Brand Manual Blog

"THIS MURDER WAS NO ACCIDENT. 
IT WAS DONE BY DESIGN."
SHERLOCK HOLMES DEFINED DESIGN AS SOMETHING DONE ON PURPOSE.

Service design is just that: making sure everything works on purpose.

The article was published in September issue of Estonian business magazine Director

A hospital wanted to improve patient satisfaction. Long having understood that it was the patient that needed to be healed, not the injury treated, they thought about what it was that improved patient care above and beyond the doctor's competence. Finally the hospital hit upon the notion that people are always grouped by their disease. But why? Why does it make sense to have people with broken bones in one room and cuts in the other?

The problem is that none of these people know each other and really have nothing in common. Therefore also nothing to talk about except their injury, which in many cases can be a very depressing topic. So "how do you feel" is answered by, "bad". The hospital took this insight and started grouping people in rooms by interest instead. Football fans left, current affairs people to the right.

Suddenly patients found themselves with like-minded people and weren't bored out of their skull. They stopped thinking about their ailments and started answering the same old question with "pretty good". For doctors the re-organization of patients didn't make their route longer while patient satisfaction, and rate of cure, both increased. As an added bonus for doctors, it was much better to treat people who were in a good mood.

This "service design" came about from one simple change in management thinking: putting the patient in the center of the problem, not the hospital. This same approach applied to signage results in the unmissable "way out" sign on the London Tube. The presumption is that the traveler doesn't know where the exit is, whereas in most traffic situations the organization responsible presumes always, that the signage is for people who know, and places it in locations that a first time visitor will never reach, because they turned around too early.

Design is uniquely suited to meeting and resolving these challenges. Not for aesthetic reasons but rather because design is a problem solving discipline. In all cases, where things work well, it has been designed. It is done on purpose, and meets the requirements of the task at hand. Be this an arched aqueduct dating from the Roman Empire to today’s smart phone that a three year old can operate without having to understand how it works, design is the unifying feature. The esthetic value is simply a collateral benefit rather than the goal itself.

The key difference in applying design to business problems, instead of analytical thinking or engineering or brainstorming or just plain guessing, is that design asks “why”. Not what we have to achieve, but why. Ask why often enough, and you get to the core of the issue. By resolving that, you can change behavior and make people happy.

In this modern world that we now inhabit, where the rate of change is accelerating exponentially, where 70% of the economy is made up of services, where social networks and internet search provides people with instant information overload on every topic, interaction between customers and companies is the key brand building component. If the website is poorly written and ugly, if the product doesn’t make sense to anyone outside the group of people who invented it, if to get what I want I have to follow rules that don’t make sense, then it will not work. If the people I meet don’t care, then why should I? If the employees don’t feel like they matter, then they won’t care. No service will flourish in these conditions, while management mistrust, employee dissatisfaction and low financial performance will.

Customer satisfaction is our goal. Easy to say. 
What have you done to deliver?

The difference between products and services is that a service is co-created with the customer. Each contact is unique and cannot be packaged. In defining services, one can go even further. Cars deliver services. The goal is to get from point A to point B. Is owning a car the best solution for this? Need is never a thing. A need is what you can do with it. Thinking in this direction, each product becomes a potential service and the world becomes more complex. Just ask Nokia, if effective product manufacturing delivered success?

What you, as a service provider know, and what your customer knows is different. This information gap can also be called the presumption gap. "Oh, I thought you were going to do it," is commonly heard when information exchange is incomplete and instructions confusing. For private businesses the feedback is usually less customers. If the customer doesn't understand, and an other option exists, then she'll choose that.

Services are often designed from the wrong end. From the service provider's point-of-view. Following procedures, fitting into work schedules and meeting complex, for customers, impenetrable conditions. For example, if you buy a phone that doesn't work, and return it in three days to the dealer, she still has to send it to repair at least three times, before it can just be replaced. To do so, the customer has to play stupid, receive the phone back after two weeks of "repair" to discover the same fault again in 15 minutes, and return it once more. At no fault of the customer, 7 weeks are spent, most of the time without a phone, because of "internal process" and "rules". In whose interest?

Most organizations are in the process of optimization. Business wants to earn more money and therefore efficiency gains are seen as beneficial. When these efficiency gains are executed from the business’ point-of-view, when the customer is an afterthought, then efficiency is gained only at the expense of the customer's benevolence. If she get's fed up with efficiency, she will choose a different service provider that is less "efficient".

It is an oft cited statistic, that banks are closing their branches because people are no longer using them. On the other hand, 75% of up-selling of services happens at face-to-face meetings between customers and bankers. Therefore, eliminating branches also ends up eliminating the opportunity to sell a useful service! Optimizing efficiency perfects the formula that goes out of date.

It is reasonable to argue, that most efficiency drives, which are made from the point-of-view of optimizing budgets, not customer value, end up undermining the longterm business in favor of short term gain. To look at this another way, consider price promotions. The logic is seemingly infallible: in a situation of tense competition, the lower priced product tends to sell better. Therefore, to sell more, price promotions, which offer greater customer value, are completely logical. As customers demand lower prices it is inevitable, that quality must be compromised. Sugar is replaced with fructose. Meat is replaced with soya. Cream is replaced with milk. Free range chicken is replaced with factory, force fed chicken. At the end of the cycle the price is lower, but so is the value to the customer. Furthermore, the company is forever locked in a spiral where price is more important than value.

This above presumes that price is really the only motivator. However, the brands that people admire are rarely price driven. Business performance wise, the stars are never price driven – in any category. HBR research from April 2013 cites data from 44 thousand companies, which clearly demonstrates that in each category the most profitable business was quality driven and earned it’s profit from higher margins, not lower prices.

There is a second aspect to delivering a great service. The employee. If decision making authority is devolved to the front line employee, the one that actually meets real customers, then service quality improves remarkably. Gary Hamel brings the example of the Indian IT company, that has publicly declared that it is the employee, not the client, who is most important. The front line before management, management before board. However, this presumes that the employee knows what the goal of the company is, what the real purpose is. Only if the employee understands the business strategy can he or she make correct decisions that benefit both the customer and the company. Statistically speaking, however, only 5% of employees understand their company’s strategy (Robert Kaplan, David Norton - Balanced Scorecard). Usually because they’ve never been told, or told only once and quickly when they were hired.

To deliver a service, be it online, face-to-face or remotely, the people responsible for delivering must be able to make independent decisions based on company or product strategy. If they are not able to do so, because they don’t know and have more than likely not been told the strategy, then decision making is delegated up the management chain of command. Depending on how bureaucratic the business is, it might be that only the boss can make any decisions. Efficiency can never happen in such an environment nor a good customer experience delivered. Remember the mobile phone case.

Analytical thinking looks for the shortest route. 
Design thinking looks for the best route.

In October 2011 Brand Manual together with SEB held a two day service design training and workshop session. One of the goals of this was to come up with a tool that would allow people who don’t save to save some money. The conventional bank approach was to sell the opportunity to save with the benefit of interest earned. This works fine for savings above a certain limit. But when you don’t save at all, then interest earned on nothing is nothing. During the workshop we looked at human behavior with money and quickly understood that coins are a pain when paying in cash. Eventually you get home with coins in your pocket, and you put them away. From this insight we developed the digital coin jar. It rounds up each card payment to the next 00 and deposits the difference (cents only) into a savings account.

Since it’s launch in Estonia in November 2012, over 40 thousand people have saved over 2.4 million euros. With cents.

This wasn’t an accident. It was by design. Mr. Holmes would concur.