Hello everyone. The presentation today is on the topic of service innovations. As we've talked about product innovations, let's get into the other aspect of innovations, which is called service innovations. Now, you know that we've talked about our overall model of comprehensive innovation, that looks at not only products but services, business models, bad experiences, sustainability and internal process. So we know this is a kind of a general framework. What we've talked about so far has been product and today we'll talk about services. So the way we can think about this is when you think of products, on the right, you think of tangible products. What we mean by tangible products is things like a car, or salt even, it's a physical, tangible thing that you can consume. On the other hand, intangible services refer to things like actually what's happening right now, teaching, right? Teaching is a service that's provided by an organization like Coursera or University, to students such as yourself. So tangible products are physical things, intangible services are nonphysical experiences that you have. And so if you think about both of them together, Imagine that in the case of a car. So a car that you might buy is a physical, tangible thing, but it always goes hand in hand with a set of services. For example, you're sure you'll need to get your car repaired sometimes. And that is an intangible service that is provided by the company or by the dealership. By third parties etc. So, when we design things, when we come up with new innovations, we often think of them as product service systems. All right, so these, no product can exist without a service, the way services cannot exist without a product. So, think of them together and that's essentially a way to think about introducing new innovations into the market. There is a product, there is a service, there's something tangible and there's something intangible. Let's talk about some of the differences between the two as well. So products for the most part tend to be standardized. If you buy a car there's thousands, if not a hundred of thousands if not a million of similar exactly similar products that are mass-produced, standardized, and put out in the market, right? So you don't have a unique product for yourself. On the other hand, a service is non-standardized. So if you go, if you buy a car, you buy a Volkswagen for instance, you go to a dealership, you go to the service center. The experience that you will have with that service, whether it's an oil change or tuning the transmission, rebuilding the engine, changing a light, it could be anything. The service that you'll get will be nonstandardized. Each person gets a different kind of a service. So one is standardized, the other one is nonstandardized. Another difference between them is products are non-perishable. Now what that means is that they do not suddenly disappear. They do not end when the service ends. For example, the car, the Volkswagen car, you will have it for maybe 10 years, 15 years or maybe 2 years, however long you want to use that vehicle. Over that period of time it's there with you. A service for instance, it starts and ends, during that experience. So you go to the dealership. You get your car fixed and the service is over, right? So that's the difference between perishable and non-perishable products and services. Third difference, in case of products the production of that product is separate from the consumption of the product, right? So, a company makes a shoe for instance. They make that shoe, they produce it. They send it to the retail outlet. It sits on the store shelf, and the production is ended, right? You go there as a consumer, you buy the shoe, you wear it, and you start consuming it right? So, the production and consumption are separate. In case of a service, this happens simultaneously. Again, you think of the experience of teaching and learning. We are creating this video and you are watching it. This video is being delivered to you as you are watching it as you are consuming the service. Or in the case of a car service the dealership provides you that service and it's being consumed, your car is being serviced at the same time right. That's one other differences between products and services. But, if you wanted to get a definition of what, exactly, are services, intangible services, there's a definition from Hugh Dubberly, who does product design, service design, runs a firm in the Bay area, in San Francisco, called, Dubberly Design Office. This is a definition, by Shelley Evenson, and Hugh Dubberly. So the way they define services is they talk about them as activities or events. In a sense, they are both. They are activities that are being performed by somebody, which creates an event for you the consumer. That forms a product through an interaction between the customer mediating technologies and a representative of service to organization. So, for instance, let's again take the example of teaching and learning. You have a customer, which is the student. You have a mediating technology, which is your computer, your laptop, your iPad, whatever it might be, through which you're watching this video. And the representatives of the service organization, such as myself, who is a teacher, and all the other people from Arizona State University, as well as Coursera, who were involved in getting this service out to you, right. So, that's a definition of a service. So it's an activity, an event that happens with three key things. A service provider. A technology and a consumer, right? And that's a good sort of comprehensive definition of what services. So service innovation then essentially reverse to the process of developing new services using technologies with an organization to create a certain impact or a certain value for the consumer who might be interested in those services, right? So there are four ways of classifying or categorizing these services and service innovation and we'll talk each one of them in a bit more details when we look at examples of each one of them. The first one on the top left is service industries, industries that are in the business of offering services. Then you have services as product right below that which is, the company provides a service as a main product, that's what they do. Customer service connects to all products, we all need help on solving problems and we often go to customer service. The last one is, what's called a derived service and I'll explain that with an example. So, let's talk about these in a bit more detail. So, service industries, the first one, essentially, can be defined as Industries and companies whose core product is a service, right? So, that's essentially what they develop and what they deliver. And example of that is financial services, all right? So, you might think of a bank for example or you might think of an investment, advising company, these are organizations or institutions that will offer you monetary advice, how to save, how to invest, how to build a retirement fund, etc. So this is a form of a service. They don't really have a physical tangible product that they give you, but they actually give you advice on how to save and invest your money, so that's one form of service industry. Another form of service industry is the hotel industry, right? Of industry that provide lodging. In this case it could be a hotel that offers rooms that you can rent and that is also a form of a service. Now in this case there is a physical product. There is a room, there's a bed, there's a television set, the table, there's a chair, etc. But the primary offering from the hotel is lodging. It's a place where you can sleep. The third one is transportation. This goes across the board not only airlines and aircraft but trains and other services like taxis etc as well. So, that is another form of a service which essentially focuses on getting consumers from point A to point B, again using some kind of a mediator technology, which could be a plane, a car, a taxi service, etc., right? So, that's another form of service industry. Another really big one is healthcare, right? Hospitals, clinics, etc., where you go to get yourself looked at, to get yourself checked, to get your health monitored. To get surgery, to get any kind of medical work done on yourself. So that's another form of a service industry. There's many of these service industries. Educational institutions fall in as a part of this as well, but this is one way of classifying services. You think of the industry that is offering these services. The second one is services as product. So these are intangible product offerings. Again we know, they are intangible because they don't have physical form very often that consumers value and pay for in the marketplace, right? Again let's look at some examples. For instance, one is information technology consulting or marketing consultance or financial consulting as well. So these are again, companies and services that are offered for people to get certain things done. So for example, you might have a large organization, a large company, there's a whole IT group, a whole information technology group, that makes sure that the computers are running fine. The servers are in place, the network is up and running, computers are being fixed, all of that stuff, all that servicing is a part of IT services within an industry. But in this case, consulting would also refer to an external company that will come and provide you some consulting on how to manage your information technologies. Another example is wrapping and shipping. So companies will have boxes ready for you. They will have wrapping paper. They will have bows and things like that, the packaging. And they'll ship things for you. So you can go to these places and you can get your gifts etc wrapped and sent, wrapped and shipped to people that you might want to send them to. So that's another form of a service as a product. For example is pet care, where you can take your dogs and cats, and you can get them groomed, you can get them shampooed, you can get the massages if you want and that also is another form of a services, it's essentially taking your pets to get groomed and taken care of. The third form is service provided in support of a company's core products, so in this case, there is a company, for example, let's take Apple. Apple has a series of core products like the laptops, the tablets, the phones, etc. And they provide some kind of customer service, either through the store or online, on the phone, through chat. So these are the services that a company provides in support of their core product. This could happen in one of two ways. One is on site, a really wonderful classic example is this where you have. A race track you have a race car that's going on the track really fast. Every once in a while they have to replace the tires, they have to look at the vehicle and if you watch this on television it's incredible to see how fast these guys come in, change the tires and leave. Because timing is of extreme importance. So this is a good example of an on site extremely rapid and fast paced customer service, right. The car pulls up, these guys show up, they change the tires, they're gone. So there's an on site form of customer service. Another form of customer service is remote, that's in this case you have, very often, some kind of a call center. So if you call a credit card company, for instance, because you've got some doubt on your credit card statement, or you have any questions to ask. What happens in that case? When you call in you might get connected to somebody and this person could be anywhere in the world. There's lots of call centers that are located in other countries where you find people who can speak English but labor costs are low. So when you call in, you get connected to a remote customer service. It's not on site, but it's remote. And that's another form of customer service. So you can classify customer service in two parts, on site or remote and then the last one is a fall for derived service. So in this case, its value provided by physical goods and the waiter explained this in a sense as people often don't really care about the product itself. But they care about what it does for them. You could argue that this happens in all cases, if you want, for instance a classic example is when people go and buy a portable drill to make a hole in a wall to hang a picture frame or something like that they don't really want to buy a drill. What they really want to buy is a hole in the wall. It's a product that essentially things that offer those services. But in this case what it refers to is things like this, medicines, right? So we buy these pills because you want to get better. We have a cold, we have a flu, we have something, a headache that's bothering us. And you take these pills, so what you really want is that derived service. The derived service on these pills is that your headache goes away. Your flu goes down or your cold disappears, right? So these are forms of derived services. So what we've talked about in this presentation essentially are these four different kinds of services. They are four different ways of categorizing and classifying services. And one quick example that is a good, it's a good example of a product service system, right, there's product innovation but also service innovation. And this is happening in quite a few cities all over the world. This is from Paris and these are bicycles that tourists or anybody for that matter can borrow, can rent from the city center. You can go up to this station. You can use a credit card or you can use any form of cash or money. You put the money into the meter, you borrow the vehicle, the bicycle in this case. You can ride it around the city, you can get from point A to point B and when you get to point B there's a similar station at that point B where you lock in the bicycle again and you get charged for the service it provided, and this is happening with cars as well. In the US the company called Zip Car provides a very similar service. So this is just one potential example of a product service system where it's a very innovative product. It's a bike sharing programmed as a unique sort of design of the bike but also is a service because you can use and borrow these bikes at any time to use in the city. Just to wrap up what we talked about today, is the whole notion of developing service innovations. Essentially services are intangible events or activities that a company might offer. The goal is to provide some sort of a service to somebody and it happens with some kind of a media technology that technology could be a computer. It could be a laptop. It could be online. It could be Internet. Or it could be something like which integrates the bike share. It could be a potential service that people that can borrow the bicycles for any amount of time. So that ends our presentation on developing services. Thank you.
