Servitization can’t be based on a hunch
Good customer experience cannot be achieved without an understanding of the things the customer values the most.
“In my opinion, customer understanding relies too heavily on a hunch. You can’t know who your customer is or what they want if they’ve only been surveyed for customer satisfaction. There have been cases where companies have been afraid to ask their customers questions at the risk of sounding stupid. The mindset needs to change,” says Janne Pirkola, Director of Digital Strategy and UX at Bonsky.
Customer understanding isn’t something that can be done once and then forgotten. It relies on interaction and understanding the world in which the customer lives.
“Many times, companies seem to think that the service they’re producing is what their customer is interested in – as if the customers were the company’s fans! This tells me that the company is looking at things through their own processes without seeing what the customer really thinks or wants. When a customer receives a service that is customized to their needs, that’s when the magic of competitive advantage happens,” Pirkola summarizes.
According to Designer Emma Ylivainio from Vincit, it’s important to broaden the scope when looking at servitization and the impact of service:
“We want servitization to consider not only customer understanding, but also the environment and the ecosystem. It’s called Planet Centric Design. We’re not going to forget about the customer, who remains at the center of things; we’re just going to adopt a slightly broader view. By doing so, we try to account for sustainability, transparency and systemic thinking, which aims at looking at the effects of service on a larger scale.”
Why should you understand your customer’s everyday life?
Understanding the realities of the customer’s everyday life provides a goal-oriented and efficient foundation for building new services – or for improving existing ones. Organizations need to ask what motivates the most important target groups and what are the customer’s biggest work-related challenges and problems.
“Sometimes a solution can be found by just understanding what stages the customer needs to go through in their work. It all boils down to internalizing what things the customer finds most valuable, what services they really need, and how they can be helped and supported. The tools of service design help with answering these questions,” Pirkola says.
The biggest challenge organizations face is their ‘old way of thinking’.
“The customer may not have been engaged at all before, and it’s possible that the work has been led by the organization and driven by product development. These organizations are under the misconception that linear planning can replace the voice of the market or the customers. Service design methods allow companies to get inside the customer’s head and to understand why they want to do things in a certain way or in a certain order,” Pirkola explains.
Ylivainio agrees and adds that in his opinion customer understanding is first and foremost based on empathy, which is a staple in any service designer’s tool box.
“The tools of service design can be used to explore the usage of a service as well as how customers approach the service. Often the company learns something new during the process. This may improve company-internal policies, bring together various experts, and even present new ways of providing services to the customers,” Ylivainio says.
What difference does service design make?
The central idea of service design is to identify the things that are relevant to business as well as the customer. This is followed by finding a solution to a problem or demand.
“A clear objective must be maintained – we ask ourselves what it is we’re actually trying to solve. Our approach is very hands-on, and we try devise a practical outcome, which will get us closer to a decision or the realization of a solution,” says Anna Ruutiainen, Business and Service Designer at Bonsky Digital Oy.
Ylivainio points out that the themes of sustainability are increasingly present in every product and service.
“For example, a digital service may let the users know what happens when they click a button: what happens behind the scenes after they order food via a website, how long the production chain is and where the ingredients come from,” Ylivainio explains.
If Agile development isn’t a familiar concept, service design may be thought of as superfluous and costly. However, designing and testing a service is inexpensive compared to realization – particularly the kind that doesn’t meet the needs of the target groups. Design should be seen as a method that creates value and helps to continuously improve both business and services.
“Service design is a strategic thought process, but Agile in practice. First you define your objectives, after which you stay alert and proceed one step at a time. The design process also involves giving up on ideas if they do not test well or if their realization seems too difficult or expensive. The prioritization of alternative solutions is naturally done together with the customer, and in the end the customer is in charge,” Ruutiainen says.
Ruutiainen finds cooperation to be one of the best strategic advantages of service design:
“If IT isn’t aware of what the business needs, and vice versa, you can’t say that the organization is producing maximum value for its customers. Tearing down silos is a big leap in development. When people from different parts of the organization take part in a common development process, it creates a new kind of understanding and strong engagement with the shared objective. Realizing something valuable about how your organization works can be really exciting, and something I often get to witness during workshops.”
Ruutiainen encourages companies to engage all essential stakeholders in the development of services: “It would be a good idea to ask the operators in your value chain what their objectives are. A company that’s able to produce significant value for the other operators in its ecosystem is bound to be successful.”
Another way of learning to understand who your customers are is systemic thinking, which is based on the idea that all the parts in a system affect the outcome. A systemic approach can help you get acquainted with the customer’s operating environment, which is important because, as Ylivainio puts it, “no service or product exists in a vacuum, but in a rapidly changing world”.
“Agile methods aren’t based on knowing everything in advance”
Service design develops solutions that are appropriate for their purpose. If an organization struggles with process efficiency, for example, service design can focus on that particular problem. The process may reveal several challenges which the design team then tries to solve internally and from the point of view of the customer or the user.
“If service development finds a way of reducing the need for manual work, for example, employees can start to focus on things that are more productive. For instance, finding a way to stop the use of unnecessary Excel files in product data management can free up resources for the development of product data quality,” Ruutiainen explains.
It’s in the nature of service design to do things iteratively, one step at a time:
“Agile methods aren’t based on knowing everything in advance. If you first plan everything, and only then ask the customer about their needs, you may be in for a nasty surprise if the service isn’t to the customer’s liking. Making predictions is dangerous,” Pirkola says.
Pirkola points out that normally people have a different idea of what a service is or what it should be.
“When an idea is converted from speech into a visual realization plan or a concrete concept, it’s much easier to assess and discuss. Having something you can test and validate in practice is particularly important for revealing any defects and flaws in the capabilities. In other words, the concept is a preliminary script of what the solution is going to look like. What makes it a winner is that it can be tested both in-house and by the end customer,” Pirkola says.
How to build customer understanding the Agile way?
Service design methods provide many great tools for accumulating customer understanding. We’ve gathered some of them below and we are more than happy to help you apply them.
Methods used by service design
Image: Methods of service design.
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