Experience of one

very funny or maybe offensive for some

In days of yore, businesses considered people as operand resources. Just like gold or crude oil. The more you have them the better off you are. Hence people are considered just like a commodity to be owned and segmented according to all the different criteria be it demographics or psychographic. People from marketing will conduct customer surveys to tap into our likes and dislikes so that they can deliver the correct product according to our age group and income distribution. Or as in the case of hair shampoo, you can go into a supermarket and discover for yourself all the different types that is most 'suitable' for your hair type and maybe lifestyle! For me, that is an example of market segmentation at its best. But in the end, for some people, the value in having a multitude of choices for hair shampoo will lead to much confusion and lost value. ( I had spent countless hours thinking in-front of shelves of shampoo bottles, figuring out whether my hair is greasy, normal or dry or combination/ with or without dandruff/ should I buy the one that is suitable for people with tudung or without/should I stick with the menthol one or not/ with or without conditioner/ two in one/three in one/ etc.etc----after all that I usually migrate to the section that sells panadol!)

The shampoo example illustrates how the goods dominant logic works. In years to come companies who still operate from this kind of logic will certainly be left behind. These companies must move on to the new service dominant logic*. Under this logic customers are responsible to extract the kind of value from the goods or service that they consume. It puts the companies in the rightful place as facilitators of value creation. It will create a unique experience for every one of the customer. The experience of one.

* don't ask me how the shampoo case can be redesign under the new SD logic...go figure :-)

Unlocking value

I had an almost embarassing experience while using microsoft word. I was supposed to prepare a report that involved representation of data collected from a survey. My experience in using microsoft word thus far is just using the editing functions, copying and pasting, changing fonts and paragraphs and maybe inserting mathematical equations. All of which I had learnt on my own, through trial and error. I knew that I had not really deployed the software maximum's ability but I was happy. Up until two days ago, that is. I had to figure out a fast way of inserting graphs and charts directly into the word document  (without going to excel and copying and pasting ----that I knew how to do). Time was running short and I had no choice but use my charm (my operant resource) on my operand resource*, which came in the form of my daughter Sakinah. I knew she had the knowledge ( which is her operant resource*) because I had the opportunity of printing her folio report for school ( one of the things parents do for their children). It was beautifully done complete with bar charts and histograms ( I remembered thinking...how did she do this all on her own? I knew later that it was knowledge that she got from her ICTL class). So, anyway to cut a long story short, I swallowed my pride and asked her to show me how to do "the insert a chart thing, complete with data, percentages, legend, labeling etc".

The whole episode with me and microsoft word and the very easy (as I found out later) task of inserting charts demonstrates an important idea in service science which is known as 'unlocking value'. I was not able to unlock the full value without resorting to available operand and operant resources. It is also interesting to note that in Microsoft Corp. they do have people in charge of finding ways and means of unlocking value of their products as can be seen from this 2007 report in Bloomberg Business Week http://www.businessweek.com/bschools/content/jun2007/bs20070607_329811.htm

The article reports on the experience of an employee at Microsoft whose job is about unlocking the value of Microsoft office products.

The value of a cake lies in the eating and sharing. Thanks

to my students, it was an experience I will not forget :)

* knowledge is an operant resource as are many other intangilbles like skills etc; operand resource are tangible resource like raw materials, people etc; operand resource  are usually acted upon maybe by operant resource to produce something useful (of value)

Ref: Lusch and Vargo : The service dominant mindset

Woodruff's value hierarchy model

While trying to come up with a methodology for conducting research in service science, I realised that I have to scour the literature on value. With the magic of Google Scholar I stumbled upon a paper by Woodruff (1997) entitled Customer Value: The next source for competitive advantage. It is a heavily cited paper. At the time of me writing this piece, it stands at 1309 citations. I also noticed that Prof Irene Ng's paper (the one she talked about during her visit here to UKM) also cite and heavily leverage on Woodruff's work.


Woodruff's paper is a very good read and it presents a hierarchical model that connects three levels (dimensions) of customer value. The lowest is attribute base value, followed by consequence based (in use) value and finally at the top most is goal based value. Woodruff explains the interconnections between the values and how each level leads to the other and vice versa. He pointed out that most customer research (at the time of him writing the paper) are geared towards the narrow point of view where value are usually associated with product attibutes*. In doing so other customer value dimensions such as use value and goal based value are left out. It is my contention that these are the dimensions that service science is concentrating on. Talking about goal based value, Prahalad and Ramaswamy (2002) highlights some of these (I have put some in the figure) in his paper (The Co-creation Connection).

* A lot of co-creation techniques are still concentrating in this area. Here customers are encouraged to give their input on how they would want their products to look like and how the products should perform. They are given the opportunities to co-create/produce/design/construct the products with the manufacturers via virtual tools like the 'co-creation lab' or the 'concept lab'. These type of co-creation will produce desired product attributes and product performance according to user needs.

In search of a methodology

Conducting research in service science posed several challenges. The first is coming to grasp with the new terms and concepts. This is unavoidable since this is a new area rooted in several disciplines ranging from social science, engineering, management and design. The understanding of the concept of value in use, value co-creation, service dominant logic vs goods dominant logic etc do require some thinking for the novice researcher especially those coming from a technical background such as Computer Science. However, having got pass all that the next challenge is to develop the right methodology that encapsulates the concept of value in use. For example if we are to develop a system or services that somehow embodies the "value in use' element, how do we go about doing it? Do we follow the quantitative approach and develop surveys? Do we spend all our waking ours 'together' with our 'customers" to get a feel for the 'values in use'? Do we conduct focus groups interviews with lead users? Do we use an ethographic approach? Do we develop personas and investigate the use of avatars? Or do we go around with a video trying to capture all the movements from our 'customers'? From my reading of the literature, there is no one special (fixed) way of doing these. Bragge et al (2009) presented an approach utilizing lead users recruited from virtual communities to co-create innovative information systems. Another approach developed at the CTF-Service Research Center, Karlstad University, Sweden, is the so called in-situ method of data capture. In their research into transport services, repondents are asked to keep diaries of their experiences while travelling using public transport (in their case, trains) and these respondents are also followed by a videographer to record expressions and situations. This means that data is captured by customers in situ—i.e., data from customers in their own words, in their own situation, when the service is exchanged and the co-creation of value takes place. In yet another research paper prototypes are also used as a communication tool whereby the respondents can articulate specific 'in use' situations that might lead to innovations (either in terms of new systems or other types of services).

So, in conclusion, the adopted methodology (as are all other methodologies) must suit the research questions and objectives. Just make sure that the method used will lead you to the objective of the research.

Ref:

1. Bragge et al. (2009) Inviting lead users from virtual communities to co-create innovative IS services in a structured groupware environment

2.Pareigis et al. The role and design of the service environment in creating favourable customer experiences

Go google them  :-)

Customer engagement level

Another interesting day of presentation. Lessons from todays' presentation can be summarised as follows:
1. There is a measure of customer engagement level as presented by Masoud and Azam. According to a research done, Starbucks is number one in terms of presence and engagement. It would be interesting to investigate the measures used in the rankings.
2. In customer engagement, customer plays or assumes the role as resource (for ideas), co-developer and users of products/services. It is interesting to note that companies such as Nike and Starbucks has evolved into those that are interested in their customers expereince while using their products (customers as users). These companies are said to be interested in the "value in use" of their products. This is different form companies that might use customers as sources of ideas and co-developers but will 'leave' their customers once their products are sold at the point of exchange.
3. It is also interesting to note that research is part and parcel of Nike+ website. The DART model was used in designing the features and content of the website so as to maximize value in use.
4. We can also see that companies are at varying degrees of cuctomer engagement. It would be interesting to conduct a local study to see the level of engagement these local companies are at. Maybe we can develop the similar rankings as those developed by Engagementdb.com (refer to Masoud and Azam's and Denny's presentation)

Use value

Value co-creation in the context of service science refers to the value in use or use value of a product and/or service. The use value is dependent on several factors. One of them is product attributes or features of a service. Besides this, of special interest are the impact of the user resources and the user state on the use value. User resources here refers to user knowledge or the ability to source for knowledge as well as other means available that can be used in the extraction of use value from the products and/ or service. User state on the other hand refers to the situation or context of use of the product and/or service. To put it simply, an umbrella will have a high use value for a rainy day (or a very hot and sunny day, if you are anywhere in Malaysia!) but will be of no use value for someone who do not know how to operate it even though it is raining (or totally hot and sunny)! The second situation points out the importance of the users resources in extracting use value.

Avatars and personas

Personas  (http://en.wikipedia.org/wiki/Persona) is an interaction design technique with considerable potential for software product development. The idea of using personas as representing the voice of the customer was illustrated by Microsoft. They had developed complex personas of customers and based on these personas they had visualised their customers' needs and requirements which formed part of their software requirements for future softwares. Used alone personas can aid design, however the real power of personas lies in the fact that it provides a shared basis for communication. Avatars on the other hand are virtual characters that are created by users to represent them in a virtual setting. They are made popular with the advent of Yahoo messaging and chatting facilities where users usually choose avatars to represent them online. Online games also made avatar a household terminology. In fact any child who has been exposed to online educational material easily understands what an avatar is. A lot of information can be gleaned from the characteristics of avatars that are chosen by users. For instance firms can glean information pertaining to hair colours and styles as indicative of customer preferences and use them in hair care product development.

Innovation

Innovation is the buzz nowadays. It can only happen if a company engages both their employess and their customers. I had just finished an interesting session with my students concerning customer engagement. With the advancement of technology and the pervasiveness of the Internet customers are now one of the major forces that will influence business decisions. It is now not sufficient for companies to push their products and hope that the customers will adopt and enjoy them. Customers' roles have changed from  passive users to that of co-creators and co-developers. Forward looking companies have long realised this fact and have started to actively engage their customers. BMW for instance has developed an online co-creation lab where customers can vote on certain design of cars. They also hold competitions whereby customers at large are encourage to submit ideas concerning issues related to cars like parking etc. Lego has also developed online co-developers websites for children. Here the children are encouraged to design their own toys from lego blocks (virtually). Designs are then voted on and the one with most votes will be presented with the 'real' lego blocks to be enjoyed by the customers.
I would love to see similar things happening in our home grown companies.