Some Thoughts on Value Propositions and Service Patterns
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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
For Discussion with Visitors from Korea at IBM AlmadenOctober 19, 2011
Download these slides at: http://www.slideshare.net/StephenKwan
Some Thoughts on Value Propositionsand Service Patterns
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
Kwan & Müller-Gorchs 2011 2
ServiceExperience
ServiceProvider
Customer
Society
Community
Competition
Partners
Service System
Employees &Stockholders
Service System Worldview
Kwan & Müller-Gorchs 2011 3
4Kwan & Müller-Gorchs 2011
ServiceExperience
ServiceProvider
Customer
Society
Community
Competition
Partners
Employees &Stockholders
Service System Worldview
4
MarketSegmentation
ServiceConceptRealized
CustomerFlow &ServiceDelivery
OperatingStrategy
FacilityLocation& Design
Capacity& Manpower
Planning,Training
CompetitiveStrategy
SocialNetworking
Service ManagementFitzsimmons & Fitzsimmons
ServiceExperience
ServiceProvider
Customer
Society
Community
Competition
Partners
Service System
Employees &Stockholders
Value
Value
Governance
Value
Value
Value Co-Creation Through Value Propositions
Kwan & Müller-Gorchs 2011 5
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 & Müller-Gorchs 2011 6
* Should be accompanied by a “Schema & Rules ” – behavior expectations
Customer Driven Service Value Network
Customer’sSocial
Network
Customer
ServiceExperience
ServiceProvider
Value Proposition
FocalRelationship
Value Proposition
Provider PartnerNetwork
Value Proposition
Kwan & Müller-Gorchs 2011 7
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Foundational Premises of Service Dominant Logic
MicroeconomicConsiderations
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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
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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
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HedonicSpiritualCulturalCorporal
EmotionalIntellectualFamilial….
FP10
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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?
12Kwan & 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
13Kwan & 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
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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
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16Kwan & Müller-Gorchs 2011
Amazon.comBookcloseout_us
nengland4
theBookGrinder
Customer
Example: E-Commerce
17Kwan & Müller-Gorchs 2011
Customer
Amazon.comSP0
Bookcloseout_usSP1
theBookGrinderSP2
negland4SP3
S0
S4
S1
S5
S2
S6
S3
Se0
Se1
Se2
Se3
SE
SP4
VP0
18Kwan & 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
19Kwan & Müller-Gorchs 2011
Customer
SE0
SP0
Time
VP0
Pattern 2 – Continuous Service over a Period of Time
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Customer
Se0
SP2
Time
VP0
Se1
Se2
SP1SP0Instantiation of the Service
Experience at a particular point In time
Service Pattern 3 – Service in Parallel
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Customer
Se0
SP0
Time
Se1 Se2
VP0
Pattern 3 – Continuous Service with Occasional Service Episodes
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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
23Kwan & 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
23Kwan & 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
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25Kwan & Müller-Gorchs 2011 25Kwan & 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
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
For Discussion with Visitors from Korea at IBM AlmadenOctober 19, 2011
Download these slides at: http://www.slideshare.net/StephenKwan
Some Thoughts on Value Propositionsand Service Patterns
Mercè Müller-GorchsKarlsruhe Service Research Institute
Karlsruhe Institute of TechnologyKarlsruhe, Germany
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