Constructing Effective Value Propositions in Service Systems
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Constructing Effective Value Propositions in Service Systems
- 1. Constructing Effective Value Propositions for Stakeholders in Service System Networks1 Dr. Stephen K. Kwan Professor, Service Science Management Information Systems College of Business Administration San José State University, CA, USA http://www.sjsu.edu/ssme Contact: stephen.kwan@sjsu.edu 1Kwan, S.K., Muller-Gorchs, M. (2011). "Constructing Effective Value Propositions for Stakeholders in Service System Networks,” Proceedings of SIGSVC Workshop. Sprouts: Working Papers on Information Systems, 11(160). http://sprouts.aisnet.org/11-160 Presented to the IBM Service Science & Innovation Community of Practice March 6th, 2012 Download these slides at: http://www.slideshare.net/StephenKwan
- 2. Some Definitions Service Science is short for Service Science, Management, Engineering and Design (SSMED1). Service Science is concerned with the study of Service Systems. cf. Computer Science is concerned with the study of Computer Systems. Service Systems are man-made complex systems designed to improve the quality of life by co-creating value through value propositions among the stake-holders. 1 Spohrer, J., Kwan, S.K. “Service Science, Management, Engineering, and Design (SSMED): An Emerging Discipline – Outline and References”, International Journal of Information Systems in the Service Sector, 1(3), 2009. Kwan 2012 2
- 3. Service System Worldview1 Service Customer Provider Service Experience A Service System and Its Entities 1Kwan, S. K. & Min, J. H. (2008) “An Evolutionary Framework of Service Systems”. Presented at the International Conference on Service Science, Beijing, China, April 17-18. Kwan 2012 3
- 4. A Service System Network Service Service Interactions System A Service System B Service Service System E System C Service System D Service System F Kwan 2012 4
- 5. A Service Supply Chain Service Service Interactions System A Service System B Service Service System E System C Service System D Service System F Kwan 2012 5
- 6. Service System Worldview Employees & Stockholders Community Service Customer Provider Service Partners Experience Service System Competition Society Kwan 2012 6
- 7. Service System Worldview Service Management Fitzsimmons & Fitzsimmons Employees & Capacity Stockholders & Manpower Planning, Community Training Service Customer Facility Location Provider & Design Service Partners Experience Social Networking Competition Competitive Market Customer Service Strategy Society Segmentation Flow & Concept Operating Service Realized Strategy Delivery Kwan 2012 7
- 8. Value Co-Creation Through Value Propositions Employees & Value Stockholders Community Value Service Value Customer Provider Value Service Partners Experience Service System Competition Society Kwan 2012 8
- 9. Stages in Customer Empowerment in Value Co-Creation1 Stage 1: Value Chain Value Proposition Focal Service Customer Relationship Provider Service Experience 1 Kwan, S. K. & Yuan, S. T. ”Customer-Driven Value Co-Creation in Service Networks”, in Demirkan, H., Spohrer, J.C. and Krishna, V. ed., The Science of Service Systems, volume in Service Science: Research and Innovation (SSRI) in the Service Economy series, Springer, 2010. Kwan 2012 9
- 10. Stage 2: Traditional Service Value Network Value Proposition Focal Service Customer Relationship Provider Provider Service Partner Experience Network Value Proposition cf. ICT-enabled service networks, mobile applications, etc. Kwan 2012 10
- 11. Stage 3 – Improved Value Chain Value Proposition Focal Service Customer Relationship Provider Value Proposition Service Customer’s Experience Social Network Kwan 2012
- 12. Stage 4: Customer Driven Service Value Network Value Proposition Focal Service Customer Relationship Provider Value Value Proposition Proposition Provider Service Partner Customer’s Experience Social Network Network cf. “Resource Integrators” in Service Dominant Logic literature Kwan 2012
- 13. Variety of Value Propositions Maslow’s Hierarchy Of Needs Service Provider Society Hedonic Stakeholders Spiritual Cultural Community Corporal Emotional Employees Intellectual Familial…. Stockholders A point in this 3-D space is Partners a Potential Value Customers Proposition Kwan 2012 13
- 14. Disposable Income & Desire for Services Needs vs. Wants Kwan 2012 14
- 15. Value Propositions can also be bi-directional Customers Service Provider Stockholders Partners Community Employees Customers Partners Service Provider Society Service Provider Society ? Community Employees Stockholders Partners Customers Kwan 2012 15
- 16. Value Proposition Model (VPM) Starting with the Service System Service Customer Provider Service Experience Kwan 2012 16
- 17. VPM – a common example Service Customer Value Proposition Provider Customer Service Experience Service Customer Experience Service Experience Kwan 2012 17
- 18. VPM – individuals and community Service Customer Value Proposition Provider Community/ Social Customer Network A Shared Experience Service Experience Service Experience Customer Service Experience Kwan 2012 18
- 19. VPM – individuals and Facebook community Service Customer Value Proposition Provider Community/ Social Customer Network A Shared Experience Service Experience Service Experience Customer Service Experience Kwan 2012 19
- 20. VPM – service provider partners Service Customer Provider Value Proposition Customer Service Service Experience Experience Service Experience Service Experience Value Proposition Vendor Kwan 2012 20
- 21. VPM – partner’s acquistion of customer Service Customer Provider Customer Service Service Experience Experience Service Experience Service Experience Customer Acquisition Strategy Service Vendor Experience Kwan 2012 21
- 22. Those ads will say the user’s friends likes the brand, adding a social context that Facebook says will make the ads 80% more likely to be remembered. … leveraging the connections among its 850 million users… Ads produced $31.5 billion in revenue in 2011… Kwan 2012 22
- 23. Example 1 of 4 Service Customer Provider Customer Service Service Experience Experience Service Experience Service Experience Vendor Kwan 2012 23
- 24. Example 2 of 4 Service Customer Provider Customer Service Service Experience Experience Service Service Experience Service Experience Experience Service Vendor Vendor Experience Kwan 2012 24
- 25. Example 3 of 4 Service Customer Provider Customer Service Service Experience Experience Service Service Experience Service Experience Experience Service Vendor Vendor Experience Kwan 2012 25
- 26. Example 3 of 4 (continued) Cost of acquiring subscribers: 2099 $2.52 2011 $5.23 Kwan 2012 26
- 27. Example 4 of 4 Service Customer Provider Customer Service Service Experience Experience Service Experience Service Experience Service Vendor Experience Kwan 2012 27
- 28. Foundational Premises of Service Dominant Logic Kwan 2012 28
- 29. Value Systems and Value Dimensions Provider’s Value System Opportunities for Value Co-Creation Customer’s ★ Value System ★ ★ ★ ★ ★ ★ ★ His Customer’s Value System FP8 Kwan 2012 29
- 30. Variety of Value Propositions Maslow’s Hierarchy Of Needs Service Provider Society Hedonic Stakeholders Spiritual Cultural Community Corporal Emotional Employees Intellectual Familial…. Stockholders A point in this 3-D space is Partners a Potential Value Customers Proposition FP10 Kwan 2012 30
- 31. Constructing a Value Proposition The Customer have a lot of VP’s to choose from. Accepted Value Proposition = Service Level Agreement? Kwan 2012 FP7 31
- 32. A Hierarchy of Value Propositions An Service Provider’s Value Proposition can be made up of a recursive set of sub-Value Propositions that could be realized by partners. <VP> = <vp> | <vp><VP> A Service Provider can also offer different Value Propositions for a variety of Service Offerings. Kwan 2012 32
- 33. A Customer’s Choice of Service A Service Provider’s Promised Value: Service Components Based on the Customer’s own A Customer’ Choice Function: expectations Kwan 2012 33
- 34. A Customer’s Realization of Value FP6 Degree of completion Actual Benefits Quality Assessment A Customer’s Realized Value (value in use): could be more complex Co-Production Service Process Service Provider and Customer’s His Partners’ + Contributions Contributions FP9 Kwan 2012 34
- 35. Constructing Value Propositions: Customers and Service Providers Sc,R,M too Connecting Components of a Value Proposition to a Service Provider’s KPI’s through Feedback Kwan 2012 35
- 36. Example: E-Commerce Customer Amazon.com Bookcloseout_us theBookGrinder nengland4 Kwan 2012 36
- 37. VP0 Se0 SE Amazon.com S0 SP0 Se1 Bookcloseout_us S1 SP1 S4 SP4 Customer Se2 theBookGrinder S2 SP2 S5 Se3 negland4 S3 SP3 S6 37 Kwan 2012
- 38. Service Pattern 1 – Single Service Episode Customer Instantiation of the Service Experience at a particular point VP0 In time SE0 Focal Relationship Time SP0 SE0 = Service Experience provided by SP0 SP0 = Service Provider of the Focal Relationship (the basis of the Value Proposition from Kwan & Yuan 2011) VP0 = Value Proposition offered by SP0 to Customer for SE0 Kwan 2012 38
- 39. Pattern 2 – Continuous Service over a Period of Time Customer VP0 SE0 Time SP0 Kwan 2012 39
- 40. Service Pattern 3 – Service in Parallel Customer VP0 Se0 Se1 Se2 Time Instantiation of the Service SP0 SP1 SP2 Experience at a particular point In time Kwan 2012 40
- 41. Pattern 3 – Continuous Service with Occasional Service Episodes Customer VP0 Se1 Se2 Se0 Time SP0 Kwan 2012 41
- 42. Pattern 4 – Service provided by more than one Partner Service Providers Customer VP0 SE1 SE2 SE3 SE0 Time SP0 SP1 SP2 SP3 VP1 VP3 SE4 SE6 VP2 SE5 Kwan 2012 42
- 43. Future Directions • More on development of Value Dimensions and Measurement • More on connecting VPM with Service Provider’s KPI • More on Quality Dimensions and Measurement • Integrate VPM with Service System Design and Prototyping Integrate with Foresight and Innovation Method Knowledge Management for Service System Design & Engineering © Cockayne and Carleton Kwan 2012 43
- 44. Service System Framework & Service System Networks Foresight and Innovation Method Value Propositions & Service Patterns © Cockayne and Carleton Kwan 2012 44
- 45. Service System Framework & Service System Networks Foresight and Innovation Method © Cockayne and Carleton Process Chain Network Diagram UI Prototyping UML – Use Value Propositions Cases & Service Patterns BPMN Work System MANGA Story Service Blueprint Boards Kwan & Müller-Gorchs 2011 &Müller-Gorchs 45
- 46. Constructing Effective Value Propositions for Stakeholders in Service System Networks1 Dr. Stephen K. Kwan Professor, Service Science Management Information Systems College of Business Administration San José State University, CA, USA http://www.sjsu.edu/ssme Contact: stephen.kwan@sjsu.edu Fin Presented to the IBM Service Science & Innovation Community of Practice March 6th, 2012 Download these slides at: http://www.slideshare.net/StephenKwan
- 47. Example of Value Proposition A Class Syllabus (1) Kwan 2012 47
- 48. Example of Value Proposition A Class Syllabus (2) One of many MIS Electives offered in Fall 2011 Course Description Course - Learning Objectives 3 Credit Hours Kwan 2011 $$ 48
- 49. Example of Value Proposition A Class Syllabus (3) Reputation & Accreditation “PoweringSiliconValley” Prerequisites & Required Texts Kwan 2011 49
- 50. Example of Value Proposition A Class Syllabus (4) Required Texts, Rules & Policies Class Procedure Kwan 2011 50
- 51. Example of Value Proposition A Class Syllabus (5) Grading Criteria Student Evaluations (Faculty KPI) Kwan 2012 51
- 52. Example of Value Proposition A Class Syllabus (6) Guest Lecture (Partner) Service Episodes Service Components Kwan 2011 52
- 53. Kwan 2012 53
- 54. Environmental Value Kwan 2011 54