Thanks to Mark Davis and his staff at Bentley University, in Waltham, MA. Their “Art & Science of Service” conference last week was a big success, with attendees from industry and academia who came from as far away as Germany, the Netherlands and Israel. There were lots of good contacts and networking opportunities. Our workshop, “Thinking Outside-In: Identifying New Service Revenue Opportunities” on Friday (see photo), generated some good interaction among the attendees. Thanks to all who contributed!

Some key takeaways from my conference notes:

• Out of IBM’s $103 billion USD of annual revenue, services now respresent more than half – $57 billion USD.
• IBM: Service science is more like biology (focused on classification) than physics (focused on mathematizing).
• “Service is value co-creation” – not just about money, but also about knowledge.
• At one hospital in the Boston area, a 1% turnover equals $250,000 USD. At one point, their turnover (prior to a new management team with a service design focus) was up around 20%.
• Why not show the wait times in an emergency room, similar to an airport terminal or deli counter?
• M2M acronym equals “machine to machine”
• Technology which enables M2M is exploding – both embedded devices and the back-end services. (Can security risks/opportunities be far behind?) This will have big impact on service design.
• What’s needed is a conference specifically focused on “service design in healthcare.” Lots of best practices and case studies, but it such a large sector that it needs its’ own vertical focus.

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.

IncBizNet , the online site for Inc. Magazine, just posted a video clip from our service design workshop in New York City. Check it out below.

You can also find a set of photos from the workshop on Flickr.

Thanks again to the entire staff at IncBizNet for organizing a great event!

We were profiled today by The Phoenix , a local newspaper and I think it was very well written on our approach to service design. Here’s the article…

New Start-up Focuses on ‘Service Design’

Wednesday, March 18, 2009 8:39 AM EDT

By G.E. Lawrence

MALVERN — For Charlestown resident Bob Cooper and Frontier Service Design LLC, the most interesting part of finding ways to add to a company’s bottom line is its intellectual challenge.

"We want to work with clients who know what they know, and more importantly, know what they don’t know," Cooper says. Clients who are "eager to find a knowledgeable and experienced partner who will help them know what they don’t know."

That’s no Zen koan: it’s a principle of a business model emerging out of Cooper’s over two decades working with corporate clients, and discovering along the way undiscovered value in what they do — leading to the development of new and consistent revenue streams.

"The most fun and profitable relationships for everyone," Cooper says, are those "where we really get inside the business, understand the culture and the people, and really make a difference through service design."

"Service design?" Yes, the focus is on "service," in a national economy in which 70 percent of gross domestic product is in services, not products — but on the services surrounding manufacture, as well.

His new company, Cooper says, takes "an approach to help companies design, prototype and launch" service innovations, by getting to know a company’s processes thoroughly, and applying good ideas and best practices across industries, developing in the end "new and recurring revenue streams.

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You are invited to attend a free workshop that we will be presenting in conjunction with IncBizNet, the online business networking community created by Inc. magazine and their website, Inc.com. The workshop will be held at their New York City headquarters on February 26 from 5:30 to 8:00 pm. The program will also be videotaped and made available via IncBizNet.com, as well as the website of event sponsor, FedEx Office. More details and registration information can be found here but a summary is listed below…



Gold at Your Feet: How to identify new sources of revenue within your existing business

At the heart of entrepreneurship, there is a spirit of innovation, reinvention and thinking outside the box. Entrepreneurs and private companies are constantly striving to transform, reform, and reinvent the business landscape from the ground up in a positive, forward-thinking way. In support and celebration of that spirit, IncBizNet is hosting a complimentary, interactive executive meet up for private company CEOs around discovering new, innovative and easily accessible revenue streams within your existing business.

Inc.’s special guest Bob Cooper, national pioneer in the cutting-edge field of service design, leads New York’s fastest-growing private company leaders in identifying and realizing unseen, potential revenue streams within your current day to day business – using real-world examples and a proven step-by-step process. Bob will explore how to leverage your brand, knowledge, data, relationships and technology to drive new innovation and additional revenue without economic overhaul. The interactive event kicks off with a cocktail networking reception followed by a presentation, case studies, hands-on exercises, Q&A session.

Come join other New York area CEOs and business owners in our celebration and commitment to a successful 2009. Click HERE to RSVP. Space is limited and RSVP is required. CEOs may bring one executive guest.

Made possible by FedEx Office

Kevin Kelly has a great post on his blog, "The Technium" with thought-provoking notions about ownership, renting, and borrowing as they relate to both goods and services in both the physical world and online. Here is a great quote:

“The downside to the traditional rental business is the “rival” nature of physical goods. Rival means that there is a zero-sum game; only one rival prevails. If I am renting your boat, no one else can. If I rent a bag to you, I cannot rent the same bag to another. To scale your rental business you have to buy more boats or bags. But of course, intangible goods and services don’t work this way. They are “non-rival” which means you can rent the same movie to as many people who want to rent it this hour. Sharing intangibles scales magnificently. This ability to share on a large scale without diminishing the satisfaction of the individual renter is transformative. The total cost of use drops precipitously (shared by millions instead of one). Suddenly, ownership is not so important. Why own, when you get the same utility from renting, leasing, licensing, sharing?”

These notions bring into focus some innovative ideas for designing new services.

Kevin is a terrific writer, and a very smart guy with great insights on a wide array of topics. I also highly recommend his "Cool Tools " weekly email with tips on all sorts of things (bits and bytes) to make life easier or more interesting. You can subscribe here .

Speaking in Tongues – Four Dreams
by roujo

I heard a re-broadcast of an interview with Robert Prosky who passed away last week at the age of 78. Prosky was well-known character actor, both on stage and screen and is probably best recognized by TV viewers for his on-going role in "Hill Street Blues." What he said in the the last minute of the interview from 1998 struck me as a great metaphor for the service experience…

Prosky said, "There is also a joy in a stage production – there is a unique event that’s built each evening between the audience and the actor. It’s not just the actor – it’s built together and it’s unique to that event. Joe Chaikin , who writes on theatre said that, ‘One of the beauties of theatre is the shared mortality in the space.’ And that’s why it’s precious – it’s because it lasts an instant. And that’s the essence of the actor’s work – to create the moment; the now. And the now only exists for an instant."

Just as a stage actor and the audience co-exist in the moment to create a live theatre experience that is unique to that particular evening, so does the service provider and the customer. Whether it is a transaction from human-to-human at a ticket counter, or human-to-machine at an ATM, or team-to-team on a year-long project – each are creating their own unique "now" or series of "nows." Even though the "script" might be the same night after night, each performance is actually quite different on subtle levels made so by both the actor(s) and the audience.

In the theatre of your business, is your audience engaged?

This past Saturday night I went to a wedding at The Church of the Holy Trinity on Rittenhouse Square in Philadelphia. It’s a beautiful Episcopalian church, built 150 years ago. At the reception, I ended up sitting next to the Rector, Reverend Alan Neale, who performed the wedding ceremony. Over the course of the evening he asked me what I did and I explained that Frontier works with clients in a burgeoning discipline called service design.

“Essentially, we ask questions like, ‘What if?’ and ‘Why not?’ to design new services – and new sources of revenue – for our clients,” I explained over the second course of dinner. The Rector is a smart guy and he “got it” immediately. Born and educated in London, his first degree was from the London School of Economics and a degree in Theology from Oxford University followed.

He leaned in close and said, “Yes, that’s exactly what we did here when I first arrived four years ago. Previously, this church would only marry those people who were parishioners at the church. I came along and thought that was ridiculous so we opened up the church to anyone who wanted to be married. I meet with the couple four times prior to the wedding to provide counseling to get them off on the right foot, and now we do about 40 weddings a year. (more…)

A lot of folks on the client side don’t know this yet, but most traditional advertising agencies – even ones with a shiny new “digital/on-line/interactive” department – are headed for a world of hurt.  Why?  Three reasons.

HISTORY
For more than 100 years, ad agencies have all operated pretty much the same way. Be clever, know how to sell, and get in deep with the client. Being clever is a good thing, as is getting in deep. But ad agencies are so focused on selling the client’s stuff – and have been for so many years – they are not very good at figuring out what people want to buy.  Consider the very terms that are used in sales and marketing: “taking market share,” “grabbing eyeballs,” “capturing customers,” etc. Even the word “brand” originally meant a red-hot piece of metal used to burn the identity of the owner into a horse or cow’s rump. Barring a few bumps in the road (like when big media mark-ups went away) the ad agencies have pretty much continued on status quo. But now that the power has shifted to buyers (as opposed to sellers), ad agencies continue to tap dance on an ice-berg that is slowly – but surely – melting.  So why can’t they change? (more…)