SDGC14 DAY ONE - 9. Redefining Value, to Business and to Society by Nathan Shedroff

SERVICE DESIGN GLOBAL CONFERENCE
October 2014 | Stockholm
redefining value,
to business and to society
Nathan Shedroff

REDEFINING VALUE
TO BUSINESS &
SOCIETY
Nathan Shedro!
nathan.com
California College of the Arts
designmba.org

MAKE I T S O
Interaction Design Lessons from Science Fiction
by NATHAN SHEDROFF & CHRISTOPHER NOESSEL
foreword by Bruce Sterling
Experience Design 1.1
a manifesto for the design of experiences
by Nathan Shedroff
product taxonomies 16
user behavior 116
100 years 22
information 42
takeaways 28
data 36
knowledge 48
subjectivity 78
consistency 96
navigation 84
product taxonomies 16
user behavior 116
experiences 4
experience taxonomies 10
100 years 22
wisdom 54
information 42
takeaways 28
data 36
knowledge 48
subjectivity 78
consistency 96
navigation 84
Design Strategy in Action
Edited by Nathan Shedroff
A publication from the MBA in Design Strategy program
California College of the Arts
2011
Dictionary of
Sustainable Management
2008 Edition

MBA IN DESIGN STRATEGY
MBA IN CIVIC INNOVATION
MBA IN STRATEGIC FORESIGHT

$ £ € ¥
Photo: epsos (Flickr)

$ £ € ¥
function
Photo: bengt-re (Flickr)

(Lifetime Customer Value)
CLV = GC "! - M "
i = 0
n
r i !
function
n
(1 + d) i
i = 1
r i - 1
(1 + d) i - 0.5
GC = gross contribution per customer
M = (relevant) retention costs per customer per year
n = horizon (in years)
r = yearly retention rate
d = yearly discount rate.
Photo: southernfoodwaysalliance (Flickr)

(BRAND)
{ (V/S)b - (V/S)g}* Sales
$ £ € ¥
function
(V/S)b = Enterprise Value / Sales ratio of the firm with the benefit of the brand name
(V/S)g = Enterprise Value / Sales ratio of the firm with the generic product
Let's use as an example branded cereals maker like Kellogg (K) against a generic provider like Ralcorp (RAH).
Value of Kellogg brand name = (1.78 - 1.32)(13846) = $6,369 Million
Thus, (6369/24200) or 26% of the value of the company is derived from brand equity.

meaning
identity
emotion
price
function

meaning
identity
emotion
price
function
Photo: mynameisharsha (Flickr)

meaning
identity
emotion
price
function
Photo: kheelcenter (Flickr)

meaning
identity
emotion
price
function
Photo: gsfc (Flickr)

INTENT
meaning
identity
emotion
price
function
OFFER NEEDS

INTENT
meaning
identity
emotion
price
function
OFFER NEEDS
RELATIONSHIP

INTENT
meaning
identity
emotion
price
function
OFFER NEEDS
EXPERIENCE

INTENT
meaning
identity
emotion
price
function
OFFER NEEDS
EXPERIENCE
user
customer
audience
participant
employee
citizen
company
NGO
agency
brand
family
friend
stranger
user
customer
audience
participant
employee
citizen
company
NGO
agency
brand
family
friend
stranger

QUANTITATIVE QUALITATIVE
meaning
identity
emotion
price
function

QUANTITATIVE QUALITATIVE
meaning
identity
emotion
price
function
++++
= TOTAL VALUE

TOTAL VALUE
(PREMIUM VALUE)
FUNCTIONAL VALUE
+ FINANCIAL VALUE
+ EMOTIONAL VALUE
+ IDENTITY VALUE
+ MEANINGFUL VALUE
=
QUANTITATIVE
QUALITATIVE

FUNCTIONAL VALUE
+ FINANCIAL VALUE
+ EMOTIONAL VALUE
+ IDENTITY VALUE
$1.1B + MEANINGFUL VALUE =
TOTAL VALUE
Instagram

FUNCTIONAL VALUE
$86M
+ FINANCIAL VALUE
+ EMOTIONAL VALUE
+ IDENTITY VALUE
$1.1B + MEANINGFUL VALUE =
TOTAL VALUE
Instagram

FUNCTIONAL VALUE
+ FINANCIAL VALUE
+ EMOTIONAL VALUE
+ IDENTITY VALUE
$1.1B
+ MEANINGFUL VALUE =
TOTAL VALUE
$86M
$1.01B
Instagram

THOSE COMPANIES
(AND PEOPLE)
WHO FOCUS ON
TOTAL VALUE
CREATE MORE OF IT,
MORE OFTEN

THOSE COMPANIES
(AND PEOPLE)
WHO FOCUS ON
PREMIUM VALUE
CREATE MORE OF IT,
MORE OFTEN

YOU’RE IN THE
RELATIONSHIP
BUSINESS

RELATIONSHIPS
ARE STRATEGIC
Photo: yeahbouyee IFlickr)

WE NEED BETTER
TOOLS TO
UNDERSTAND
TOTAL VALUE

WE MUST COLLECT
MORE & NEW
INFORMATION

Time Indicator
Online
Reservation Customer
Table Media-
Touchpoint
Waitress
Cook
Manager
Media-
Touchpoint Role 4 Role 3 Role 2 Role 1
Fail Line
Emotions
+
–
+
–
Media-
Touchpoint
Media-
Touchpoint
00:00
15:00
00:00
02:30
03:30
07:00
08:00
09:00
15:00
35:00
35:30
37:00
38:30
41:00
50:00
50:30
01:15:00
01:17:00
Confirmation by SMS
Enter restaurant, short wait
at reception
Order Aperetiv
Given menu
Aperetiv comes with extras
Guest is surprised/deligted
Food is served
Wrong side dish.
Guest complains
Correct dish served
Guest is satisfied again
Waitress greets guest and
leads them to table
Waitress takes the food
order
Food order sent through to
kitchen
Message and dish sent back
to kitchen
Kellner streicht einen Teil
der Rechnung
Meal Prepared
Communication
failure in kitchen
Chef agitated and other
meals pushed late in order
to re-do side-dish.
Correct side-dish prepared

Qualitative Research
Techniques:
Interviews
Careful Surveys
Shadowing
Laddering
Games, etc.
Book: The Meaning of Things
by Mihaly Csikszentmihalyi

Flavor
Bright/
Saturated
Hard,
Artificial,
Natural
Curvaceous/
Smooth,
Solid,
Sharp/Pointed
Loud,
Simple/Clear,
Musical/Melodious,
Mechanical
Musky,
Bright,
Alcohol,
Forest/Plants
Meaty,
Salty
Accomplishment Triggers
Color Materials Form Sound Aroma

Flavor
Community Triggers
Primary Hard Complex Loud Forest/Plants Sweet - Sugar

Flavor
Muted/
Desaturated Plastic
Porous Natural/Organic Natural,
Floral Salty
Harmony Triggers

BUSINESS MODEL:
With these new elements of experience, are their threats to your gurrent
business model?
EXPERIENCE WORKBOOK
Are there new opportunities?
OBSERVATIONS AND
OPPORTUNITIES IN
EXPERIENCE DESIGN
CCA LEADING BY DESIGN
FELLOWS PROGRAM
www.cca.edu/fellowsprogram
15
THE 6 DIMENSIONS OF EXPERIENCE:
There are 6 dimensions of every experience, whether these are natural or
man-made adn whether these are business-oriented to not. This workbook
will help you explore and analyze the experiences around you and aide
you in developing better experiences for customers.
SIGNIFICANCE
Meaning
Status/Identity
Emotions/Lifestyle
Price/Value
Function
DURATION (TIME)
Initiation
Immersion
Conclusion
Continuation
TRIGGERS
Sight
Sound
Smell
Taste
Touch
Concepts
Symbols
BREADTH
Prodcut
Service
Brand
Name
Channel/Environment
Promotion
Price
INTENSITY
Reflex
Habit
Engagement
INTERACTION
Static
Passive
Active
Interactive
EXPERIENCE OBSERVATION
For each of the dimensions above, observe your customers/users/audience
when and where they experience needs and current solutions.
INTENSITY
Is the experience...
REFLEX? HABIT? ENGAGEMENT?
If so, there is likely no design
opportunity.
If so, can this experience be
turned into an engagement
experience?
This is where the vast number
of opportunities lie.
DURATION (TIME)
opportunity.
experience?
1 14
designmba.org/open-source-curricula

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T<=(© SCANSION 2014

EXPERIENCE
AFFECTS “STATE OF MIND”

STATE OF MIND (SOM) IS
WHAT YOU FEEL AND
THINKING AT ANY MOMENT

Response Response
Response
Stimuli

State of Mind:
Memory
Emotions
Perceptual Bias
Behavioral Response
Mental Models

State of Mind:
Memory
Emotions
Perceptual Bias
Behavioral Response
Mental Models
Stimuli:
Sights
Sounds
Smells
Tastes
Touch
Concepts
Symbols

State of Mind:
Memory
Emotions
Perceptual Bias
Behavioral Response
Mental Models
(Triggers)

Core Meanings
State of Mind:
Memory
Emotions
Perceptual Bias
Behavioral Response
Mental Models

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JOURNEY MAP vs WAVELINE
• Maps touchpoints
• Maps functions
• Design 4 touchpts
• Maps experiences
(“change in people”)
• Maps emotions,
values & meaning
• Maps value
(and, opportunities)
• Can map triggers
• Places opportunities
in context and time
• Design 4 relationships

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Trepidation
Boredom
Frustration
Anger
Hope
Relief
Frustration
Contempt

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STRATEGIC MEANING ALIGNMENT
Corporate
Decision Drivers
Security
Community
Accomplishment
Team
Decision
Drivers
Customer
Decision
Drivers
Competitors’
Decision Drivers
Strategic Focus
Community
Wonder
Security
Accomplishment
Security
Wonder

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FREEDOM
BUSINESS MODEL:
With these new elements of experience, are their threats to your gurrent
business model?
EXPERIENCE WORKBOOK
Are there new opportunities?
OBSERVATIONS AND
OPPORTUNITIES IN
EXPERIENCE DESIGN
CCA LEADING BY DESIGN
FELLOWS PROGRAM
www.cca.edu/fellowsprogram
EXPERIENCE OBSERVATION
Community Triggers
15
THE 6 DIMENSIONS OF EXPERIENCE:
There are 6 dimensions of every experience, whether these are natural or
man-made adn whether these are business-oriented to not. This workbook
will help you explore and analyze the experiences around you and aide
you in developing better experiences for customers.
SIGNIFICANCE
Meaning
Status/Identity
Emotions/Lifestyle
Price/Value
Function
DURATION (TIME)
Initiation
Immersion
Conclusion
Continuation
TRIGGERS
Sight
Sound
Smell
Taste
Touch
Concepts
Symbols
BREADTH
Prodcut
Service
Brand
Name
Channel/Environment
Promotion
Price
INTENSITY
Reflex
Habit
Engagement
INTERACTION
Static
Passive
Active
Interactive
For each of the dimensions above, observe your customers/users/audience
when and where they experience needs and current solutions.
INTENSITY
opportunity.
experience?
DURATION (TIME)
opportunity.
experience?
1 14
Flavor
Primary Hard Complex Loud Forest/Plants Sweet - Sugar

THANK YOU
nathan@nathan.com
@nathanshedroff
designmba.org

SDGC14 DAY ONE - 9. Redefining Value, to Business and to Society by Nathan Shedroff

SDGC14 DAY ONE - 9. Redefining Value, to Business and to Society by Nathan Shedroff

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SDGC14 DAY ONE - 9. Redefining Value, to Business and to Society by Nathan Shedroff