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KOIL(Kashwano-ha-Open Innovation Lab)

企These days, when businesses consider what new value they can offer, they ask themselves not only about their products and services, but also about how they can design experience. Loftwork held the XPD2014 Autumn conference on November 11th, 2014 to discuss the latest ideas in user experience (UX) and customer experience (CX). Like the conference last spring (March 12th, 2014), there was a waiting list to get in this time as well. The conference, held at KOIL, a new center for innovation, focused on exploring the future of business.

People buy drills so they can drill holes

In her opening speech, Loftwork’s Chiaki Hayashi began by asking, “The keyword here is experience. Why has experience become so important?” She went on to explain, “People do not buy drills because they want a drill. They buy them because they want to drill holes. This might just be an amusing marketing expression, but it is also a key to thinking about experience.”

Loftwork Representative Director, Chiaki Hayashi

In brand marketing, we tend to focus on the value of a product or service, and fail to ask the question, “Why would someone buy this?” The MIT Media Lab, for example, generously made their world class educational content open to the public, which sparked greater interest in the program and resulted in an increase in applicants. Rather than attracting customers by concealing the best they have to offer, Hayashi says, “From now forward, businesses will have to make part of their strategy, ‘What do we make open, and where do we draw the line?’”

For these reasons, we need to dig more deeply into the questions of “What experiences do our products and services provide?” and “What are the value systems that motivate people?” “The keyword for understanding the hidden needs and hidden values that govern our actions,” said Hayashi, “is experience. Today I want for us to return to the starting point of marketing, and to put our heads together to think about experience.”

Don’t ask ‘How can we use this technology?’ Ask ‘What is its value to the customer?’

Sony Computer Science Laboratories lab director Hiroaki Kitano offered up unmanned aircraft technology, or “drones,” as an example of innovation with experience at its core. He stressed, “The technology is not the most important thing; it’s the idea that they can move autonomously.” Kitano also presented some examples of drone research.

The RoboCup Federation Founding President, Sony Computer Science Laboratories President and CEO, Hiroaki Kitano

Research is being done, for example, to get 100 drones to fly in tandem without colliding, to fly multiple drones that can repeatedly separate and rejoin together in flight, to use drones for work on construction sites, and to replace emergency vehicles with drones. Additionally, a movement to create a drone delivery network has begun in Africa, where many roads are poor, and Amazon is making every effort to achieve its vision of becoming the first to be able to reliably deliver goods with the whole process, from order to delivery, handled by drones. They believe that the autonomous movement of goods will bring new value to individuals and society.

Drone research samples

Of course, there are challenges to the practical implementation of drones. Kitano says, for example, “Flying an extremely expensive drone via remote control runs the inevitable risk of a collision or crash. As long as it is a human in control, we cannot guarantee safety, and even if they are not human-controlled, training for those managing them and a flight infrastructure are necessary, and that puts us squarely in the realm of city planning.”

Another major challenge is the potential use of drones for criminal activity. In fact, U.S. authorities seized a drone intended for use in a terror plot in the U.S. that was capable of flying at a speed of 600km/hr. On-board computers are also potential targets of cyber-terrorism. Nevertheless, the potential economic effects and social impact of drones is tremendous. Kitano insists, “Going forward, we have to be thinking: ‘what is the drone mission?’”

Kitano says that we do not yet really have an answer to the question of what drones are. “The value of drones lies in their aerial mobility. The technology cannot go beyond that. We need to approach the subject not by asking ‘How can we use this technology?’ but instead asking, ‘What is its value to the customer?’ It is also useless to look at drones as a singular thing. Their practical use will require such things as establishing new infrastructure, which will require us to turn our focus to different areas.”

Service design is business orchestration

What is the best way to tie together experience and technological potential with your business? Keio University’s Masanao Takeyama used a number of concepts and examples to dig into the potential of service design.

Keio University School of Economics Professor Masanao Takeyama, Ph.D, Service Design Network Japan Chapter, Co-Representative

Service-Dominant Logic

Professor Takeyama explained, “We have to convert the conventional thinking about business from a goods-dominant (product-oriented) way of thinking, that says we manufacture value and then delivery it to the customer, to a service-dominant way of thinking by which we co-create value with the customer. When we do that, we can establish and revise outcomes, and from the new customer outcomes (customer goals), we can examine the customer journey, enabling us to identify where we are not penetrating, and to discover new business insight and opportunities for innovation.”

He said that companies that are a step ahead are concentrating their efforts on creating new customer outcomes (customer goals) and creating new value in cooperation with the customer, and outlined some specific methods being used.

Product-oriented thinking & service-oriented thinking

Service design connects business and experience

Below are three strategies for creating new customer outcomes together with the customer.

  • a) Customer empowerment
    Get a higher level of appealing outcomes by transferring skills and knowledge to customers. Ex.) Car navigation systems
  • b) Shift the division of labor between businesses and customers
    Reduce customer time and labor and eliminate anxiety. Even when time and labor are required, it is possible to offer a sense of attachment by enhancing participation levels. Ex.) Car sharing
  • c) Networking so different customers co-create new value
    As the Internet does so well, connect multiple customer outcomes through a network to create a Win-Win-Win.

As Takayama says, “Service design projects are a feat of business orchestration (integrating to create harmony).” The process requires not only building a business based on strategies a) thru c) above, but then integrating a wide range of components and factors in an attempt to create a comprehensive harmony. If you can do that, you can make an impact on the world with a sustainable service.

  • 1) Three perspectives on service
    ・“Experience” (achieving customer outcomes)
    ・“Delivery” (offering a service that can really be used)
    ・“Ecosystem” (making the business sustainable)
  • 2) Orchestrating at every level
    ・Experience orchestration (harmonizing diverse touchpoints)
    ・Service delivery orchestration (creating harmony between the customer-facing and backstage systems)
    ・Service ecosystem orchestration (building an ecosystem out of a diverse set of players)
  • 3) Orchestrating the whole
    Tying together a single experience value by integrating a wide variety of factors.

While Takeyama presented a variety of examples of applications of service design, he also pointed out that “The vertical structure of Japanese companies makes it difficult for them to play a harmonious tune. As long as nothing is done to address this issue, innovation will be stifled.” Further, with the complication of the roles of customers and key players, there are many problems that need to be solved, including a trend toward service entanglement (mutual service delivery due to service modularization). Takeyama closed by saying, “I would like to see us grasp all of these problems and business opportunities and take them on as service design challenges. If we do so, Japan will be a much more exciting place.”

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