For years we have been educating business owners about the need to migrate from products to services, from services to total solutions, and from total solutions to experiences, in an effort to address the broader needs of their clients and to offer a stronger value proposition. The classical exercise we've used to illustrate this value migration has been to challenge business owners to enhance their value proposition assuming their business is, plain and simple, selling salt. Since salt is a commodity - claiming that your salt is saltier than mine won't get you far - entrepreneurs are faced with the challenge of using salt (the product) as a platform for value added services. In the process, they understand the importance of creating business models that offer a total solution or experience. The point of the exercise is to show that if we can formulate and configure a robust value proposition using a commodity such as salt as a platform, we can migrate towards total solutions and experiences with any offering.
Building upon this concept of value migration, the increased interest in innovation as the source of competitive advantage, coupled with the service sector's preeminence on the island's GDP, suggest an interesting marriage: service innovation.
Service innovation can be defined as the process of designing new or improved service concepts that satisfy customers' unmet needs. Contrary to service development, which focuses on converting a service concept into reality, service innovation takes place in the forefront of the creative process, where ideas, knowledge, and experimentation intersect to create new formulations.
A key element in service innovation is realizing one critical insight: services are a means to an end. People purchase or "hire" services to obtain an end result. Outcome driven innovation theory refers to this end result as "the job to be done." When a customer purchases a milk shake through the drive-through window of a quick service restaurant, he has "hired" the milk shake to "get a job done." This job may be functional (quench his hunger with something portable that will keep him feeling "full" throughout the afternoon) or it may be emotional (relive the pleasure of eating ice cream as a kid). Acknowledging that services are a means to an end is fundamental if one is to engage in service innovation.
Much effort is lost trying to innovate through analyzing and changing attributes of the service. Spending energy and effort in delivering a milk shake faster or in providing multiple flavors may be resources ill spent if you do not understand, fully, the job your customer is trying to get done. The "job" needs to be the starting point of the ideation process, not the service.
Interestingly, people go through a series of typical steps when trying to get a job done. Knowledge of these steps can help you focus your innovation efforts. For example, all clients spend some effort locating information and preparing the environment to get their job done. Also, as customers work to get their job done, they will monitor their progress to one degree or another and adjust accordingly to improve execution. Each of these five steps (locating information, planning, executing, monitoring, and modifying) are excellent focus points for service innovation.
Note that some service offerings attempt to complete jobs for the customer while other service offerings attempt to help customers complete the jobs themselves. Many home owners, for example, will "hire" a gardener's knowledge, expertise, and time to maintain their lawns. However, there are those that prefer buying a lawn mower and doing the job themselves. Both audiences are targets for service innovation. If you are in the business of tending lawns, it will help if you understand the full extent of jobs your client is trying to get done. You may be able to assist your client in completing ancillary or related jobs by enhancing your value proposition. If, on the other hand, you are in the business of selling lawn mowers, why not consider offering your customers the ability to bring in a dirty lawn mower, you'd clean, maintain, and store it for them, and have it ready for the next time they need it? This, by the way, is not too distant from what a Marina does for people's boats. So, while we're at it, is there anything else taking up space in people's garage that might merit this treatment? Barbeque grills, perhaps?
The key point to be made is that service innovation feeds from a comprehensive understanding of the job people are trying to get done. Invest time and energy in capturing that knowledge - whether through direct observation, in-depth conversation with customers, or any other means. Once you've developed a clear understanding of the jobs your customers are trying to get done and of the criteria they are using to assess satisfaction with the outcomes they're pursuing, then you may begin to explore and experiment with new value propositions.
Without doubt, knowledge about the degree of customer satisfaction or dissatisfaction with your service is critical if you attempt to run a successful business. Service innovation, however, suggest an additional angle to explore: to what degree are customers satisfied with the outcomes they are achieving. In other words, in addition to asking customers how well you're doing (given your current offering), you may want to start asking them how well they're doing (given the current jobs they're trying to get done). What you hear may surprise you; it may pave the way for your next service innovation.
Thinking of products and services as "things" that get "hired" to "get a job done" is not necessarily natural. However, we are sure that it is an indispensable step if you want to surprise your customers (and your competitors) with breakthrough innovative service offerings. The challenge is out there. All that is needed is someone willing to get the job done!
Copyright 2010 QBS, Inc.