Service Systems, Value Propositions and Service Innovation

1. 10/26/11
Prepared for
SJSU International & Extended Studies
IT group, Russian Federation
October 26th, 2011
A Framework for Service Science and Some Research Challenges
Service Science is short for Service Science, Management,
Engineering and Design (SSMED1).
Service Science is concerned with the study of Service Systems.
cf. Computer Science is concerned with the study of Computer Systems.
Service Systems are man-made complex systems designed to
improve the quality of life by co-creating value through value
propositions among the stake-holders.
1 Spohrer, J., Kwan, S.K. “Service Science, Management, Engineering, and Design (SSMED): An Emerging
Discipline – Outline and References”, International Journal of Information Systems in the Service Sector, 1(3),
2009.
Kwan
2011
2
1

2. 10/26/11
A Service
System is
Complex
3
A Service System and Its Entities
1Kwan, S. K. & Min, J. H. (2008) “An Evolutionary Framework of Service Systems”.
Presented at the International Conference on Service Science, Beijing, China, April 17-18.
Kwan
2011
4
2

3. 10/26/11
Service
System A
Service
System B
Service Service
System E System C
Service
System D
Service
System F
Kwan
2011
5
Service
System A
Service
System B
Service Service
System E System C
Service
System D
Service
System F
Kwan
2011
6
3

4. 10/26/11
Employees &
Stockholders
Community
Partners
Service System Competition
Society
Kwan
2011
7
Service Management
Fitzsimmons & Fitzsimmons Employees & Capacity
Stockholders & Manpower
Planning,
Community Training
Facility
Location
& Design
Partners
Social
Networking Competition
Competitive
Customer Service Strategy
Market
Segmentation Flow & Concept Operating
Society Service Realized Strategy
Delivery
Kwan
2011
8
4

5. 10/26/11
Employees &
Stockholders
Community
Partners
Service System Competition
Society
Kwan
2011
9
Service Provider’s Back Stage Support
Back
Stage
Processes
Information
Technology
Platform
Front
Stage
Front Stage Processes
ITSM – Management of the Processes
Service Computing
and Infrastructure of IT Services
(e.g., SOA)
1 Kwan, S. K. & Hefley, B., “Service Systems”, 2008.
Kwan
2011
10
5

6. 10/26/11
Stage 1: Value Chain
Value Proposition
Focal
Relationship
5 Kwan, S. K. & Yuan, S. T. ”Customer-Driven Value Co-Creation in Service Networks”, to appear in Demirkan, H.,
Spohrer, J.C. and Krishna, V. ed., The Science of Service Systems, volume in Service Science: Research and Innovation
(SSRI) in the Service Economy series, Springer, 2010.
Kwan
2011
11
Value Proposition
Focal
Relationship
Value Proposition
cf. ICT-enabled service networks,
mobile applications, etc.
Kwan
2011
12
6

7. 10/26/11
Service System/Network
1. People
2. Technology
3. Shared Information
from Jim Spohrer 4. Organizations
connected by value propositions
Kwan
2011
13
Value Proposition
Focal
Relationship
Value
Proposition
Kwan
2011
7

8. 10/26/11
Their Friends
TV Programs
Ad’s and “Buy Me”
Target Audience
Illustration from:
Vascellaro, J. A. “Video’s
Product Placements New Friends”, The Wall
Street Journal, February
28, 2008.
Kwan
2011
15
Value Proposition
Focal
Relationship
Value
Value
Proposition
Proposition
Kwan
2011
8

9. 10/26/11
Provider’s Value System












Opportunities for


Value Co-Creation

Customer’s
★
Value System
★ ★
★
★
★
★
★
His Customer’s Value System
Kwan
2011
17
s Maslow’s
ns ion Hierarchy
ime Of Needs
Service Provider u eD
Val
Intr
Society Hedonic
i
Stakeholders
nsi
So
En
Spiritual
So
ci
c
Cultural
vi
Community
Po
al
ci
Corporal
ron
eta
litic
Emotional
Employees
Eco
me
l
Intellectual
a
Familial….
l
nta
n
Stockholders A point in this 3-D space is
om
l
ic
Partners a Potential Value
Customers Proposition
1
Stage 2
s of Cu
stome 3 4
r Emp
ow ermen
t
Kwan
2011
18
9

10. 10/26/11
Estimated China Per Capita National Income
25000
20000
20000
15000
10000
8500
5000
4400
0
350
1000
1990
2000
2010
2020
2030
Disposable
Income &
Desire for
Services
Needs
vs.
Wants
Kwan
2011
19
Me es
The Customer
Ru m
Sc ty ty o
Qu oba
tric
have a lot of VP’s
Pr sts its xpe
l
he
ali bili
Co nef e E
s
to choose from
Be rvic
a
Se
fS
uc
ce
rie
ss
nc
e
Service Level Agreement?
Kwan
2011
20
10

11. 10/26/11
Customers
Service Provider
Stockholders
Partners
Community
Employees
Customers
Partners
Service Provider
Society
Service Provider
Society ?
Community
Employees
Stockholders
Partners
Customers
Kwan
2011
21
Kwan
2011
22
11

12. 10/26/11
Value Proposition
Kwan
2011
23
Value Proposition
Community/
Social
Network A Shared
Experience
Kwan
2011
24
12

13. 10/26/11
Value Proposition
Community/
Social
Network A Shared
Experience
Kwan
2011
25
Value
Proposition
Value Proposition
Kwan
2011
26
13

14. 10/26/11
Kwan
2011
27
Kwan
2011
28
14

15. 10/26/11
Kwan
2011
29
Kwan
2011
30
15

16. 10/26/11
Kwan
2011
31
“There are no such things as service
industries. There are only industries
whose service components are greater or
lesser than those of other industries.
Everybody is in service.”
Theodore Levitt, “Production-line Approach to
Service”, Harvard Business Review, Sept/Oct 1972.
Kwan
2011
32
16

17. 10/26/11
James Teboul, Service is Front Stage, Palgrave MacMillan, 2006.
Kwan
2011
33
James Teboul, Service is Front Stage, Palgrave MacMillan, 2006.
34
Kwan
2011
17

18. 10/26/11
Product Service
“Servitization”
“Productization”
Kwan
2011
35
Services Transformation and Innovation Group LLC www.servtrans.com
36
Kwan
2011
18

19. 10/26/11
혁신
Innovation resides at the intersection
of invention and insight, leading to the
creation of social and economic value.
National Innovation Initiative
CREATING Innovation can happen
SOMETHING anywhere on the Value Chain!
(business model, organization,
NEW environment, process, technology, etc.)
Kwan
2011
37
“Creativity can be taught.
Innovation can be learned.”
David Blakeley, Director
“Incremental Innovation vs.
Radical Innovation”
Judy Estrin
“Closing the Innovation Gap”
Kwan
2011
38
19

20. 10/26/11
Radical Innovations
 Major Innovation: new service that customers did not
know they needed.
 Start-up Business: new service for underserved market.
 New Services for the Market Presently Served: new
services to customers of an organization.
Incremental Innovations
 Service Line Extensions: augmentation of existing service
line.
 Service Improvements: changes in service delivery
process.
 Style Changes: modest visible changes in appearances.
Kwan
2011
39
© Cockayne and Carleton
Kwan
2011
40
20

21. 10/26/11
Kwan
2011
41
Kwan
2011
42
21

22. 10/26/11
Service System Framework
& Service System Networks
Foresight and Innovation Method
Value Propositions
& Service Patterns
© Cockayne and Carleton
Kwan
&
Müller-­‐Gorchs
2011
43
Service System Framework
& Service System Networks Foresight and Innovation Method © Cockayne and Carleton
Process
Chain
Network
Diagram
UI Prototyping
UML – Use
Value Propositions Cases
& Service Patterns
BPMN Work
System
MANGA
Story Service Blueprint
Boards
Kwan
&
Müller-­‐Gorchs
2011
44
22

23. 10/26/11
Prepared for
SJSU International & Extended Studies
IT group, Russian Federation
October 26th, 2011
23