Qualtec's Business Performance Improvement Blog

Designing a product and designing services have many similarities but also key differences.  Both need clean VOC, clear definition of CTQs, stakeholder input and intelligent tollgates.  But the differences in the design process for the two are far greater.  And those differences are defined by the nature of products versus the nature of services.  So here are the top ten differences in their nature.

How do these attributes change the design process?  Well imagine how difficult it is to know if you have the right design if you can’t easily measure different attempts since repeatability and storability are issues.  And you really aren’t sure what you can measure since quality is defined by the customer’s experience of an outcome more than measuring the attributes of output.  And imagine what happens to multi-generational planning when you have to factor in how difficult it is to maintain your moat of defensibility for a new service without the right of a patent. Time and again basic elements of a design process are scraped or reinvented in an attempt to build a proxy for what is normally taught and practiced as good design principles.

In the end, you essentially have to nearly start over n building your design process for a service.  Basics are retained but new elements must be introduced or emphasized.  In a recent blog post, I point out how the basic principle of tollgates must be retained but mapping becomes the foundation to test, validate and repeat due to the absence of data.

a short presentation on Service Blueprinting now ……..

At Qualtec, we’ve built a new design process or roadmap and established a set of tools to support each step of the way.  We will continue to write about this subject as we find there is a real dearth of information available.  But we also welcome your input and so if you’d like to discuss the differences and how to adapt to them, we invite you to contact us.

In our design course we present an argument that over 70% of a product’s total cost is captured within its design process.  Based on that assumption, we go on to argue the most impactful activity a company can make to lower the cost of new products is to improve its design process. While we don’t cite similar statistics for a service, we believe the basic principals are the same.

Within Service Design, we believe there are two activities that we have observed service companies don’t aggressively pursue and which, if improved, could dramatically improve its cycle times, costs and perceived customer service quality.  Specifically, intensive mapping and tollgating are two basic design process and design principles that service companies would be well served to improve.

Tollgates should serve as business reviews and not technical reviews.  Tollgate business reviews should include cross-functional teams that are named based upon the business risk of the project.  Some new service offerings should include the CEO and others shouldn’t require such attention.  Tollgate reviews should include discussions about project risk, customer requirements, financial objectives and schedule/timeline.

Certainly, when constructing customer requirements for the service, there should be some form of VOC, such as a quantitative or qualitative survey, and conversion to CTQs using some form of decision matrix or tool such as a QFD.  But customer input shouldn’t stop after setting initial customer requirements.

Customers should be part of the tollgate process.  They should be treated as a stakeholder just like everyone that is part of the cross-functional team.  Of course, design incorporates a lot of proprietary information that is part of an entity’s business model and which a company certainly doesn’t want to disclose to its customers as it risks the very essence of their value proposition.  This is especially true for B2B service companies.

a short .ppt dealing with tollgate reviews in the service design process …

The key to incorporating the customer in the tollgate process and still maintaining a protective shield on your value proposition is to know when and on what to include the client.  A valuable tool to identify those points is a service blueprint that details all the “on stage” points of customer interaction.  These are the customer input points.  It is here that they form their perception of service quality.

Service companies still have very ad hoc service design processes.  Process mapping and tollgate reviews are two simple tools that can put some initial structure into service design.  Service Blueprinting, a form of process mapping, is a great tool to understand how to extend tollgate reviews to include customer feedback during design.  The stronger the design process, the shorter the lead times, lower the costs and higher the perceived customer experience.  If you would like to discuss any of these concepts or how to implement them, contact me.

Recognizing co-production as the core concept of service innovation leads service providers to rich deposits of waste, the extraction of which adds tremendous value to a customer relationship.  And, failing to recognize the interdependence leads to suboptimal solutions.

When providing a service, whether B2B or B2C, we too often view the flow of activity as simply going one way.  In actuality, there is a constant flow of information and activity in both directions as you and your customer move along the continuum of operations that deliver the ultimate job.  This is especially true in B2B businesses that have another end consumer to a co-produced good or service.

Too often we give the notion of this relationship a friendly nod but fail to incorporate it into our work.  We fail to respect this interdependence because we all look for control in our work.  The introduction of the notion of reliance on the interrelationship with our customer brings a highly uncontrollable input.  We have a difficult time telling the person to whom or entity to which we are attempting to satisfy a need that we need something from them.

a short .ppt dealing with tollgate reviews in the service design process …

But as iconic movie star Tom Cruise, while playing sports agent Jerry McGuire, says to Cuba Gooding Jr.’s Rod Tidwell, playing his client, “Help Me Help You”.  It was when Jerry McGuire recognized the interdependence between his actions and his clients that success accrued to both of them.  Your clients’ actions as your partner may be uncontrollable but they remain undeniable.  And when they are recognized, great opportunities open to provide more value and earn more profit by capturing a portion of it themselves.

The first step in recognizing this co-production is to give it visibility.  The best way to do this is with various mapping activities.  You can value stream map the overall process, including both the service provider and clients’ activities.  This can be pursued further with customer mapping.  Another alternative is to perform service blueprinting, which specifically focuses on a service provider’s interactions with its customers.

For a further discussion on how to identify the interrelationships between you and your customer’s co-production so as to add value to your customer and capture value for your company, please contact me.

A service provider seeking to grow by innovating new services must have a competitive advantage versus existing service providers, whether internal or external, when positioning new services.  In services, with its low barriers to entry, it’s not good enough to simply say I’m the largest.  And when perceived quality is the final measure it is also not good enough to say I’m the cheapest.  A service provider must be able to provide a good value for the best work. And to meet that sort of test, it must design processes to do jobs and achieve outcomes better than whoever is doing them today.

Service and/or process design is a core capability that can be built. With stronger process design, companies can offer better deliverables at a lower price.  If gaining scale is one of the service designers goals, process design can produce more scalable services since an element of scalability is consistency which can be enhanced with better process design.  Process design is also an easier core capability to develop than many others because it can be contained in a small group of people that are leveraged across an entire organization.  It is the service business equivalent of an R&D function whose output is leveraged by manufacturing, sales, marketing and distribution.

It is also the building of such a capability that can be promoted to change a company’s brand image.  Many equipment manufacturers provide services in conjunction with equipment sales.  However, they are still viewed by their clients, employees and, most importantly, customers as equipment makers.   If the vision is to move from being an equipment maker, with all its inherent cycles, to a service provider that has greater stability and growth, expertise is designing and executing services is a key roadmap.

a short .ppt on service innovation ….

In a previous post, I wrote how service innovation is different from service excellence.  The latter requires knowledge of your processes while the former requires you to know your client’s and/or competitor’s processes.  I also wrote how even though you must have service excellence to establish the credibility to be given the opportunity to provide new services, expertise in delivery isn’t a guarantee to be able to define and design solutions that ensure better outcomes.  This article adds that one of the two basis on which you can differentiate yourself as a service provider is to design better solutions.

If you’d like to speak more about this, feel free to contact me.

Service organizations must grow by offering new solutions to customer needs.  The trust needed for a consumer of services to buy a new offering is obviously highly dependent on their perception of the service quality they are experiencing on current services.  If the customer has issues with service delivery on existing services, it is no surprise there will be a lack of confidence in buying new services.  However, service delivery excellence, while critical to successfully expanding new services, is a different capability from service innovation.

Successful service innovation depends on (i) defining unmet VOC for which the customer has not contracted as they currently are doing it themselves or have other vendors doing it and (ii) the ability to design better processes as measured by the customer than the customer or an existing third party provider can design.  Service delivery is about executing against customer expectations on existing contracts and internal processes.    Improving service delivery is about understanding the service provider’s processes.  Succeeding with new services about understanding the customer’s or a third parties processes.

a short overview of our service innovation approach ….

Never assume excellent service delivery ensures the ability to define, design and deliver new services.  In the end, the muscle tissue a service organization builds by improving service delivery will improve perception for new services but not necessarily the ability to define, design and deliver new services or to innovate. Service innovation must be addressed separately from Service delivery.  The upside of building service innovation ability is that if the service provider succeeds it will be able to extend beyond providing existing services.

If you’d like to speak more about this, feel free to contact me.

For service organizations seeking to grow, excellent service delivery of existing offerings instills trust with the customer. That trust is the cornerstone to successfully launching new services. But the goodwill of that trust can only be leveraged if new service offerings provide NEW value. And excellence in what you do doesn’t guarantee providing that new value. To put it another way, doing something well for someone doesn’t mean you will add value in everything new you can think of or be asked to do for them in the future.
What is common between delivering on current services and new services is the ability to execute. What is different is that the Voice-of-the-Customer (VOC) is well defined in the former case and has yet to be defined in the latter. Defining VOC well is a function of listening well. Execution and listening are critical to both situations. Execution has the same definition in both cases. But the two situations call for two different types of listening.

How does the listening differ? Well, in Service Delivery the target had been acquired at the time of the sale. Therefore, you are listening to determine if you are hitting the target and, if not, how you’re missing and by how much.  In the case of new service design, you are trying to acquire the target. When delivering existing services, customer requirements are well known and VOC must be collected on how well you are performing vis a vis those requirements. With new services, you are more heavily involved in defining customer requirements.

a short training module that discusses Critical to Customer Requirements

Too often, I see companies launch new services with confidence based on their ability to stay tuned to a specific target and hit it consistently only to fail with a new service launch. The reason they failed is that they never properly defined the new target. Staying on a target and finding a new target are really very different.

For Service Delivery, the primary “listening” or “targeting” challenge is how to (i) monitor VOC and (ii) convert VOC to Critical to Quality. To launch new services, the primary “listening” or “targeting” challenge is to define the value to be delivered per the customer or define Critical to Customer Requirements.

In the end, service delivery VOC is about how to understand your processes while the VOC needed to successfully launch new services is about understanding the customer’s unexpressed needs.

If you would like to discuss, contact me directly.