builds positive relationship with clients as early as they signal their needs prior to actually purchasing anything. The positive experience should be maintained all the way after buying a service or a product. Post-sales relations are equally important as pre-sales ones as they impact further clients’ decisions.

Service Design is a process

Its initial steps include a status quo analysis of business environment, formulating a business hypothesis, developing a vision and a value proposition.  Then, all assumptions are verified with a control group.  Material conclusions result from interviews, ethnographic surveys or quantitative data analyses.  Then, a map of relationships is developed, including all touch points, which are evaluated in terms of quality and value. The analysis includes both a direct relation with a client and the entire mechanism underlying the provided service.  Service Blueprint, a document including the current status assessment, a new service prototype, change strategy and new process efficiency indicators is the final deliverable.

Benefits for the organization

Design Value Index (DVI) tracks the value of 16 largest publicly traded businesses (such as Apple, Nike or SAP), which have built best Design Thinking or Service Design practices into their corporate strategies. Over last ten years, profit on investments in these companies has outgrown that on all S&P500 index ones by 200 percent. This is the best illustration of the importance of the design approach in innovation, indicating the contribution of well-designed products and services to overall business success and to maintaining long-term positive relations with clients, who then become brand ambassadors, replacing the purely consumptional approach with more emotional one.

The design process itself changes the organization, which opens up to innovation, appreciating both success and failure. As employees understand the new tools and use them in their routine activities, they see the benefits of observation and research, of making hypotheses and verifying them. All these factors contribute to business success, translating into profit, thus providing opportunities for more innovations.

Polish companies should not miss the opportunity and embrace both Design Thinking and Service Design. Although Polish business environment has undergone substantial changes for last 20 years, we still cannot adopt the design-based approach, being oblivious to the need to improve products or services, not understanding innovation and treating it as an end it itself as opposite to an opportunity for substantial improvement. Innovation and its purposeful utilization is the key to our future success on the European market.