Here is a round-up of innovative uses of vending machines from around the world, compiled by Trendwatching.com. These are all great examples of service design. How, you ask, since they are all selling products? Service design comes into play in the methods in which they have chosen to “get” products to customers. That delivery is, in and of itself, a service supporting the product. In most cases this is about delivering the product to the right customers in the right place at the right time. And in doing so, cutting out a whole chain of middlemen, resellers, and wholesalers. (Is that good or bad? Depends on what role you currently play in that chain!)

This is also another example of technology prices continuing to fall, which make it financially feasible to distribute via vending machines or self-service kiosks. That technology is applied to not only the “machine” itself, but also it’s wired or wireless connection back to headquarters to let it’s owners know when it’s time to restock or fix the machine.  Which of these would you use?

• Barcelona company Lof (short for ‘Lo Fresco’) has developed a range of vending machines that only dispense healthy food, from prepared fruit and ready meals to gazpacho soup.
• Redbox specializes in the vending of DVDs via self-service kiosks. Redbox kiosks are located throughout the US in fast food restaurants, pharmacies, grocery stores and convenience stores, leasing out DVDs from USD 1 per night.
• Launched earlier this year, US based U*tique bills itself as the world’s first interactive, automated luxury store for “life’s little emergencies and indulgences”. Debuting at Los Angeles retailer Fred Segal, U*tique lets consumers learn about selected luxury and personal-care products and have them dispensed with a swipe of their credit card. Only 50 products are available at any given time, and all have been handpicked by product specialists with backgrounds in global beauty, trend-hunting and innovation. The technology features a touch-screen interface, interactive LED lighting design, and a behind-the-scenes robot that delivers products from secure storage into consumers’ hands.
• German farm ‘Peter-und-Paul-Hof’ has begun selling its fresh produce in vending machines. The specially designed Regiomat machines sell milk, eggs, butter, cheese, potatoes and sausage in thirteen German towns and communities.
• The Standard Hotel chain in the US has introduced a retail concept by placing vending machines stocked with designer swimming trunks in their hotels. Quiksilver and André Balazs’ have partnered to fill the vending machines in the New York, Los Angeles, Hollywood and Miami hotels.
• Bike manufacturer Trek set up a prototype Trek Stop Cycling Convenience Center in Madison, Wisconsin. Located outside (and operated by) bike shop Machinery Row, the Trek Stop is a convenience center for cyclists. The vending machine is stocked with bicycle products such as spare tubes, patches, tire levers and more, along with food and cold drinks.
• InstyMeds have developed vending machines to dispense medication. The machines are designed to be placed in doctors’ offices, clinics, emergency rooms and other healthcare facilities. Each holds 100 of some of the most often used medications, ranging from pills to drops to creams and so forth.
• Last year, US Electronics retailer Best Buy installed vending machines at 14 major US airports as part of a successful pilot program for the company’s new Best Buy express kiosks. The kiosks are large vending machines that carry cell phone and computer accessories, flash drives, MP3 players, headphones, gaming devices, travel adapters, and other items that are likely to appeal to customers on the go.
• Kosher Vending Industries in the US operates “Hot Nosh” vending machines that deliver hot kosher meals in 90 seconds. The company originally launched with more than 50 locations in New York City and has expanded nationwide through partnering agreements and regional licensing.

And we particularly like this one, which solves a very specific problem, in very specific places…

• Two British companies now sell their version of portable ballet flats in vending machines at nightclubs: Rollasoles sell for about GBP 5 and come in four colors: Hi Ho Silver, Gold Digger, Back to Black and Pink. Afterheels are similar rollable ballet flats which have the added feature of being recyclable.

Interesting times in the media worlds as the television and Internet continue their mash-up dance. Some interesting statistics from a recent article by Terry Teachout.

In 1949:
- Americans owned 85 million radios
- Americans owned 1.3 million TVs – of which over 70% were located on the east coast
- a 16 inch picture tube TV $695, or the equivalent of $6,212 in today’s dollars.
- TV networks were losing money at a clip of about $116,000 (today’s dollars) EACH day

Then came the tipping point. Fifteen TV stations on the east coast and in the Midwest got connected via a crude coaxial cable network, which enabled far more viewers to see network programs “live.” As a result, movie theater attendance dropped by 72% but bars who had TVs installed were filled to the rafters on certain nights.

Who made it safely to the other side? Big (radio) media companies who kept funding their vision, and entertainers who embraced the new medium, as opposed to pining for the past. Bob Hope and Big Crosby made the leap from radio to TV, while Fred Allen, a big radio star, decried the loss of the “theater of imagination” that radio made possible, and got left on the far shore.

These are underlying principals of service design; understanding what customers want, using technology as an enabler, and being patient to see your ideas to fruition. (This latter point is difficult for public companies who live quarter-to-quarter.) All in all, the transitions of previous media shifts are all good history lessons for today’s media executives.

The California Academy of Sciences, a natural history museum in San Francisco re-opened last fall in a $488 million eco-friendly building. Beyond the new digs, they also apparently have a new attitude as well. They now stay open late Thursday nights and transform the museum into one of the city’s hottest night spots. More than 3,000 people drink and dance while touring the hands-on tide pool, aquarium, planetarium and four-story tropical rainforest. But book your $10 ticket now because they often sell out in advance.

Who the heck wouldn’t want to hang out in a cool aquarium for happy hour, rather than sitting in bar? We’re glad to see that the lawyers haven’t killed off this idea (can you imagine the wrangling that took?) and see this as a great example of service design. Museums are, after all, in the service business, delivering memorable learning experiences. Massive sums of money are put into bricks, mortar, collections and all the people needed to support it. So why not leverage those sunk costs into new and innovative revenue streams?

It makes perfect, brilliant sense to open the museum after-hours in this way. It provides an uber cool backdrop for socializing, and who knows – you just might accidentally learn something while sipping your mojito.

A recent article in the Wall Street Journal, entitled “The New, Faster Face of Innovation” points out that technology is transforming innovation because it allows companies to test new ideas at speeds – and prices – that were unimaginable even 10 years ago.

Changes implemented on websites or even in-store promotions can be launched, watched and analyzed all within a 24 period. In turn, the authors believe that innovation is becoming a “way of life” at more and more enlightened companies, and we say it’s not a moment too soon. Companies will (or should) be willing to try new things because the price of failure is so low.

In turn, customers should be getting better tailored services, products and offers. This is all good news for service design. These are the types of clients we love to work with; they think big, start small and act fast. And in the end, they win because their customers win.

Starbucks is taking a page from Toyota’s playbook in their new focus on streamlining the coffee-brewing process. From bending over to scoop coffee from below the counter, to eliminating idle moments waiting for expired coffee to drain, an 11-person team is bringing the gospel of “lean manufacturing” to more than 11,000 Starbucks stores.

According to the Wall Street Journal, Starbucks says the efforts are already helping its bottom line, as shown by quarterly results last month that beat analysts’ expectations. However, there are some employees who fear that the new efforts will turn them into coffee-making robots.

This focus on streamlined operations is an interesting complement to the other tack that Starbucks is taking with some of its stores in “de-Starbucking” them. Stores across the country are being revamped to look like locally-owned coffeehouses, complete with local artwork, baked goods and live music. The stores go by the name of their street address i.e. “250 Chestnut” and have drawn mixed reviews from observers. While some accuse Starbucks of going “stealth” in trying to pretend to be a local small business, customers who have actually experienced the stores give them high marks for being much more community-oriented, fun and funky than their corporate brethren.

Turning a ship the size of Starbucks is a slow and daunting task, but we give management credit for both their initiative and imagination. This is a great example of service design in which they’re using both sides of their brains; focusing on both mechanics and aesthetics, to improve both the bottom-line and the customer experience. How can you do the same in your business?

Longing for a taste of the good ol’ days? The John W. Hartman Center for Sales, Advertising & Marketing History at Duke University just posted thousands of television commercials created or collected by the D’Arcy Masius Benton & Bowles (DMB&B) advertising agency, from the 1950s to the 1980s. From American Express to Vicks VapoRub, they’re all here. (Did not remember the spots for Fluffo Shortening, but they’re all here too!)

Click here to jump into the time machine.

From Wikipedia: “DMB&B was established in November 1985 by the merger of the Benton & Bowles (B&B) and D’Arcy-MacManus Masius(D-MM) advertising agencies. DMB&B created the original Santa Claus icon for a Coca-Cola ad, as well as the slogans “This Bud’s for you” for Budweiser and “Melts in your mouth, not in your hands” for M&Ms. They were acquired by Publicis and closed in 2002.”

These ads reminds us of simpler days, when advertisers could simply blast a clever message out through the limited media channels (NBC, CBS, or ABC) over and over and over, to win the hearts and minds of American consumers.Today, the challenge is much complex and requires actually listening to consumers and speaking with them, as opposed to at them.

Unfortunately, we’ve seen too many current-day ad agencies who are still stuck in the time machine, longing for the “good ol’ days.” This is where service design can help.

A recent article on Retail Wire details how PetSmart, the big box pet supply retailer, plans to add in-home services to their revenue mix. Services will include dog walking, backyard clean-up and aquarium set-up, all in an effort to differentiate itself from Wal-Mart, which offers everyday low prices on pet supplies and even pets, such as fish.

PetSmart currently offers grooming, training and kenneling at many of its 1,137 stores.

“In-home services are a big opportunity, but we have a lot of work to do before we determine how to make that work,” Robert Moran, who became the pet retailer’s chief executive officer last month after serving as COO since 2001.

Conversely, any move by PetSmart into at-home services would put pressure on the many mom & pops currently supplying those services.

“I would really question the training of the people they would hire,” said Jill Tuesday, owner of No Furry Worries in Huntington Beach, Calif., a local entrepreneur providing dog walking and pet-sitting services. “You can’t just hire a bunch of kids and then expect people to let them into their homes.”

But then again, that’s exactly what Best Buy does with the Geek Squad.

Where are the opportunities to enhance your existing core business with specialized services? This is where a service design review can help.

We have posted four new videos today which cover a range of topics related to service design. Click here to check them out.

We recently came across an amazing service designed for kids; a Brooklyn, NY storefront appears to cater to outfitting superheros for his/her next crusade. The shelves are lined with tools of the trade – invisibility paint, capes, deflector bracelets, and bottles of chaos and anti-matter. Customers are treated as real superheroes throughout every facet of the customer experience – and take an oath when they leave the store not to share trade secrets with “villains.”

An actual business generating real revenue, this novel idea actually creates a comfort zone for the real business in the back-room; a non-profit creative writing and tutoring center called 826NYC.

Imagine students, who are hesitant at best when their parents sign them up for extra help (equaling extra homework.) Now they enter a cool and unique storefront, and get to the tutoring center through a secret bookcase in the back wall. What kid wants to walk into a storefront that says “Tutoring Center?”

826NYC is the second in a series. A pirate supply store called 826 Valencia, located in San Franscisco, was the first tutoring/creative writing center and was the brainstorm of Dave Eggers, author of the Pulitzer Prize finalist novel “A Heartbreaking Work of Staggering Genius.”

Since then, sister sites have popped up all over the country with different themed storefronts. Seattle has a space traveler theme and 826 Michigan is a robot supply and repair shop.

Many times, we assist our clients in finding new service design concepts in the most obvious places. This story also shows that sometimes you have to “zig” when logic would tell you to “zag.” Kudos to Dave Eggers and everyone involved with his tutoring program for thinking differently in order to help kids bridge the gap between their own inner hero and their schoolwork.

Click here to see a Dave Eggers discuss this project at the 2008 TED conference.

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.