Service thinking : Our Services

Service Thinking

Our thinking is often a product of the past. The future demands fresh perspectives. Service Thinking provides just that.

The nineteenth and twentieth centuries were all about industrialisation. Mass production and economies of scale tackled many of the issues of the day and meant that people in the developed countries saw their standard of living leap. Workers were also consumers of the goods they made – creating a virtuous circle of wealth. From cars to washing machines, the product ruled the roost.

Today our western economies are 75% service-based and we live in an information age. Despite the fact that few of us in the West make anything tangible, what is left of our manufacturing sector still out-performs services in terms of productivity. Why does the dominant sector of the economy fail to perform?

And we have lost the sense that things are getting better. We have unsatisfactory experiences when we use banks, buses, health services and insurance companies. They don’t make us feel happier or richer. Why are they not designed as well as the products we love to use such as an Apple iPod or a BMW?

At live|work, we believe we need to embrace a new reality that maximises the potential of services. In the private sector and in the public sector there is enormous opportunity to increase the competitiveness and improve the effectiveness of services.

The answer lies in Service Design and Service Thinking.

The product problem

The reason so many services under-perform and disappoint customers is because we treat a service as if it is an industrially manufactured product – a legacy of what worked in the past.

The industrial revolution transformed the world. Ways were discovered to vastly improve the material standard of living of many people across the globe. A big part of this was the mass production of affordable high quality products. Henry Ford – perhaps the most important pioneer of mass production – was not only a genius in the way he managed his factories, he also created a new generation of people who could afford his cars. He transformed the way we work, but also the way we live. We became consumers and we have been enthusiastically consuming ever since.

Industrial manufacture spread rapidly until all goods could be mass produced and mass consumption flourished. As the twentieth century progressed, mass production techniques and thinking were applied to more and more areas of our lives.

This way of thinking spread into industries that do not need factories – Service industries. Managers in all sectors now discuss their products. Industrial thinking has permeated every corner of economic activity. Financial service companies now mass-market pensions, mortgages and insurance as products. A train journey is somehow a product. We have heard people in the UK’s National Health Service discussing their products.

Thinking about mass-producing and mass-marketing products is the dominant mindset, especially in the commercial world. But thinking of services in product terms causes problems.

Futurist Alvin Toffler identified the limitations of industrial thinking in his book The Third Wave. Toffler argues that, “the Industrial Age violently split apart two aspects of our lives that had always been one… production and consumption”.

Toffler draws our attention to the fact that when production takes place in one place far from where the product is consumed the relationship between producer and consumer becomes impersonal, disconnected and ultimately unsustainable.

Products are made in factories and consumed somewhere else – homes, offices, in the street – somewhere other than the factory. However, for a service to be realised, the producer and consumer must come together. This means that the people who use a service are involved in its creation together with the organisation that provides it. When we use a cash machine, we are literally given direct access to the machine room of the bank, and we produce the result we desire. A doctor can’t give us good diagnosis unless we are there to provide the ‘specification’ – and tell her how we feel. If I don’t know when to get off the bus, I’ll simply end up where I started. In effect, there is no service unless there is a user there to engage with it and help it perform by communicating what he or she needs.

The challenge with this is that people are a much more unpredictable part of the production process than a robot in a controlled factory environment. Organisations must learn to involve the people that use their services, see them as valuable parts of the ‘machinery’ and embrace the full variety of their needs and desires. Only then will they be able to deliver services that people love and find truly useful.

Think service

Over the last ten years, live|work – the Service Design consultancy we founded – has been working with organisations in both the public and private sectors to enable them to move beyond the industrial, product-fixated mindset. As opposed to industrial or ‘product thinking’ we call our approach Service Thinking. Service Thinking places people, networks and sustainability at the core of how we design and innovate services. The application of Service Thinking can help transform our organisations and economies.

Service Thinking is built on our understanding of the specific qualities of services, developed through experience of over 200 service design projects with over 50 clients. We have identified three key service imperatives that must be considered if we are to create great services that make things better for people, businesses and society.

The first imperative is to put people at the heart of services. If we try to produce a service without the participation of the customer it cannot either satisfy that customer or achieve its potential. We must find ways to re-engage people in the services they use.

The second imperative is to create networks that enable services. Services have always been networks; a rail network, a telephone network, even a church service is a part of a social network. We currently have such powerful information technologies that service networks are now possible in all sectors.

The third imperative is to install sustainability as the bottom line. In this case we are talking about a triple bottom line of economic, social and environmental sustainability. We expect services to be there for us at all times – whether a phone connection or a doctors’ surgery – and we feel lost when they are not. Ultimately, Service Thinking is the ongoing consideration of how we meet our collective needs without overstretching our human and natural resources.

What we see missing from the industrial model are people, networks and sustainability. These three imperatives are central to Service Thinking.

Service Thinking

1. Put people at the heart of services

As Shoshana Zuboff and James Maxmin demonstrate in their book The Support Economy the freedoms of democracy, education and mobility have made us all more self-confident, independent and aware of our entitlements. We no longer accept one size fits all, defer to greater authority or accept the assumed wisdom of experts, whether they are doctors, teachers or large organisations.

Zuboff and Maxmin argue that companies need to be more responsive to twenty-first century customers, or risk falling behind to more nimble competition. We need to focus on individuals and then develop strategies that enable companies to meet customer needs on a personal basis. The aim of any service must always be to provide value to an individual, delivered in a way they desire and at a price they want to pay.

In order to put people at the heart of services we need to know who they are. We need to listen to them and gain accurate information that helps us give them what they need, when they need it. Organisations across the spectrum have the potential to personalise services and to create huge benefits for themselves and their customers. From personalised learning in education, to insurance quotes tailored to my driving style, personalisation is a powerful concept. Shifting attention from the masses to the individual enables radical new opportunities.

In social care services in the UK, personalisation is underway as centralised social services budgets begin to be paid directly to individuals who then choose how they are spent rather than being obliged to use the default public care service. This is already saving money and creating better care outcomes. For instance, an 85 year-old man we visited in Northumberland was spending his care budget on a taxi to take him to the church group that he had been a member of for years, rather than attend the local day care centre. Needless to say this enabled him to maintain his independence and social network. However, it also created a cheaper and more effective way to support him to stay emotionally and physically well and active in his old age.

2. Create networks that enable services

The dominant technology of the industrial age was the production line, machines to speed the manufacture of goods. The information age has information and communication technologies that reflect our more networked societies and enable new relationships between organisations, people and things.

Network technologies can be seen as service technologies. They are intangible and their power is in the connections they enable. This can be seen in the language of global companies like Nokia, who proclaim themselves an Internet company rather than a manufacturer, and advertise themselves as “connecting people”.

Technologies enable these connections. More and more technical platforms are emerging to make it possible to better connect a range of people, organisations, information and objects.

Services thrive on networks. In order to fly, you may use the Expedia website to choose between carriers, Visa to pay, Heathrow Express to get you to the airport, Virgin Atlantic to check your bags, and Starbucks to fill your waiting time. An ecology of services come together as a complex network. When designing services it is essential to understand these networks, make them visible and think about how best to connect all the people, information and physical elements of a service.

Networks are not just technical things but social structures as well. Think of Wikipedia. The best services enable a network of people and organisations to be as productive as possible and create mutual value.

3. Establish sustainability as the bottom line

Service Thinking is for the long term because services are ongoing activities. They do not have a limited life span like a product, but continually evolve and renew. When we think of services we think of health, education, transport and communications; things we expect to be with us throughout our lives. If we think of services for the long term we have to focus on sustaining value, whether it is economic, social or ecological.

Service Thinking helps sustain value in new ways. Industrial models focus on products and make money from the margin on each unit of production. Services create value by meeting customer needs and make a profit by doing so as efficiently as possible. Because of this important distinction, service providers are motivated to reduce waste. For example, an energy company that sells units of gas could instead agree to provide a level of warmth to a household. It would then find the most cost effective way to achieve this goal – perhaps using less gas and more insulation. Doing more with less.

live|work has demonstrated the potential to do more with less, working with Streetcar – a UK car club. Streetcar reduces the need for personal car ownership with a pay-as-you-go service that provides easy access to a network of cars. Each Streetcar replaces at least six privately owned cars on the street. The goal is to use fewer resources to create greater value.

This logic can be applied to the public sector and especially to healthcare. Streetcar enables a larger number of people to use a smaller number of cars. The NHS needs to enable a larger number of people to have fewer hospital visits. People can book and rent a Streetcar using a website, a 3G SIM and a smartcard. Health services are beginning to use similar network technologies to support people with long-term illnesses and prevent them suffering the setbacks and unnecessary issues that cause them to need hospital treatment. live|work is working with the National Hospital for Neurology at UCLH on a new service in this area for people with Multiple Sclerosis.

Thinking about services for the long-term means we shift our attention from the quick-fix product launch and focus on the ongoing activity of meeting needs in the most effective way possible. Service Design is a similar activity. Each service interaction creates the opportunity to learn and improve. The best way to think about Service Design is as an ongoing cycle of insight, ideas, improvement and innovation. When designing a service the job is never done and, in twenty-first century economies and organisations, no job is more important.

The future for services

So what difference can Service Thinking make?

Consider three pressing issues: healthcare, the environment, and finance. They are all vital to the quality of our lives. Yet in all three areas we have reached the limits of industrial thinking. In the future, the solutions lie with a service approach.

Healthcare

For public services like the UK’s NHS, adopting a production model has meant that we have focused on the number of hospital beds rather than the wellbeing of a community. We now have western diseases like diabetes growing exponentially as the public realm does not dare to get involved in private lives until people require costly treatment. Problems are then easily identified but harder to treat.

This kind of health problem threatens to become too expensive to treat. It is not enough to simply run a hospital, wait for sick people to arrive and try to fix them as best we can (the industrial approach). We need to support people to lead healthy lives, stay out of hospital and feel good. We need services designed to help people stay well.

If we consider the resources invested in hospitals – the buildings, the equipment and the people – and then think, “what if we put more of those resources, the technology and expertise into keeping people well?” we can begin to imagine how to keep people out of hospital. We just need services to help them do it.

The Environment

Industrial production has enabled an unchecked growth in our use of natural materials and in pollution. We have become disconnected from the land and lost traditions of stewardship and reciprocity. This has been done in the name of productivity and efficiency. Yet today, according to the World Trade Organisation, each calorie of corn takes twelve calories of energy – oil, fertilizer and transportation – to produce; far more than in pre-industrial times. We cannot afford this kind of waste.

The earth’s resources are finite. (The International Energy Agency is now predicting that oil extraction will peak in 2020). Again, we have reached the limits of industrial thinking. We can no longer just dig raw materials from the ground, refine them, manufacture goods from them, ship them and dispose of them with no regard to the impact of these activities. We need to think of natural resources – like the climate – as services that provide us with food, water and a place to live. Services that need sustaining.

Most businesses and individuals now want to be greener. But we often feel trapped in a system that makes it very hard for us to change. We feel we need our cars to get around or computers to do our jobs whilst worrying about the energy they consume. In addition we don’t have the skills or knowledge to make the best use of what we have. A service that connects our cars to smart geographic information telling it that it is approaching a hill and resetting the engine to run in a more fuel efficient ‘uphill mode’ shows how networks can help us use resources more efficiently. To do more with less.

Finance

For many businesses, but especially banks and insurance companies, there is a loss of trust, loyalty and collaboration from customers who are suspicious of a company’s true motives. This situation creates huge waste as marketing and sales pursue customers who are harder and harder to win over and retain. Our experience of financial services is that companies are used to a 0.3% return from their direct mail marketing campaigns and think that is acceptable. This is not a strong connection with customers.

We need to create real value in the relationships between banks and the people who use them. The credit crunch shows that banks cannot operate as money factories without a wider social responsibility. This new relationship must include trust, equity and mutual benefit. It must also take account of the way that our needs change over time as we move through life – for example; from being single, to being married, to having a family and retiring.

The simple fact is that people don’t want mortgage products. They want home ownership services – genuine financial services that allow them to buy their home and provide for their families. They want services that adjust to their circumstances as their needs change. This is Service Thinking – reconnecting businesses to the customers they exist to serve.

Creating Service Equity

Service Thinking defines the importance of positioning people, networks and sustainability at the heart of our services. It moves us on from the industrial mindset of the twentieth century. When put into practice through Service Design, Service Thinking can change the way we live, work and relate to the world.

The goal of Service Thinking and Service Design is to maximise the potential of services and to create shared value for organisations and their customers. This value is measured in the personal, social and environmental capital created by great services. At live|work we call this value Service Equity. And this, we believe, is the future.