We heard a story the other day from a large infrastructure service company that has over a thousand field service personnel on the road on any given day, around the country. One of the senior executives did a ride-along with one of these long-time employees and heard an interesting story.

“You know, I’ve been driving this van for about 16 years now, going to people’s homes to help them out, or going to troubleshoot at one of our field facilities. For years, I always felt that I was part of a bigger team of people, you know? I’d be driving along and I’d hear the dispatcher coming over the radio calling out assignments to different techs. I’d hear those voices go back and forth and I’d have a feeling for what was going on around me, you know? So, if maybe Jim got assigned to a big issue about a mile away and it was raining, I might swing by there to see if he needed help. Or I might check in with him on the radio. But ever since we got these GPS systems and smartphones a few years ago, I just get text messages from central dispatch telling me where to go next. I go through an entire day never hearing any human voices of people I work with anymore, and frankly, I feel like I’m out here all alone. In fact, I don’t even feel like I’m part of the company anymore.”

The beauty – and terror – of service design is that it all revolves around people. Certainly, we want to leverage technology to make every process run more smoothly but we also have to keep in mind the collateral damage incurred by such choices. In order to provide an outstanding customer experience, service personnel need to feel as though they are part of a larger mission, and community. How has technology disintermediated your employees from your own company and culture?

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.

Today’s Wall Street Journal has an article entitled, “Palm’s Pre Smart Phone Fails to Stem Deep Losses.” The article goes on to describe the Palm’s quarterly loss has quadrupled since the launch of the much-touted Pre on June 6. Revenues are down, profits are down.

But how much of this is attributed to the phone itself, which has been lauded as an “iPhone killer,” versus the partner that Palm chose to dance with on the network provider side? This is a classic case service design example of the symbiotic relationship between products and services. From our vantage point, Palm’s problem is not the Pre product, but the Sprint Nextel network, which is suffering from massive customer flight due to spotty coverage, dropped calls and bad customer service.

As a long-time (and happy) Verizon customer, I have been jonesing for the Palm Pre ever since I saw it in Las Vegas last January at the Consumer Electronics Show. Add into the mix that I am also a long-time (and happy) Palm Inc, customer who started on the old Palm Pilot handheld organizer, moved up into the Treo family of smartphones and is now happily using a Palm Centro. And even though I’m happy I STILL want a Pre. But I will not buy it until Verizon has it. (This is probably also the number one reason I don’t have an iPhone – even though I am Mac everywhere else in my life – you can only get an iPhone via AT&T, another inferior network to Verizon.)

Call me old fashioned, or just call me loyal. But Verizon has always done right be me when it comes to mobile communications and that service relationship is the stake in the ground around which my product decisions are made. This is a key insight of service design that product folks often don’t get: it’s more about the service “eco-system” than it is about individual features of a product.

When is this insanity going to stop? Imagine if you bought a Chevrolet and you could only put Sunoco gas into it. In Europe, the phone networks are independent of the handsets so that consumers are free to combine their favorites. Until the U.S. adopts the same model,  I just have to hope that Palm hangs in there long enough for me to get a Pre on the Verizon network. Please, Santa…

A critical part of the service design process is putting into place feedback loops which enable your customer to let you know how you’re doing. This is a delicate matter because you want to do it without disrupting the customer experience. That’s why we applaud Facebook and the way they’ve incorporated a simple feedback loop into their advertising.

Did you ever notice the little “x” at the top corner of a Facebook ad? I kept seeing these annoying ads for “Mafia Wars,” a Facebook game that appears to be wildly popular with others. Out of curiosity I clicked on the “x” up in the corner of the ad, having been conditioned over the years to know that clicking on an “x” makes things go away. That feature is standard user interface component for applications, or a way to get rid of an intrusive “overlay” ad that hides content below it.

In this case, the ad on Facebook was on the side of the page just sitting there. And being able to hit the “x” to just make it go away is a great idea. But before the ad goes away, Facebook solicits your feedback by asking “Why don’t you want to see this ad?” Your options are misleading, offensive, uninteresting, irrelevant, repetitive or other (in which case a text box pops up for your custom input.)

After making a selection, you see “Thanks for your feedback. Over time, this information helps us deliver more relevant ads to our users.”

There’s also the famous “thumbs up” logo at the bottom of the ad to show that you like the ad. (It would be interesting to see a breakdown of how many people click the “thumbs up” versus the “x” – and why.)

This is such a simple, yet powerful tool. Why don’t other websites integrate this feedback feature into their online advertising? The whole point of the web is that is interactive. “Ask and ye shall receive,” right? We all know that ads are the currency of the realm when it comes to delivering content. So why not do everything you can to get feedback from viewers as to what they like or don’t like, and why?

Smart move Facebook, and a great example of a powerful feedback loop for service design!

Last week the Wall Street Journal ran an article about Wi-Fi services available on airlines. Bottomline: people love it, but really aren’t willing to pay for it. Why not?

According to the article, “in tests and now in regular service, usage drops off considerably when travelers must pay for the service.” Even Alaska Airlines, which only charges $1, saw a steep drop off in usage. (By the way, Alaska Airlines is a “cashless” airline, so if you want the Wi-Fi, you have to pay for it with a credit card – ggrrrrrrr.)

So what’s going on here? Is the economy causing people to cut back on non-essentials? Or have people become so used to ubiquitous computing that they expect “the cloud” to envelope them everywhere, all the time, for free?

Or could it be – as we suspect – that sitting in an (albeit overpriced and cramped) airline seat at 35,000 feet is one of the last places where you can seek refuge from our “always on” world of instantaneous communications?

An interesting question to answer for sure, and one which has ramifications for service design in the worlds of travel, entertainment, and hospitality.

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.

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?

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

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.