Innovation in Services

BOTH LARGE ORGANISATIONS AND START-UPS NEED TO THINK ABOUT NEW WAYS TO OFFER SERVICES. IN THIS SESSION KAMALINI WILL SHARE HER RESEARCH,

HIGHLIGHTING OPPORTUNITIES THAT EXIST THROUGH INNOVATING DIFFERENT ASPECTS OF A SERVICE, INCLUDING THE SERVICE PRODUCT AND THE WAY IN WHICH

IT IS DELIVERED.

Kamalini Ramdas The Deloitte Professor in Innovation and Entrepreneurship and

Professor of Management Science and Operations

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Innovation in Services

ValueValue

One-on-One

One-on-Many

Many-on-One

Many-on-Many

Virtual

ValueValue

One-on-One

One-on-Many

Many-on-One

Many-on-Many

Virtual

Copyright Ramdas, Teisberg & Tucker 2012

Harvard Business Review, Forthcoming

KAMALINI RAMDAS

Copyright Ramdas, Teisberg & Tucker 2012

Harvard Business Review, Forthcoming

Does higher quality or wider access imply higher cost in your current service model?

Pricing/Product Support

Delivery Mix

Service Product

Service Structure

How does the client experience the service encounter?

Service Boundary

What is the client’s trueunderlying need?

Service Organization

What organization and timing of tasks creates highest value for the client?

Service Location

Where would the client be best served?

Does the information you share with one client become less or more valuable if another client has it?

Can your clients learn from or support each other?

Do your clients need multiple types of expertise in the service?

Which parts of the service can only your organization do?

Can your client or a third party do some aspects of the service better than you?

Where are the frustrations with coordination or communication?

Does everyone think the solution to the problem is IT?

What are the barriers to better client results and who, if anyone, currently offers those services?

What parts of the service are not delivered or tend to get lost or forgotten?

What tasks do you do each day?

Which of these can be done by someone who doesn’t have your level of experience and expertise?

Which of these can be done better by someone else?

Who can do those tasks?

How mobile are the people, information and equipment that the service requires?

How many locations does your client or service provider go to each week?

How much time is spent in transit vs. providing service?

Where does inconvenience or inefficiency occur now?

Does higher quality or wider access imply higher cost in your current service model?

Pricing/Product Support

Delivery Mix

Service Product

Service Structure

How does the client experience the service encounter?

Service Boundary

What is the client’s trueunderlying need?

Service Organization

What organization and timing of tasks creates highest value for the client?

Service Location

Where would the client be best served?

Does the information you share with one client become less or more valuable if another client has it?

Can your clients learn from or support each other?

Do your clients need multiple types of expertise in the service?

Which parts of the service can only your organization do?

Can your client or a third party do some aspects of the service better than you?

Where are the frustrations with coordination or communication?

Does everyone think the solution to the problem is IT?

What are the barriers to better client results and who, if anyone, currently offers those services?

What parts of the service are not delivered or tend to get lost or forgotten?

What tasks do you do each day?

Which of these can be done by someone who doesn’t have your level of experience and expertise?

Which of these can be done better by someone else?

Who can do those tasks?

How mobile are the people, information and equipment that the service requires?

How many locations does your client or service provider go to each week?

How much time is spent in transit vs. providing service?

Where does inconvenience or inefficiency occur now?

Kamalini Ramdas

Systematic creativity is widely used to generate successful new product ideas

Unearth Patterns Understand why/when/where a pattern works

Translate to other contexts

Move Upmarket

Different Industry

Different Geography

Kamalini Ramdas

Can we find patterns in business models?

Kamalini Ramdas

The Theory of a Business

Revenue Model

Price

Volume (market Size)

Ancillary Sales

Cost Structure

Direct, Indirect costs

Economies of scale and scope

Resource Velocity

Rate of value output

Lead times, turns, throughput, utilization

Riskiness of Revenues, Costs and Resource Velocity

Sensitivity of profits to changes in price, volume, costs, resource utilization

Assortment, Pricing

Production Sales Markdowns

Time

Receivables

TIMELINE OF EVENTS (e.g. RETAIL)

PROFIT FORMULA

RISK EXPOSURE

Revenue Model

Price

Volume (market Size)

Ancillary Sales

Cost Structure

Direct, Indirect costs

Economies of scale and scope

Resource Velocity

Rate of value output

Lead times, turns, throughput, utilization

PROFIT FORMULA

(based on Johnson et al 2008 & Girotra & Netessine 2011)

Kamalini Ramdas

INNOVATING THE RISK EXPOSURE IN PARTNERSHIPS…

Revenue Model

Price

Volume (market Size)

Ancillary Sales

Cost Structure

Direct, Indirect costs

Economies of scale and scope

Resource Velocity

Rate of value output

Lead times, turns, throughput, utilization

PROFIT FORMULA

Assortment, Pricing

Production Sales Markdowns

Time

Receivables

TIMELINE OF EVENTS

Riskiness of Revenues, Costs and Resource Velocity

Sensitivity of profits to changes in price, volume, costs, resource utilization

RISK EXPOSURE

(based on Johnson et al 2008 & Girotra & Netessine 2011)

Kamalini Ramdas

Can we reduce risk by managing relationships?

Kamalini Ramdas

INNOVATING THE TIMELINE – PLACING BETS AFTER GETTING INFORMATION

Revenue Model

Price

Volume (market Size)

Ancillary Sales

Cost Structure

Direct, Indirect costs

Economies of scale and scope

Resource Velocity

Rate of value output

Lead times, turns, throughput, utilization

PROFIT FORMULA

Assortment, Pricing

Production Sales Markdowns

Time

Receivables

TIMELINE OF EVENTS

Riskiness of Revenues, Costs and Resource Velocity

Sensitivity of profits to changes in price, volume, costs, resource utilization

RISK EXPOSURE

(based on Johnson et al 2008 & Girotra & Netessine 2011)

Kamalini Ramdas

Can we flip the timeline so that we have better

information before placing bets?

Kamalini Ramdas

Still need to go from free form brainstorming to a single service concept

Kamalini Ramdas

The journey to a final service concept

Kamalini Ramdas

Experience Modeling: The Common Cold

Something

feels

different

Getting a cold

Have a cold

Getting

over

a cold

Feeling better

Aromatherapy

Hydrotherapy

Feeling good

Based on research done at E-Labs

Kamalini Ramdas

Steps in Experience Modeling

► Gather detailed multi-media data on individual users

► Display data visually and focus on identifying patterns

►Collapse data into broad conceptual categories

► Identify time trends such as phases of the experience

Based on research done at E-Labs

Kamalini Ramdas

Whose Life is This?

A Service Innovation Exercise

Kamalini Ramdas

Exercise

► Form a group

► Pick one person in the set of pictures whose life you will analyze

► Develop a “bug” list for your chosen person based on the information in all of the pictures

► Based on your bug list and your assigned service industry, come up with new service concepts for your chosen person, particularly service concepts that use your company’s core capabilities

► Pick the best, and think about what underlying dimensions of service innovation they embody

Kamalini Ramdas

Pick an Industry to innovate in

► Financial Services

► Education

► Health and well being

► Legal services

► Entertainment

► Travel and leisure

► Home support services

► Insurance

► Restaurant / food services

► Real estate / construction

► Media

Kamalini Ramdas

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Kamalini Ramdas

Bug List Service Concepts

Develop a “bug” list for your chosen person from the set of pictures.

Brainstorm service concepts and identify what dimensions of service innovation they rest on.

Kamalini Ramdas

“Design products for people you love, never for people you don’t know”

Herman Miller design

philosophy