Dr. Stephen K. Kwan Professor, Service Science Management Information Systems College of Business Administration San José State University, CA, USA .
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Dr. Stephen K. KwanProfessor, Service Science
Management Information SystemsCollege of Business AdministrationSan José State University, CA, USA
http://www.sjsu.edu/ssme
Contact: stephen.kwan@sjsu.edu
Presented at the Conference on Understanding Complex Service Systems Through Different Lenses, 22-23 September 2011, Cambridge, UK.
Download these slides at: http://www.slideshare.net/StephenKwan
Constructing Effective Value Propositions for Stakeholders in Service System Networks
Mercè Müller-GorchsKarlsruhe Service Research Institute
Karlsruhe Institute of TechnologyKarlsruhe, Germany
ServiceExperience
ServiceProvider
Customer
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.
Service System Worldview1
2Kwan 2011
3
ServiceSystem A
ServiceSystem B
ServiceSystem C
ServiceSystem D
ServiceSystem E
ServiceSystem F
Service Interactions
3
A Service System Network
Kwan 2011
4
ServiceSystem A
ServiceSystem B
ServiceSystem C
ServiceSystem D
ServiceSystem E
ServiceSystem F
Service Interactions
4
A Service Supply Chain
Kwan 2011
ServiceExperience
ServiceProvider
Customer
Society
Community
Competition
Partners
Service System
Employees &Stockholders
Service System Worldview
5Kwan 2011
ServiceExperience
ServiceProvider
Customer
Society
Community
Competition
Partners
Employees &Stockholders
Service System Worldview
6
MarketSegmentation
ServiceConceptRealized
CustomerFlow &ServiceDelivery
OperatingStrategy
FacilityLocation& Design
Capacity& Manpower
Planning,Training
CompetitiveStrategy
SocialNetworking
Kwan 2011
Service ManagementFitzsimmons & Fitzsimmons
ServiceExperience
ServiceProvider
Customer
Society
Community
Competition
Partners
Service System
Employees &Stockholders
Value
Value
Governance
Value
7
Value
Value Co-Creation Through Value Propositions
Kwan 2011
8Kwan 2011
From:
To:
Formulation of Value = Benefit / Cost
To:
Customer Value = (Results + Process Quality ) / (Price + Customer Access Costs)
Heskett et all 1997
Harvey 2005
Better Off
9
Customer
ServiceExperience
ServiceProvider
Stage 1: Value Chain
FocalRelationship
Value Proposition
Stages in Customer Empowermentin Value Co-Creation
5 Kwan, S. K. & Yuan, S. T. ”Customer-Driven Value Co-Creation in Service Networks”, to appear 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 2011
10
Stage 2: Traditional Service Value Network
Customer
ServiceExperience
ServiceProvider
Value Proposition
Provider PartnerNetwork
FocalRelationship
Value Proposition
Kwan 2011
cf. ICT-enabled service networks,mobile applications, etc.
Stage 3 – Improved Value Chain
Customer’sSocial
Network
Customer
ServiceExperience
ServiceProvider
Value Proposition
FocalRelationship
Value Proposition
Kwan 2011
12Kwan 2011
Product Placements
Ad’s and “Buy Me”
TV Programs
Their Friends
Target Audience
Improved Value Chain –Connecting with Customer’s Social Network
Stage 4: Customer Driven Service Value Network
Customer’sSocial
Network
Customer
ServiceExperience
ServiceProvider
Value Proposition
FocalRelationship
Value Proposition
Provider PartnerNetwork
Value Proposition
Kwan 2011
cf. “Resource Integrators” in Service Dominant Logic literature
14
Stages of Customer Empowerment
12
34
Sta
keho
lder
s
Service Provider
Society
Community
Employees
Stockholders
Partners
Customers
A point in this 3-D space is a Potential Value
Proposition
Value Dimensions
Variety of Value Propositions
Econom
icE
nvironmental
Societal
SocialP
olitical
Kwan 2011
Intrinsic
Maslow’sHierarchyOf Needs
HedonicSpiritualCorporalEmotionalIntellectual
15Kwan 2011
Maslow’s Hierarchy of Needs
Disposable Income &Desire forServices
Needsvs.
Wants
16
Value Propositions can also be bi-directional
Service Provider
Society
Community
Employees
Stockholders
Partners
Customers
Ser
vice
Pro
vide
r
Soc
iety
Com
mun
ity
Em
ploy
ees
Sto
ckho
lder
s
Par
tner
s
Cus
tom
ers
?
Kwan 2011
Partners
Service Provider
Customers
17Kwan 2011
ServiceExperience
ServiceProvider
Customer
Value Proposition Model (VPM)Starting with the Service System
18Kwan 2011
ServiceExperience
ServiceProvider
Customer
ServiceExperience
Customer
ServiceExperience
Customer
Value Proposition
VPM – a common example
19Kwan 2011
ServiceExperience
ServiceProviderCustomer
ServiceExperience
Customer
ServiceExperience
Customer
A SharedExperience
Community/Social
Network
Value Proposition
VPM – individuals and community
20Kwan 2011
ServiceExperience
ServiceProviderCustomer
ServiceExperience
Customer
ServiceExperience
Customer
A SharedExperience
Community/Social
Network
Value Proposition
VPM – individuals and Facebook community
21Kwan 2011
ServiceExperience
ServiceProviderCustomer
ServiceExperience
Customer
Value Proposition
ServiceExperience
Vendor
ValueProposition
ServiceExperience
VPM – service provider partners
22Kwan 2011
ServiceExperience
ServiceProviderCustomer
ServiceExperience
Customer
ServiceExperience
Vendor
ServiceExperience
ServiceExperience
VPM – partner’s acquistion of customer
23Kwan 2011
ServiceExperience
ServiceProviderCustomer
ServiceExperience
Customer
ServiceExperience
Vendor
ServiceExperience
Example 1 of 4
24Kwan 2011
ServiceExperience
ServiceProviderCustomer
ServiceExperience
Customer
ServiceExperience
Vendor
ServiceExperience
ServiceExperience
VendorService
Experience
Example 2 of 4
25Kwan 2011
ServiceExperience
ServiceProviderCustomer
ServiceExperience
Customer
ServiceExperience
Vendor
ServiceExperience
ServiceExperience
VendorService
Experience
Example 3 of 4
26Kwan 2011
ServiceExperience
ServiceProviderCustomer
ServiceExperience
Customer
ServiceExperience
Vendor
ServiceExperience
ServiceExperience
Example 4 of 4
27Kwan & Müller-Gorchs 2011
Foundational Premises of Service Dominant Logic
MicroeconomicConsiderations
28Kwan & Müller-Gorchs 2011
Customer’s Value System
Provider’s Value System
Opportunities forValue Co-Creation
His Customer’s Value System
★
★
★★★★★
★
Value Systems and Value Dimensions
FP8
Stages of Customer Empowerment
12
34
Sta
keho
lder
s
Service Provider
Society
Community
Employees
Stockholders
Partners
Customers
A point in this 3-D space is a Potential Value
Proposition
Value Dimensions
Variety of Value Propositions
Econom
icE
nvironmental
Societal
SocialP
olitical
Kwan & Müller-Gorchs 2011
Intrinsic
Maslow’sHierarchyOf Needs
29
HedonicSpiritualCulturalCorporal
EmotionalIntellectualFamilial….
FP10
30Kwan & Müller-Gorchs 2011
Constructing a Value Proposition
Metrics
Rules
Schema
Quality
Probability of Success
Costs
Benefits
Service Experience
The Customer have a lot of VP’s
to choose from
FP7Service Level Agreement?
31Kwan & Müller-Gorchs 2011
A Customer’s Choice of Service
A Customer’ Choice Function:
A Service Provider’s Promised Value:
Based on the Customer’s own
expectations
32Kwan & Müller-Gorchs 2011
A Customer’s Realization of Value
A Customer’s Realized Value:
Customer’s Contributions
Service Provider andHis Partners’ Contributions
Co-Production Service Process
Co-Creation of Value
FP6
FP9
An Example
33Kwan & Müller-Gorchs 2011
Constructing Value Propositions:Customers and Service Providers
Connecting Components of a Value Proposition to a Service Provider’s KPI’s
through Feedback
Sc,R,Mtoo
Kwan & Müller-Gorchs 2011
ServiceExperience
ServiceProviderCustomer
ServiceExperience
Customer
ServiceExperience
Vendor
ServiceExperience
ServiceExperience
VendorService
Experience
Example: Social Network
34
35Kwan & Müller-Gorchs 2011
Amazon.comBookcloseout_us
nengland4
theBookGrinder
Customer
Example: E-Commerce
36Kwan & Müller-Gorchs 2011
Customer
Amazon.comSP0
Bookcloseout_usSP1
theBookGrinderSP2
negland4SP3
S0
S4
S1
S5
S2
S6
S3
Se0
Se1
Se2
Se3
SE
SP4
VP0
37Kwan & Müller-Gorchs 2011
Customer
SE0
SP0
Time
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
FocalRelationship
VP0
Instantiationof the Service
Experience at aparticular point
In time
Service Pattern 1 – Single Service Episode
38Kwan & Müller-Gorchs 2011
Customer
SE0
SP0
Time
VP0
Pattern 2 – Continuous Service over a Period of Time
39Kwan & Müller-Gorchs 2011
Customer
Se0
SP2
Time
VP0
Se1
Se2
SP1SP0Instantiation of the Service
Experience at a particular point In time
Service Pattern 3 – Service in Parallel
40Kwan & Müller-Gorchs 2011
Customer
Se0
SP0
Time
Se1 Se2
VP0
Pattern 3 – Continuous Service with Occasional Service Episodes
41Kwan & Müller-Gorchs 2011
Customer
SE0
SP0
Time
SE1 SE2
SP1 SP2
SE4
SE5
SP3
SE6
SE3
VP1
VP2
VP3
VP0
Pattern 4 – Service provided by more than one Partner Service Providers
42Kwan & Müller-Gorchs 2011
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
42Kwan & Müller-Gorchs 2011
Integrate withForesight and Innovation Method
© Cockayne and Carleton
Kwan & Müller-Gorchs 2011Kwan & Müller-Gorchs 2011
Foresight and Innovation Method
Service System Framework& Service System Networks
Value Propositions& Service Patterns
© Cockayne and Carleton
43
44Kwan & Müller-Gorchs 2011 44Kwan & Müller-Gorchs 2011
Foresight and Innovation Method
BPMN
UML – Use Cases
Story Boards
UI Prototyping
Service Blueprint
MANGA
WorkSystem
Service System Framework& Service System Networks
Value Propositions& Service Patterns
© Cockayne and Carleton
ProcessChainNetworkDiagram
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