Kwan & Muller-Grochs Cambridge Understanding Complex Service Systems Conference 2011

Dr. Stephen K. KwanProfessor, Service Science

Management Information SystemsCollege of Business AdministrationSan José State University, CA, USA

http://www.sjsu.edu/ssme

Contact: [email protected]

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

http://creativecommons.org/licenses/by-nc-sa/3.0/us/

Kwan & Müller-Gorchs 2011 2

“Service Science is just ___<name your discipline>____”

OR/IEMS

CS/AIMultiagent Systems

Economics & LawGame Theory

MIS Anthropology& Psychology

OrganizationTheory

A ServiceSystem is Complex

ServiceOperationsMarketing

ManagementQuality

Supply ChainHuman Factors

DesignInnovation

EngineeringSystems

ComputingEconomics

ArtsScience

InformationScience

(i-schools)

GeneralSystemsTheory

Service Science is a Big Tent -A Transdiscipline Approach

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


ServiceExperience

ServiceProvider

Customer

Society

Community

Competition

Partners

Service System

Employees &Stockholders

Service System Worldview


ServiceExperience

ServiceProvider

Customer

Society

Community

Competition

Partners

Service System

Employees &Stockholders

Value

Value

Governance

Value

Value

Value Co-Creation Through Value Propositions


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.


* 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


8Kwan & Müller-Gorchs 2011

Foundational Premises of Service Dominant Logic

MicroeconomicConsiderations


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

10

HedonicSpiritualCulturalCorporal

EmotionalIntellectualFamilial….

FP10


Constructing a Value Proposition

Quality

Probability of Success

Costs

Benefits

Service Experience

The Customer have a lot of VP’s

to choose from

FP7


A Customer’s Choice of Service

A Customer’ Choice Function:

A Service Provider’s Promised Value:

Based on the Customer’s own

expectations


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


Constructing Value Propositions:Customers and Service Providers

Connecting Components of a Value Proposition to a Service Provider’s KPI’s

through Feedback


ServiceExperience

ServiceProviderCustomer

ServiceExperience

Customer

ServiceExperience

Vendor

ServiceExperience

ServiceExperience

VendorService

Experience

Example: Social Network

15


Amazon.comBookcloseout_us

nengland4

theBookGrinder

Customer

Example: E-Commerce


Customer

Amazon.comSP0

Bookcloseout_usSP1

theBookGrinderSP2

negland4SP3

S0

S4

S1

S5

S2

S6

S3

Se0

Se1

Se2

Se3

SE

SP4

VP0


LBSCommunity

Quality of LifeImprovement

Service

Safer SuttonService

Partnership

Service Provider

Service Experience

Customer

VP0

Example: Social ServiceLondon Borough of Sutton


LBSCommunity:

Residents &Businesses

SSPS – Coordinator Role

MPS

LBS Council

Partnership

Partnership

Partnership

Partnership

Sutton Police

Safer Transport

Team

Safer ParkTeams

SaferNeighborhood

Teams

FairerService

Components

GreenerService

Components

SaferService

Components:PreventAssist

ReduceImprove

SuttonNeighborhood

WatchAssociation

Quality of LifeImprovement

Service VP0

Partnership

Partners

Customer

VP1

VP2

VP3

VP4

VP5

Example: Social ServiceLondon Borough of Sutton


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• Integrate VPM with Service System Prototyping


Kwan & Müller-Gorchs 2011Kwan & Müller-Gorchs 2011

Foresight and Innovation Method

© Cockayne and Carleton

21

Future Directions

Kwan & Müller-Gorchs 2011Kwan & Müller-Gorchs 2011


Service System Framework& Service System Networks

Value Propositions& Service Patterns


22

23Kwan & Müller-Gorchs 2011 23Kwan & Müller-Gorchs 2011


BPMN

UML – Use Cases

Story Boards

UI Prototyping

Service Blueprint

MANGA

WorkSystem

Service System Framework& Service System Networks

Value Propositions& Service Patterns


ProcessChainNetworkDiagram

Dr. Stephen K. KwanProfessor, Service Science

Management Information SystemsCollege of Business AdministrationSan José State University, CA, USA

http://www.sjsu.edu/ssme

Contact: [email protected]

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

End

http://creativecommons.org/licenses/by-nc-sa/3.0/us/


Disposable Income &Desire forServices

Needsvs.

Wants

25

Maslow’s Hierarchy of Needs

26Kwan & Müller-Gorchs 2011 26

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



29

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

30

Stage 2: Traditional Service Value Network

Customer

ServiceExperience

ServiceProvider

Value Proposition


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

Stage 4: Customer Driven Service Value Network

Customer’sSocial

Network

Customer

ServiceExperience

ServiceProvider

Value Proposition

FocalRelationship

Value Proposition


Value Proposition

Kwan 2011

cf. “Resource Integrators” in Service Dominant Logic literature

33Kwan 2011

ServiceExperience

ServiceProvider

Customer

Value Proposition Model (VPM)Starting with the Service System

34Kwan 2011

ServiceExperience

ServiceProvider

Customer

ServiceExperience

Customer

ServiceExperience

Customer

Value Proposition

VPM – a common example

35Kwan 2011

ServiceExperience


ServiceExperience

Customer

ServiceExperience

Customer

A SharedExperience

Community/Social

Network

Value Proposition

VPM – individuals and community

36Kwan 2011

ServiceExperience


ServiceExperience

Customer

ServiceExperience

Customer

A SharedExperience

Community/Social

Network

Value Proposition

VPM – individuals and Facebook community

37Kwan 2011

ServiceExperience


ServiceExperience

Customer

Value Proposition

ServiceExperience

Vendor

ValueProposition

ServiceExperience

VPM – service provider partners

38Kwan 2011

ServiceExperience


ServiceExperience

Customer

ServiceExperience

Vendor

ServiceExperience

ServiceExperience

VPM – partner’s acquistion of customer

39Kwan 2011

ServiceExperience


ServiceExperience

Customer

ServiceExperience

Vendor

ServiceExperience

Example 1 of 4

40Kwan 2011

ServiceExperience


ServiceExperience

Customer

ServiceExperience

Vendor

ServiceExperience

ServiceExperience

VendorService

Experience

Example 2 of 4

41Kwan 2011

ServiceExperience


ServiceExperience

Customer

ServiceExperience

Vendor

ServiceExperience

ServiceExperience

VendorService

Experience

Example 3 of 4

42Kwan 2011

ServiceExperience


ServiceExperience

Customer

ServiceExperience

Vendor

ServiceExperience

ServiceExperience

Example 4 of 4


S1 =

S2 =

Customer

ServiceProvider

Service ExperienceMade up of

Observable orEvidential

Components

Service Components

Co-produced byCustomer

Service Components

Co-produced byService Provider

S1,C

S2,C S2,0

S1,0

Illustration of Service Co-production


V = Σ

Customer

(π1,Cβ1,Cθ1,C

(π2,Cβ2,Cθ2

,C

π2,0β2,0θ2,0)

π1,0β1,0θ1

,0)/ c1

/ c2

Value

+

+

ServiceProvider

Value

Illustration of Value Co-creation


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


Customer

SE0

SP0

Time

VP0

Pattern 2 – Continuous Service over a Period of Time


Customer

Se0

SP2

Time

VP0

Se1

Se2

SP1SP0Instantiation of the Service

Experience at a particular point In time

Service Pattern 3 – Service in Parallel


Customer

Se0

SP0

Time

Se1 Se2

VP0

Pattern 3 – Continuous Service with Occasional Service Episodes


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


Example from Dan Pritchett

Example: Quality of Service Supply Chain

Kwan & Muller-Grochs Cambridge Understanding Complex Service Systems Conference 2011

Business

service system

service economy

social servicelondon

service system

customer driven

service networks

service system

service patterns