The module – in brief 

Service Design is about analysing customers’ needs and from there outlining one or more possible services that meet these needs. A tool is presented that can help you translate knowledge about the customer’s work tasks, problems and unfulfilled dreams into ideas for new services. The result is that you get one or more sketches for services, which you can subsequently and quite informally present to one or more of the customers to get their feedback before you implement a new service.

Service design 

Global competition and technological development mean that as a company, you have to develop your business digitally to ensure your competitiveness. This applies to both the use of advanced production technology and digital solutions to make administrative processes more efficient, but it also applies to offering services related to the physical products.

Why should one spend time developing services? Because it is generally and significantly easier for your competitors to offer products that are almost identical to yours than it is to offer completely similar services – one reason being that services connect customers closer to you and make it harder and less obvious for customers to jump over to one of your competitors.

In other words, it makes very good sense for companies to combine physical products with services, and the more your services can be offered and delivered digitally as part of a digital business model, the better your company can take advantage of the fact that the digital opportunities can streamline processes and add value.

What services?

Examples of services could be the possibility for the customer to assemble a product consisting of different components, for the customer to subscribe to products or service of purchased products, for the customer not to buy at all, but only rent the products, or for the customer to get product data collected and analysed via smart products. Depending on which products you sell to which types of customers, it is only your imagination that limits which services you can design.

Value design

When designing services, it is important to keep the Outside-in principle in mind, which states that you should take the market and the customers as a starting point, not your own company. You should also remember the principle of Iterative and agile development, which implies that you should design and implement services in small, short cycles during which you are quickly able to implement and test an idea in the real world, in order to learn from that and continuously create new and improved versions of the service.

The following outlines how you can translate customer needs into solution ideas using a tool for value design.

“Value design tool” adopted from Digital Business Models for the Future under license CC BY-SA 4.0

 
Value design tool.Print-friendly version of the tool in large format.

Your new service should be designed to help customers solve their tasks, eliminate their problems and perhaps even help them seize new opportunities. This method is based on the customer’s perspective and needs and makes it easier to outline solution ideas. These ideas can be tested on selected customers – either simply in the form of an oral description of the solution idea, an illustration or a quickly drafted early version of the actual service.

Translating customer needs into a solution idea 

Before you start outlining solution ideas from the perspective of your customers, you will need to examine the relevant customer groups – both existing and potential – in detail, to ensure that you meticulously understand their needs. In other words, the result of a Customer Analysis must form the basis for your effort to generate solution ideas. You can also choose to invite a few customers that are representative of your target market(s) to participate in a workshop together with you where they can contribute directly with input about their needs.

Practical information

Set aside 3-4 hours to outline a solution idea based on customer needs.

It will be a great advantage to involve different key employees in this process. Firstly, because different people bring different ideas and points into play; secondly, because employees in different jobs together will create a more detailed and complete analysis, and last, but not least, because the analysis process itself is an excellent way to create a common understanding of what changes the company must go through as well as why and how.

You will need the value design tool in large format (either in a printed version or drawn on a whiteboard), a lot of self-adhesive paper slips (Post-its) and pens (one for each participant). In principle, the results of the analysis can be written directly into a blank document on a computer, but it is highly recommended to perform the analysis on paper, as it is much more flexible and makes it easier to stay focused.

Step-by-step guide 

1) Make sure that the Value Design tool is visible and available for contribution by all workshop participants. The tool for designing services consists of two parts: The first part is used in order to describe the customers’ needs and the second part is used to describe your ideas for one or more solutions to cover the customer’s needs.

2) Initiate your analysis by selecting one customer group. It is important that you restrict the focus of the analysis to only one homogeneous group of customers to ensure that targeted solution ideas are generated.  If you are targeting several customer types, you will have to fill in the tool separately for each group of customers.

3) Start out in the first part of the Value Design tool to define the needs of the chosen customer group. It is important that you focus exclusively on describing the customers’ needs and complete this process before you start coming up with ideas for solutions.

• Describe “Customer tasks”, which refer to the things that customers try to do and achieve in their work – i.e. the tasks they must perform, the problems they must solve and the needs that must be met. Remember that in addition to professional tasks, organisational or social tasks may also play a role in the customer’s needs. Please describe (perhaps on a separate sheet) if there are important details about the context or importance of the tasks.
• Describe “Problems”, which refer to things that irritate, disrupt or limit customers in relation to solving their tasks; these could be problems, obstacles and risks. Remember to describe problems from the customer’s perspective.
• Describe “Opportunities”, which refer to things like results and benefits that the customer would like. For example, opportunities can be professionally functional, simple, financial or social. Remember to distinguish between opportunities that the customer considers valuable, desired or unexpectedly positive.

Be careful to distinguish between tasks as something that needs to be done, and problems and opportunities that are hassle or potentials for the customers when solving the tasks. Also, remember to see things from the customer’s perspective and not from your own wishful thinking about the customer, and describe both tasks, problems and opportunities as concretely as possible.

Use the results of your Customer Analysis as input to fill in this part of the tool.

Write down the descriptions on self-adhesive paper slips and stick them on the various fields of the tool.

4) Continue to the second part of the Value Design tool to ideate solutions for the chosen customer group. Describe your solution ideas based on the information you have already provided on the customers’ needs.

• Describe the “Solution”, which is one or more services that you can develop and offer to the customer, that helps the customer to solve his/her tasks, to remedy his/her problems and to let his/her opportunities come true. Describe a service focusing on the function it offers the customer – in other words, what it exactly does for the customer.
• Describe under “Eliminates problems” how your solution concretely eliminates the previously described problems that the customer is experiencing. 
• Describe under “Seizing opportunities” how your solution concretely helps the customer to realise the previously described opportunities.

Be careful to distinguish between the description of the solution’s elements and function, as opposed to how it solves problems and seizes opportunities. Write down the descriptions on self-adhesive paper slips and stick them on the various fields of the tool.

5) With the Value Design tool filled in, you will now have a range of ideas for how the needs of your customers can be translated into solutions, as well as a formula for how your company can design value by addressing market pains. You may not be able to design just one idea for one solution that can solve all the customer’s tasks, solve all problems and seize all possibilities, but a good solution idea will focus on the tasks, problems and opportunities that the customer considers being most important. Evaluate and discuss whether the solution idea can be the foundation for a potential new business model. In case you have found several solution ideas, you must fill in the tool separately for each idea.

Reflection questions

• Has the analysis of customers’ tasks, problems and opportunities created insights that may be used in other contexts such as product development, marketing or sales?
• Can insights from the analysis somehow serve as a reference framework for our dialogues with specific customer groups? 
• On which specific customers can you informally test your solution idea(s)?

Output 

When you have filled in one or more sheets with solution ideas, you have gained an overview of what tasks your customers must have solved, and what problems and opportunities they encounter in that connection. This insight has also been translated into a sketch for a service that can help customers solve the tasks, eliminate problems and seize the opportunities.

Now, you can test the outlined service idea informally on a few, typical customers. This can be done by simply describing the idea briefly and asking customers if they would be interested in using such a service, how valuable they think such a service would be, and if there is anything that could make the service even better from their point of view. Based on feedback from customers, you can then work on refining the solution idea before implementing the first real version of it.

After outlining ideas for services based on customer needs, the next step is to outline a business model for those services. The business model describes how you deliver value to the customers through a service, and how you ultimately make money from it – either by directly selling the service or, for example, indirectly by the fact that the service gets you more customers or retains the customers you already have.

Next step 

The insight from Service Design is useful for the Design of a New Digital Business Model as well as during the Development Process, since the foundation for the development is based on the specific problems and concrete solutions that have been identified.

The natural, next step after Service Design is to visit the module What You Need to Know About Business Models, which will give you an overall understanding of a business model. If you have already visited this module, you can go directly to the module Insight into Current Business Model or Design of a New Digital Business Model.

The content elements above have been developed through two projects:

‘Digital Business models for the Future’ by Aarhus University, Aarhus School of Marine and Technical Engineering and Danish Technological Institute supported by The Danish Industry Foundation. The material from this project has been adopted in alignment with CC BY-SA 4.0

‘EU-IoT’ by Aarhus University, Martel Innovate, Netcompany-Intrasoft, Fortiss, BluSpecs and funded by the Horizon 2020 Framework Programme under topic ID ICT-56-2020, grant ID 956671.