Perhaps it would be helpful to describe some of the components of services. A simple definition of a service is a solution to fulfill needs. The concentration here is on filling needs (and desires) without presupposing a physical prod-
uct. Even when a product is required, who owns it and how it is used is at the heart of a service solution. To create services effectively, service providers must focus on customer value as an end solution. The aim is to deliver high value (whether in terms of price, performance, emotions, values, or meanings) in customer terms, not merely the terms of the manufacturer. In addition, a priority is often placed on creating and maintaining a deeper customer relationship than is often the case with product manufacturers (who often don’t consider anything past the sale of the product).
A service orientation not only benefits environmental and social impacts by optimizing efficiency, but it also often leads to innovative solutions that competitors haven’t imagined simply because most organizations operate in a product mentality.
Financial, healthcare, legal, consulting, training, education, and information services are all examples of services that focus on results and value over physical products. In many cases, there are
few physical products involved in the service experience. Likewise, restaurants and bars, spas and salons, hotels, rental cars and equipment use materials to create an experience and satisfy needs, but the products are not always the focus of value.
In order to develop services effectively, it’s a requirement to rethink the process of deriving solutions. Those familiar with product development will need to augment their understanding with service design fundamentals. In addition, it’s critical to prototype services through interaction design in order to validate that important value is actually being provided. Design research techniques that focus on qualitative data instead of merely quantitative data are also important since much of the value provided by services isn’t tangible or easily described.
Services may require organizations to engage other organizations as partners in order to provide a complete solution. For example, it’s not easy to deploy new information solutions without adequate networks (and creating those may be outside an organization’s expertise). Age-old quandaries that plague new technologies often require networks of organizations in order to roll out new services. (Who’s going to buy a GPS device, for example, before the GPS network is in place—and vice versa?)
Services can also have an effect on the financial accounting of an organization in unexpected or even counterintuitive ways. When Microsoft announced its original concept of. NET services, it spoke of online subscriptions to its popular software applications (like the Office Suite). They quickly realized, however, that it would destroy their revenues in the near-term since the revenue they make up front, when customers purchase the software outright, would be spread over years instead. This required a change in their strategy and original vision, opening the way for companies like Google, who didn’t have such models to cannibalize, to offer them instead.
Services are not foreign to product companies. Each company that sells a product must service it in some way.