SD 101:

An Introduction To Innovation Through

Design

Traditional approaches to innovation are largely a product of a manufacturing mindset - a hangover from our industrial past.

Today, most developed economies are dominated by the service sector, with services accounting for 70%-80% of GDP.

This has lead to the emergence of what Pine and Gilmour (1998) have dubbed the ‘experience economy’.

Agrarian Industrial Experience

Products and services are no longer mutually exclusive. Companies, like apple for example, are increasingly tying their products (Macbook) to services (iTunes).

Unlike products, however, services require sustained interaction with the service user. To create value, the service provider relies on the service user’s participation in the service journey.

This creates significantly more opportunities and threats to the brand experience than a static product creates.

Design is a method that gives organizations the skills necessary to identify service users’ needs, and to engineer solutions based on available organizational resources.

Contrasting with the organization-centric ‘boardroom’ approach to innovation (where ideas are developed with minimal input from service users and delivery personnel), design directly involves stakeholders in an iterative co-creation process.

Co-creation helps to better identify real-world needs, and emphasizes risk minimization over risk taking by identifying potential problems early on.

Service design is the specific application of the design process to services.

Both front-end and back-end processes are considered, giving you a birds-eye view of your organization.

Though related, customer experience (CX) is focused only on the customer.

User experience (UX) is focused only on the touchpoint.

Service design’s aim is to devise holistic solutions to improve the complete experience.

Service design can help with any number of complex challenges:

Choosing appropriate technology platforms.

Developing new and improving existing branded service experiences.

Improving employee experiences.

Digital channel development, transition, or adoption.

The Design Process

Research

Define

Prototype

Test

Launch

Measure

If you have high intolerance of uncertainty, this will be a good exercise for you.

Iterative processes mean multiple loops back and forth to find the right solution.

Doing so reduces risk of failure through rapid prototyping and testing.

An Iterative Processes

Design

Psychology

Sociology

Business Management

Anthropology

The MethodsService design borrows tools and methods from business and the social sciences:

The Tools

Quantitative Qualitative Visualization Testing

Sustaining a culture of design and innovation comes from the top.

You need to know your purpose and how to translate that purpose into services that meet people’s real need on their own terms.

You also need to set up the systems and processes that facilitate collaboration and free-thinking.

First, Purpose

While individual innovations are important, developing a sustainable innovation program is key to long-term competitiveness.

These firm-level dynamic capabilities that underpin innovation are known as service innovation capabilities (SICs).

SICs allow an organization to adapt to their environment through the repeated and continuous innovation.

Then, Capability Development

Strategizing Capability: An organization must possess a high degree of clarity in understanding who the customer is, what services to offer, and how they can be efficiently delivered. 1

Knowledge Management Capability: Refers to an organization’s ability to manage and deploy knowledge assets for innovative purposes through knowledge-centred activities. 1

Service Innovation Capabilities

1. Blommerde & Lynch (2014). Dynamic Capabilities for Managing Service Innovation: Towards a Conceptual Framework

Networking Capability: Refers to an organization’s ability to exploit its existing ties with external entities and to explore new ones. 1

Customer Involvement Capability: Refers to the extent to which service providers interact with current or potential customers, the organization’s understanding of customer usage and benefits, and their role in creating value with the customer. 1

1. Blommerde & Lynch (2014). Dynamic Capabilities for Managing Service Innovation: Towards a Conceptual Framework

Service Innovation Capabilities

Research on SME competitiveness has shown that design-driven organizations created on average 250% more wealth than non-design driven organizations.1

Design-driven organizations have a 9% higher employment growth rate than non-design driven organizations.1

Design-driven organizations have a 9% higher employment growth rate than non-design driven organizations.1

1. Design-Driven Innovation - Why it Matters for SME Competitiveness, Northern & Western Regional Assembly

The Results

Are You Ready for the Experience

Economy?