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Service Design in the Experience Economy

Lilith Louise Lysgaard Hasbeck / lihas@edu.kadk.dk MA Design / Dept. of Visual Communication The Royal Danish Academy of Fine Art, School of Design Extent of thesis: 24,157 typographical units Tutors: Tau Ulv Lenskjold and Else Skjold

On the front: A citation from The Guardian in an article on service design (see Aaltonen, 2010-b): People are becoming far less interested in stuff alone products or commodities and far more interested in an all-embracing experience as they interact with a product or service. Owning an iPhone, for instance, is just the beginning: its what you can do with it the apps that matter.

Table of Contents
Welcome to the Experience Economy 6 Services Are No Longer Enough 6 Is There More To Services? 6 Approach 6 Discussing Definitions: Services v Experiences 6 Service versus Experience 6 A Service in an Economic Perspective 7 A Service in a Design Perspective: Service Design 7 Case: The Good Kitchen 8 Holistically adding more value to services 8 Designing for the Individual 9 Not Designing for the Average 9 Pine and Gilmores Answer 9 The Designers Answer: Co-Design 9 A Reflection of Our Individualised Society 10 Public services: You are what you charge for? 10 Are You Only What You Charge For? 10 Service Design for Public Services 10 Ratio of service and experience 11 With Experiences at Heart 11 Co-Design within NHS 11 Ratio of Experiences and Services 11 Taking a Look at the Big Picture 12 The Economists Perspective versus the Designers Perspective 12 A Way to Talk of Services and Experiences 12 The Experience Economy Shaped Service Design 12 Summary 13 Bibliography 14

Welcome to the Experience Economy

Services Are No Longer Enough On the verge of the third millennium, B. Joseph Pine II and James H. Gilmore, heralded a shift from our well-known service economy to what they chose to term The Experience Economy. According to Pine and Gilmore, experiences represent an existing but previously unarticulated genre of economic output (Pine & Gilmore, 1999, p. xxiv). The Experience Economy breaks with the commodity mindset, which means mistakenly thinking that a business is merely performing a function (Pine & Gilmore, 1999, p. 5). To offer experiences as economic offerings is to go beyond that base functionwhether it is commodities, goods or servicesand compete on the basis of creating a memorable event. That is the future of economic success, they inform us (Pine & Gilmore, 1999). Thus the new era of an experience economy revolves around the fact that goods and services are no longer enough to foster economic growth, create new jobs, and maintain economic prosperity (Pine & Gilmore, 1999, p. ix). Is There More To Services? This thesis will challenge the statement that services are no longer enough. In the light of the emerging design field, service design, I will investigate if there is more to services than Pine and Gilmore make it out to be, and explore the differences and similarities between service design and The Experience Economy on the basis of service design in the public sector: What are the differences and common traits between Pine and Gilmores staging of experiences and service design? And how can we talk of public services in an experience-led welfare society? Approach The Experience Economy, written by Pine and Gilmore in 1999 and re-released in 2011, will provide the foundation for a discussion of experiences and services in a present-day perspective. I will be comparing the designers perspective on designing services to the business perspective of staging experiences presented by Pine and Gilmore. Ive been looking mostly to service design agencies and the Danish Design Centre for articles and publications on service design to form a service design perspective on experiences and services.

Discussing Definitions: Services v Experiences

This section will examine what differentiates an experience from a service, taking the starting point in definitions from the OALD and then moving on to explore how Pine and Gilmore explain the differences between the two. Finally, I will introduce the field of service design.

Service versus Experience The OALD defines a service as a business whose work involves doing something for costumers but not producing goods; the work that such a business does (Service, 2011). According to this definition, today, fourteen years after The Experience Economy was first published, Pine and Gilmores viewpoint that experiences form the new category of economic offerings and replaces services still has not gained grounds. As indicated by the OALD, staging experiences is still seen merely as a subclass of services, as any company that does not produce goods 6

is in the service business. This is furthermore corroborated by the definition of an experience as an event or activity that affects you in some way (Experience, 2011). In other words, to qualify as an experience the customer must be affected by the offering, which leads us to reason that an experience can be a service, but that not all services are experiences. A Service in an Economic Perspective: Pine and Gilmores Definition Pine and Gilmore do not offer any clear-cut explanation of the difference between a service and an experience in The Experience Economy. The economists perspective that Pine and Gilmore lay out is that in a service the operation is the offering (1999, p. 289), nothing more and nothing less. Services are merely intangible whereas experiences are memorable (Pine & Gilmore, 1999, p. 9). Pine and Gilmores definition strips a service void of anything else than the mere action: Services are only intangible operations for the experiences they stage (1999, p. 289). Therefore, in the view of Pine and Gilmore, services are merely a stepping stone for experiences. A Service in a Design Perspective: Service Design Almost simultaneously as the proclamation of the experience economy, a new design field started to emerge and gain acknowledgement. New focal points have been created in research and development since the mid-90s, paving the way for what is now referred to and widely accepted as Service Design (Kln International School of Design [KISD], 2013). Service design proclaims that some designers are moving away from designing physical artefacts to designing intangibles, namely services. Many designers, agencies and companies have given their views on the nature of service design, such as The Guardian, Design Council, Danish Business Authority, creative agency Karo, Design Wales and Kln International School of Design (Aaltonen, 2010-a; Bedford & Lee, 2008; Design Council, n.d.-a; Design Wales, 2008; Erhvervs- og Byggestyrelsen, 2010; KISD, 2013; Stickdorn & Schneider, 2010). Every definition varies; some are slightly different from each other while others are barely comparable. Instead of discussing these definitions I will describe my viewpoint on service design. My definition is based on that from service design bureau, live|work (live|work, n.d.), mixed in with key elements of service design from Birgit Mager, founder of the Service Design Network (Mager, 2009). The last line, I have collected from innovation agency Continuum and AIGAs definition (AIGA, 2011): Service design is the application of established design processes and skills to the development of services. It is a holistic, interdisciplinary, co-creative, user-centred and practical way to improve existing services and innovate new ones. Service design is about creating better service experiences for people. The reason I find this definition most precise is that, although no conclusive definition of service design prevails, most service designers agree on the key elements of service design: It has its roots in traditional design skills, but is combined with new co-creative approaches. A great deal of the definitions I have been sorting through agree that in service design, you think of a service as a whole and complex system and not as a mere action. In this thesis I will show that service designers often centre their process on the experience of a service. 7

Service design is indeed a break with the service mindset that focus solely on what tasks employees do, and to some degree an adoption of the experience mindset that also considers[s] how those tasks are performed (Pine & Gilmore, 1999, p. xiv). If service design is about designing better service experiences for people, wherein lies the difference from the staging of an experience as outlaid by Pine and Gilmore? To delve into these differences, I will firstly introduce a service design case.

Case: The Good Kitchen

Think about it. The words municipal food services smell like grey, industrial food factories []. Holstebro Municipality was well aware of this and decided on service design to make change happen. (Hatch & Bloom, n.d.)

Hatch & Bloom, a Danish innovation agency, was asked to service design Holstebro municipal meal service to improve both food and life quality. In the project, there was a particular focus on how to improve the food experience for the individual citizen and perhaps whet a bit of appetite amongst the elderly with a poor appetite to avoid malnourishment (Erhvevs- og Byggestyrelsen, 2010, p. 3033). Through workshops, co-creation, and dialogue between all partners in the project combined with design anthropology methods, opportunities for improvement was located and acted upon. I have chosen this case firstly because it is one of many service design projects for the public sector that is well-documented and that there is plenty of information available on. Furthermore, it is a fairly straightforward case that in a simple way highlights what service design is about, in extension of my aforementioned definition.

Holistically adding more value to services

Throughout the next sections, I will delve into different aspects of service design by looking at The Good Kitchen, and compare these to Pine and Gilmores staging experiences. I will start out by discussing the addition of extra value that both service design and The Experience Economy centre on. Service design is a holistic approach where it falls to the designer to think of the sum of the whole, just as it would fall to the director to create a harmonised whole in the Experience Economy (Pine & Gilmore, 1999, p. 217). In the case of The Good Kitchen, not just one thing was improved at Holstebro Municipal meal service. Different visual aspects were taken into account such as a new brand identity, better-looking menu cards, uniforms for the staff and a focus on the looks of the food. The food menu was improved and supplementary services such as delivery of snacks or special guest dinners were added, and steps were taken to form a better dialogue between municipal, employees and citizens. (Erhvervs- og Byggestyrelsen, 2010, p. 34) All these separate improvements-when combined-resulted in professional pride among the staff, improved satisfaction among users as well as heightened engagement (Erhvervs- og Byggestyrelsen, 2010, p. 30-34). If you ask the citizens of Holstebro, they will surely say that public meal service is public meal service is not just public meal service in Holstebro. 8

As is the case with The Good Kitchen, service design is a way of differentiating services; it is basically enhancing the value of a service in the sense that designers turns it into a designed service experience. Pine and Gilmore states that due to largely undifferentiated services (1999, p. ix), [e]xperiences have necessarily emerged to create new value. Such experience offerings occur whenever a company intentionally uses services as the stage [...] to engage an individual (1999, p. 17). Common for both service design and Pine and Gilmores staging experiences is that both are consciously creating new value by adding something more to a base service.

Designing for the Individual

In this section I will examine how the idea of designing not for the average but for, and even with, the individual is present in both The Experience Economy and in the field of service design but is addressed in two very different ways. Not Designing for the Average Pine and Gilmore break with one of the traditional methods of dealing with users in a marketing perspective: Designing for the average. They highlight this method of designing for the average consumer who doesnt really exist as the root cause of customer sacrifice, and instead encourage marketing and business people alike to keep known individuals in view (Pine & Gilmore, 1999, p. 121-122), and to search for uniqueness (1999, p. 126). Pine and Gilmores Answer: Customisation Equals Transformation Pine and Gilmores own answer to not designing for the average is customisation. Customisation is a tool to take a step up the ladder of economic value through producing a response to a particular customers desire (Pine & Gilmore, 1999, p. 108-111), and ultimately reaching the final and most valued economic offering: Transformations (p. 245). With transformations, the customer is the product, we are told (Pine and Gilmore, 1999, p. 255). Pine and Gilmores statement is that people want to be changed and that they will pay more for this than for any other offering (1999, p. 255-270). The Designers Answer: Co-Design The service designers approach to not designing for the average is co-design: A design methodology that is user-centred and cocreated from beginning to end, namely designing with people. As acknowledged by Pine and Gilmore (1999, p. xx-xxi), experiences and services are all, when everything comes down to it, co-produced as they are based on interactions where an individual person play a part. Service designers take it one step further and do not consider people as passive consumers but active partners and co-creators of value (Mager, 2009, para. 9). In the case of the Good Kitchen, Hatch & Bloom held a handful of user workshops, in which local politicians, senior citizens councils, and partners from the public home care along with the elderly, brought their own ideas to the table (Erhvervs- og Byggestyrelsen, 2010, p. 3031): People were actively involved in the process of designing. Service design elevated The Good Kitchen to not only be the delivery of better food, but to be almost like a service community, wherein the elderly people know who forms their meatballs in the kitchen, and the staff is proud to be part of the service (Erhvervs- og Byggestyrelsen, 2010, p. 9

30). Co-ownership through co-design methods makes people part of the creation of the service as well as of the service itself. Co-design lets us think of services with another mindset: Public services as services for the public, by the public. A Reflection of Our Individualised Society As described above, both service design and The Experience Economy have an individual standpoint and reflects todays highly individualised society, although the two fields approach this in quite different ways. Pine and Gilmore suggest generating business success by continuously individualising everything through customisation. Ultimately, it does not get any more individual than with transformations, where the individual customer is the offering. Service designers search for uniqueness through interaction, collaboration and sometimes designing with the stakeholders of the service. In a sense, a person involved in this type of service design is part of the offering and its creation but is not the offering itself. Service design may change the way people behave and interact within a service, but the offering is never the individual, though individuals are in focus from beginning to end.

Public services: You are what you charge for?

In this section I will move on to consider how service design offers a way to talk of and work with public services in an experience-led welfare society.

Are You Only What You Charge For? The Experience Economy teaches us that if you are competing solely on the basis of price, then you have been commoditized, offering little or no true differentiation (Pine & Gilmore, 1999, p. 92-105). With an economic mindset like that of Pine and Gilmore, you are what you charge for: You may design the most engaging experience for your service offering or within your retail establishment, but unless you charge people specifically for watching or participating in the activities performed (...) youre not staging an economic experience (1999, p. 93). No one can argue that The Good Kitchen is an undifferentiated service. The projects two design awards, and the 22 % increase in customers testify to that (Hatch & Bloom, n.d.). Yet Holstebro Municipality still charges per meal and not a membership fee. It still defines itself as an economic service, even though it centres on the food experience. Service Design for Public Services The Good Kitchen is municipal and therefore a public service. As a public service, you are bound to servicing the public and taking public interest into account. Thus the criteria for staging experiences change completely within the public sector. As public services are funded by taxes with the goal of helping and supporting people, I imagine that most people in Denmarkand probably most other countrieswould think it unnecessary and perhaps even unjustifiable to transform public economic services to public economic experiences. Take a moment to think of how the public would react if the any government announced that from now on you would have to pay a high membership fee for municipal food services and not for the food and the delivery itself, and that instead of paying for each bus or train ride and the length of it, you would have to pay an expensive access fee to enter the station. The nature of the issue is that The Experience 10

Economy is written in a place where the public sector basically is nonexistent. Pine and Gilmore has written it on the basis of and for the American economic market, where public welfare is very limited. Service design, and especially service design for the public sector as is the case with The Good Kitchen, still aims at remaining an economic service but with focus on the experience to some extent. Service design enables us to talk about something more than the mere action of a service. It offers a way to work with public services in an experienceled welfare society, where a service stays true to its base service while focusing on individual experiences. In my opinion, service design is an evolving example of how services might transform to the experience economy. This especially holds true for public services.

Ratio of service and experience

In this section, I will argue that the fundamental difference between staging an experience and service designing must be found in their ratio of service and experience, and in how experiences are used. For this section, I will look to the UK and their public healthcare service. With Experiences at Heart Hatch & Bloom organised their service design of The Good Kitchen around improving the food experience, and service designers often centre the process on some kind of service experience related to the individual customer, person or guest. As The Guardian so precisely puts it: at its [service designs] heart lies the idea of experience (Aaltonen, 2010-a). Service design, and especially of services in the public sector, uses the experience as a mean or tool to help reaching a goal such as improved trust or, in the case of The Good Kitchen, improved engagement and satisfaction. The NHS, the British publicly funded healthcare system, has been using service design to improve its services and future experiences by addressing patient experiences. Co-Design within NHS Through service design, the NHS has embraced a co-creational approach, and encourages the staff to use co-design techniques and methods within their every day job, and to work with and for patients (NHS, n.d.-a). For this to work, a range of tools and techniques from the design industry has been translated for the staff to use and turned into a toolkit: The EBD, Experience Based Design. The EBD centres on co-design and collaboration with the goal of capturing, understanding and improving experiences (NHS, n.d.-b). The service design of and within NHS thus focuses on experiences, but not experiences for the sake of experiences. The focus lies on experiences within the public service, of the public service. Experiences that can help improve and deliver change to the service. Experiences that enable improvement of future experiences. Ratio of Experiences and Services As this case clarifies, service designers use experiences almost as a tool and a goal at the same time. In the eyes of Pine and Gilmore, the experience is the core of the offering, and companies use services only to support their experiences. This outlines how the two mindsets essentially differ from each other by their dissimilar ratio of service and experience. Service design has a service as its core economic offering where experiences are important tools and objectives. With a service design 11

mindset, the experience is of the service or a service aspect, thus sometimes referred to as a service experience. E.g. The Good Kitchen focuses on the users food experience but the municipal meal service is the primary and most important offering to the public. With an experience economy mindset, staging experiences has an experience as its economic offering. Services are important tools to support the experience. To use an example from The Experience Economy, the Rainforest Caf (Pine & Gilmore, 1999, e.g. p. 53) has the experience of safari dining as its economic offering, and the food (the commodity) or serving of such (the service) is only there to support the experience.

Taking a Look at the Big Picture

As I have outlined differences as well as common traits for service design versus Pine and Gilmores The Experience Economy, I will now take a step back to look at the findings in a bigger picture context. The Economists Perspective versus the Designers Perspective Pine and Gilmore, with a background in, respectively, management and economics, have a view on services that is particular to the business sector. They look at services from an outside perspective, never considering the creation or design of a service, merely viewing it as a stepping stone for staging experiences. Essentially, they see goods, services, experiences and transformations as an evolutionary process where one thing replaces the other. As this thesis has shown, designers show usthrough service design that there is more to services than Pine and Gilmore lead us to think. That services are not sheer operations that are only delivered and never experienced. Service design shows that design can enhance the value of a service, as design has been known to add value to an object. A Way to Talk of Services and Experiences Service design provides a way to talk of experiences that is more relevant than Pine and Gilmores economic theory, in a presentday perspectiveand especially in relation to public services. In a service designers perspective, you do not need to replace services with experiences; instead you can improve services by using and adding experiences. Welfare societies are facing great challenges. Ever-changing demands for services force the public sector to look at how it delivers services and how citizens experience the services that the public provides (Erhvervs- og Byggestyrelsen, 2010, p. 3). Service design offers to transform public services to our experience-led society while staying true to its original purpose: Servicing the public. The goal of service designing is not to transform the service to an economic experience. Hence, with service design, you can be more than what you charge for. The Experience Economy Shaped Service Design Pine and Gilmore highly influenced the way we service design today. Through The Experience Economy, they proclaimed that people should move away from products and services and focus on the extra value. The reason I chose to term this thesis Service Design in the Experience Economy is that, although Pine and Gilmores predictions have not come true exactly as they foresaw it, they nevertheless helped shape how we think of our economy todayas experience-ledand thus helped shape service design as we know it. 12

Pine and Gilmore are part of the reason that, today, we surround ourselves with and build societies around buzzword such as knowledge economy, though nobody knows exactly what it as or how to handle it. The latter also holds true for transformations: Except for the search for uniqueness and customisation, Pine and Gilmore do not offer much information on how to transform your offering to transformations, nor do they explain in depth what transformations are more precisely than the fairly fluffy description of changing people. This makes it almost unmanageable. Is it changing people when The Good Kitchen makes undernourished elderly eat a bit more? Service design has not yet grown to become a buzzword, and I hope it never will. But when the Design Council categorises service design into traditional design disciplines such as product design, graphic and brand design and interior design (Design Council, n.d.-b), I cannot help but wonder what service design is not, when it no longer is a holistic approach but simply e.g. graphic design for a service? With this thesis, I have given my view on what service design is: Service design mingles interdisciplinary, user-centred, co-creative and holistic methods with traditional design processes and skills to improve or innovate services and service experiences. My standpoint is that service design is a mindset and an approach, wherein experiences are important factors.

Summary

Service design and staging experiences are built on the same foundational principles: They have necessarily emerged to create new value. They reflect the shift from physical products to intangibles, and take designing for the individual as their starting point while embracing holistic approaches in the creation of economic offerings. In the end, Pine and Gilmore convince us that companies have to replace services with experiences, while service designers proclaim that replacing the service is not necessary; an experience can be a tool or a focus of a service. With service design, we are enabled to work with and talk of services and experiences in an experience-led welfare society, where a public service can stay true to servicing the public, while focusing on individual experiences.

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Bibliography
Aaltonen, G. (2010-a, March 12). Experience Matters. The Guardian. Retrieved from: http://www.guardian.co.uk/service-design/ introduction Aaltonen, G. (2010-b, March 12). Community in, commodity out. The Guardian. Retrieved from: http://www.guardian.co.uk/service-design/ introduction AIGA. (2011, October 14-15). Video: Service Design [video file]. Retrieved from http://www.aiga.org/video-pivot-2011-service-design/ Bedford, C. & Lee, A. (2008). Would you like service with that? Retrieved from: http://www.brandchannel.com/images/papers/496_ service_with_that.pdf Design Council. (n.d.-a). What is Service Design? Retrieved from: http://www.designcouncil.org.uk/about-design/types-of-design/ service-design/what-is-service-design/ Design Council (n.d.-b). Service design case studies. Retrieved from: http://www.designcouncil.org.uk/about-design/types-of-design/ service-design/case-studies/ Design Wales. (2008). Design Matters: Design for Service. Retrieved from: http://www.designwales.org/downloads/DM08_ DesignServiesEnglish.pdf Erhvervs- og Byggestyrelsen. (2010). Servicedesign vejen til enkle lsninger. Copenhagen: Rosendahls Schultz Grafisk A/S. Online version retrieved from: http://www.ddc.dk/sites/default/files/ mediafiles/Servicedesign-vejen-til-enkle-l__sninger_www.pdf Experience. (2011). In Oxford Advanced Learners Dictionary online. Retrieved from http://oald8.oxfordlearnersdictionaries.com/ dictionary/experience Hatch & Bloom (n.d.). Everyone deserves a good meal. Retrieved from: http://www.hatchandbloom.com/case-studies?show=kkx Kln International School of Design. (2013). Service Design. Retrieved from: http://kisd.de/en/study/areas-of-expertise/servicedesign/ live|work. (n.d.). Service Design + Service Thinking = Service Equity. Retrieved from: http://www.livework.co.uk/articles/creatingcustomer-centred-organisations Mager, B. (2009). Service Design as an emerging field. In S. Miettinen & M. Koivisto (Eds.), Designing Services with Innovative Methods. Helsinki: University of Art and Design Helsinki. Online version of chapter retrieved from: http://www.service-design-network.org/ system/files/media/Mager_Service%20Design%20as%20an%20 emerging%20field.pdf

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NHS. (n.d.-a). Using design to innovate. Retrieved from: http://www. institute.nhs.uk/innovation/innovation/using_design_to_innovate. html NHS. (n.d.-b). Experience Based Design: Using patient and staff experiences to design better healthcare services [video file]. Retrieved from: http://www.institute.nhs.uk/quality_and_value/experienced_based_ design/the_ebd_approach_(experience_based_design).html Pine, B. J. & Gilmore, J. H. (1999). The Experience Economy (Rev. ed.). Boston, MA: Harvard Business Review Press. Service. (2011). In Oxford Advanced Learners Dictionary online. Retrieved from http://oald8.oxfordlearnersdictionaries.com/ dictionary/service Stickdorn, M. & Schneider J. (2010.) This is Service Design Thinking. Amsterdam: BIS Publishers. Verganti, R. (2009). Design-driven Innovation: Changing the Rules of Competition by Radically Innovating What Things Mean. Boston, MA: Harvard Business Press.

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People are becomin interested in stuff products or commod far more interested embracing experien interact with a prod Owning an iPhone just the beginning: do with it the ap