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(I Wrote the article for the book:

Agile Experience Design: A Digital Designer's Guide to Agile, Lean, and Continuous http://amzn.to/zwhNcg )
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Value Co-Creation

A product or service is merely a means to an end. The real deeper value lies in the context, the story attached. I don’t want to own a phone – I want to be able to stay in touch with my friends wherever I go. I don’t want to use a train - I want to be home with my wife and children. I don’t want to use a financial service – I want to do the smart thing and feel more secure about the future by saving money.

 

Unfortunately most large organizations are not capable of listening or acting on stories. They need most of their energy to understand and manage the complex, vulnerable and oversized structures they have become. Sitting with their backs to the window they seem unaware of outside realities or simply incapable of responding quickly to changing demands and expectations. And this is why the “trust gap” between inside and outside has grown too wide.

 

Organizations still try to bridge this “trust gap” with marketing efforts and advertisement. But these strategies are developed after the service or product has been build or developed and rushed to market. Marketing is simply used as cosmetics. Rather disguising than revealing. It’s a one-way street that is proving to be a cul-de-sac.

 

Like a Vodafone CEO recently said “Companies will become more transparent as a necessity – customers now see that as an essential part of the trust equation.”

 

But there is more; products and services companies are offering us are often undistinguishable from one-another. Most of us can’t really tell the difference between what banks are offering us, telephone companies are selling us, and recruitment agencies are telling us. It is either too complex or too much alike. Even products like cars are basically the same, if you take away cosmetics. All cars offer us mobility, and we expect them to be good no matter what we paid for it.

 

The only way companies can truly differentiate themselves, strengthen their competitive abilities, and have their business grow naturally is by offering innovative and high quality services. Services that truly help customers reach goals, big and small.

 

To be able to do so organizations need to design and implement systems that will allow them to have meaningful and ongoing conversations with customers, using the insight they gain to improve and innovate in an ongoing iteration.

 

This is why service design emerged; Service design develops and collects tools and methods for the design of eco-systems of connected products, services, communications and environments, with people and for people, that enable the co-creation of value.

 

Like a senior Nokia CEO recently said: “The battle of devices has now become a war of ecosystems (...) Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem. This means we’re going to have to decide how we either build, catalyze or join an ecosystem”

 

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Comment by Paulo Peres on March 1, 2012 at 18:18

With this paper I remembered the book - What's Mine is Yours

Comment by Graham Hill on March 1, 2012 at 9:01

Hi Joe

I see you have been imbibing from the service design cup. 

I don't accept that product differentiation has to be short-lived. It will be if you only differentiate once and then stop innovating. But that is hardly a strategy for success. Winners continue to differentiate: to improve the underlying product, to add supplementary services, to create more compelling experiences, even to encourage customers to tell stories about how great they are. Differentiation can and should last a lifetime. It is a real strategy for success.

The only way to predict the future is to create it. Go create your differentiation strategy.

Graham Hill
Customer-centric Innovator
@grahamhill 

Comment by Joe Dager on March 1, 2012 at 2:26

Are designers always the creators? Are we not inspired by our customer's needs and desires?

Did Henry Ford design a mechanized horse that was still impractical without a road system? Was the iPod created without iTunes? Or as you said, iPhone without apps? People/users therefore drive the enablers (apps, roads) of the revolutionary product by the way they try to use it. The stories are still developed from people's experiences. Most products are commoditzed very quickly, so differentiation is short-lived. The only long -lasting differentiation is in the stories people tell of its use: functional, social or emotional.  

Comment by Graham Hill on February 29, 2012 at 23:48

Hi Arne

How do you get people to tell stories about object... artefacts... products they never even imagined could exist, let alone seen or touched? 

In other words... How do you develop revolutionary products that create stories that have never been told before?

Click... Over to you. The clock is ticking.

Graham Hill
Customer-centric Innovator
@grahamhill 

Comment by Arne van Oosterom on February 29, 2012 at 23:38
Hi Graham,

I sometimes feel we are making thing a bit too complicated.... Can the value just be the objects itself. And yet again, on an more abstract level, it's always context, history, perceptions, emotions we project into the object which has value. This means the value of the object is very subjective, intangible. One object has different values to different people. Storytelling is one of the ways peope make sense of these values. Listening to these stories will understand not just What people do, but also Why they do it.

Good product designers will try to understand the context,the stories, the are designing for.

Great Design is materialised emotion.
Comment by Graham Hill on February 29, 2012 at 19:31

Hi Arne

An interesting post. It got me thinking?

Is a product always just a means to an end as you state? Isn't it sometimes worth owning, borrowing or sharing a product for its own sake? And is the end always some kind of functional value-in-use as you suggest? Isn't there value also in the emotions attached to ownership. What would you feel like if you had a spanking brand new Range Rover parked outside your home rather than your old Disco? And what about the value from building better relationships with loved ones. Or better social contacts with new friends. There is much more to products than just the functional benefits in use that ownership brings.

Putting the semantics of 'service' in service-dominant logic aside for a moment, is it really true that the answer to product commoditisation is just more services? Apple didn't just respond to mobile handset commoditisation by adding services. First it completely reinvented the product experience with the iPhone. The App Store only came later. And Swatch didn't respond to stagnant wristwatch design by adding services at all. It disrupted the wristwatch market with the Swatch watch and created a completely new category in the process. There is much more to product innovation than just adding services, no matter how well they are designed.

Competing in today's fragmented markets may require a focus on value in use and supplementary services. But it just as likely to require much better designed or much simpler products. As the marketing legend Ted Levitt famously said, "there is no such thing as a commodity, just an undifferentiated product". And you know what, he was right.

Graham Hill
Customer-centric Innovator
@grahamhill 

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