1. Innovation approach for identifying, developing, and launching new services PD Dr. Heiko Gebauer Business innovation in utility sectors Swiss Federal Institute of Aquatic Science and Technology (EAWAG) Zurich, Switzerland

2. Service innovation approaches Benchmarking GoalsImitating services from competitors Using competitor services as a facilitator for creating new servicesProceduresCustomersPartnersCreating services through an in-depth understanding of customer needsCreating services based on the competences of partnersPredicting changes in the service needs and emergence of new service needsCreating services based on partners in-depth understanding of customer needsMonitoring competitive offeringsIdentification of service ideasMonitoring crossindustry offerings and service innovationsService development Market launch of new servicesPartner workshopsCompany Creating services based on companys competencies and skills Leverage existing services into new customer segments Improving and reinnovating existing services Competence analysis Critical incident techniques for existing services 3. Customer-driven service innovation approach CustomersSupplier of ideas and challengersInnovation processDefinition DefinitionTasks Instruments Behavioral orientation for segmenting customers Process mapping (Lifecycle analysis) Utility layers BrainwritingObjectivesCustomer segmentation Customer processes Customer needs Idea generationCo-developer and testerEntwicklung Development Idea description Module description Process description Check-lists Modularization Blueprinting Resource planning Development workshops PrototypingPurchaser and Feedback providerMarket launch Executing market tests Roll out Cost and sales supervision Test markets Capacity management Customer observation Optimization workshopsEfficiency Effectiveness Source: Drner, Gassmann & Gebauer (2011) 4. Customer-driven service innovation approach CustomersSupplier of ideas and ChallengersInnovation processDefinition DefinitionTasks Instruments Behavioral orientation for segmenting customers Process mapping (Lifecycle analysis) Utility layers BrainwritingObjectivesCustomer segmentation Customer processes Customer needs Idea generationCo-developer and testerEntwicklung Development Idea description Module description Process description Check-lists Modularization Blueprinting Resource planning Development workshops PrototypingPurchaser and Feedback providerMarket launch Executing market tests Roll out Cost and sales supervision Test markets Capacity management Customer observation Optimization workshopsEfficiency Effectiveness Source: Drner, Gassmann & Gebauer (2011) 5. Task 1: Behavioral description of customer segments Households Households HouseholdsCustomer segments Commercial customers (e.g., industry, retails, farmers, branches and so on) Public institutions (e.g., schools, public buildings) Private customers (landlords, tenants, families)Usage behavior Stand-by, temperature, light, washing clothes & dishes, cooking, PC work Adaptive behavior Purchasing and exchange of devices (fridges, tv, energy saving lamps, timers, sensors windows & doors ) Investment behavior Installation of heating pumps, solar panels, air conditioning, heating systems, windows, cladding isolation ... 6. Example Household description according to social milieus Usage behaviorInvestment behaviorAdaptive behaviorHouseholds Social milieus according to social status and basic values General for consumer behavior Social statusSpecific for utilitiesPerformers & AchieversTraditionalsEnvironmentally consciousMaterialisticBasic values 7. Short description of Traditionalists CharacteristicsDescriptionValues Interests Product interests: Garden, Health, Food Potential interests on utility services - today: Day/Night tariff, customer centre, information material, disconnectable electric meter and - future: Displays or specific, but simple invoices for controlling energy consumption, support services, exchange programs for household devices, detection of heating leakagesWillingness to pay Medium, limited financial resources, sufficient time, highest savings through the exchange programs for household devicesSocial status Certainty, frugality, and continuity Saving is an essential attitude Concrete analysis and control of energy consumption Limited acceptance of technological innovations Strong effort on understanding energy efficiency Long-term decisionsMostly women Age: +50 Education: low to medium Income: medium level Jobs: Pensioners, housewives, basic employees, farmers 8. Illustration of Traditionalists 9. Task 2: Identification of household energy related processes and daily routines Search housingatBuying AppliancesSource: Philips / B2Ee enHome RenovationSleepingDaily lifeg ie HylneSource: Philips / B2Enn DiMealLeisure & EntertainmentKidserl ea MSchooli ng av Le ome hKids are home and watch TVSource: B2EWorkSource: PhilipsBreakfastMealea MWorke en gi Hy i ng av e Le om hnei ng av Le ome hgi HyLeisure & EntertainmentEntertainmentl ea MSleepingShared livingEnergy auditgie HyLights onVacationWorkEnergy bills Sleeping.Leisure & Entertainmentg Hyne ieMoving inLeavingerigh NeWUtility contractsing av e Le om h Source: B2E 10. Task 3: Classification of energy related processes Relevance of the processes/activities for energy issues High Results of task 2Low LowHighFrequency of processes /activities 11. Task 4: Analyzing the utility layers for selected energy related processes Selected energy related processes Results of task 3Utility layers 1Relevance for energy issuesCustomer productivityHighABSimplicity Convience Risks Low LowFrequencyHighImage & fun Environemental friendliness1 Based on von Kim, W.C. and Mauborgne, R. (2005), Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant, Harvard Business Review Press.... 12. Task 5: Brainwriting for identifying innovative ideas for utility services BrainwritingExamples 1 Information services for saving energies Feasibility studies for solar panels Case studies on how to save energyUtility layer maps as a input for idea generation2 Round 1: Within 5 Minutes writing down 3 Suggestions on a flip chart Circulating the flip charts among the team Result: List of innovative ideas Customer card Thermal imaging of buildings ... 13. Task 7: Description and evaluation of the service ideas (Check list)Value-benefit analysis Customer Customer situation needsService ideaCompetence Demanded by customers Recognized by customers Existing in the utilityImportance for customer High Medium LowDifferentiationRevenue Charging Implementation timeStandard High Differen- Medium tiator Low Future+ -Short-term Mediumterm Long-term 14. Customer-driven service innovation approach Customers & partners asSupplier of ideas and ChallengersInnovation processDefinition DefinitionTasks Instruments Behavioral orientation for segmenting customers Process mapping (Lifecycle analysis) Utility layers BrainwritingObjectivesCustomer segmentation Customer processes Customer needs Idea generationCo-developer and testerEntwicklung Development Idea description Module description Process description ... Check-lists Modularization Blueprinting Resource planning Development workshops PrototypesPurchaser and Feedback providerMarket launch Executing market tests Roll out Cost and sales supervision Test markets Capacity management Customer observation Optimization workshopsEfficiency Effectiveness Source: Drner, Gassmann & Gebauer (2011) 15. Task 1: Preliminary description of the service ideas (Check list) A) Short summary a) Main objectives b) Customer needs c) Service description B) Strategy a) Consistency with the overall strategy b) Strategic importance c) Synergies to other services and productsC) Customer needs a) Customer situation b) Customer needs b) Unique selling proposition D) Service description a) Core elements b) Standards c) Service levels and options d) Involved partners and organizational units E) Service Process a) Rough process description b) Responsibilities within the process c) Execution of the processesF) Service marketing a) Target group b) Key market c) Competition d) Pricing model e) Selling f) Promotion G) Preconditions a) Feasibility studies b) Preconditions c) Restrictions (rlaw, others) H) Cost & revenue estimation a) Developing costs and investments b) Delivery cost c) Sales prices and sales volume I) Development plan a) Time line for the implementation plan b) Milestones c) Resource planning J) Risks a) Product & service risks b) Project risks c) Market and competitive risks d) Others 16. Task 2: Modularisation of services Service definitionsService platform?Pure must elementModul descriptionServiceModul?ServiceModulUpgrading Elements?ServiceModulOptional ElementsNecessary basic elements Extension of the basic elements Additional services MustsFunctional analysisAnalysis of customer requirementsService functions for all customer typesCouldsService functions for specific customer typesCustomer type 1Customer type 2 Customer type 3 17. Sun Power Service packages This idea had been developed for a specific utilityCore idea House-owner has a sufficient roof-surface. By installing photovoltaic equipment (5 KWPeak), houseowners make significant contribution to sustainability Utility copes with all challenges and provides a total solution. Challenges include (house-owner has limited knowledge and wrong expectations) Utility covers the whole process starting from a first counseling, access to financial support, installation and maintenance of the photovoltaic equipment Utility guarantees quality of product and services through partnering with installers Sun Power Service packages contributes to the extension of renewable energy usage Key issues: Service package descriptions Partnering concept Communication and promotion of the servicesModul 1: ConsultingModul 2: Interest clarificationModul 3: Feasibility studyModul 4: Proposal, Execution (installation), and operation 18. Thermal imaging services (1) This idea had been developed for a specific utilityCore idea Cost-competitive, simple and neutral entry with a substantial and clear recommendation for the customers Awareness and engagement into the topic on energy losses in private buildings Modules go beyond the existing offerings of other service providers and provides more substantial recommendations to the houseowner High standardization and automatization of the modules Key issues: Full descriptions of each module Pilot study and market launchesModule 1: Mini-Check Thermal imaging service Module 2: Full-scale thermal imaging services Optional module 3: Energy Performance Certificate (for Buildings) 19. Thermal imaging services (2) This idea had been developed for a specific utilityModule 1: Mini-Check Thermal imaging service Module 2: Fullscale thermal imaging services Optional module 3: Energy Performance Certificate (for Buildings)Objectives Easy and cost-competitive entry of customers into the issue of energy efficiency of buildings Offering a small-size service package, which makes technical sense and offers an additional value for the house-owners Differentiation compared to existing offerings through quality levels Clear restrictions of the applications of the thermal images (e.g., no applications for reclamation on new buildings) Contents: Personal customer contacts Written introductions (Check lists for the customer preparations) Customer preparations Executions of the thermal imaging (selection of specific thermal imaging days) Standardized analysis of the thermal image Sending the information to the customers Charging Cost-coverage charging methods of the mini-check of about 100 Euro (labor costs about 2h equals 100 Euro) without travel costs of 75 Euro and overhead-cost 20. Thermal imaging services (3) This idea had been developed for a specific utility Objectives: Identification and description of technical-feasible recommendations for improving the energy-efficiency of buildingsModule 2: Fullscale thermal imaging servicesContents: Personal customer contact Written or verbal introduction (Check list for the customer preparation) Detailed preparation of the customers necessary (about 3 days including windows, heating and building) Execution of thermal imaging services (inside and outside) Detailed analysis of the images and the formulation of the report Discussion of the report with the customers Support for the getting subsidies and financial support for energy efficiency actions Implementation of the actions together with the customersOptional module 3: Energy Performance Certificate (for Buildings)Charging: Charging of the standard module 2 1200 Euro (labor costs of 2 days 900 Euro costs internally Intermediate finances for the implementation actions could be provided by the utilityModule 1: Mini-Check Thermal imaging service 21. Thermal imaging services (4) This idea had been developed for a specific utility Objectives: Energy performance certificates are mandatory in various areas. For example, in the field of subsidized housing, every new, extended, and re-build house with more than 1000 m2 and renting and selling of houses (buildings).Module 1: Mini-Check Thermal imaging serviceContent: Energy performance certificate contains all building information and calculations related to the thermal characteristics of the building Specific norms apply to the energy performance certificateModule 2: Fullscale thermal imaging services Optional module 3: Energy Performance Certificate (for Buildings)Charging: Optional module: Energy performance certificates for about 1500 Euro Prices are similar to competitive offerings 22. Task 3: Service blueprinting Procedure1The identification of the service process, that is supposed to be blueprinted2The identification of the customer segment or the supposed to experience the service3Picturing the service from the customers perspective4Picturing the actions of the contact employee (onstage and backstage), and/or technology actions5Linking the contact activities to the needed support functions6Adding the evidence of service for every customer action step 23. Sun Power Service packages This service blueprint had been developed for a specific utility CustomersSalesSolar power centerInstallation partnersLocal authoritiesProcessesActivitiesOpen discussionAnswering FAQsClarification of interestService descriptionLegal conditionsSelf-financing informationFeasibility studyTechnical feasibilityEconomic feasibility Proposal preparation for subsidiesProposal developmentSelf-financing clarificationInforming partners about the proposal evaluations (accepted, waiting list, and rejected) ImplementationScheduling of partners InstallationAcceptance test OperationMonitoringTrouble shooting - Parties involved in and/or conducting the activities 24. Task 4: Business plan development Template for business plan developmentContents Main contentContent elementsExecutive summaryService description Customer benefits Service objectives Financial key indicators*R eferenz zu DL-RessourcenServicesService elements Service variants Service documentation Service marketing* F equenz rService processesCustomer activities Internal activities Customer contact pointsPersonal resourcesPersonal resource demand Personal qualifications Personal training & education Personal assessment & compensationService partnersPartner agreements Partner activitiesService qualityQuality standards Quality controlFinancial aspectsLabor costs Material costs Educational costs Overhead costs Service pricing & controllingRisk assessmentProduct & service risks Project risks Market and competitive rissImplementation planTime line Milestones Resource planningBchli AG Sei te 6DL-Kon zep t: 5) Q ualittsstand ards A) Q ua littsstanda rds de finieren(bs pw. lei stungsbezogen, kommunikati onsbez., bedrf ni sbez.)B) Form der Q ualit tskontrollePeriodisch, d.h. alle ........ W ochen Ad hoc, d.h. stichpr obenweise (bs pw. Kunden-Feed-back, S ic hproben, Rev iew, Kennzahlen) tC) Ve ra ntw or tliche r Q -D ef./Kontr olle6) Fina nz aspekte A) Ge schtzt e Koste n pro N achfr age Personalkosten Ma erialkost en t Hardwarekosten Ge inkostenanteil meCHFT otal* * * ** Totale Kosten pro Periode .........CH FCHF CHF CHFCHF* Bemerkungen 25. Business plan development for energy checks (1) This business plan had been developed for a specific utility Objectives: Short-term objectives: Conducting energy consulting services Supporting behavioral and investment related actions for improving the energy efficiency Module 1: Measure and analysis of energy efficiencyLong-term objectives Enabling customers to execute energy efficiency actions themselves Establishing a platform for self-services for energy efficiency Access to information on value-added services (energy-efficiency recommendations, energy savings calculator)Module 2: Guiding the implementation actionsContents: Module 1: Measure and analysis of energy efficiency Module 2: Guiding the implementation actions Optional module: online energy accountingOptional module: Online Energy accountingKey financial indicators: Separate prices for Module 1 and 2 Yearly cost contribution for online energy accounting depending on the identified energy saving potential 26. Business plan development for energy checks (2) This business plan had been developed for a specific utility Hotels Main implementation steps Pilot study Building partner network Final service development Market launch and assistanceOffices Transfer experiences of doctor's office to general offices Pilot study Market launch and assistanceDoctor offices Final service development Pilot studies Market launch and assistanceSchools Pilot study during Feel-the-Energy program Market launch and assistanceTime frame2010-20142012-20162011-2015openRevenues164000 607500 103000 openInvestments210000 910000 140000 open90 Mwh270 Mwh50 MwhopenYearly energy savings 27. Business plan development for energy checks (3) This business plan had been developed for a specific utility Service modulesElectricityModule 1: Measure and analysis of energy efficiency Module 2: Guiding the implementation actions Optional module: Online Energy accountingHeatingWater 28. Business plan development for energy checks (3) This business plan had been developed for a specific utility Initial situation for hotel energy checks Energy-saving potential is relative high, and covers different applications (heating, warm water, electricity and so on) Until now limited number of actions implemented by hotels If one hotel will demand the energy check, other hotels are very likely to follow Challenges technical competencies to conduct the energy check is beyond the competence base of the utility. Utility has to rely on a various partners Short-term objectives Execution of energy consulting service together with interested hotels Supporting hotels in changing their behavior and investment-related actions Long-term objectives Enabling hotels to execute energy efficiency actions themselves Establishing a platform for self-services for energy efficiency Access to information on value-added services (energy-efficiency recommendations, energy savings calculator) 29. Business plan development for energy checks (4) This business plan had been developed for a specific utility Target market Hotels within the regions, which are confronted with an above-theaverage energy consumption and strong interest in saving energy High market potential, because it is a touristic region Competition No competition for measuring energy consumption in hotels (today) No competitor or partner is able to systematically and comprehensively cover energy efficiency in hotels Pricing Prices are based on individual prices for each module Basic modules are relative cheap (cost-covering) in order to avoid to high upfront investments. 60% of the realized energy saving go to the utility within the first years 30. Business plan development for energy checks (5) This business plan had been developed for a specific utility Implementation plan Pilot study with a single hotelDevelopment of the energycheck for hotelsMarket launch and assistance 100 WD (Working days) Costs (about 500 Euro per WD) = 50000 EuroSetting-up partners Identification of potential partners Developing a partnering concept (quality criteria, cooperating forms) Service development Standardization of the service delivery processes Setting-up conditions for service delivery processes Market capacity is estimated to be 325 hotelsEstimated effort and costs 40 WD Costs (about 500 Euro per WD) = 20000 Euro Within the first three years about 10% of the hotels can be convinced to use the energy checks (32 hotels) Following number of hotels are estimated: 1st year = 8 hotels 2nd year = 12 hotels 3rd year = 12 hotels Estimated effort without consideration of learning effects 1st year= 40 WD 2nd year = 60 WD 3rd year = 60 WDComment: Resource demand and costs depend strongly on the time frames, when hotels would demand the services. Most probably. Hotel only would demand the service during the off-season or rebuilding periods. Peak management is, therefore, essential for the financial success of the service 31. Business plan development for energy checks (6) This business plan had been developed for a specific utility Service delivery process and activities (1): Effort to conduct the service activities is estimated to take 5 days Process / activitiesShort descriptionPreparation of the hotel visits Previous energy consumption analysis and definition of performance indicatorsOrder clarification at the hotel Checking the technical pre-conditions and economic potentials of the services and modules (e.g., GSM-Standard, offline or online data transmission) Definition of necessary actions together with selected partners based on a preliminary analysisOrder explanation Price information / explanation of the service, service elements, and modules Information on involving customers (e.g., hotel energy manager) Service and consulting contents, guarantees and reliabilities, integration of partnersTechnical measurement Installing measurement equipment depending on the modules Online or offline data transmissionDetailed analysis and assessment of energy savings Data analysis Discussion of the data together with the customers (e.g. electric (energy) consumers together with the hotel energy managers and technical energy saving potentials identifications) Detailed measurements with dedicated measurement instruments 32. Business plan development for energy checks (6) This business plan had been developed for a specific utility Service delivery process Process / activitiesShort descriptionDeveloping actions & recommendations Developing potential actions for increasing energy efficiency Cost-benefit-analysisReport development Categorizing and describing the recommended actions Categories Immediate actions (low costs, independent from other actions, favorable cost-benefit ratio Short-term actions (economic interesting under the assumption of todays energy prices or low increases in the energy prices) Specific actions (implemented together with other actions such as rebuilding or new investments. Might get attractive by higher energy prices)Report presentation Report Design and explanation (pdf and ppt) are key enablers Suitable language, clear suggestions Discussing the report with the customersGuiding the implementation of tthe actions Discussion of the actions together with the customers Creating awareness and motivation Supporting the implementation and coordination of the partners Labeling once the actions pay-off in terms of energy efficiency 33. Customer-driven service innovation approach CustomersSupplier of ideas and ChallengersInnovation processDefinition DefinitionTasks Instruments Behavioral orientation for segmenting customers Process mapping (Lifecycle analysis) Utility layers BrainwritingObjectivesCustomer segmentation Customer processes Customer needs Idea generationCo-developer and testerEntwicklung Development Idea description Module description Process description Check-lists Modularization Blueprinting Resource planning Development workshops PrototypingPurchaser and Feedback providerMarket launch Executing market tests Roll out Cost and sales supervision Test markets Capacity management Customer observation Optimization workshopsEfficiency Effectiveness Source: Drner, Gassmann & Gebauer (2011) 34. Thank you very much for your attention