An excerpt from ISDI’s The Apprentice Part I, from the three-part Service Designer’s series of books and courses.

 SERVICE DESIGN AND DISRUPTIVE INNOVATION

There is a raging debate among economists whether we can innovate our way out of a slowing economy due to a perennial decline in the service sector.

The service sectors dominate most economies by as much as 70 percent, across the U.S., Western Europe, plus countries in South America and Africa, and most countries throughout Asia and the Middle East.

Pie chart showing the make up of U.S. GDP - with Services 79%.

Pie chart showing the makeup of U.S. GDP – with Services, 79%.

U.S. Share of private sector https://blog.trade.gov/2012/05/21/expanding-trade-through-services/

Economists measure the state of the economy by the Gross Domestic Product (GDP), a numerical value representing output by sectors. The sectors are Primary (agriculture), Secondary (goods and manufacturing), and Tertiary (services), in the order they emerged.  Since services eclipsed manufacturing, the industrial sector, about 50 years ago, the average person in the world became 4.4-times richer.

Average wages across the globe with U.S. Western Europe, Japan and Australia in the lead.

Average wages across the globe with U.S., Western Europe, Japan, and Australia in the lead.

GDP – Gross Domestic Product – measures the total production of an economy as the monetary value of all goods and services produced during a specific period. Dividing GDP by the size of the population gives us GDP per capita to measure the prosperity of the average person in a country.

 

Chart showing negative effect on jobs due to poorly performing GDP.

Chart showing a negative effect on jobs due to poorly performing GDP.

 

 

 

 

 

U.S. GDP (historical) compared with the European Economic Union.

The relationship between services growth and overall economic growth has become stronger in the past two decades due

to the contribution of services to GDP. Still, some economists say the services sector isn’t growing fast enough and at its current rate of growth will level out. When that occurs, it causes falling incomes, lower consumption, and job cuts.

We rely on services provided by educators, healthcare providers, and financial managers. We also depend on transportation services, food services, public services, and professional services. Most services are adequate to serve user needs. But to maintain our standard of living, many more services will need to be innovative.

“The Internet revolution is hyped; the industrial world’s greatest productivity occurred during the decades between the Civil War and just after World War II, and, the golden age of American growth may be over,” Chicago-based economist Robert Gordon warned. Compared to the past “what have we done with our technology that would amaze someone from one hundred years from now?”

Others aren’t so sure he’s right and question whether the output and benefit of services can be adequately measured.  John Ross, a senior fellow at Chong Yang Institute for Financial Studies, Ren Min University of China, points out that services are not products, alone with the standard measures economists still use.

Yet for the service sector, the best bet is to adopt service design techniques and hire a service designer – who can infuse innovation into the designs of services.

ROLE OF SERVICE DESIGNERS

Service designers develop new services and improve existing ones with the aim to meet user needs.  That includes solving a problem, making a routine task easier, and achieving the desired outcome for users.

As the designer creates designs, they apply user-centric design techniques that, in part, force design considerations to revolve around the user journey, thereby creating service experiences. The designer also works within a service lifecycle spanning from pre-service – or when a user encounters a service – to the service experience, and to post-service.

The typical Uber ride is a great example. The service begins when a user launches the Uber app.  Then he or she plugs in an address that notifies nearby Uber drivers.  Meantime, the user pays for the ride using pre-authorized credit card that Uber has securely stored in its database.

When the driver shows up, the rider gets into the car and the service journey begins. The journey lasts until the rider exits.  At that time, post-service, the user receives an email asking to rate the driver and whether he or she wants to add a tip.

A successful service experience satisfies a user with an experience that evolves and ends smoothly. A service experience doesn’t have to exceed user expectations, just meet them and ideally, the service should be reliable and designed to scale so it accommodates growing demand.

In the early phases of a design, a service designer can help with ideas for new services to match the needs of a particular group of users, or a persona. Depending on the service provider’s requirements, a service designer can work with ideas that will fuel hyper-demand.  When sufficient numbers of users purchase large quantities of service experiences, the output in currency can contribute to GDP, even if the contribution is small.

To contribute even more to the economy requires disruptive innovation.

DISRUPTIVE INNOVATION THEORY

According to Merriam-Webster dictionary, Innovation is a new idea or method, or the introduction of something new.  Disruptive innovation, meanwhile, refers to introducing new products or services that create new markets – the kindling for a hot economy.  A new market created from disruptive innovation, like the shoot on a plant, can have a long-term impact on economic growth.  A service designer has techniques to help innovate a service, yet achieving disruption is far less certain.

The precise definition of disruptive innovation, a theory attributed to American economist Clayton M. Christensen, who died in 2020, is when a product or service enters an existing market at the bottom of competition, and over time dominates the others, rendering competitors obsolete.  Take the old non-smart cellphones, as an example.  When the iPhone was introduced, smartphone technology took off into an entirely new market.

A chart showing how market disruption boosts GDP.

The chart shows how market disruption boosts GDP.

There are plenty of examples for disruptive innovation, including soft drinks (Coca-Cola), kitchen appliances (refrigerator), electronic vehicles (Tesla), ride-sharing (Uber), internet service (AOL), video streaming (Netflix), and genetic coding (Celera Genomics), to name just a few.

SERVICE DESIGNERS AT THE FOREFRONT OF DISRUPTIVE INNOVATION

Service designers are often motived to include innovation into their work because of the potential of a breakthrough-unique solution.  The service designer’s path to innovation can occur with various techniques through the phases of design.

One that is worth highlighting, because it is often overlooked, is service prototyping, with a number of techniques for testing a service.  One of them is called iterative, a technique that can begin in the first phases of design and continue throughout.  The iterative technique is not as process-heavy as Agile Methodology but is similar in the way that designs evolve through continuous tests.

The invention of Uber ridesharing originated as a concept at a French technology convention.  Two Silicon Valley entrepreneurs attending the convention in 2008 were unable to hail a cab, which led them to an idea of ordering a cab from a phone. The original concept was a timeshare limo service that could be ordered through an app.

During the next year, Garrett Camp continued developing ideas through prototypes. The initial concepts were to further an idea for UberCab.  By the summer of 2019, Travis Kalanick joined on ‘Chief Incubator’ to help improve on the ideas and mature the prototypes into a working service.  In 2010, the two took functioning prototypes to New York City.  There the service was further refined.  In late 2010 Uber was launched in San Francisco.

Prototyping Uber helped get the idea off the ground, quickly, with opportunities to resolve design challenges and add features to create service experiences that proved to disrupt the cab market.

There are other techniques through phases of design that serve well to add innovation. Additionally, innovating services isn’t just for new services it is also for service improvements. Either way, a skilled service designer is essential to the process of innovation, quite possibly leading to market disruption.

Want more? 

ISDI is a professional development organization for service designers, offering training and other resources for service designers.

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