Service Design for Business

Speech given at LiveWork's launch of their new book "Service Design for Business" at DOGA 4th April 2016.

I am delighted to be here today in cooperation with two partners of Center for Service Innovation (CSI) at Norwegian School of Economics: DOGA and LiveWorks. Both are doing excellent work on developing and disseminating new knowledge and insights - as evidenced by LiveWork's new book and this DOGA-seminar.

Todays topic - Design thinking for business - is important, relevant, and interesting. From CSI`s business partners we learn that design thinking and service design is in high demand. However, at AHO, a research partner of CSI, Dean Ole Gustavsen, tells me that there is room for more students to enroll in the Service design program or courses.  This is a paradox knowing that in most developed economies, the service sector constitutes 70 to 80 per cent of the GDP. In other words, the goods and manufacturing sector is only 30% of most nations´ GDP. Why educate and train yourself for a declining sector?

My point of departure is that the purpose of any firm or organization is to create, communicate, and capture value and that customers are more important than shareholders. With this as a backdrop, I have three reflections pertaining to design thinking and service design that I would like to share with you today.

My first reflection is that design thinking is an alternative approach to complex problem solving. 

In business schools we train our students in an analytical approach to problem solving and decision making based on theory and financial numbers. Through case teaching we expose our students to numerous business cases where pattern recognition is central to learning and problem solving. A structured, analytical, and hierarchical approach to problem solving is not necessarily the best approach. Design thinking is an alternative to this approach - an approach I think business schools can learn from.

My second reflection is that service design is a way of working and by many academics and designers, hugely misunderstood. 

In marketing an alternative view to a goods dominant logic - service dominant logic - is gaining ground. Prof Stephen Vargo, who is one of the two founding fathers og SD logic, states in an interview that he is concerned about service design because it has an embedded goods logic in its approach. As most designers have a goods training, I tend to agree. In my experience, service design is holistic (blending all 7 Ps) and focused on the end-result: 

• customers´ behaviour (e.g. adoption and retention)
• state of mind (e.g. positive attitude and customer delight)
• emotional status (e.g. aroused or sleepy). 

Service design is so much more than form, function, and color. It is designing the entire experience with a defined end-result in mind.

My third reflection is more substantive and related to design thinking and service design's decoupling from business performance, measurement, and theory. 

In my mind we are beyond the point where the field needs to justify its existence. Business has adopted it (as evidenced by consulting firms buying up design firms, companies developing their own skills and competences, and Harvard B-school offering a course on design thinking to their MBAs) but CxOs are looking for evidence of impact of design thinking and service design on important customer variables and business performance. 

But to offer such evidence we need to be able to measure the effects (if any) on key variables. My reflection is that there is no or only limited culture for measuring service design or designing studies that will disclose any correlations between key constructs. How do we know that the proposed solution will work and is the best if we do not measure ex or post ante?

In numerous design lectures I have asked the presenters for the theoretical foundation for their thinking - hoping to link it to something that can assist me in my understanding. I am sorry to say that I am still waiting for a good answer. Design thinking and service design's goal is to make a service more efficient or effective. For increased efficiency, designing for higher degree of customer participation, is one option. But what are potential responses to increased customer input to coproduction or value creation? If designing for effectiveness, how do we know that we are triggering the "right" emotional responses for cognition, attitude, and behavior? To me the ultimate goal would be to perform a brain scan to see or detect different responses to various design stimuli!

In conclusion: My prediction is as follows: while design schools have given us design as an approach to problem solving and way of working, business schools will give us the link to business performance and thus make it an important approach and tool for managers in their effort to create value for customers. While this may sound provocative, it is what will make the field sustainable and not a fad.