Short servicestories barbarafluegge_how businesses and consumers tell us what to offer next

Short Service Stories: «How consumers and businesses tell us about what we should offer next» - The case of urban needs -

Abstract This Short Service Story is about telling how services could be viewed from our own (private) consumer point of view. It sketches how to explore which services and products are being sought by consumers driven by their specific needs and expectations. The Story begins by introducing briefly the trends in servitization under the umbrella of innovative consumer-targeted offerings. Following our research activities and projects, the paper highlights the viewpoints consumers have when deciding upon what to shop next. The example of an urban layout has been chosen to turn the readers’ attention towards service rather than product offerings. We hereby mirror our very own shopping experience as citizens and tourists piggy-backing our very own decision parameters about what we like and what not. We take the urban layout to reflect upon how products and services are being exposed to us in our preferred shopping area and ask you to do the same. Based on the example of Berlin Mitte we demonstrate what other services could be added to an urban area to serve consumers paper. The paper provides an exercise at the end that any of the readers can make use of. We like to get your reflection results in case you like to share them with us! If so, please send your insights to [email protected]. Keywords: Innovation, Service Trends, Services, Urban Layout, Urban Needs

© SAP AG, Barbara Flügge Page 1 of 15

mailto:[email protected]






Table of Content Page Introduction … 3 ① Serving instead of purely Selling … 4 ② What is the viewpoint of the consumers and business customers? … 5 ③ The Urban Layout … 6 ④ An Example in Berlin Mitte … 7 ⑤ Being Served in My Neighborhood … 8 ⑥ The Urban Service Layout … 9 ⑦ What makes consumers stay … 10 ⑧ Concluding how to «make consumers stay» … 11 ⑨ Get started in creating your very own layout … 12 Exercise … 14 Keywords: Innovation, Service Trends, Services, Urban Layout, Urban Needs

© SAP AG, Barbara Flügge Page 2 of 15


Introduction The relevance of services is growing. As identified by the OECD, the World Bank and research studies on service growth, revenue generated by services has been overtaking the revenue generated by products sale with a ratio of about 2:1. Not necessarily all industries encounter the same level of speed, but are approaching towards more and more service foci. The trend «servitization» in fact is revolutionizing entire industries. When we look behind the curtain on most innovative companies, our analysis showed that a major trigger for innovation to companies was to serve markets differently, differentiate from product sellers, and attract consumers more intuitively, yet surprise them with a «blink» (Gladwell, 2005). Innovation has many definitions. The following we find suitable are. Following Chesbrough (2003, p. 35), innovation is apparent where «companies are increasingly rethinking the fundamental ways in which they generate ideas and bring them to market». In the field of technical innovation, the Organization for Economic Co-operation and Development (OECD) (2005) concludes that a technological new product that includes a significant improvement and has been put into use is perceived as a technological innovation. A technological innovation covers scientific, technical, organizational, financial as well as commercial aspects (OECD (2005)).

© SAP AG, Barbara Flügge

Sources of reference: • Chesbrough, Henry W. (2003). The Era of Open Innovation in MIT Sloan Management Review, Spring 2003, Vol. 44 No. 3. • Flügge, Brookes (2013). Short Service Stories – Social Networks and Open Innovation. • Flügge, Peslova, Fliegauf (2010-2013). The Service Store Concept • Flügge, Barbara. Service Innovation and Transformation Projects (ongoing) • Gladwell, Malcom (2005). Blink: The Power of Thinking Without Thinking. Little, Brown and Company; 1 edition (January 11, 2005) • OECD. (2005). Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data [Electronic Version], 3rd edition from

http://www.oecd.org/. • Statistics around Servitization can be found at the websites of OECD, World Bank, Berlecon and statistics offices of a specific country and the European

Union.

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① Serving instead of purely selling. 7 emerging trends build the fundament about the increasing role of serving instead of purely selling:

1

2

3

4

Market Growth by Services continues

Anything-as-a-Service in focus to become consumable, downloadable, digestable, subscribe and exchangable

Geographical Decoupling is needed to serve customers anywhere

Electronification of Service Ordering is made feasible

Business Transformations are required to cope with the increasing service demand by businesses and business networks

Enterprises’ and Consumers’ Mobility increases, yet expectations for real-time execution emerge

Mature Information Technology is awaiting Intelligent Content

5

6

7


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② trends make further initiatives accountable. still, market orchestrators seek to gather direct and immediate insights in what comes next. What is the viewpoint of the consumers and business customers?

consumers tell because they like us for the great shopping experience

consumers do not tell, but raise expectations elsewhere

consumers are loyal customers as they are fans about our products for a long time

consumers continue to shop the pro-service package as they like the packaging of product, installation and repair services

A Product

A Product plus a Service

The non-existing ideal cool thing

A Service

the company does not serve my needs – consumers drop out and it takes a long time to recognize a change in the offerings and come back



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Image source: Mikoleit, Pürckhauer (2011), 100 Lessons for Understanding the City, p. 22

③ The Urban Layout. like in an urban layout as illustrated below, well positioned shops attract others, complementary products are being sought first in the immediate neighbourhood, and what I do not find at the first corner, I hope to find across the street.

The illustration on the left indicates shops, cultural amenities, restauraunts and bars in the lower New York City district of SoHo. The arrangements are quite stunning as mostly you find restaurants and bars rather at the edges of the district. Shops are piled towards the centre of the district. A number of no public access areas add to the layout – potentially with access to residential buildings or local community offices and governmental or business related areas. Cultural amenities are rather a few compared to the number of shops and restaurants made accessible to the local residents, the visitors, tourists and personnel doing business in the SoHo area. The analysis does not reveal how many of the shops focus on a product or on a service offering. Hereby we only can speculate that most of the early established shops in the former industrial area got acquainted with the number of artists that moved in that area. Where rents have been affordable, living costs manageable, the early shops covered what the artist needed and especially offered: galleries, art cafes and supply shops.



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④ An Example in Berlin-Mitte. let’s have a look at one of the streets of Berlin Mitte and gather with shops are currently allocated and which ones might be added following the viewpoints of being better served …

global brand chain

bar

restaurant

restaurant

shoe shop

global brand chain

decoration store

furniture

residential

residential

residential

phone supply

phone supply

residential access to backyards

residential residential

Chinese food supply

local grocery store

kiosk at the corner

boutique

boutique

boutique

boutique

bar

bar

resi-dential

resi-dential

resi-dential

hotel

resi-dential

boarding house

resi-dential

resi-dential

resi-dential

… …

boutique

access to backyards

public area

offerings

restaurants & bars

no public access

The street layout reflects the emerging combination of being a resident that seeks to gather any kind of offering for daily living supply needs nearby and stay within his or her district for dining, chilling and other sorts of distraction needs. The streets of Berlin Mitte gained attraction because of creative product displays, shop layouts like the Boss Orange shop that offers distinct dressing rooms following an apartment layout. Attraction is given also by the huge variety of distinct types of restaurants and bars offered to the resident and the tourist. An essential adding to the attraction is the historical landmarks, teared-down buildings reflecting the spirit of being-yet-to-start to become an upscale district. That label of turning into an upscale district sticks with Berlin Mitte for many years, even decades.

© SAP Next Business and Technology, Barbara Flügge


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⑤ Being Served in My Neighborhood. now let’s consider for that street of Berlin Mitte and gather with services might be added to what I shop in my neighborhood and being better served just-around-the-corner …

global brand chain

bar

restaurant

restaurant

shoe shop

global brand chain

decoration store

furniture

residential

residential

residential

phone supply

phone supply



Chinese food supply

local grocery store

kiosk at the corner

boutique

boutique

boutique

boutique

bar

bar

resi-dential

resi-dential

resi-dential

hotel

resi-dential

boarding

house

resi-dential

resi-dential

resi-dential

boutique

access to backyards

decoration showroom

sewing service

repair-to-serve-around the corner

residential

residential

residential

bar

residential

local community service office

decoration supply

carpenter

residential

residential

residential

snapshop studio

residential

re-crea-tion area

Serving consumer will result in expanding in a the traditional product offering. Ideally the expansion is a combined activity of experimenting on the one hand side and on the other hand intentionally, planned driven addings.

public area

offerings

restaurants & bars

no public access

pop-up shop

Examples of experimenting are so called pop-up shops. The concept behind is to spread the word of mouth, make use of a community or simply market it in an existing store distributing pop-up postcards. A pop-up shop opens for a brief period of time, launching it in an existing retail surrounding or making use of an unused building and planting it into the community.



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⑥ The Urban Service Layout. now let’s consider for that street of Berlin Mitte and gather with services might be added to what I shop in my neighborhood and being better served just-around-the-corner …

global brand chain

bar

restaurant

restaurant

shoe shop

global brand chain

decoration store

furniture

residential

residential

residential

phone supply

phone supply



Chinese food supply

local grocery store

kiosk at the corner

boutique

boutique

boutique

boutique

bar

bar

resi-dential

resi-dential

resi-dential

hotel

resi-dential

boar-ding

house

resi-dential

resi-dential

resi-dential

boutique

access to backyards

decoration showroom

sewing service

repair-to-serve-around the corner

residential

residential

residential bar

residential

local community service office

decoration supply

carpenter

residential

residential

residential

snapshop stuido

residential

re-crea-tion area

The service layout we envision turns into additional onsite offerings. New service offerings are product-adjacent on the one hand. On the other hand they are related to residential needs such as the establishment of a social community service office. and non-product, residential. They are being offered directly to the neighborhood.



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public area

offerings

restaurants & bars

no public access

pop-up shop

⑦ What makes consumers stay. what we saw from the example of Berlin, products and services offered in a certain, compelling logic, will ideally guide the consumers to the next shopping experience as well and the next one and the next one.

1 we like how we have been served

2 it is the package that convinces us

3 the top-seller product should last

4 we love to get more, but from whom?

Four reasons of «make consumers stay» are about: 1 we like how we have been served 2 we are convinced by the onsite offerings 3 we like to get continuity in the offering and those that provide the offerings 4 we need more and if not offered, we browse and shop elsewhere

Why would residents stay within their area to experience anything they need for daily living, entertaining and nice-to-haves? In Berlin the concept is called Kiez-life – everything that is needed in is offered in my Kiez. «Kiez2 is a local term for «my area», «my suburb». Residents do not leave the Kiez for their being served elsewhere. The neighborhood knows each other pretty well. That makes it is easy for residents to interact. Furthermore, they fill acquainted when going out, on the streets and in the stores when coming from work or when leaving their home offices. Familiarity with the ones that offer the products and services is key to feel home, not loosing time in finding out who else would serve our daily needs.

Out of the above stated reasons would the insights into reasons 1, 2 and 3 be compelling enough to prevent residents being distracted to another outside offering? Would we still encounter what residents miss? Missed opportunities are those we should know and listen to at an early stage. Otherwise the risk of loosing and investing in re-attracting the consumer turn into additional financial, marketing and logistics and human resource efforts.



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Product offering exists

Product and Service offered in a package

No offering yet available

Service offering is compelling

⑧ Concluding how to «make consumers stay». there are 4 entry points to check out compelling service layouts:

and 3 key questions that trigger the layout design:

what is the strategic impact the existing offerings should create and which impact should new offerings create?

differentiating the existing products and services, what are the results of the ABC analysis?

who are the addressees of each of the identified offerings?

longterm objectives

value propositions to consumers

value creation process

intangible assets

stand-alone

service bundles

hybrids (product + service)

businesses …

local government …

consumers …

gatekeepers, bridges, multiplicators…



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⑨ get started in creating your very own layout

It is now transformational excercise to transform what we learned from the insights in an urban layout into a service layout offering to a community, a business partner which set of services. In our method of service innovation we make use of the ecosystem analysis as demonstrated in the urban layout example. Based on all the stakeholders involved we then build categories around the level of involvement. We suggest you start with a layout sketch similar to the one of the Urban Layout and list all the services and products you are currently offering and run through the following steps: . sketch the layout of existing products and services . add to the layout further services you like to see being offered next to your product . add to the layout further services you like to bring newly to your consumers . sketch the layout again and include the new offerings . identify what you need to do to deploy the layout 3 Questions on the next page support in finding out what you like to see next. Publish your layouts ideally in the blog and make it accessible for comments and further ideas to the community – we love to see your layouts!



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the layout sketch pad – you want to make use of the shading and colour coding below and want to make use of the icons as well

your location – where you like to shop

you

r con

sum

ers

public area and inter-organizational access

offerings (products, services, service bundles)

recreation and entertainment offerings

no public access – intra-organizational

pop-up shop or service

adjacent knowledge sharing services and products

addressees: . individuals . businesses . business networks, entire communities



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you

r con

sum

ers



your mapping result(s)





you

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your mapping result(s)