When we engage with a client for service design, one of the things we always do is scan their industry, as well as other industries, for any technology that might be a good fit for their particular solution. Too often, companies are inclined to believe that their problem is so unique that only a custom application will do. But by spending some time on deep research, this “re-purposing” ultimately saves our clients tremendous amounts of time and money. One of the areas we have learned to tap into is the U.S. government. With the right search methods, you can uncover a treasure trove of data, software, and intellectual capital that is available for the asking.

An article in today’s Wall Street Journal shows how software, already funded by the U.S. taxpayers, could be the lynch pin to solve one of the most dysfunctional aspects of the U.S. health care crisis. The potential solution lies in a software system that was designed to manage the medical records for Veteran’s Administration hospitals across the country. The software, dubbed VistA (Veteran’s Health Information Systems and Technology Architecture) has been created with several billion dollars of taxpayer funds over the past two decades. The system is now used in over 1,400 VA facilities and the source code is now in the public domain.

According to the paper, “Paperless technologies have revolutionized banking and retailing. But even after a decade-long effort to modernize health care, fewer than 2% of the nation’s 5,000 non-VA hospitals have what could be considered a comparable full-fledged system, according to a recent survey in the New England Journal of Medicine. Hospitals say they haven’t been able to afford the cost of the systems, which range from $20 million to $100 million, and the current economic crisis isn’t helping.”
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The App Store for the iPod has been getting a lot of attention, but another intriguing aspect of the iPhone has gone relatively unnoticed. During the recent preview of the iPhone 3.0, Apple announced that they would be opening up the 30-pin connector at the base of the device for third-party hardware accessories (and software apps that can take advantage the inter-connect).

This is a big deal. Why? Because now, this “device” can talk to other “devices.” Imagine all types of input or output devices, from blood pressure or glucose monitors, to breathalyzers, to biometric or security devices. This list goes on and on, for both consumers apps as well as very focused B2B applications. The great thing is that Apple already has an installed base of 30 million devices with a very powerful (and ever-growing) developer base with over 25,000 applications deployed to date.

Hardware and software, products and services. The lines are blurring more and more – all requiring more refined service design.

J.P. Morgan Chase & Co. , the new owners of Washington Mutual, Inc. are undoing the roughly $1 billion branch make-overs that WaMu implemented in about 900 branches. The radical design was called "Occasio," which means "favorable opportunity" in Latin, and was even patented by WaMu to keep other banks from using it.

The re-think replaced bank-teller windows with free-standing counters and cash-dispensing machines to create a warm and fuzzy retail-banking strategy. Apparently, the design was implemented by a retail design firm that also designed the Disney retail stores. But the question is: did they have experience with service design? Designing a space in which people deal with their money is far different than buying plush toys.

When WaMu customers walked in the door they saw a "concierge desk" where an employee would direct them to tellers standing in the middle of the branch. Since Occasio tellers didn’t handle cash, customers who wanted to withdraw money had to take a slip of paper from a teller to a cash dispenser, entering a numerical code.

Other banks have tried but failed to reinvent the traditional branch concept. In the late 1990s, First Union Corp., now part of Wells Fargo & Co. , launched "Future Bank," emphasizing video kiosks and electronic banking over traditional teller transactions. It was a flop, hurting the Charlotte, N.C., bank’s revenue and fueling a customer backlash that took years to mend.

Even the J.P. Morgan executive charged with dismantling Occasio had his own flirtation with one-on-one teller stations earlier this decade when he ran the retail business at Chicago-based Bank One Corp. "We thought it would be more engaging for customers to be close to the teller," he said. "It just didn’t work."

This article from the Santa Cruz Sentinel newspaper outlines a growing trend in service design for healthcare; using email to get a quick answer directly from your doctor.

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An online system, which made it possible for 120,000 patients at Santa Cruz Medical Foundation to check their medical records online, receive lab results and make an appointment for free, now allows them to e-mail their doctor for a fee of $5 a month.Patients will have to decide whether they would rather phone for free or pay to use e-mail.

In the Palo Alto area, which implemented a secure online system several years ago, about 45 percent of patients signed for the free services. About 6 percent use the e-mail message service for which there is a charge.In Santa Cruz, about 16 percent of patients have taken advantage of the online system since it become available a year ago.

About 36 percent of doctors in the United States communicated with patients online last year, up from 31 percent in 2007, according to a survey by Manhattan Research. Those who don’t communicate online are concerned about privacy issues or legal liability — or they feel they should be paid for the time they spend answering e-mail.

Medicare doesn’t allow doctors to bill for e-mail or e-visits, but doctors are hopeful that policy will change eventually.

Last week we were asked by an upcoming online retailer to re-think the service design of their online returns process for merchandise. This company sells clothing and have a very liberal returns policy, modeled after Zappos . They really want you to be happy with the fit, so they have no problem if you need to make an exchange for a different size or product. The problem is, the actual process of making the return is a hassle.

For most consumers, the traditional process breaks down into these key steps once they decide to make a return or exchange: Go to the website, look up your order, request a "return merchandise authorization" (RMA) which triggers the merchant’s systems to know that the merchandise is coming back and to prepare a return shipping label.

Now UPS or FedEx or USPS gets pulled into the loop. UPS does a pretty good job of interfacing into merchant systems, but they still have to open a new window in your browser to display the return shipping label, which you then have to print. If the merchant uses FedEx, they have to actually "pass you over" to FedEx to print your label and then FedEx has to "pass you back" to the vendor. It is a major case of "process interuptus." The whole customer experience falls apart.

For some systems, you can print the label once or twice or else have to start over. Don’t accidentally close the window before you print, or you have to go back to square one. Then you have to fold or cut the label and use multiple strips of packing tape to tape the new label over the old label. (Don’t have packing tape? Then run to the store!)

Some retailers include a return shipping label inside the box to begin with. Typically, this is part of an 8.5" x 11" crack-n-peel sticker sheet on which the original shipping label was printed, as well your bill of lading/invoice and the return label. But this is a waste of resources because that large label is expensive and unnecessary, and in most cases, people don’t actually need to do a return.

So, here’s a better way. We came up with a solution we call the "reversible shipping label" that UPS and FedEx could simply integrate into their business logic to make everything much simpler for their customers – and their customer’s customers. The fact is that no one (except the final recipient or their housemate/officemate) actually reads the text that is written on the labels. Every step of the package’s journey is controlled by the machine-readable bar code. The label is scanned numerous times, from the time it is picked up (from your home, office or a drop box) to every key checkpoint in the logistics network, right up until the moment the recipient signs for it. So…..

A consumer should be able to go online, tell the merchant they want to send the item back and then the merchant would trigger the "reversible shipping label" with UPS or FedEx. This way, all the customer would have to do is seal the box up as is, and have it picked up (or drop it off.) The original "ship-to" information on the original label is simply reversed. The original recipient is now the shipper and the original shipper is now the recipient.

The fact is that the logic is in the NETWORK, not the physical label. So why force the customer to go through all the messy hassle of dealing with printers, paper, tape, scissors, etc.? Let the machines do what machines do well, and let people get back to shopping online and doing more productive things with their time.

(That is, unless of course, the merchant wants to make returns a hassle. But that’s a different topic for another service design blog entry…)

A book which had a big influence on our thinking back in the late 1990s was "The Innovator’s Dilemma" by Clayton M. Christensen, a Harvard professor who illustrated in very simple and elegant terms how disruptive innovation is brought about not by the folks with the big R&D budgets, but by smaller companies who "thought differently." Instead of adding feature upon feature, these innovator’s create products and services that are "good enough" at dramatically lower (and disruptive) price-points. Christensen and his colleagues have now set their sites on one of the biggest and toughest issues now facing the United States; healthcare.

In the recently published "The Innovator’s Prescription: A Disruptive Solution for Health Care" Christensen, along with co-authors Jerome H. Grossman M.D. and Jason Hwang M.D. lay out some very fundamental and easy-to-understand concepts as to why the current healthcare system is broken. You can read an extended excerpt of the book at the Forbes website, and we have chosen some of the "best of the best" ideas below.

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In order to understand how to "fix" hospitals, first it’s important to understand the value proposition of hospitals. Hospitals have become the workshops within which physicians could be trained and practice their intuitive craft, clinical laboratories where complex medical cases could be solved and unanticipated emergencies and complications could be resolved with as much certainty as possible.

This value proposition has been a great fit for solving poorly understood problems of the past, such as tuberculosis in the early 1900s, poliomyelitis in the 1950s and AIDS in the 1980s. When these diseases were first encountered, they had to be addressed in hospitals. However, in terms of the complexity of diagnosing and treating disease, for a century hospitals have been on a relentless upmarket march on the trajectory of sustaining innovation.
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Some excerpts from a recent article in The Economist…

"In recent years, consumers have become used to feasting on online freebies of all sorts: news, share quotes, music, e-mail and even speedy internet access. These days, however, dotcoms are not making news with yet more free offerings, but with lay-offs—and with announcements that they are to start charging for their services.” These words appeared in The Economist in April 2001 , but they’re just as applicable today.

The only reason it had not worked the first time around, it was generally agreed, was a shortage of broadband connections. The pursuit of eyeballs began again, and a series of new Internet stars emerged: MySpace, YouTube, Facebook and now Twitter. Each provided a free service in order to attract a large audience that would then—at some unspecified point in the future—attract large amounts of advertising revenue. It had worked for Google, after all. The free lunch was back.

Ultimately, though, every business needs revenues—and advertising, it transpires, is not going to provide enough. Free content and services were a beguiling idea. But the lesson of two Internet bubbles is that somebody somewhere is going to have to pick up the tab for lunch.