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Robert Bau 9/1/24 Robert Bau 9/1/24

Let’s (not) get (too) physical, physical • 1

Thinking services instead of products: Access > Ownership

While the shift from products to services – often referred to as servitization – is far from new, it remains a powerful framework for manufacturing companies and digital-first startups looking to embrace customer-centric, service-dominant business models. In this series of blog posts, I have refreshed vintage content with repackaged strategies and new examples to help leaders, innovators, and designers transform customer offerings and experiences for the future.

Eight ways to think services instead of physical and digital products:

Access > Ownership. Enabling access to assets and resources without the burdens of ownership.
Solutions > Products. Delivering holistic, outcome-focused solutions that address the broader needs of customers.
Customization > Standardization. Encouraging active participation in the specification, creation, production, delivery, and marketing of customer solutions.
Adaptability > Stability. Dynamically adjusting offerings and delivery systems to respond to customer needs over time and in real time.
Experience > Transaction. Orchestrating engaging and memorable experiences across every touchpoint in the customer journey.
Inclusion > Exclusion. Removing barriers that prevent individuals and groups from engaging with solutions and brands..
Connection > Disconnection. Building vibrant, connected communities around solutions and brands.
Circularity > Linearity. Promoting circular business models and mindsets to contribute to broader sustainability goals.

Note: These strategies are not mutually exclusive or collectively exhaustive (MECE), which is intentional. Think of them as lenses through which to explore opportunities to transform customer offerings and experiences – an approach that proves highly effective in ideation sessions.

1. Access > Ownership

The Access Over Ownership strategy empowers B2B and B2C customers to experience, utilize, and benefit from assets and resources without the burdens and costs associated with ownership. The focus shifts from value exchange and take-make-dispose models to value-in-use, circular behaviors, and collaborative consumption. (Based on Bau, 2006, 2010, 2011, 2014, 2015; Wirtz & Lovelock, 2016; Botsman & Rogers, 2010; Buczynski, 2013; Jégou & Manzini, 2008.)

Note: In this context, assets refer to physical items (vehicles, machinery, real estate, etc.) and digital assets (software, data, digital content, etc.). Resources encompass these assets along with intangible elements such as expertise, time, and network access. In outcome-driven innovation, resources are tools or means that enable customers to perform tasks, ‘get the job done,’ and achieve their desired outcomes.

Service models:

B2C2C peer-to-peer sharing models empower individuals to share their own assets and resources – such as homes, cars, tools, or skills – with others in exchange for a fee, or for free in a bartering system where goods or services are exchanged directly. In this setup, enabling platforms typically serve as intermediaries, connecting users, managing transactions, and fostering a sense of community.
Examples: Turo – car owners rent out their personal vehicles to others through Turo’s car-sharing marketplace; TaskRabbit – locals offer their skills and time to perform various tasks, such as home repairs or furniture assembly, for a fee; community-based collaborative services – community members engage in micro-initiatives such as bicycle self-repair workshops, family-run micro-nurseries, and home laundry services.
B2B P2P sharing models enable businesses to share their own assets and resources – including vehicles, facilities, equipment, tools, and even manpower – with other businesses for a fee. Platforms play a crucial role by facilitating connections, managing transactions, and fostering collaboration, networking, and knowledge sharing.
Examples: Floow2 – businesses share equipment, office space, and even staff with other companies; LiquidSpace – businesses rent out unused office space to other companies, freelancers, or startups on a short-term basis; Cohealo – healthcare facilities share medical equipment with other institutions, optimizing the use of expensive resources.
B2C rental, leasing, and subscription models provide individuals with access to high-value assets and resources, sometimes bundled with services like customer delivery, onboarding, and support to boost productivity and address potential issues.
Examples: Rent the Runway – customers rent designer clothing and accessories for a specific period, returning them after use; Netflix – subscribers gain access to a vast library of movies and TV shows, streaming content without the need for ownership; Zipcar – users rent cars by the hour or day, gaining access to vehicles without the costs of ownership.
B2B rental, leasing, and subscription models allow businesses to access high-value assets and resources, often bundled with services like delivery, setup, installation, training, maintenance, optimization, and expert support to boost productivity and maximize value-in-use.
Examples: Salesforce – businesses subscribe to Salesforce’s CRM software, which includes ongoing updates, support, and customization options; WeWork – companies lease office spaces and enjoy bundled services like high-speed internet, cleaning, and community events; Cisco Systems – companies lease networking equipment from Cisco, which includes maintenance, setup, and ongoing support.
Resource pooling brings together groups of people or businesses to share or jointly access resources. Through collaboration, these groups can collectively strengthen their bargaining power to negotiate more favorable terms or secure preferential treatment.
Examples: WeWork Labs – startups share office space and resources, benefiting from networking opportunities and shared services; Gartner Peer Connect – businesses pool their knowledge and expertise, sharing best practices and industry insights within the network; community solar projects – groups of individuals or businesses invest in shared solar energy installations, pooling resources to generate renewable energy and reduce energy costs.
On-demand access allows people or businesses to instantly obtain assets and resources as needed, paying only for what they use at the moment, without any long-term commitment.
Examples: Uber – users request rides instantly, paying only for the service they need at the moment without any long-term commitment; AWS (Amazon Web Services) – businesses access cloud computing power on-demand, scaling up or down based on their immediate needs; Blue Apron – customers order meal kits on-demand, choosing from a variety of recipes, with no commitment to ongoing subscriptions, allowing them to cook at home only when they need it.
Freemium models offer basic features for free, but once upgraded, they often allow multiple users, like project teams or households, to share access.
Examples: Spotify Family Plan – lets multiple household members share a single premium music streaming account, allowing each person to have their own playlists and recommendations; Google Workspace – allows users to work together and create content in real-time, with paid upgrades for additional storage, advanced collaboration features, and increased user access; Zoom – offers free video conferencing, with paid upgrades for hosting larger meetings and accessing additional collaboration features.

Note: P2P sharing models are typically shorter-term and less formalized than rental, leasing, and subscription models.

Benefits:

Democratizes access to high-value assets and resources by enhancing accessibility and affordability
Eliminates the hassle, responsibilities, and costs associated with ownership (e.g., upfront capital, storage, maintenance, repairs, upgrades, and disposal)
Provides flexibility and freedom to adjust, scale, or discontinue usage/consumption as needs change over time
Aligns with the trend of prioritizing experiences over possessions
Maximizes resource utilization through continuous use and reuse
Monetizes underutilized assets or resources, turning them into revenue-generating opportunities
Reduces the demand for the production of new tangible goods
Reduces carbon footprint and minimizes environmental impact
Fosters a sense of community by connecting users who share similar needs or values
Encourages innovation in value creation, value co-creation, and value facilitation (see my blog post Get the balance right! • 2)
Drives differentiation and builds brand equity

See also:

Solutions > Products
Connection > Disconnection
Circularity > Linearity

The Solutions Over Products strategy will be covered in the next blog post.

References

Bau, R. (2006). Design av tjänster och upplevelser [Design for services and experiences]. Part of Executive education in Design Management [unpublished training material]. Berghs School of Communication.

Bau, R. (2010, December). Ten strategy paradoxes in service Innovation and design. Paper presented at ServDes 2010 (Service Design and Innovation Conference), Linköping, Sweden.

Bau, R. (2011, December). Strategy paradoxes in service innovation and design. In: Cai et al. (Eds.), Design Management: Toward a new era of innovation. Proceedings from the 2011 Tsinghua-DMI International Design Management Symposium, Hong Kong, China. IDMA.

Bau, R. (2014). Sharing & caring across generations. Breakout session at Service Design Global Conference, Stockholm, Sweden. [Unpublished]

Bau, R. (2015). Thinking services instead of products. In: Service Design Boot Camp, Day 1 [unpublished training material]. Veryday.

Botsman, R & Rogers, R. (2010). What’s mine is yours: The rise of collaborative consumption. HarperCollins.

Buczynski, B. (2013). Sharing is good. How to save money, time and resources through collaborative consumption. New Society Publishers.

Jégou, F. & Manzini, E. (2008). Collaborative services: Social innovation and design for sustainability. Edizioni POLI.design.

Wirtz, J. & Lovelock, C. (2016). Services Marketing: People, technology, strategy (8th ed.). World Scientific Publishing.

Robert Bau 8/1/24 Robert Bau 8/1/24

Going for gold • 7

Service Design for Equitable Experiences

Inspired by an article in Harvard Business Review about the underlying quests for corporate transformation (Anand & Barsoux, 2017), I have identified seven arenas where the power of service design can transform organizations, teams, and people. In this blog post, I explore the final category, Service Design for Equitable Experiences. This one acts as a connective thread weaving through and enhancing the other six arenas, ensuring that the tenets of diversity, equity, and inclusion are deeply embedded in all aspects of service design.

7. Service Design for Equitable Experiences

Purpose: To remove discriminatory, socioeconomic, cultural, linguistic, physical, or financial barriers that prevent underrepresented and historically excluded groups from fully accessing, engaging with, and benefiting from workflows, products, services, environments, and experiences (adapted from Linares, 2021). This includes fostering an inclusive environment where all voices feel welcome, heard, and respected; embracing contrasting workstyles and personalities; and leveraging multiple perspectives to identify and address blind spots in processes, outputs, and outcomes. These efforts will lead to long-lasting positive changes that benefit individuals, communities, organizations, and society at large.

Note: Compared to a product-centric and compliance-based approach to DEI, a genuine service design mindset pays careful attention to how multi-touchpoint services and experiences are envisioned, co-created, co-produced, co-delivered, and perceived over time. This ensures that DEI is not just an afterthought but woven into the fabric of internal (employee-facing) and external (customer-facing) services and experiences.

Common themes: Exclusion. Barrier-free experiences. Equity of access, experience, and impact. Fair treatment, inclusive representation, and equal opportunities for all. Conscious and unconscious biases. Blind spots. Intersectionality. Cultural sensitivity and relevance. Physical, sensory, and cognitive impairments. Long-term disabilities, temporary conditions, and situational limitations. Design for belonging. Inclusive/universal design principles and applications. Adaptive and customisable design. Participatory design. Value co-creation. Shared decision-making. User autonomy and empowerment. Equitable outcomes. Iterative design. Continuous learning and adaptation. DEI metrics and evaluation. DEI accountability and transparency.

Project archetypes:

Designing for participation (participatory design and decision-making). Equipping facilitators, designers, and users with the platforms, services, spaces, workflows, tools, and skills needed to collaboratively create innovative, inclusive, and effective solutions to complex, multi-faceted challenges. By treating customers, employees, and other collaborators as co-creators, this approach cultivates collective intelligence, fosters lateral thinking, encourages shared decision-making, and ensures shared ownership of both outputs and outcomes. Designing for participation includes selecting the most effective engagement format(s) for co-creation – such as world cafés, design sprints, innovation jams, hackathons, co-design workshops, and crowdsourcing – depending on project needs at any given time in the process. (Kaner et al., 2014; Lipmanowicz & McCandless, 2014; Gray, Brown & Macanufo, 2010; Knapp, Zeratsky & Kowitz, 2016; Brown & Isaacs, 2005)
Designing for cultural competency. Ensuring that customer and employee experiences are welcoming, relevant, and respectful for all, regardless of cultural background – including ethnicity, nationality, language, religion, education, generation, and other cultural factors. This involves not only appreciating and embracing cultural subtleties and differences but also tailoring workflows, services, and experiences to meet the specific needs and preferences of diverse cultural groups. (Meyer, 2016; Kowalski, 2023)
Designing for accessibility. Ensuring that customer and employee experiences do not intentionally or unintentionally exclude groups and individuals with one or more impairments. This includes designing adaptive solutions for mobility, dexterity, visual, hearing, speech, and cognitive impairments that are effective in three distinct scenarios: long-term disability, temporary conditions, and situational limitations. (Microsoft Design, 2016; Microsoft Inclusive Design, 2023; Holmes, 2020)
Designing for intersectionality. Ensuring that customer and employee experiences address the unique needs and challenges faced by groups and individuals with diverse and intersecting identities – based on factors such as gender, race, sexual orientation, and socioeconomic class – as well as the multiple forms of discrimination or privilege they may experience. This involves creating environments, workflows, and services that are attuned to the complexities and nuances of these intersecting identities, ensuring that everyone feels represented, respected, and valued. (Lupton et al., 2021; Noel, 2023)
Fostering culture of systemic equity. Building and nurturing a culture where all employees feel valued, supported, and empowered, regardless of their background and identity. This involves crafting policies, programs, playbooks, practices, services, tools, benefits, incentives, and feedback mechanisms that leverage diverse perspectives; drive diversity of thought (including style, approach, and experience); foster inclusive collaboration; support underrepresented and historically excluded groups; and promote equitable career paths within the organization. (Myers, 2012; Frost & Aladina, 2019; Brown, 2016)

Examples: Airbnb (Project Lighthouse, Open Doors Policy, Instant Book), Microsoft (Xbox Adaptive Controller), Target (Adaptive Clothing), Nike (FlyEase), Apple (in-app accessibility features), Forum Virium Helsinki (co-creating urban futures for the city of Helsinki), and IDEO (OpenIDEO, the open innovation platform, and Design Kit, the human-centered design toolkit for social innovation).

Complementary/alternative methodologies, toolkits, and resources: Collective Action Toolkit (Frog, part of Capgemini Invent). Liberating Principles & Structures (Liberating Structures). Gamestorming – playbook with 80+ games for collaborative play (Gray, Brown & Macanufo, 2010). Facilitator’s Guide to Participatory Decision-Making (Kaner et al., 2014). Inclusive Design Toolkit (Microsoft). Inclusive Design Toolkit (University of Cambridge). Human-Centered Design Kit (IDEO). OpenIDEO (IDEO). Equity-Centered Community Design Field Guide (Creative Reaction Lab). Equity-Centered Design Framework (Stanford d.school). Racial Equity Tools (Equity in the Center). Liberatory Design Modes (Liberatory Design). Design Justice Network Principles (Design Justice Network). Inclusive Design for Business Impact and Social Impact (Helen Hamlyn Centre for Design, Royal College of Art).

Supplementary methodologies and toolkits: Systems thinking. Critical thinking and design. Social design and innovation. Civic design. Community design. Ethnographic research. Design thinking. Behavioral design. Industrial design. Service design. UX design. Retail design. Interior design. Workplace design. Experience design. Urban planning and environmental design.

Exploring the problem space: Understanding the broader context. Defining stakeholder mindsets / archetypes / personas. Understanding user drivers, needs, goals, behaviours, and blockers in existing experiences (in close collaboration with stakeholders and end-users). Crafting mental models to highlight moments that matter, pivotal touchpoints / interactions, common pain points, and unmet needs. Uncovering deep insights across multiple research methods and sources. Crafting tentative North Star for equitable experiences, determining ambition levels, and identifying opportunity spaces for improvement. Framing or reframing challenges/problems. Brainstorming initial ideas and hypotheses. Etc.

Exploring the solution space: Finding smart, emotionally resonant solutions (in close collaboration with stakeholders and end-users). Continuously testing tentative solutions through storytelling, rapid prototyping, experimentation, and piloting. Considering scalability, sustainability, and ethical implications of all solutions. Continuously adapting, downselecting, and prioritising tentative solutions. Crafting ideal, future-state end-to-end experiences (onstage and backstage) for prioritised user segments or mindsets. Defining stakeholder, business, and social impact. Crafting compelling stories and value cases for change. Identifying roadblocks, creating roadmaps, defining requirements, and mobilising resources for implementation and sustained success. Etc.

Project sponsors: Chief Diversity Officer, Chief Inclusion Officer, Chief Accessibility Officer, CXO, CHRO, CEO, or equivalent

Desired outcomes: ↑ service/experience accessibility, ↑ service/experience equitability, ↑ user empowerment, ↑ community trust and engagement, ↑ inclusion and representation in innovation & design processes, ↑ DEI-related metrics, ↑ employee engagement and retention, ↑ customer satisfaction and NPS, ↑ brand differentiation, ↑ brand reputation, ↑ brand engagement and loyalty

Note: Thank you, AnnaRose Girvin, Lead Experience Designer at Method, for serving as such a valuable sounding board for this blog post. Any mistakes or shortcomings in the final piece are entirely my responsibility.

References

Anand, N. & Barsoux, J-L. (2017, Nov–Dec). What everyone gets wrong about change management. Poor execution is only part of the problem. Harvard Business Review.

Brown, J. (2016). Inclusion: Diversity, the new workplace & the will to change. Advantage Media Group.

Brown, J. & Isaacs, D. (2005). The world café: Shaping our futures through conversations that matter. Berrett-Koehler Publishers.

Frost, S. & Aladina, R-F. (2019). Building an inclusive organization: Leveraging the power of a diverse workforce. Kogan Page.

Gray, D., Brown, S. & Macanufo, J. (2010). Gamestorming: A playbook for innovators, rulebreakers, and changemakers. O’Reilly Media.

Holmes, K. (2020). Mismatch: How inclusion shapes design. MIT Press.

Kaner et al. (2014). Facilitator’s guide to participatory decision-making (3rd ed.). Jossey-Bass.

Knapp, J., Zeratsky, J. & Kowitz, B. (2016). Sprint: How to solve big problems and test new ideas in just five days. Bantam Press.

Kowalski, S. (2023). Cultural sensitivity training: Developing the basis for effective intercultural communication. Econcise.

Linares, M. (2021, April). Frameworks for measuring product inclusion and product equity. Medium.

Lipmanowicz, H. & McCandless, K. (2014). The surprising power of liberating structures: Simple rules to unleash a culture of innovation. Liberating Structures Press.

Lupton et al. (2021). Extra bold: A feminist, inclusive, anti-racist, nonbinary field guide for graphic designers. Princeton Architectural Press.

Meyer, E. (2016). The culture map: Decoding how people think, lead, and get things done across cultures. PublicAffairs.

Myers, V. (2012). Moving diversity forward: How to go from well-meaning to well-doing. American Bar Association.

Microsoft Design. (2016). Inclusive 101 guidebook. Microsoft.

Microsoft Inclusive Design. (2023). Cognitive exclusion. Microsoft.

Noel, L-A. (2023). Design social change: Take action, work toward equity, and challenge status quo. A Stanford d.school guide. Ten Speed Press.

Robert Bau 6/15/24 Robert Bau 6/15/24

Going for gold • 6

Service Design for Organizational Change

6. Service Design for Organizational Change

Purpose: Crafting approaches, strategies, services, processes, and tools to empower change leaders in top-down and bottom-up change processes.

Note: See also my blog posts Ch-ch-ch-ch-changes and Comparing & contrasting innovation & change roles.

Project archetypes:

Designing for directed change. Comparable to winning hearts and minds in occupied territories, directed change is a top-down, leadership-driven approach to change supported by a compelling vision, deliberate action plans, and ‘scientific’ evidence. Employees are spurred or forced into action through a series of top-down interventions. Proponents argue that this is the fastest way to drive first-order and second-order change. Resistance to change is typically high but (ultimately) futile. This approach is based on the Empirical–Rational, Power–Coercive, and Normative–Re-educative change strategies by Chin & Benne (1969) and Thurley & Wirdenius (1973).
Designing for Darwinian change. Comparable to Battle Royale (the 2000 Japanese dystopian thriller), Darwinian change emphasizes a survival-of-the-fittest approach within organizations. Predetermined quests, visions, long-term goals, and values function as a lighthouse to guide innovation efforts and change initiatives within the organisation (and ecosystem). Autonomous or semi-autonomous units are encouraged to bring fresh perspectives, experiment with new ideas, battle for attention, and fight for resources. The ‘fittest’ ideas make the cut and get adopted. Proponents argue this approach is the best way to drive first-order and second-order change, especially when the path to desired outcomes is deemed unclear, uncertain, or unpredictable. Resistance to the ideas of others is actively encouraged (to a certain degree) to stimulate critical thinking and drive continuous improvement. This approach draws inspiration by van de Ven and Poole’s single and dual-motor change theories (1995).
Designing for guided change. Comparable to wandering into the unknown with sherpas by your side, guided change is a bottom-up, systematic effort to improve the problem-solving capabilities of the system as well as to unlock and foster growth in the individuals and groups that make up the system. Employees are empowered to change through expert facilitation in experiential learning and action research. Proponents argue that this approach is best suited for first-order change. Resistance is minimized thanks to heavy employee involvement. This approach is based on the Action-centered change strategy by Thurley & Wirdenius (1973), the Normative–Re-educative change strategy by Chin & Benne (1969), and the experiential aspects of Organizational Development (Brown & Harvey, 2006).
Designing for self-directed change. Comparable to jazz improvisation (O’Donnell, 2012), self-directed change operates on the premise that leaders should set teams and employees free to self-organize, interact, adapt, and learn autonomously. Organisations are viewed as complex, adaptive systems operating in diverse, dynamic, and interconnected environments. These systems continuously evolve through cycles of interactions, emergence, and non-linear feedback loops. Proponents argue this approach is the best way to explain how organisations adapt, evolve, and survive in turbulent environments. Resistance is minimal or even non-existent since everybody is a change agent. This approach draws heavily from complexity and chaos theory (Stacey, 1996).
Note: While self-directed change and holacracy (as initially implemented by Zappos) may share similar goals and characteristics, the latter relies more on formalized governance structures, documented processes, decision-making protocols, and clearly defined roles and responsibilities.
Fostering a culture of innovation and change. Building and nurturing a culture of continuous innovation and change throughout the organization. This involves crafting employee-centric spaces, services, playbooks, toolkits, tools, workflows, rituals, and incentives to help leaders and teams navigate change, build resilience, foster x-capability collaboration, build creative confidence, encourage experimentation, seek continuous feedback, and capture lessons learned.
Note: For more information about top-down and bottom-up initiatives to drive innovation and change, please see my blog posts Comparing & contrasting innovation & change roles and Ch-ch-ch-ch-changes.

Complementary methodologies:

Top-down change – strategic planning models (Hoshin Kanri, scenario planning), goal-setting frameworks (MBO, OKRs), diagnostic & alignment frameworks (McKinsey 7-S Framework, Balanced Scorecard), and linear change models (Kotter, ADKAR, Burke-Litwin, Lewin).
Bottom-up change – no specific meta-models, but common concepts include experiential learning, self-organisation, decentralised decision-making, x-capability collaboration, continuous feedback and learning, continuous improvement (e.g., Kaizen), small-scale experimentation, communities of practice, and customer and/or employee-driven innovation practices (crowdsourcing, hackathons, innovation jams, etc.).

Supplementary methodologies: Lean and agile approaches to strategic planning. Employee engagement and motivation theories. EX management. Systems thinking. Design thinking. Human-centered design. Lean startup. Nudge theory and behavioral change. DEI design. Process design. Storytelling. Knowledge management.

Exploring the problem and solution spaces:

Directed change. Service designers help leaders make the case for change through compelling, human-centered North Stars, stories, concepts, value cases, etc.
Darwinian change. Service designers design the rules and set the tone for the organization-wide game of innovation (and, upon invitation, we can also take part as active players).
Guided change. Working side-by-side with expert facilitators in experiential learning and action research, service designers make bottom-up innovation happen through systemic and systematic co-creation.
Self-directed change. Service designers create the conditions for change, creativity, and collaborative play by helping change leaders ‘loosen’ or ‘tighten’ the system.

Project sponsors: CEO, CHRO, COO, CIO, SVP strategy, SVP innovation, or equivalent

Desired outcomes:

Top-down change – ↑ strategic alignment, ↑ organisational control, ↑ accountability, ↑ decision-making speed, ↑ innovation capacity, ↑ transformational innovation [arguably], ↑ risk management, ↓ resistance to change [over time], ↓ organisational waste, ↑ organisational learning [through knowledge management]
Bottom-up change – ↑ adaptability, ↑ resilience, ↑ collaboration, ↑ employee empowerment, ↑ employee engagement, ↓ resistance to change, ↑ core innovation, ↓ organisational waste [through grassroot initiatives], ↑ organisational learning [through continuous learning and knowledge sharing]

Note: For an exploration of the roles service designers can play in empowering change leaders in top-down and bottom-up change, see Bau (2020).

Service Design for Equitable Experiences will be covered in the next blog post.

References

Anand, N. & Barsoux, J-L. (2017, Nov–Dec). What everyone gets wrong about change management. Poor execution is only part of the problem. Harvard Business Review.

Bau, R. (2020). Service design to the rescue. The critical roles service designers play in organizational change. Touchpoint, 11(3), 74–79.

Brown, D. & Harvey, D. (2006). An experiential approach to Organization Development (7th ed.). California State University–Bakersfield.

Chin, R. & Benne, K. (1969). General strategies for effecting changes in human systems [Research report]. Boston University.

O’Donnell, E. (2012, April). Is improvising really improvising?

Stacey, R. (1996). Strategic management and organizational dynamics (2nd ed.). Pitman.

Thurley, K. & Wirdenius, H. (1973). Supervision: A reappraisal. Heinemann.

van de Ven, A. & Poole, M. (1995, July). Explaining development and change in organizations. The Academy of Management Review, 20(3), 510–540.

Robert Bau 5/15/24 Robert Bau 5/15/24

Going for gold • 5

Service Design for Ethical Circularity

5. Service Design for Ethical Circularity

Purpose: Crafting approaches, strategies, services, processes, and tools to tackle social and environmental challenges in our world. This can be achieved by integrating systems thinking and circular design principles with behavioral design and strong ethical considerations.

Common themes: System boundaries, dynamics, interventions, and change. Ecological footprint. Life cycle thinking for products, services, and experiences. Upstream and downstream impact. Circular economy with sustainable and circular design strategies. Cognitive and behavioral science for sustainable habits, behaviors, and practices. Cultural, regional, and contextual sensitivity. Ethics and ethical conduct. Social equity. Human rights and working conditions. Diversity, equity, and inclusion. Fair trade practices. Economic viability – without exploiting people or depleting natural resources. Sustainable / circular business models. End-to-end transparency and accountability. Climate resilience and adaptability. Decarbonization. Regulatory and policy frameworks. Purpose-driven change and changemakers. Robust metrics, measurement tools, and dashboards to assess the relative effectiveness and performance of sustainability/circular initiatives.

Project archetypes:

Designing circular service systems. Developing service production and delivery systems based on circular economy principles to minimize environmental impact and build climate resilience across infrastructures, processes, workflows, touchpoints, and assets. This involves decarbonising operations, services, and assets, while promoting environmental responsibility and social governance across a wide range of suppliers, all without sacrificing service productivity or quality. Additionally, embedding circular properties into all touchpoints and assets across end-to-end customer experiences optimises resource use, eliminates waste, and encourages reuse, repurposing, and recycling.
Designing circular business models. Rethinking business models for circularity – such as product-as-a-service, sharing platforms, and take-back programs – to create new revenue streams, drive efficiencies, promote sustainability, and decrease the environmental footprint. This approach extends beyond developing new revenue models to also crafting fit-for-purpose service processes, orchestrating seamless stakeholder experiences, and designing intuitive consumer-facing channels and touchpoints.
Designing circular loops. Designing or redesigning feedback loops in a circular economy to reduce waste, extend product lifecycles, and promote reuse. This involves developing desirable and effective systems, services, and experiences for maintenance, refurbishment, repair, upgrading, repurposing, upcycling, redistribution, remanufacturing, and recycling.
Designing for circular mindsets & behaviors. Encouraging the adoption of circular mindsets, principles, and rituals in daily life through consumer-centric initiatives and interventions. This includes developing educational campaigns, interactive experiences, incentive schemes, actionable dashboards, and practical tools that inspire individuals, households, and communities to integrate circular practices into their everyday routines.
Fostering culture of ethical circularity. Instilling circular mindsets, principles, and rituals in the workplace through organization-wide initiatives and interventions. This involves developing strategic frameworks, training programs, incentive schemes, hands-on playbooks, actionable dashboards, and practical tools to integrate circular and ethical principles into all aspects of operations and teamwork.

Note: Eliminating waste from service creation, production, and delivery is a key focus of the Service Design for Operational Excellence arena. For more details, check out my blog post Going for gold • 4.

Complementary methodologies and toolkits: Systems thinking. Life cycle thinking. Disruptive design. Design for sustainability and circular economy. Nudge theory and behavioral change. DEI design. Theory of Change. Storytelling.

Supplementary methodologies and toolkits: Design thinking. Human-centered design. Process design. Business model innovation. Knowledge management. Change management.

Exploring the problem space: Understanding the broader context. Mapping and assessing systems, value chains, and lifecycles. Identifying stakeholder motivations and barriers. Evaluating the fairness and ethical implications of current practices. Analyzing existing policies and regulations. Framing opportunity spaces for improvement / intervention. Determining ambition levels. Establishing objectives, defining KPIs, and setting baselines. Crafting tentative North Star. Designing provocations to challenge assumptions, provoke reactions, and stimulate discussions. Framing or reframing challenges / problems. Etc.

Exploring the solution space: Generating, screening, and prioritising ideas / interventions for systemic and behavioral change. Continuously developing, testing, and adapting tentative solutions through storytelling, rapid prototyping, experimentation, simulation, and piloting. Defining stakeholder and business impact. Crafting compelling stories and value cases for change. Identifying roadblocks, creating roadmaps, defining requirements, and mobilising resources for implementation and sustained success. Establishing a culture of continuous learning and improvement. Etc.

Project sponsors: Chief Sustainability Officer (CSO), SVP Sustainability, COO, CHRO, CEO, or equivalent

Desired outcomes: ↑ ethical conduct, ↑ compliance (with environmental and social regulations), ↑ resource efficiency, ↓ organizational waste, ↓ environmental impact, ↑ resilience and adaptability, ↑ employee engagement, ↑ customer engagement, ↑ brand reputation, ↑ core innovation, ↑ transformational innovation, ↑ organizational learning

For an introduction to systems thinking and disruptive design applied to sustainability and purpose-driven change, check out Richmond (n.d.), Acaroglu (2017), and The Unschool of Disruptive Design (2024).

Note: Thank you, Glyn Griffiths, sustainability expert at PA Dublin, for serving as such a valuable sounding board for this blog post. Any mistakes or shortcomings in the final piece are entirely my responsibility.

Service Design for Organizational Change will be covered in the next blog post.

References

Acaroglu, L. (2017). Tools for systems thinkers: The 6 fundamental concepts of systems thinking. Medium.

Anand, N. & Barsoux, J-L. (2017, Nov–Dec). What everyone gets wrong about change management. Poor execution is only part of the problem. Harvard Business Review.

Richmond, B. (n.d.). The thinking in systems thinking: Eight critical skills. The Systems Thinker.

The Unschool of Disruptive Design. (2024). Upskill with the Unschool.

Robert Bau 4/15/24 Robert Bau 4/15/24

Going for gold • 4

Service Design for Operational Excellence

4. Service Design for Operational Excellence

Purpose: Crafting approaches, strategies, services, processes, and tools to improve service productivity, quality, and profitability. Service quality is defined as a “high standard of performance that consistently meets or exceeds customer expectations” (Wirtz & Lovelock, 2016).

Note: See also my blog posts Going for gold • 5 and Lean & mean innovation machine • 1.

Common themes: The Toyota Way. Lean thinking. DOWNTIME (8 types of waste). Customer focus and feedback (Voice of the Customer). Service performance, productivity, and quality. Process mapping, journey mapping, and flow charting. Service quality gaps. Standardizing and optimizing workflows. Digitizing and digitalizing processes. Standardisation. Demand patterns, demand management, and capacity management. Automation and RPA (robotic process automation). Continuous learning and improvement. Kaizen. Data-driven, fact-based decision making. Simulation and modelling. Agile ways of working. ISO certification. Return on Quality. Etc.

Project archetypes:

Designing for waste elimination. Streamlining service processes (for value facilitation and co-creation) to reduce variability, inefficiencies, and environmental impact while enhancing service productivity and quality. Key strategies include identifying and reducing sources of waste (think: DOWNTIME); eliminating non-value-added activities, ensuring every step adds value from the customer’s perspective; digitizing and digitalizing processes and workflows; and establishing robust protocols and procedures for effective complaint handling and service recovery.
Note: See the four project archetypes below for additional strategies to minimize waste and maximize customer value.
Example: Amazon uses data-driven decision-making, lean supply chain practices, and advanced automation to streamline operations.
Designing for standardization and adaptability. Balancing standardization and adaptability to create reliable and repeatable systems, processes, and servicescapes that can be easily replicated or scaled (across different contexts, locations, and time zones) while maintaining the same levels of service quality, productivity, and profitability. This may involve taking a modular approach, where certain components are standardized to ensure consistency and efficiency (such as CRM systems, production processes, and onboarding), while other components are adapted to fit local needs and preferences (such as service delivery processes, marketing activities, and DEI training).
Note: Replicating involves duplicating service processes and systems exactly as they are in different contexts or locations. Scaling involves expanding service capabilities to handle increased volume, complexity, or geographical reach. (Inspired by Grönroos, 2007; Normann, 2000.)
Example: McDonald’s standardizes cooking processes, equipment, and training programs while localising (to a certain degree) restaurant designs, menu items, and marketing campaigns.
Designing for automation and augmentation in a team-centric way. Automating tasks and workflows using the power of NLP, RPA, and Intelligent Automation to improve accuracy, reduce time-to-completion, ensure reliability, enhance service productivity, elevate service quality, free up capacity, and improve quality of life (see, e.g., Gupta, 2023; Porwal, 2024). Additionally, by augmenting human capabilities with next-gen AI and XR technologies, project teams can evolve into ‘superteams,’ where human and non-human team members work seamlessly side by side (Schwartz et al., 2020). This approach is particularly valuable during moments in the project lifecycle that benefit from increased firepower and alternative perspectives – such as sensemaking, systematic ideation, or participatory decision-making. Successful implementation of automation and augmentation requires ethical guidelines, redesigned workflows, robust tools, emotional intelligence, data governance, and intentional upskilling.
Note: Enabling or emerging technologies for automation and augmentation include ML (machine learning), NLP (natural language processing), RPA (robotic process automation), adaptive AI, IA (intelligent automation, infusing RPA with AI), cobots (collaborative robots), digital twins, MR (mixed reality, combining elements of both VR and AR), blockchain, IoT (Internet of Things), AI-powered collaboration tools, drone technology, edge computing, edge AI, etc.
Example: The Salesforce Einstein Automate platform combines RPA with AI capabilities to help clients automate a wide range of tasks and workflows, such as customer support, personalized content, patient scheduling, inventory management, loan approval, risk assessment, and so on.
Designing for optimal utilization. Balancing demand and capacity to utilize staff, labor, equipment, and facilities as productively as possible, particularly in the face of fluctuating demand. Strategies to manage capacity include stretching capacity levels and adjusting capacity to match demand. Strategies to manage demand include reducing demand in peak times, increasing demand during low periods, configuring effective queuing systems, implementing reservation systems, and reducing perceived waiting time. (Wirtz & Lovelock, 2016)
Example: Starbucks uses demand forecasting and workforce management techniques to balance staffing levels with customer demand.
Fostering culture of continuous improvement. Building and nurturing a culture of continuous improvement to sustain operational excellence and competitiveness. This involves engaging all employees in identifying and implementing improvements. It also requires consistently acting on feedback from customers, employees, and other stakeholders. Additionally, promoting life-long learning where employees continually acquire new skills and knowledge, is essential. This bottom-up and outside-in approach fosters accountability, empowerment, and customer-centricity.
Example: Ritz-Carlton conducts daily line-ups where employees gather to share stories and discuss ways to enhance service, fostering a culture of continuous improvement and exceptional customer service.

Alternative/complementary methodologies & toolkits: Lean Service for optimizing service delivery and improving workplace efficiency (with tools such as value stream mapping, service blueprinting, 5S, Kaizen, and root cause analysis). Six Sigma for improving service quality by removing the causes of defects and minimizing variability in service production and delivery processes (tools: DMAIC, VOC, SIPOC, fishbone diagrams, control charts, FMEA, etc.). Total Quality Management for enhancing the quality and performance of service delivery (tools: PDCA, SERVQUAL, QFD, service blueprinting, Pareto analysis, root cause analysis, etc.). Theory of Constraints for addressing critical bottlenecks in service delivery (tools: current reality tree, future reality tree, five focusing steps, etc.). Business Process Reengineering for fundamentally rethinking and redesigning core service processes (tools: value stream mapping, process mapping, benchmarking, gap analysis, root cause analysis, etc.). Robotic Process Automation (RPA) for automating routine, repetitive, and rule-based tasks in service production and delivery processes, Intelligent Automation (IA) for handling non-routine, complex tasks and end-to-end workflows with cognitive abilities, and Hyperautomation for automating as many business and IT processes as possible. Queue management software for managing customer flows in real-time and simulation tools for predicting and optimizing queue performance (by modelling different scenarios). Agile and the Scrum framework for managing and delivering projects in service organizations (tools: sprint planning; product and sprint backlogs; daily scrums/standups; sprint reviews and retrospectives; epics and user stories; etc.).

Supplementary methodologies & toolkits: Design thinking and human-centered design. CX and EX management. Knowledge management. Change management.

Exploring the problem space: Understanding the broader context. Identifying customer needs and pain points. Mapping existing processes. Collecting and analyzing quantitative data. Identifying areas of inefficiency/waste. Framing opportunity spaces for improvement. Determining ambition levels. Establishing objectives, defining KPIs, and setting baselines. Crafting tentative North Star. Designing provocations to challenge assumptions, provoke reactions, and stimulate discussions. Framing or reframing challenges/problems. Etc.

Exploring the solution space: Generating, screening, and prioritising improvement ideas. Continuously testing and adapting tentative solutions through storytelling, rapid prototyping, experimentation, simulation, and piloting. Defining stakeholder and business impact. Crafting compelling stories and value cases for change. Identifying roadblocks, creating roadmaps, defining requirements, and mobilising resources for implementation and sustained success. Establishing a culture of continuous improvement and operational excellence – through Kaizen principles, leadership support, upskilling, continuous experimentation, feedback loops, customer involvement/co-creation, revamped performance management systems, revised KPIs, and transparent communication. Etc.

Project sponsors: CIO, COO, CHRO, CFO, CEO, or equivalent

Desired outcomes: ↑ efficiency, ↓ organizational waste, ↑ compliance, ↑ quality, ↑ cost savings, ↑ flexibility, ↑ employee engagement, ↑ customer satisfaction, ↑ customer loyalty, ↑ core/process innovation, ↑ organizational learning

Note: For a rock solid introduction to service processes, service productivity, service quality, and service performance in service organizations, check out chapters 8, 9, 14, and 15 in Wirtz & Lovelock (2016).

Power tip: For all project types, harness the power of data analytics – including descriptive, predictive, and prescriptive analytics – to gain deep insights into past performance, forecast future trends, and recommend optimal courses of action.

Service Design for Ethical Circularity will be covered in the next blog post.

References

Anand, N. & Barsoux, J-L. (2017, Nov–Dec). What everyone gets wrong about change management. Poor execution is only part of the problem. Harvard Business Review.

Grönroos, C. (2007). Service management and marketing: Customer management in service eompetition. John Wiley & Sons.

Gupta, S.K. (2023). The importance of human-centered automation in manufacturing. Forbes.

Normann, R. (2000). Service management: Strategy and leadership in service business. Wiley.

Porwal, Y. (2024). From RPA to Intelligent Automation to Hyperautomation – the progression of business process automation. Binmile.

Schwartz, J., et al. (2020, May). Superteams. Putting AI in the group. Deloitte.

Wirtz, J. & Lovelock, C. (2016). Services Marketing: People, technology, strategy (8th ed.). World Scientific Publishing.

Robert Bau 2/1/24 Robert Bau 2/1/24

Going for gold • 3

Service Design for Employee Engagement

3. Service Design for Employee Engagement

Purpose: Crafting purpose-driven operating models, policies, services, workflows, tools, and rituals to help leaders, employees, and teams grow, perform, and thrive in the workplace.

Common themes: Purpose-driven organizations and brands to provide meaning, focus, and direction. Career/employee journeys. Talent and performance management. X-capability collaboration. Diversity, equity, and inclusion. Employee engagement and empowerment. Health, wellbeing, and safety. Learning & development. Hybrid work. Customer centricity and intelligence. Continuous learning and improvement. ESG and CSR. Systemic and systematic creativity and innovation. Organizational and employee adaptability and resilience. Emotional intelligence at work. Operating models, work structures, culture(s), and leadership for the future. Agile organizations, functions, and work structures (e.g., holacracies). DevOps, DesignOps, and InnovationOps.

Project archetypes:

Designing the purpose-driven, people-centric North Star. Crystallizing, dramatizing, and socializing a compelling purpose and vision that outlines how the organization will address pressing issues, tackle complex challenges, drive massive change, and ultimately make a positive impact on people, society, and the planet (see, e.g., Cone, 2022; Mau, 2004; Norman, 2023). The purpose statement provides a clear answer to the questions, ‘Why do you get out of bed every morning?,’ ‘Why does your organization exist?,’ and ‘Why should that matter to anyone else?’ (Sinek, 2009). The vision statement describes the desired future state by painting a vivid picture of what success looks like. The North Star should generate excitement, build alignment, guide decision-making, shape behavior, and ultimately drive innovation.
Examples: Tesla’s mission adopted in 2016 – ‘Accelerating the world’s transition to sustainable energy;’ Starbuck’s mission adopted in 2008 – ‘To inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time;’ and CVS Health’s mission and vision in 2014 – ‘Helping people on their path to better health’ and ‘To help people live longer, healthier, happier lives.’
Power tip: To reinforce the North Star, consider incorporating elements such as BHAGs (Big, Hairy, Audacious Goals), corporate values/beliefs, and guiding principles. To track progress towards the North Star, add strategic milestones and a robust measurement system.
Designing for employee journeys and performance. Ensuring an engaging, cohesive, seamless, and supportive experience throughout the entire journey with an organization, from bonjour to au revoir. This includes crafting employee-centric services, tools, and rituals to elevate moments that matter in the employee/career journey, such as recruitment, onboarding, professional development, professional networking, performance management, career development/transition, life transition, benefits engagement, offboarding, and alumni engagement. (Whitter, 2019; Meister & Mulcahy, 2016; Morgan, 2017; and others)
Designing for team journeys and performance. Ensuring self-organizing teams are equipped and enabled to build collective intelligence, improve collaboration, and boost performance (especially in hybrid work environments). This involves crafting team-centric spaces, services, products, tools, workflows, and rituals to elevate moments that matter in the project lifecycle, from recruitment & onboarding to offboarding & transitioning.
Note: For more information, please see Bau (2023) or, for a taster, my blog post Let’s accomplish amazing things together.
Designing for effective DesignOps (or equivalent). Equipping multi-disciplinary innovation, design, and delivery teams with the systems, services, workflows, tools, and skills they need to unlock creativity, drive efficiencies, and produce high-quality deliverables at scale. This involves standardizing workflows, integrating fit-for-purpose tools, building effective design systems, promoting collaboration and co-creation, fostering a culture of continuous learning, and aligning design processes with broader organizational goals. (See, e.g., DesignOps Assembly, 2024; Merholz & Skinner, 2016.)
Fostering culture of customer excellence. Building and nurturing a customer-centric culture where human needs and preferences are at the heart of every conversation, decision, action, process, and strategy. This involves equipping both backstage and frontline teams with the data, tools, training, support, and empowerment needed for effective value facilitation and co-creation. Additionally, it encompasses designing policies, platforms, services, procedures, touchpoints, and incentives required for exceptional customer service, effective multi-channel support, robust service recovery, and continuous learning & adaptation. (Franz, 2022; Goodman, 2009; and others)

Note: To keep it simple, I am here assuming that all project types are relevant regardless of where the organization falls on the spectrum between the hierarchical, command-and-control model and the fluid, network-based holacracy. For building and nurturing a culture of sustainability, see my blog post Going for gold • 5.

Complementary methodologies & toolkits: Strategic thinking. Business agility. Operating models. Organizational culture(s). Employee experience. Design research. Design thinking. Service design. Behavioural design. Process/workflow design. DEI design. Workplace design. Workplace/employee wellbeing. Knowledge management. Etc.

Exploring the problem space: Understanding the broader context. Exploring organizational & HR strategies, operating models, cultures, and change needs. Defining employee mindsets / archetypes / personas. Defining moments that matter in end-to-end career journeys and employee experiences (from Bonjour to Au Revoir). Uncovering unmet, underserved, or overserved employee needs in these moments. Uncovering deep insights across multiple research methods and sources. Identifying opportunity spaces for improvement. Framing or reframing challenges/problems. Brainstorming initial ideas and hypotheses. Etc.

Exploring the solution space: Generating compelling ideas and crafting holistic concepts (ideally in a series of co-creation sessions with employees, leaders, and HR professionals). Setting strategic directions and creating strategic platforms. Continuously testing ideas, concepts, and strategies for desirability, feasibility, viability, etc. (through rapid prototyping, experimentation, and piloting). Continuously adapting, downselecting, and prioritising tentative solutions. Defining stakeholder and business impact. Crafting compelling stories and value cases for change. Identifying roadblocks, defining requirements, and mobilising resources for implementation and sustained success. Etc.

Project sponsors: CHRO, Chief Diversity Officer, SVP People & Culture, SVP Employee Experience, CXO, CEO, or equivalent

Desired outcomes: ↑ organizational agility, ↑ innovation capacity, ↑ x-capability collaboration, ↑ organizational/strategic alignment, ↓ organizational waste, ↑ employee engagement, ↑ employee/team health & wellness, ↑ employee satisfaction, ↑ employee loyalty, ↑ employee retention, ↑ customer satisfaction, ↑ NPS, ↑ customer loyalty, ↑ brand advocacy

Note: Desired outcomes could also cover effectiveness and efficiency indicators to measure performance in moments that matter (e.g., emotions evoked, goal fulfilment, effort levels).

Service Design for Operational Excellence will be covered in the next blog post.

References

Anand, N. & Barsoux, J-L. (2017, Nov–Dec). What everyone gets wrong about change management. Poor execution is only part of the problem. Harvard Business Review.

DesignOps Assembly. (2024). Learn about DesignOps.

Franz, A. (2022). Built to win: Designing a customer-centric culture that drives value for your business. Advantage Media Group.

Goodman, J.A. (2009). Strategic customer service: Managing the customer experience to increase positive word of mouth, build loyalty, and maximize profits. AMACOM.

Meister, J. & Mulcahy, K.J. (2016). The future workplace experience: 10 rules for mastering disruption in recruiting and engaging employees. McGraw Hill.

Merholz, P. & Skinner, K. (2016). Org design for design orgs: Building and managing in-house design teams. O’Reilly.

Morgan, J. (2017). The employee experience advantage: How to win the war for talent by giving employees the workspaces they want, the tools they need, and a culture they can celebrate. Wiley.

Whitter, B. (2019). Employee experience: Develop a happy, productive and supported workforce for exceptional individual and business performance. Kogan Page.

Robert Bau 12/15/23 Robert Bau 12/15/23

Going for gold • 2

Service Design for Customer Excellence

2. Service Design for Customer Excellence

Purpose: Crafting approaches, strategies, services, processes, and tools to make customer experiences feel reliable, convenient, engaging, enjoyable, and meaningful. (Feel free to replace ‘customer’ with passenger, guest, patient, resident, citizen, client, partner, consumer, end-user, or whichever term makes sense to you.)

Note: All CX work in the context of service design should include both the onstage and backstage components required for effective service production and delivery; please see my blog post Bringing down the house • 1 for a lighthearted introduction to the 7Ps of services marketing.

Common themes: Core product and supplementary services. Production & delivery processes. Three experience phases (pre-delivery, point-of-delivery, post-delivery – or pre-purchase, service encounter, post-encounter) with moments that matter and prioritised touchpoints. Customer segments, mindsets, archetypes, and/or personas. Diversity, equity, and inclusion. Customer outcomes/goals/jobs. Customer activities, customer–provider interactions, and customer–employee interactions. Customer moods and emotions. High-touch and low-touch engagement models. Frontline employees and backstage teams. Service roles and scripts. Line of visibility (between onstage and backstage components). Value creation, value facilitation, and value co-creation. Unmet, underserved, or overserved needs. Pain/friction points. Service quality gaps. Experience mapping. Journey management. Self-service technologies. Customer onboarding and training. Customer churn, retention, and loyalty. Customer feedback systems. Customer service and support. Customer complaints and service recovery. Value propositions, service packages (customer offerings), and service tiering. Etc.

Project archetypes:

Designing for value creation & co-creation. Exploring new or improved ways to enable and empower customers in their value creation process. This involves uncovering untapped sources of value creation, defining new or improved ways for customers to engage in value creation, identifying opportunities for value facilitation and co-creation, and crafting new value propositions, customer offerings, and service tiers. (Based on Grönroos, 2011; Wirtz & Lovelock, 2016; and others.)
Examples: Airbnb (peer-to-peer business model, dynamic pricing tools, AirCover for hosts and guests, etc.), Tesla (EV charging solutions and infrastructure), Lego (LEGO Ideas), and Spotify (tiered offerings for different lifestyles and budgets).
Note: For more information about value co-creation, plesae see my blog post Get the balance right! • 2.
Designing for personalization & customization. Proactively and dynamically tailoring the end-to-end experience to meet individual needs and preferences while actively engaging customers in the co-innovation, co-creation, co-design, co-development, co-production, and co-marketing of products and services. This requires harnessing the power of data analytics, behavioral economics, relationship management, mass customization, modularity, and AI capabilities to deliver personalized content, services, and solutions across multiple touchpoints. (Based on Peppers & Rogers, 1993; Pine, 1992; Gummesson, 2008; and others.)
Examples: Nike (By You), Build-A-Bear Workshop, Amazon, Netflix, Starbucks (My Starbucks Idea), Sephora (Color IQ), Threadless, and Stitch Fix.
Designing for immersion & engagement. Staging engaging, meaningful, and impactful experiences that create a sense of anticipation, build emotional connections, leave lasting memories, and foster unwavering loyalty. This involves various strategies, including defining overarching themes and core concepts, crafting compelling narratives and content, designing multi-sensory and immersive environments, incorporating interactive and hands-on activities, introducing elements of delight and surprise, providing learning and growth opportunities, and fostering a strong sense of community among users. (Based on Pine & Gilmore, 1999; Coleman, 2018; and others.)
Examples: IKEA Experience Centers, Nike House of Innovation, Royal Carribean (onboard experiences, themed environments), and Rapha (clubhouses, cycle clubs, branded rides & events).
Designing for loyalty & advocacy. Engaging and incentivizing customers to actively support and celebrate the brand they love, leading to greater brand reach, higher retention rates, and more organic growth. While the first three project types all aim to encourage loyalty and engagement, this one focuses specifically on creating tiered membership programs with experiential rewards, orchestrating surprise and delight campaigns, offering exclusive access and early releases, and encouraging customers to become co-innovators and co-marketers. Additionally, it involves developing referral and ambassador programs, publicly recognizing and celebrating loyal customers, and building a community platform through online forums, regular events, and user-generated content initiatives.
Examples: Cricut Community; Nike+ and Nike Ambassador Program; Sephora Beauty Insider and Sephora Squad; Rapha (exclusive events, clubhouses, Rapha Cycling Club); Lululemon Ambassador Program; Lego (LEGO CON, LEGO Ideas, LEGO VIP, LEGO Life app); and Apple’s “Shot on iPhone” campaigns.
Note: Specific strategies to reduce customer defections and create effective service recovery systems will be covered in a future blog post.
Fostering culture of journey orchestration. Building and nurturing a culture dedicated to orchestrating seamless experiences across all encounters with the brand(s) throughout the three stages of service delivery (e.g., pre-flight, in-flight, and post-flight experiences). This approach emphasizes the importance of cohesive and fluid transitions not only between online and offline experiences but also between onstage (customer-facing) and backstage (employee-facing) components of the ecosystem. Key strategies include synchronizing customer data and preferences across brands, functions, processes, and touchpoints, as well as proactively identifying and addressing pain points to remove friction throughout the journey. (Based on Risdon & Quattlebaum, 2018; Manning & Bodine, 2012; and others.)
Examples: Warby Parker, USAA, Airbnb, IKEA, Sephora, and Porsche.
Note: See also my blog post Going for gold • 4.

Complementary methodologies/toolkits: Design research. Services marketing / management. Service quality (SERVQUAL or Service Gap Model). Customer experience management. Journey management. Customer segmentation. Outcome-driven innovation (jobs-to-be-done theory). Design thinking. Service and UX design. Ecosystem and experience mapping (value exchange maps, value stream maps, journey maps, service blueprints, flowcharts, etc.). DEI frameworks and toolkits.

Exploring the problem space: Understanding the broader context. Defining customer mindsets / archetypes / personas. Understanding customer drivers, needs, goals, behaviours, and blockers in existing experiences. Crafting mental models to highlight moments that matter, pivotal touchpoints/interactions, common pain points, and unmet customer and employee needs. Uncovering deep insights across multiple research methods and sources. Crafting tentative North Star CX, determining ambition levels, and identifying opportunity spaces for improvement. Framing or reframing challenges/problems. Brainstorming initial ideas and hypotheses. Etc.

Exploring the solution space: Finding smart, emotionally resonant solutions for value creation (empowering customers to get the job done better than today) and value facilitation (empowering frontline staff and back-of-house teams to serve and support customers better than today). Creating smart solutions for effective service recovery (principles, policies, programs, procedures, etc.). Continuously testing tentative solutions through storytelling, rapid prototyping, experimentation, and piloting. Continuously adapting, downselecting, and prioritising tentative solutions. Crafting ideal, future-state end-to-end experiences (onstage and backstage) for prioritised customer segments or mindsets. Defining stakeholder and business impact. Crafting compelling stories and value cases for change. Identifying roadblocks, creating roadmaps, defining requirements, and mobilising resources for implementation and sustained success. Etc.

Project sponsors: CXO, Chief Customer Officer, Chief Brand Officer, Chief Diversity Officer, or equivalent

Desired outcomes: ↑ service quality, ↑ differentiation, ↑ brand buzz, ↑ customer reviews & testimonials, ↑ user-generated content, ↑ brand loyalty (customer retention & advocacy), ↑ customer satisfaction, ↑ NPS, ↑ customer lifetime value

Note: Desired outcomes could also cover effectiveness and efficiency indicators to measure performance in moments that matter (e.g., conversion rates, emotions evoked, effort levels, customer response time).

Power tip: When planning CX-related projects, try to scope them by altitude. High-altitude projects (10,000 to 30,000 ft.) explore the relationships, interconnections, flows, and feedback loops in an entire ecosystem (such as an airport). Mid-altitude projects (2,500 to 10,000 ft.) delve into the interconnections and flows within and between moments that matter (such as check-in, security, and boarding). Finally, low-altitude projects (500 to 2,500 ft.) focus on the flows and interactions of specific activities and touchpoints within a moment that matters (such as checking in with a self-service kiosk).

Service Design for Employee Engagement will be covered in the next blog post.

References

Anand, N. & Barsoux, J-L. (2017, Nov–Dec). What everyone gets wrong about change management. Poor execution is only part of the problem. Harvard Business Review.

Coleman, D. (2018). Building brand experiences: A practical guide to retaining brand relevance. Kogan Page.

Grönroos, C. (2011). Value co-creation in service logic: A critical analysis. Marketing Theory, 11(3), 279–301.

Gummesson, E. (2008). Total relationship marketing (3rd ed.). Routledge.

Holmes, K. (2020). Mismatch: How inclusion shapes design. MIT Press.

Kowalski, S. (2023). Cultural sensitivity training: Developing the basis for effective intercultural communication. Econcise.

Linares, M. (2021, April). Frameworks for measuring product inclusion and product equity. Medium.

Lupton et al. (2021). Extra bold: A feminist, inclusive, anti-racist, nonbinary field guide for graphic designers. Princeton Architectural Press.

Manning, H. & Bodine, K. (2012). Outside in: The power of putting customers at the center of your business. Amazon Publishing.

Meyer, E. (2016). The culture map: Decoding how people think, lead, and get things done across cultures. PublicAffairs.

Microsoft Design. (2016). Inclusive 101 guidebook. Microsoft.

Microsoft Inclusive Design. (2023). Cognitive exclusion. Microsoft.

Noel, L-A. (2023). Design social change: Take action, work toward equity, and challenge status quo. A Stanford d.school guide. Ten Speed Press

Peppers, D. & Rogers, M. (1993). The one-to-one future: Building relationships one customer at a time. Doubleday.

Pine, B.J. (1992). Mass customization. The new frontier in business competition. Harvard Business School Press.

Risdon, C. & Quattlebaum, P. (2018). Orchestrating experiences: Collaborative design for complexity. Rosenfeld Media.

Wirtz, J. & Lovelock, C. (2016). Services Marketing: People, technology, strategy (8th ed.). World Scientific Publishing.

Robert Bau 11/1/23 Robert Bau 11/1/23

Going for gold • 1

Service Design for Disruption & Growth

Inspired by an article in Harvard Business Review about the underlying quests for corporate transformation (Anand & Barsoux, 2017), I have identified seven strategic arenas where the power of service design can transform organizations, teams, and people.

While not strictly MECE, this quest-based classification reveals intriguing differences in terms of purpose, project types, project sponsors, methodologies, and desired outcomes – and stands in sharp contrast to the one-size-fits-all approach often promoted in toolkits for innovation management, new product development, design thinking, and service design.

The seven arenas are:

Service Design for Disruption & Growth
Service Design for Customer Excellence
Service Design for Employee Engagement
Service Design for Operational Excellence
Service Design for Ethical Circularity
Service Design for Organizational Change
Service Design for Equitable Experiences [spanning across the other six arenas]

In the descriptions that follow, I am presuming that many (if not most) service design projects would benefit from an insights-driven, solution-agnostic approach. See my blog post Lean & mean innovation machine • 2 for a deep dive into the differences between upstream and downstream work.

Note: The categories listed above are chosen based on the 80–20 principle. Additional quest or outcome-based categories, such as Service Design for Social Change or Service Design for Community Engagement, may be addressed at a later date. I have intentionally left out sector-specific categories, such as Service Design for Public Services, Service Design for Healthcare, or Service Design for Financial Services, and technology-first categories, such as Service Design for Digital Transformation or Service Design for Medtech.

1. Service Design for Disruption & Growth

Purpose: Crafting purpose-driven, people-centric scenarios, strategies, and concepts to help organisational leaders place strategic bets on the future and invest in transformational endeavours with confidence. In this context, strategic bets are ‘big ideas’ that uncover new sources of value by either reinventing the core business or by creating new, ‘never-seen-before’ businesses.

Note: Compared to the unimaginative product-centric approach that pays lip service to services, a genuine service design mindset brings product-service systems, value co-creation, end-to-end experiences, and a multi-actor perspective to the table. See also my blog posts Get the balance right! • 1 and Get the balance right! • 5.

Common themes: Strategic foresight. Weak signals. Speculation and provocation. Scenario planning. Alternative futures. White spaces and opportunity areas. Strategic bets and ‘big ideas’ to shape the future. MAYA. New sources of value. Purpose-driven, people-centric North Stars. Strategic bets. Business model innovation. Value proposition design. Crowdsourcing. Innovation uncertainty/risk. Innovation portfolio management. Backcasting. Roadmaps. Corporate storytelling. Etc.

Project archetypes:

Designing for reinvention (of the core business). Identifying and exploiting opportunities to reinvent, revitalize, and reposition the core/legacy business or businesses. This means rethinking and redesigning business models, strategies, processes, and services to improve relevance, differentiation, and competitiveness.
Examples: Rolls-Royce’s ‘Power by the Hour’ model in 1962; Starbucks’ ‘third place experience’ in 1987; Netflix’s streaming service in 2007; and Allstate’s Drivewise program in 2010.
Designing for adjacent innovation. Identifying and exploiting opportunities to create adjacent, ‘close-to-the-core’ businesses. This means leveraging existing capabilities, assets, data, technologies, and market knowledge to create new products, services, and revenue streams.
Examples: Virgin Direct in 1995; easyCar in 2000; Amazon FBA in 2006; Facebook Marketplace in 2016; ING’s Yolt Technology Services in 2019; and Homes & Villas by Marriott International in 2019.
Designing for organizational disruption. Identifying and exploiting opportunities to envision ‘new-to-the-core’ businesses. This approach leverages novel insights, processes, or technologies to create business models and value propositions that mark a significant departure from historical offerings.
Examples: IBM Watson in 2011; Adobe Creative Cloud in 2013; and Amazon Fresh stores in 2020.
Designing for market disruption. Identifying and exploiting opportunities to create uncontested markets or reshape existing ones. Market disruptions often displace established industry boundaries, business models, products, and services, affecting not just a single organization but the entire ecosystem. (See, e.g., Kim & Mauborgne, 2005; Christensen, 1997.)
Examples: Outsiders disrupting industry structures and dynamics include Cirque du Soleil in 1984, Airbnb in 2008, and Uber in 2009. Solid service-based examples from established companies include Google AdWords in 2000 and Amazon Web Services in 2006.
Fostering a culture of innovation and change. Building and nurturing a culture of continuous innovation and change throughout the organization. This involves crafting employee-centric spaces, services, playbooks, toolkits, tools, workflows, rituals, and incentives to help leaders and teams navigate change, build resilience, foster x-capability collaboration, build creative confidence, encourage experimentation, seek continuous feedback, and capture lessons learned.
Note: For more information about top-down and bottom-up initiatives to drive innovation and change, please see my blog posts Comparing & contrasting innovation & change roles and Ch-ch-ch-ch-changes.

Competing/complementary methodologies & toolkits: Strategic foresight and futuring (environmental scanning, trend analysis, speculative thinking, scenario planning, etc.). Technology roadmapping. Design fiction and design provocation. Lateral thinking. Blue Ocean Strategy. Business model innovation. Outcome-based innovation (jobs-to-done theory). Sinek’s Golden Circle. Open innovation. Doblin’s Ten Types of Innovation framework. Value proposition design. Lean startup. Strategic thinking. Design thinking. Product & service design. Innovation portfolio management. Etc.

Supplementary methodologies & toolkits: Systems thinking. Strategic management. TRIZ. Vertical and horizontal brand extensions. Agile development. Change management. Etc.

Exploring the problem space: Understanding industry and market dynamics. Understanding organisational strategies, operating models, cultures, and change needs. Analysing current solution portfolio (products/services/experiences). Exploring alternative futures and defining plausible scenarios. Crafting tentative North Star and BHAGs. Determining innovation ambition levels. Visualising and analysing current innovation portfolio/pipeline. Identifying white spaces and opportunity areas for innovation. Designing provocations to challenge assumptions, provoke reactions, and stimulate discussions. Framing or reframing challenges/problems. Etc.

Exploring the solution space: Crafting and prototyping ‘big ideas’ for the future (imagine alternative business models, strategies, value props, production & delivery systems, etc., to either reinvent the core business or create new businesses). Continuously testing tentative solutions through storytelling, rapid prototyping, experimentation, and piloting. Continuously adapting, downselecting, and prioritising tentative solutions. Defining stakeholder and business impact. Crafting compelling stories and value cases for change. Identifying roadblocks, creating roadmaps, defining requirements, and mobilising resources for implementation and sustained success. Etc.

Project sponsors: Chief Innovation Officer, Chief Brand Officer, Chief Strategy Officer, CEO, or equivalent

Desired outcomes: ↓ innovation risk, ↑ clarity/focus, ↑ agility and responsiveness, ↑ organizational learning, ↑ engagement, ↑ organisational learning, ↑ business growth (new sources of value and revenue streams), ↑ long-term differentiation and competitiveness, ↑ business growth (new sources of value and revenue streams), ↑ brand reputation

Power tip: The first four project archetypes can be visualized as a maturity ladder, with each step representing an increasing degree of departure from the core/legacy business. The ladder also indicates the corresponding level of risk, ranging from relatively low to relatively high. Throughout this innovation journey, let the North Star (see blog post Going for gold • 3) serve as your lighthouse to guide your innovation efforts and strategic decision-making.

Service Design for Customer Excellence will be covered in the next blog post.

References

Anand, N. & Barsoux, J-L. (2017, Nov–Dec). What everyone gets wrong about change management. Poor execution is only part of the problem. Harvard Business Review.

Christensen, C.M. (1997). The innovator's dilemma: When new technologies cause great firms to fail. Harvard Business Review Press.

Cone, C. (2022). What does a purpose-driven company look like? 5 ways brands with a purpose make positive impact. The 360 Blog. Salesforce.

Kim, W. C., & Mauborgne, R. (2005). Blue Ocean Strategy: How to create uncontested market space and make the competition irrelevant. Harvard Business Review Press.

Norman, D. A. (2023). Design for a better world: Meaningful, sustainable, humanity-centered. MIT Press.

Mau, B. (2004). Massive change. Phaidon Press.

Sinek, S. (2009). Start with Why: How great leaders Inspire everyone to take action. Portfolio.

Robert Bau 9/1/23 Robert Bau 9/1/23

Let’s accomplish amazing things together

Nine HR services to boost team performance

Operating in a post-pandemic world, progressive HR functions play a strategic role in driving collaboration, adaptability, and innovation across organizations. The shift to more fluid operating models will inescapably lead to adaptive work structures and self-organizing teams. How might HR empower project teams to collaborate and perform dramatically better than today?

It takes hard work to work well together, especially in hybrid work environments. High-performing teams are equipped and enabled to lead with clarity, embody a growth mindset, forge healthy relationships, embrace cultural differences, and achieve outstanding results. And high-performing teams are equipped and enabled to stage equitable, engaging, and effective collaborative experiences regardless of where, when, and how team members choose to work.

Based on my experience of directing and leading North Star EX projects for large organizations since 2018, I have written an article in Touchpoint about how HR can help people accomplish amazing things together in project-based knowledge work (Bau, 2023). Please find below an overview of nine services that HR could deliver to improve collaboration and boost performance in project teams.

Nine HR services to boost team performance

As an internal service provider, HR could deliver nine types of coaching services that empower project teams to build collective intelligence, improve collaboration, and boost performance. These enabling, team-level services can be divided into three overlapping categories (Bau, 2023):

(A) Building and maintaining healthy, well-balanced teams

(B) Embracing continuous feedback, learning, and adaptation

Category A: Building and maintaining healthy, well-balanced teams

A1. Coaching for Team Recruitment. HR service that helps leaders form well-balanced and dynamic teams in terms of aptitude, personality, diversity, size, and governance (in the context of project requirements). This service is not only offered in the project initiation phase but also in the project execution phase (as teams grow or shrink due to changing project requirements).
A2. Coaching for Team Onboarding & Offboarding. HR service that empowers newly formed (or reconfigured) teams to lead with clarity, foster sense of belonging, build mutual trust and respect, and forge healthy relationships. Important themes include clarity of purpose, plan, and reponsibility (Rosenstein, n.d.) as well as emotional and cultural intelligence on a team level (see, e.g., Center for Creative Leadership, 2020). This service is offered in the project initiation, project execution, and project closure phases (as teams grow or shrink due to changing project requirements).
A3. Coaching for Team Health & Wellbeing. HR service that empowers project teams to take joint responsibility for their physical, social, and mental health and wellbeing. Important themes include: healthy work/life balance; workplace health & safety; team motivation & engagement; team adaptability & resilience; team diversity, equity & inclusion; and proactive conflict management.

Bau (2023)

Category B: Embracing continuous feedback, learning, and adaptation

B1. Coaching for Team Leadership & Appraisal. HR services that (a) equip and empower leaders to foster team growth and empowerment through servant leadership, and (b) equip and empower autonomous teams to become truly self-managing, self-designing, and self-governing. This includes new ways of recognising and rewarding performance – shifting the focus from infrequent, top-down assessments of individuals to continuous, multi-directional assessments of teams.
B2. Coaching for Team Learning & Development. HR service that empowers teams to embark on learning journeys, foster a learning/growth mindset, and boost their learning power. Important themes include: T-shaped team members; in-project upskilling & x-skilling; ongoing, situational, and multi-directional feedback; continuous reflection, learning, and adaptation; post-project debriefing; and knowledge management.
B3. Lean Coaching for Teams. HR service that empowers teams to make continuous improvements in projects based on uncovering, analysing, and resolving process inefficiencies, quality gaps, project impediments, performance blockers, conflict triggers, blind spots, sustainability issues, etc.

Bau (2023)

Category C: Supercharging people and teams for success

C1. Hybrid Work Coaching for Teams. Joint HR+IT service that helps project teams stage hyper-personalised, hyper-immersive collaborative experiences regardless of where, when, and how team members choose to work (based on Gartner’s four collaboration modes in hybrid work environments (Baker, 2021)). This includes leveraging enabling technologies such as intelligent/smart spaces, intelligent automation, adaptive AI, cloud-based ‘superapps,’ VR/XR, spatial audio, and decentralised infrastructure. Holistic B2B solutions (hardware, software, services) for inclusive meeting experiences for people and teams exist already in the marketplace (see, for example, Microsoft Teams Rooms with Logitech products such as Rally Bar, Sight, and Scribe).
C2. Performance Coaching for Teams. HR service that proactively guides teams in moments that matter in the project lifecycle to unleash human potential, foster creativity, and boost performance based on thinking modes, collective intelligence, best practices, ideal workflows, and continuous feedback. This service is important for moments in the project lifecycle that have an oversized impact on team performance and value co-creation, such as data collection & sensemaking, ideation & concepting, and participatory decision-making.
C3. Coaching for Team Augmentation. Joint HR+IT service that empowers teams to work seamlessly with the emerging capabilities of machine learning, adaptive AI, intelligent automation, and cobots (collaborative robots). This includes crafting ethical guidelines, redesigning workflows, introducing tools, and building capabilities that help teams evolve into ‘superteams,’ where human and non-human team members work effortlessly and effectively side by side. (Adapted from Schwartz, Mallon & Van Durme, 2020) This service is important for moments in the project lifecycle that would benefit from increased firepower and alternative points of view, such as data collection & sensemaking, ideation & concepting, continuous feedback & improvement, and participatory decision-making.

Bau (2023)

Core and supplementary touchpoints

All nine services would be delivered primarily through on-site or remote in-person coaching. Supplementary touchpoints range from customisable how-to guides and playbooks to AI-assisted chatbots and team simulations (Bau, 2023). See the HR engagement matrix, figure 1.

Figure 1. The HR engagement matrix: Four types of touchpoints in team coaching services (Bau, 2023)

To learn more about the ins and outs of collaboration, high-performing teams, and the strategic roles HR can play to boost team performance, please check out my article ‘Empowering people to accomplish amazing things together’ in Touchpoint Vol. 14 No. 1 (Bau, 2023). (Touchpoint is the journal of service design published by SDN; in this issue, you will find plenty of interesting articles about the intersection of service design and employee experience.)

References

Baker, M. (June 14, 2021). 4 modes of collaboration are key to success in hybrid work. Gartner.

Bau, R. (2023). Empowering people to accomplish amazing things together. Nine HR services to dramatically boost team performance. Touchpoint, 14(1), 72–77.

Center for Creative Leadership. (2020, September 9). Leading a multicultural team. www.ccl.org.

Rosenstein, J. (n.d.). How to lead with clarity of purpose, plan, and responsibility. Wavelength. Asana.

Schwartz, J., Mallon, D., & Van Durme, Y. (2020, May 15). Superteams: Putting AI in the group. Deloitte.

Robert Bau 8/15/23 Robert Bau 8/15/23

Lean & mean innovation machine • 6

Nine types of waste in upstream projects

In the world of software/product development, waste refers to any team activity that does not add value from the customer’s perspective. By continuously identifying and eliminating waste, agile teams can dramatically boost productivity and improve quality of work. What are the implications for x-functional teams working in the fuzzy front-end of service innovation?

In this blog post, I will reintroduce the nine types of waste, present five strategic ways to eliminate waste, and discuss the pros and cons of looking at team performance through the lens of lean thinking and agile practices.

Recap: Wastes 1–9 in upstream innovation projects

W1. The cost of incongruity. The team is creating project deliverables, assets, and solutions that do not seem to fit organizational quests, cultures, and/or capabilities.

W2. The cost of irrelevance. The team is creating deliverables, assets, and solutions that service actors do not seem to need, want, or use.

W3. The cost of complexity. The team is creating project deliverables, assets, and solutions that service actors find too complex to understand, implement, adopt, adapt, and/or reuse.

W4. The cost of rework. The team is altering delivered work that should have been done correctly but was not.

W5. The cost of idle/waiting time. The team (or team member) is waiting for input and/or spending time on low-priority/non-value-added steps, activities, or tasks.

W6. The cost of distractions. The team (or team member) is getting sidetracked by internal or external time-wasters.

W7. The cost of extraneous cognitive load. The team (or team member) is suffering from unneeded expenditure of mental energy.

W8. The cost of psychological distress. The team (or team member) is burdened with unhelpful stress, which may lead to physical, mental, and emotional exhaustion.

W9. The cost of non-utilized talent and knowledge loss. The team is suffering from underutilization and/or loss of knowledge, skills, and experience.

Figure 1. Nine types of waste in upstream innovation projects mapped to the dimensions Product, Process, and People. By continuously identifying and eliminating waste, agile teams can boost productivity (Process + People) and improve quality of work (Product + People).

Five strategic ways to reduce/minimize/eliminate wastes 1-9

► Take a step back and look at the bigger picture

Craft a human-centered, purpose-driven North Star; build a compelling case for change; and instill a sense of urgency (across the organization)
Uncover long-term opportunities for industry and market disruption (rather than ‘just’ chasing short-term value creation)
Identify portfolio gaps based on long-term consumer trends, emerging technology, and industry disruptions
Flatten hierarchies and smash silos through decentralized decision-making, self-managing units and groups, radical transparency, and knowledge sharing
Retrain leaders to become coaches and servant leaders (facilitative leadership)
Recruit people with a customer-centric, collaborative, creative, and entrepreneurial mindset
Promote agile and customer-centric ways of working, and recognize and reward the right behaviors
Drive continuous learning and improvement, encourage talent mobility and skill-building, and bolster diversity, equity, and inclusion (DEI) efforts
Hold leaders accountable for healthy workplaces, lifestyles, and behaviors
Redesign/optimize team workflows for moments that matter in the project lifecycle (such as onboarding, data collection, and participatory decision-making) built on best practices and best-in-class collaboration tools
Build capabilities in machine learning, adaptive AI, and intelligent automation to add firepower and alternative perspectives in moments that matter (such as collective sensemaking and systematic ideation).
Shape compelling projects that provide purpose, meaning, focus, and direction for teams
Introduce systems, workflows, and rituals for capturing, storing, sharing, and transferring knowledge.

► Set teams & members up for success

Redesign recruiting & onboarding processes for better team composition and dynamics
Provide training to improve collaboration and boost team performance (critical thinking, lateral thinking, divergent & convergent thinking, hybrid work, etc.)
Clarify project purpose, project plan, and team roles & responsibilities (upfront or over time depending on the ambiguity and ‘fuzziness’ of the project)
Clarify project methodology upfront (and be mindful of mixing and matching methodologies & tools)
Discuss and agree upon the right mix of collaboration modes and tools for hybrid work environments
Manage expectations with project stakeholders and push back early on unreasonable deadlines
Build in slack in project plans
Build in recovery & rest time in and between projects

► Boost team adaptability, nimbleness, velocity, resilience, etc.

Make teams truly autonomous and self-organizing (encourage and empower leaders to let go)
Cultivate a strong, cohesive team culture with shared beliefs, attitudes, rituals, and habits
Embrace the upfront ambiguity and ‘fuzziness’ of upstream projects (don’t emerge/converge too quickly)
Challenge project assumptions, reframe problems, and revise hypotheses through research, experimentation, and prototyping
Insert ample opportunities for experimentation, prototyping, and stakeholder feedback into the end-to-end process
Identify strategic opportunities to stop, reflect, learn, and adapt throughout the process
Encourage in-project upskilling and x-skilling
Encourage teams to make project deliverables, assets, features, and solutions that intentionally can be reused for other projects/programs

► Streamline team workflows & dynamics

Introduce team rituals for feedback, reflection, learning, and adaptation (to continuously remove impediments and optimise the flow of value)
Instil a culture of continuous, multi-directional feedback within the team and between team and stakeholders
Make teams truly autonomous and self-organizing (leaders need to let go)
Encourage and embrace multiple perspectives, workstyles, and personalities
Agree upon team process and rituals for participatory/collaborative decision-making
Incorporate proactive solutions for conflict management
Build team empathy and pay attention to team health & wellness
Introduce the role of an independent process coach (like a Scrum Master)
Redesign workflows and introduce workflow automation of mundane tasks if possible
Use machine learning and adaptive AI to provide extra firepower and alternative perspectives when required
Shield team members from time-wasters (e.g., unnecessary administrative duties)
Simplify support processes and systems (e.g., time & expense management)

► Set stakeholders & end-users up for success

Manage expectations upfront with project stakeholders with regard to project purpose, plan, and timeline (in particular for upstream projects)
Co-create solutions with project stakeholders and end-users for better engagement, relevancy, and buy-in
Simplify and hide complexity in project deliverables, assets, and solutions whenever possible
Co-create business cases, roadmaps, and other assets to streamline implementation efforts
Make it easier for stakeholders and users to understand, embrace, and adopt delivered work through familiarity, compatibility, onboarding, training, incentivization, etc.
Educate/train end-users how to best use delivered work in their day-to-day work or lives

Pros and cons

What are the pros and cons of looking at team performance in upstream innovation projects through the lens of lean thinking and agile practices?

Advantages

Relentless focus on the customer/end-user
Relentless focus on team collaboration, productivity, and performance
Relentless focus on continuous feedback, learning, and improvement
Feels relevant for most (if not all) innovation & delivery methodologies

Disadvantages

Teams or individuals may be resistant to change
Teams may not be empowered to make decisions, overcome impediments, and optimise the flow of value
Teams may not embrace the notion of continuous feedback, learning, and improvement
Teams may struggle to resolve/handle ongoing tensions between productivity and quality of work in specific moments that matter in the project lifecycle (such as data collection & sensemaking or ideation & concepting)
Teams may encounter organizational impediments that prove hard to remove/reduce, such as inappropriate/unhelpful planning cycles, reporting structures, and performance management systems
Investment required for redesigned workflows, team upskilling, new collaboration tools, etc.
No direct reference to how to best manage the golden triangle of project management, or how an agile mindset flips the golden triangle on its head – see Team Asana (2022) for a brief introduction

References

Bau, R. (2020). Nine types of waste in software development [unpublished]. Assignment in PROJ_PMI 403-0. School of Professional Studies, Northwestern University.

Design Partners. (2022). Exploring the problem space: Unleashing the human potential in teams [unpublished]. Project work for DELL about the future of collaboration.

Sedano, T., Ralph, P., & Péraire, C. (2017). Software development waste [Conference paper]. ICSE 2017, Buenos Aires, Argentina.

Team Asana. (2022). What is the project management triangle and how can it help your team? Asana.

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Robert Bau 8/1/23 Robert Bau 8/1/23

Lean & mean innovation machine • 5

Nine types of waste in upstream projects

In this blog post, I will introduce three more types of waste that may have an impact on team productivity (and ultimately quality of work) in upstream innovation projects.

Wastes 7–9 in upstream innovation projects

W7. The cost of extraneous cognitive load. The team (or team member) is suffering from unneeded expenditure of mental energy.

W8. The cost of psychological distress. The team (or team member) is burdened with unhelpful stress, which may lead to physical, mental, and emotional exhaustion.

W9. The cost of non-utilized talent and knowledge loss. The team is suffering from underutilization and/or loss of knowledge, skills, and experience.

Reasons why W7–9 may occur in upstream projects

Lack of empathy/support/empowerment. No sense of appreciation or recognition at work. No/limited control over process, workload, or deadlines. No/limited empathy between team members and/or between team and project stakeholders. No safe space for team members to be vulnerable, take risks, and trust each other. No appreciation or recognition for cultural differences in the team (based on ability, age, gender, ethnicity, expertise, etc.). No joint responsibility for the physical, mental, emotional, and social health of team members. No/limited leadership accountability and support for healthy workplaces, lifestyles, and behaviours. Inadequate/ineffectual workplace or team training for topics such as self-organization, hybrid work, emotional & cultural intelligence, continuous feedback & adaptation, and emotional & mental health. Team feedback to leadership, project owners, project sponsors, etc., often ignored or downplayed.
Lack of clarity and direction. Unclear/shifting project scope, purpose, goals, plans, deadlines, backlogs, etc. Unclear/shifting project roles and responsibilities. Ill-defined or poorly designed processes, workflows, and rituals. Poor rightsizing, sequencing, and prioritization of steps and tasks (due to poorly designed workflows, mismanagement of backlogs, scope bloat, etc.). Unclear/shifting/non-existent quality standards and acceptance criteria for project at hand. Scope and feature creep. Inappropriate choice/blend of project/innovation/delivery methodologies. Unnecessary, non-productive, and counterproductive meetings. Disorganized/cluttered digital and physical workspaces.
Lack of focus and engagement. Disengaged, unreliable, or AWOL team members and project stakeholders. No shared understanding of and commitment to project goals and vision. Inability to find purpose and meaning in the work. No sense of belonging and pride due to poor team cohesion/spirit/morale. Unnecessary multitasking due to constant project or task switching. Workday interruptions/diversions (due to social media, household members/pets, household chores, colleagues, pointless meetings/catch-ups, pointless administrative work, unnecessary travel/commuting, etc.). Inadequate/inappropriate team leadership style. Lack of learning/growth mindset within team. No buffer time (in projects or between projects) to recharge and refocus. Team/individual concerns around career progression and job security. Personal issues (e.g., health issues, family matters, financial concerns).
Lack of alignment and synchronisation. High team turnover or churn. No common sense of purpose. No shared beliefs, attitudes, habits, and rituals. Incomplete, incorrect, misleading, inefficient, or absent communication (especially in handoffs, asynchronous work, and hybrid work environments). Team imbalances in terms of composition and dynamics (too big, too small, too fluid, too static, too uniform, too diverse, etc.). Conflicting/contrasting team personalities and workstyles. Ineffectual and inefficient decision-making processes (too authoritarian, too consensus-driven, too myopic, too slow, etc.). Unresolved/lingering team or interpersonal conflicts. Hard-to-manage dependencies on partners, functions, and other teams.
Lack of (timely) information and feedback. No culture of rapid prototyping and experimentation. No culture of continuous feedback, learning, and adaptation. No/slow/insufficient/unclear feedback from project owners, sponsors, and stakeholders. Unreliable or missing project-related information (project documentation, research findings, clarifications, feedback, test results, approvals, etc.). Limited knowledge transfer between team members, teams, and organizational silos. Inadequate systems for systematic feedback and/or knowledge management.
Lack of (timely) access to resources. Hard-to-use, inflexible, unreliable, unavailable, or missing collaboration tools and enablers (think: spaces, furniture, equipment, applications, supporting services, rituals, etc.). Hard-to-find, hard-to-access, or hard-to-utilize resources pertinent to the project at hand (think: data, information, facilities, equipment, software, infrastructure, methods & tools, expertise, leadership, partnerships, etc.).
(Inspired by Sedano et al., 2017; Bau, 2020; Design Partners, 2022; Gallo, 2023; Fernandez, 2016)

References

Bau, R. (2020). Nine types of waste in software development [unpublished]. Assignment in PROJ_PMI 403-0. School of Professional Studies, Northwestern University.

Design Partners. (2022). Exploring the problem space: Unleashing the human potential in teams [unpublished]. Project work for DELL about the future of collaboration.

Fernandez, R. (2016, January). Help Your Team Manage Stress, Anxiety, and Burnout. Harvard Business Review.

Gallo, A. (2023, February). What Is Psychological Safety? Harvard Business Review.

Sedano, T., Ralph, P., & Péraire, C. (2017). Software development waste [Conference paper]. ICSE 2017, Buenos Aires, Argentina.

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Robert Bau 6/1/23 Robert Bau 6/1/23

Lean & mean innovation machine • 4

Nine types of waste in upstream projects

In this blog post, I will introduce three types of waste that may have an impact on team productivity in upstream innovation projects. Why does it take longer than expected for the team to deliver project-related activities, deliverables, assets, and solutions that meet tacit/explicit quality standards and acceptance criteria?

Wastes 4–6 in upstream innovation projects

W4. The cost of rework. The team is altering delivered work (deliverables, assets, and solutions for value creation, facilitation, and co-creation) that should have been done correctly but was not.

W5. The cost of idle/waiting time. The team (or team member) is waiting for input and/or spending time on low-priority/non-value-added steps, activities, or tasks.

W6. The cost of distractions. The team (or team member) is getting sidetracked by internal or external time-wasters.

Reasons why W4–6 may occur in upstream projects

Lack of clarity and direction. Unclear/shifting project scope, purpose, goals, plans, deadlines, backlogs, etc. Unclear/shifting project roles and responsibilities. Ill-defined or poorly designed processes, workflows, and rituals. Poor rightsizing, sequencing, and prioritization of steps and tasks (due to poorly designed workflows, mismanagement of backlogs, etc.). Unclear/shifting/non-existent quality standards and acceptance criteria for project at hand. Inappropriate choice/blend of project/innovation/delivery methodologies. Unnecessary, non-productive, and counterproductive meetings. Disorganized/cluttered digital and physical workspaces.
Lack of focus and engagement. Disengaged, unreliable, or AWOL team members and project stakeholders. No shared understanding of and commitment to project goals and vision. No sense of belonging and pride due to poor team cohesion/spirit/morale. Unnecessary multitasking due to constant project or task switching. Procrastination. Workday interruptions/diversions (due to social media, household members/pets, household chores, colleagues, pointless meetings/catch-ups, pointless administrative work, unnecessary travel/commuting, etc.). Inadequate/inappropriate team leadership style. Insufficient team capabilities and experience.
Lack of alignment and synchronisation. No common sense of purpose. No shared beliefs, attitudes, habits, and rituals. Incomplete, incorrect, misleading, inefficient, or absent communication (especially in handoffs, asynchronous work, and hybrid work environments). Team imbalances in terms of composition and dynamics (too big, too small, too fluid, too static, too uniform, too diverse, etc.). Conflicting/contrasting team personalities and workstyles. Ineffectual and inefficient decision-making processes (too authoritarian, too consensus-driven, too myopic, too slow, etc.). Unresolved/lingering team or interpersonal conflicts. Hard-to-manage dependencies on partners, functions, and other teams.
Lack of (timely) information and feedback. No culture of rapid prototyping and experimentation. No culture of continuous feedback, learning, and adaptation. No/slow/insufficient/unclear feedback from project owners, sponsors, and stakeholders. Unreliable or missing project-related information (project documentation, research findings, clarifications, feedback, test results, approvals, etc.).
Lack of (timely) access to resources. Hard-to-use, inflexible, unreliable, unavailable, or missing collaboration tools and enablers (think: spaces, furniture, equipment, applications, supporting services, rituals, etc.). Hard-to-find, hard-to-access, or hard-to-utilize resources pertinent to the project at hand (think: data, information, facilities, equipment, software, infrastructure, methods & tools, expertise, leadership, partnerships, etc.)
(Inspired by Sedano et al., 2017; Bau, 2020; Design Partners, 2022; Brower, 2023; Christiansen, 2023)

Wastes 7 to 9 will be covered in the next blog post.

References

Bau, R. (2020). Nine types of waste in software development [unpublished]. Assignment in PROJ_PMI 403-0. School of Professional Studies, Northwestern University.

Brower, T. (2023, June). Distraction, diversion and discontent: The truth about remote work today. Forbes.

Christiansen, B. (2023, May). Defining idle time: How to calculate, interpret, and improve it. Limble.

Design Partners. (2022). Exploring the problem space: Unleashing the human potential in teams [unpublished]. Project work for DELL about the future of collaboration.

Sedano, T., Ralph, P., & Péraire, C. (2017). Software development waste [Conference paper]. ICSE 2017, Buenos Aires, Argentina.

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Robert Bau 6/1/22 Robert Bau 6/1/22

Lean & mean innovation machine • 3

Nine types of waste in upstream projects

In this blog post, I will introduce three types of waste that might may have an impact on quality of work in upstream service innovation projects. The following two blog posts will cover the remaining six types of waste.

Wastes 1–3 in upstream innovation projects

W1. The cost of incongruity. The team is creating project deliverables, assets, and solutions (for value creation, facilitation, and co-creation) that do not seem to fit organizational quests, cultures, and/or capabilities.

W2. The cost of irrelevance. The team is creating deliverables, assets, and solutions that service actors (customers, frontline employees, backstage teams, etc.) do not seem to need, want, or use.

W3. The cost of complexity. The team is creating project deliverables, assets, and solutions that service actors find too complex to understand, implement, adopt, adapt, and/or reuse.

Three big reasons why W1–3 may occur in upstream projects

► Suboptimal ways of working (inspired by Bau, 2020; Sedano et al., 2017; Mersino, 2015; Martin, n.d.; The Global Metacognition Institute, n.d.)

Lack of clarity. Unclear/shifting project scope, purpose, goals, and priorities. Unclear/shifting project roles and responsibilities. Ambiguous/volatile market conditions.
Lack of contextual awareness. Flawed/insufficient knowledge of long-term trends, external environment, organizational quests, organizational culture (and sub-cultures), stakeholder needs, etc.
Lack of empathy. Flawed/insufficient knowledge of service actors (due to arrogance, erroneous assumptions, blind spots, limited research, flawed personas, instable markets, flawed/biased data, etc.).
Lack of critical thinking. Inability to question/challenge briefs, problem statements, hypotheses, requirements, constraints, boundaries, assumptions, labels, etc. – even in the light of new/overwhelming evidence.
Lack of lateral thinking. Inability to generate and screen multiple alternatives (perspectives, options, ideas, etc.) throughout the process.
Lack of simplicity. Inability to address scope creep, verbosity, cluttered thinking, conflicting perspectives, bloated ideas, convoluted segmentation, fuzzy target groups, feature creep, etc.
Lack of modularity. Inability to create solutions based on the notion of interchangeable modules and shared platforms.
Lack of feedback. No/slow/insufficient feedback from project owners, sponsors, and stakeholders during the project.
Lack of metacognitive skills. Inability to identify gaps in knowledge and understanding inside and outside the team. Inability to critically evaluate the validity, credibility, and reliability of knowledge & information sources. Inability to continuously reflect, learn, and adapt during the project. Etc.
Lack of knowledge transfer. No/limited knowledge transfer between team members, between teams, and between team and organization.

► Internal barriers to adoption (inspired by Abernathy & Clark, 1985; Johnson & Scholes, 1999; Day, 2007)

Lack of institutional & technical knowledge. Flawed/insufficient understanding of the organizational capabilities and technical requirements required for the delivery, implementation, and maintenance of envisioned solutions.
Lack of suitability. Project owners feel that envisioned solutions are not aligned with organizational purpose, vision, goals, strategies, portfolio strategy, etc.
Lack of familiarity. Project owners feel that envisioned solutions are distant to existing business models, technical competencies, and markets.
Lack of feasibility. Project owners feel that the organisation/ecosystem lacks the necessary resources and capabilities to utilize project deliverables and deliver envisioned solutions.
Lack of acceptability (in terms of the risk-reward balance). Project owners feel that the chance of success is too low and/or the projected impact is not substantial enough (see blog post Get the balance right! • 5).
Lack of motivation/commitment. No/flawed/insufficient onboarding, training, and incentivization of onstage employees and backstage teams. No shared sense of purpose and meaning in either the work or the impact delivered.
Lack of urgency. No/limited sense of urgency for change across the organization. No purpose-driven, aspirational vision (North Star) that can provide meaning, focus, and direction.

► External barriers to adoption (inspired by Rogers, 2003; Linares, 2021)

Lack of simplicity. The new solutions are perceived by change agents, influencers, and service actors to be difficult or challenging to understand, specify, buy, use, store, and recycle.
Lack of differentiation (or relative advantage). The new solutions are not perceived by change agents, influencers, and service actors to be different or superior to existing solutions in the market.
Lack of compatibility. The new solutions are not in harmony with prevailing norms, values, and beliefs. The new solutions do not fit seamlessly into existing lifestyles and experiences. The new solutions do not fit with existing ideas, networks, and solution ecosystems.
Lack of trialability & observability. The new solutions are deemed difficult to try, test, and experiment with (before purchase). The new solutions (and/or outcomes) are not visible, detectable, or perceptible to non-users.
Lack of familiarity. The new solutions may require onboarding, training, education, and incentivization (of change agents, influencers, and service actors) to encourage uptake and optimize usage.
Lack of representation & equity. The new solutions intentionally or unintentionally exclude marginalized groups from gaining access (equity of access), engaging fully in the end-to-end experience (equity of experience), or benefiting equally from potential outcomes (equity of impact).

Wastes 4 to 9 will be covered in the next two blog posts.

References

Abernathy, W.J. & Clark, K.B. (1985). Innovation: Mapping the winds of creative destruction. In: Tushman, M.L. & Moore, W.L. (Eds.), Readings in the management of innovation (2nd ed.). Harper Business.

Bau, R. (2020). Nine types of waste in software development [unpublished]. Assignment in PROJ_PMI 403-0. School of Professional Studies, Northwestern University.

Day, G. (2007, December). Is it real? Can we win? Is it worth doing? Managing risk and reward in an innovation portfolio. Harvard Business Review.

Johnson, G. & Scholes, K. (1999). Exploring corporate strategy. Prentice Hall.

Linares, M. (2021, April). Frameworks for measuring product inclusion and product equity. Medium.

Martin, T. (n.d.). All you need to know about modularization. Modular Management.

Rogers, E.M. (2003). Diffusion of innovations (5th ed.). Free Press.

Sedano, T., Ralph, P., & Péraire, C. (2017). Software development waste [Conference paper]. ICSE 2017, Buenos Aires, Argentina.

The Global Metacognition Institute. (n.d.). What are metacognitive skills?

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Robert Bau 6/26/21 Robert Bau 6/26/21

Lean & mean innovation machine • 2

Nine types of waste in upstream projects

In this blog post, I will compare and contrast four ways to drive innovation (see table 1). This will help us map the nine types of waste to upstream projects (in the next three blog posts).

Before we begin, let me clarify my assumptions:

Service innovation teams work on projects that are classified as either upstream or downstream.
Upstream projects are about addressing complex challenges and exploring wicked problems in a systemic, people-first, and solution-agnostic way. Upstream teams follow a blended systems thinking and design thinking approach. Upstream teams are manager-led (see previous blog post).
Downstream projects are about developing and releasing specific inventions/solutions for specific customers in an incremental and iterative way. Downstream teams follow a blended lean startup and agile approach. Downstream teams are self-organizing (see previous blog post).
In both upstream and downstream projects, innovation teams and project stakeholders embark on a learning journey based on continuous experimentation, reflection, and adaptation.
Upstream projects may lead to any number of downstream projects. And downstream projects may spark the need for bigger-picture, upstream work. Hybrid projects may occur but are (arguably) not optimal from a learning perspective.

Four ways to drive innovation

Table 1. Side-by-side comparison of four ways to drive service innovation

In the next blog post, I will introduce three types of waste (out of nine) in upstream innovation projects.

References

Acaroglu, L. (2017). Tools for systems thinkers: Getting into systems dynamics… and bathtubs. Medium.

Beck, K., Beedle, M., Cockburn, A., Cunningham, W., Fowler, M., Grenning, J., Highsmith, J., Hunt, A., Jeffries, R., Kern, J., Marick, B., Martin, R., Mellor, S., Schwaber, K., Sutherland, J., Thomas, D., & van Bennekum, A. (2001). Manifesto for agile software development.

Blank, S. (2013, May). Why the lean start-up changes everything. Harvard Business Review.

Brown, T. (2008, June). Design thinking. Harvard Business Review.

Design Council. (2007). Eleven lessons: Managing design in eleven global brands. Desk research report. Design Council, UK.

Design Council. (2021). Beyond net zero. A systemic design approach. Design Council, UK.

Kim, Daniel H. (1999). Introduction to systems thinking. Pegasus Communications.

Mersino, A. (2015). Agile project management. Vitality.

Ries, E. (2011). The lean startup: How today’s entrepreneurs use continuous innovation to create radically successful businesses. Currency.

van Ael, K., Vandenbroeck, P., Ryan, A., & Jones, P. (2021). Systemic Design Toolkit Guide. Systemic Design Toolkit.

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Robert Bau 5/31/21 Robert Bau 5/31/21

Lean & mean innovation machine • 1

Nine types of waste in upstream projects

In the world of software/product development, waste refers to any team activity that does not add value from the customer’s perspective. By continuously identifying and eliminating waste, agile teams can dramatically boost productivity and improve quality of work. What are the implications for x-capability teams working in the fuzzy front-end of service innovation?

Agile teams are self-organizing, adaptive, coordinated, collaborative, transparent, disciplined, and focused (on frequent delivery of what customers need). Agile teams are expected to organize, manage, and monitor their own work as well as resolve internal conflicts and disagreements. (See, e.g., Mersino, 2015) What can upstream innovation teams learn from lean thinking and agile practices in terms of eliminating waste, boosting team productivity, and improving quality of work? What types of waste can occur in upstream projects and what are the underlying causes?

Before diving into the nine types of waste for upstream innovation projects, I will set the stage by briefly introducing three overlapping topics: the major types of waste in software development; the dynamics of dysfunctional and high-performing teams respectively; and the characteristics of self-organizing teams.

Waste in software/product development

Thought leaders Mary and Tom Poppendieck covered the following seven types of waste in their Lean Software Development framework: Partially Done Work, Extra Features, Relearning, Handoffs, Task Switching, Delays, and Defects (Mersino, 2015).

Inspired by lean thinking and Poppendiecks’ work, Sedano et al. (2017) conducted an in-depth study of eight projects in a software development consultancy and identified nine types of waste: Building the wrong feature or product; Mismanaging the backlog; Rework; Unnecessarily complex solutions; Extraneous cognitive load; Psychological distress; Waiting/multitasking; Knowledge loss; and Ineffective communication. Reducing waste, by definition, improves efficiency and productivity.

Dysfunctional and high-performing teams

According to Patrick Lencioni (2002), management teams commonly struggle with five basic dysfunctions: Absence of trust, Fear of conflict, Lack of commitment, Avoidance of team accountability, and Inattention to team objectives. These dysfunctions cause confusion, misunderstanding, and negative morale. Needless to say, dysfunctional teams are not efficient and effective.

Related, a research team at Google studied how team composition and team dynamics affect team effectiveness and performance across the organization. Variables with a significant impact on effectiveness include psychological safety (team members feel safe to take risks and be vulnerable in front of each other), dependability (members get quality work done on time), structure and clarity (members have clear roles, plans, and goals), meaning (members find a sense of purpose in either the work itself or the output), and impact (members believe their work matters and creates change). (re:Work, n.d.) Positive team dynamics reduce project and organizational waste.

Self-organizing teams

According to Hackman (2002), there are four types of self-organizing teams based on the level or amount of authority given/delegated to them by leaders: manager-led teams, self-managing teams, self-designing teams, and self-governing teams. Manager-led teams have the least authority, while self-governing teams have the most. See figure 1.

Figure 1. Four types of teams based on the level of authority given/delegated to them by leaders (slightly adapted from Hackman, 2002).

Self-managing teams have the authority to organize, manage, and monitor their own work as well as resolve internal conflicts/disagreements. Self-designing teams have the additional authority to design the composition of the team and determine reporting structures. Self-governing teams have the additional authority to determine the purpose, set objectives, define success metrics, etc. (Hackman, 2002)

In the context of agile software/product development, self-organizing teams tend to be self-managing (see, e.g., Cohn, 2017). Acting as servant leaders, Scrum Masters play a significant role on these teams to reduce waste and improve productivity; for example, they coach team members in self-management and cross-functionality, help remove blockers and impediments to team productivity and progress, and facilitate stakeholder collaboration as requested or needed (Scrum.org, n.d.; Mersino, 2015; Jarrell, 2016).

Teams do not operate in a vacuum. Organizational leaders can drive self-organization and self-direction by encouraging collaborative play and co-creation across organizational silos and boundaries; by removing organizational impediments such as inappropriate/unhelpful planning cycles, reporting structures, and performance management systems; and by encouraging continuous learning, development, and growth across the organization. (Inspired by Bittner, n.d.; Urch Druskat and Wheeler, 2004; and Rigby, 2020.)

In the next blog post, I will compare and contrast four ways to drive service innovation. This will help us map the nine types of waste that can occur in upstream projects.

References:

Bittner, K. (2019, February). Agile leadership is the key to self-organization. Agile Know-How Magazine.

Cohn, M. (2017, August 15). Two types of authority leaders must give to self-organizing teams.

Hackman, J.R. (2002). Leading teams: Setting the stage for great performances. HBR Press.

Jarrell, J. (2016, May 9). The 3 levels of a Scrum Master removing impediments.

Lencioni, P. (2002). The five dysfunctions of a team: A leadership fable. Jossey-Bass.

Mersino, A. (2015). Agile project management. Vitality Chicago.

re:Work. (n.d.) Guide: Understand team effectiveness. Google.

Rigby, D. (2020, July 20). The agile organization: Balancing efficiency and innovation (even in tough times) [Webinar]. Harvard Business Review.

Scrum.org. (n.d.). What is a Scrum Master?

Sedano, T., Ralph, P., & Péraire, C. (2017). Software development waste [Conference paper]. ICSE 2017, Buenos Aires, Argentina.

Urch Druskat, V. & Wheeler, J.V. (2004, July 15). How to lead a self-managing team. MIT Sloan Review.

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Robert Bau 4/20/21 Robert Bau 4/20/21

Get the balance right! • 5

Visualizing the innovation portfolio

Service providers need to leverage resources effectively to drive innovation and achieve desired outcomes over time. Smart visualizations of the innovation pipeline and portfolio might help leaders and teams drive fruitful discussions, uncover interconnections, make informed choices, build alignment, and ultimately get the balance right. In the first four blog posts, I expanded the scope of service innovation and explored ways to visualize the innovation portfolio of a service provider. In the final blog post of the series, I cover alternative ways to visualize uncertainty and risk.

Spreading bets in an uncertain world

Operating in an uncertain world, service providers place strategic bets and take calculated risks on innovation projects to unlock value in the core/legacy business and uncover new sources of value in transformational endeavors. (Adapted from Meyer, 2020, to fit the three tensions of service innovation.)

Strategists and innovators spread their bets across the innovation portfolio, balancing sure and safe bets that may have lower returns with solid, side, and slim bets that may have higher returns. At one end of the spectrum, sure bets are no-regret options with a high chance of success in all future scenarios (for a specific time horizon). At the other end, slim bets are long-shot options with a chance of success in only one or two scenarios. (Adapted from Meyer, 2020, to fit the three tensions of service innovation.) See figure 1.

Figure 1. Five types of strategic bets placed on a spectrum from low to high chance of success (slightly adapted from Meyer, 2020)

Strategists and innovators take calculated risks, placing bets after careful consideration of potential benefits, required commitments, and the chance of success/failure (based on Meyer, 2020).

Potential benefits cover financial impact (↑ revenue, ↑ productivity, ↓ waste, ↓ costs, ↑ customer lifetime value, etc.) as well as non-financial impact (↑ differentiation, ↑ brand equity, ↑ customer engagement, ↑ organizational learning, ↑ leadership commitment, ↑ organizational responsibility, ↑ employee engagement, ↑ barriers to entry, etc.). (Inspired by Meyer, 2020.)

Required commitments include resource commitment (dedicating money, capabilities, time, and attention), political commitment (securing internal support and putting your reputation on the line), cognitive commitment (embracing certain perspectives and endorsing certain scenarios), and emotional commitment (investing your heart and attaching yourself emotionally). In other words, people invest financially, reputationally, intellectually, and emotionally to make their strategic bets a success, limiting their ability to ‘play the field’ and pursue other options. (Meyer, 2020)

Failure is broadly defined as significantly missing the objectives that were used to justify the investment (Day, 2007). In a world of uncertainty, the chance of failure increases (the chance of success decreases) when:

The process of developing, implementing, launching, and scaling envisioned solutions is deemed ‘difficult’ due to internal and external innovation hurdles (adapted from Matheson & Matheson, 1997; Matheson, n.d.).
The evidence to support the desirability, viability, feasibility, and adaptability of envisioned solutions is limited to ‘slides and spreadsheets’ (Osterwalder et al., 2020).
The familiarity/fit of envisioned solutions with existing business models, technical competencies, and markets is deemed distant/poor (Abernathy & Clark, 1985; Day, 2007; Pisano, 2015; McGrath, 2020a).

Visualizing levels of uncertainty and risk

One way to visualize uncertainty and risk in the portfolio is by mapping the relative impact of individual projects against the chances of success/failure.

According to Matheson & Matheson (1997), impact is defined as the expected size of commercial value (NPV, net present value) and chance of success as the probability of overcoming internal and external innovation hurdles (the level of ‘difficulty’).

Subsequently, using a classic two-by-two matrix, innovation projects fall into four categories. Bread-and-Butter projects (low impact, low difficulty) produce reliable, if unexciting, returns. White Elephants (low impact, high difficulty) should be killed or repurposed. Oysters (high impact, high difficulty) are typically early-stage projects with blockbuster potential. Pearls (high impact, low difficulty) are exceedingly rare, only found by ‘opening a lot of oysters.’ (Matheson & Matheson, 1997; Matheson, n.d.)

According to Osterwalder et al. (2020), impact is loosely defined as how lucrative the business idea could be for the company if it turned out to be successful (‘financial potential’). Chance of failure is determined by the lack of evidence beyond slides and spreadsheets to prove desirability, viability, feasibility, and adaptability (‘innovation risk’). Subsequently, innovation projects fall into four overlapping categories: Safe Plays (small financial potential, strong evidence of success); Niche Opportunities (small potential, weak-to-no evidence); Promising Concepts (large potential, weak-to-no evidence); and Rising Stars (large potential, strong evidence).

In figure 2, I have combined Matheson & Matheson’s Innovation Screen (R&D Grid) with Osterwalder et al.’s Explore portfolio into one 2x2 matrix.

Figure 2. Mapping the relative impact of innovation projects against the chances of success/failure (Matheson & Matheson, 1997; Osterwalder et al., 2020)

A second way of visualizing uncertainty and risk is to map different types of uncertainty against each other (based on the familiarity or fit with existing business models, markets, technical competencies, etc.). For example, McGrath’s Opportunity Portfolio (2020a, 2020b) visualizes how the service provider is investing across different levels of uncertainty. Other similar visualizations include Day’s Risk Matrix (2007), Nagji & Tuff’s Innovation Ambition Matrix (2012), and Pisano’s Innovation Landscape Map (2015).

On a similar note, it is possible to map three levels of uncertainty to the innovation portfolio of service providers (see blog post Get the balance right! • 4). Uncertainty is here defined as the lack of organizational (or ecosystem) knowledge required to improve existing solutions and/or create new solutions. Projects with medium or high uncertainty require knowledge that the service provider (or ecosystem) does not yet possess. Strategies to reduce uncertainty include: strategic foresight; exploratory research; sensemaking; experimentation; prototyping and evaluative research; continuous deployment; and piloting. See figure 3.

Figure 3. Mapping three levels of uncertainty to the innovation portfolio of service providers

References

Day, G. (2007, December). Is it real? Can we win? Is it worth doing? Managing risk and reward in an innovation portfolio. Harvard Business Review.

Matheson, D. (n.d.). SmartOrg has invented methods that support great portfolio conversations. SmartOrg.

Matheson, D. & Matheson, J. (1997). The smart organization: Creating value through strategic R&D. Harvard Business Review Press.

McGrath, R. (2020a, December). Building a proficiency for game-changing innovation and growth: Mastering the Opportunity Portfolio. Medium.

McGrath, R. (2020b, December). Put your resources against your best opportunities! Innovation Roundtable. YouTube.

Meyer, R. (2020). Strategic bets framework. TIAS School for Business and Society.

Nagji, B. & Tuff, G. (2012, May). Managing your innovation portfolio. Harvard Business Review.

Osterwalder, A. et al. (2020). The invincible company: How to constantly reinvent your organization with inspiration from the world’s best business models. Wiley.

Pisano, G. (2015, June). You need an innovation strategy. Harvard Business Review.

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Robert Bau 3/12/21 Robert Bau 3/12/21

Get the balance right! • 4

Visualizing the innovation portfolio

Service providers need to leverage resources effectively to drive innovation and achieve desired outcomes over time. Smart visualizations of the innovation pipeline and portfolio might help leaders and teams drive fruitful discussions, uncover interconnections, make informed choices, build alignment, and ultimately get the balance right. In the first three blog posts, I expanded the scope of service innovation by unpacking three tensions. Now, I explore alternative ways to visualize the innovation portfolio of a service provider.

Visualizing tension 1 (WHY) and 2 (WHAT)

I have devised a simple three-by-three matrix to show the mix of innovation projects within a service organization or ecosystem. One dimension in the matrix represents value creation (how customers create value), and the other represents value facilitation (how the organization facilitates value creation). In addition, each cell in the matrix represents an opportunity for value co-creation (how customers engage in the production process). See figure 1.

Figure 1. Visualizing the mix of innovation projects within a service organization or ecosystem across the two dimensions value creation and value facilitation.

Each bubble in the matrix represents a specific project in the portfolio. Bubble size (area, not radius) depicts relative project size based on funding, projected return, team size, or development time. Bubble color classifies projects based on strategic importance, development phase, complexity, risk, probability of success, market segment, target audience, team health, or ownership. Connecting lines between bubbles highlight dependencies (and line thickness degree of affinity).

The matrix can also be used to visualize the balance between investments in core/legacy businesses (to unlock value) and investments in new, transformational endeavors (to create new sources of value). See figure 2.

Figure 2. Visualizing the tension or balance between investments in core/legacy businesses and investments in new, disruptive endeavors.

Visualizing tension 3 (WHEN)

The Futures Cone (Voros, 2001) is a common way to depict the range of possible futures for the near future, the intermediate future, and the distant future. See figure 3.

Figure 3. The Futures Cone (slightly adapted from Voros, 2001).

The cone is typically divided into three cross-sections; each plane (in the shape of a circle) is here used to show the distribution of scenarios and projects across the four types of futures for a specific time horizon. All innovation projects should arguably be linked to one or more scenarios. In addition, each plane can show the distribution of scenarios and projects across two or more sectors (geographical territories, market segments, customer groups, solution areas, etc.). See figure 4.

Figure 4. The Futures Cone (adapted from Voros, 2001). The cross-sections are used to show the distribution of scenarios (S1, S2, etc.) and innovation projects (A, B, etc.) across the four types of futures for specific time horizons.

In my next blog post, I will explore alternative ways to visualize uncertainty and risk in the innovation portfolio.

Reference

Voros, J. (2001, December). A primer on futures studies, foresight, and the use of scenarios. Prospect, Foresight Bulletin, 6. Swinburne University of Technology.

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Robert Bau 2/15/21 Robert Bau 2/15/21

Get the balance right! • 3

Three tensions in service innovation

Before diving into the intricacies of innovation portfolios, we need to expand the scope of innovation beyond the unimaginative, product-centric definitions of innovation that merely pay lip service to services. Let’s do this by unpacking three tensions in service innovation. The third one is covered below.

Tension 3: Innovation for the near future vs. innovation for the distant future

Service providers need to get the balance right between investing in innovation for the near future, the intermediate future, and distant future. This is ultimately about leaders and employees making sense of weak signals, placing strategic bets, and actively shaping the future they want to happen.

McKinsey’s influential framework ‘Three Horizons of Growth’ (Baghai et al., 2000) is based on the assumption that it might take years for an organization to build new and profitable businesses to displace the core ones. Horizon 1 encompasses the businesses that are at the heart of the organization; the management challenge is shore up competitive positions and extract as much value as possible before the inevitable decline and death. Horizon 2 comprises fast-moving, entrepreneurial ventures (‘emerging stars’) that are expected to complement or replace current core businesses. Horizon 3 contains strategic bets or options on future opportunities (‘the seeds of tomorrow’s businesses’) based on research projects, test-market pilots, minority stakes, alliances, etc. (i.e., real investments in the future as opposed to ideas on post-it notes). Each horizon requires different focus, management, tools, and goals. The organization should allocate its R&D and innovation budgets across all three horizons.

McKinsey’s Three Horizons of Growth and similar time-based frameworks are arguably based on the notion of diminishing returns of current technologies and the performance-improving potential of new and disruptive technologies (for more information about technology S-curves and the timings of technology transitions, see, e.g., Foster, 1988).

However, critics argue that the three horizons are no longer bound by time, and that Horizon 3 initiatives can in fact be delivered as quickly as Horizon 1 and 2 projects. According to Steve Blank (2019), “In fact, it’s the speed of deployment of Horizon 3 products, strategies, and capabilities that are a devastating upset to the status quo.” Airbnb, Uber, and Tesla are all examples of Horizon 3 disruptions based on existing technologies and unique business models, deployed and scaled in short periods of time (Blank, 2019).

A potentially more powerful way of thinking about time and innovation is through futures studies (also called strategic foresight or futures thinking), which provide the mindset, process, methods, and tools required to reflect upon the future in a structured, open, and collaborative way (see, e.g., Voros, 2001).

Voros (2001) proposes three fundamental premises or laws of futures studies. (1) The future is not predetermined; we should therefore consider many potential alternative futures. (2) The future is not predictable; we are therefore able and forced to make choices among many potential alternative futures. (3) Future outcomes can be influenced by our choices (and inactions) in the present.

Alternative futures can be classified in four ways: possible futures (what may happen), plausible futures (what could happen), probable futures (what will likely happen), and preferable futures (what we want to happen). The interrelationships between these four types of futures can be visualized using the Futures Cone. (Voros, 2001)

The creation of scenarios is one means of generating forward views, but, according to Voros (2001), “[it] should come at the end of a careful and detailed process of wide information gathering, careful analysis, and critical interpretation.” An alternative view is that we should move away from carefully crafted and well-written scenario narratives to immersion and interaction in participatory scenario workshops (Hines & Bishop, 2015).

In my next blog post, I will explore alternative ways to visualize the innovation portfolio of a service provider.

References

Baghai, M., Coley, S. & White, D. (2000). The alchemy of growth: Practical insights for building the enduring enterprise. Basic Books.

Blank, S. (2019, February 1). McKinsey’s Three Horizons Model defined innovation for years. Here’s why it no longer applies. Harvard Business Review.

Foster, R.N. (1988). Timing technological transitions. In: Tushman, M.L. & Moore, W.L. (Eds.), Readings in the management of innovation (2nd ed.). Harper Business.

Hines, A. & Bishop, P. (2015). Thinking about the future. Guidelines for strategic foresight (2nd ed.). Hinesight.

Voros, J. (2001, December). A primer on futures studies, foresight, and the use of scenarios. Prospect, Foresight Bulletin, 6. Swinburne University of Technology.

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Robert Bau 2/15/21 Robert Bau 2/15/21

Get the balance right! • 2

Three tensions in service innovation

Tension 2: Innovation for value creation vs. innovation for value facilitation

Service providers need to get the balance right between investing in innovation for value creation and investing in innovation for value facilitation. This is ultimately about empowering customers to create value and empowering employees to facilitate that value creation. (If this feels a tad too commercial, simply replace ‘customers’ with passengers, guests, patients, residents, citizens, clients, etc.)

Value co-creation is a relatively new paradigm in the domain of innovation, management, and marketing. Multiple theoretical perspectives on value co-creation compete for attention (Galvagno & Dalli, 2014); for the purpose of this blog post, I will use Christian Grönroos’ rather pragmatic perspective (2011) to capture the fundamentals of (and differences between) value creation and value co-creation:

Reciprocal value creation is the fundamental basis of business, with service as a mediating factor.
The service provider is fundamentally a value facilitator. The provider is in charge of its own production process, where resources for customer use are designed, developed, manufactured, and delivered without direct interactions with customers.
The customer as the user and integrator of resources is a value creator. Value-in-use means that value is created by the user for the user (and is the one who determines whether value emerges or not).
Co-creation of value only takes place in service encounters (interactions) between the service provider and the customer. In other words, co-creation of value emerges when the customer is engaged in the production process as co-researcher, co-developer, co-designer, co-producer, co-marketer, and so on.
Needless to say, interactions between the service provider and the customer may also have a negative impact on the customer’s value creation process (i.e., value destruction).
By supporting and facilitating the customer’s value creation process, the service provider can gain financial and non-financial value in return.

Based on Grönroos (2011), I have teased out eight opportunity areas for service innovation:

New/untapped sources of value creation (as identified by underserved/overserved customer needs, segments, markets, geographies, etc.)
New/improved value propositions and customer offerings (core products and supplementary services)
New/improved pricing strategies, profit models, risk-sharing schemes, incentive programs, etc.
New/improved ways to enable and empower customers in their value creation processes
New/improved ways to entice, engage, and empower customers and employees in value co-creation
New/improved ways to enable and empower employees in value facilitation
New/improved ways to produce resources and facilitate customer value creation
New/improved ways to continuously learn, improve, and innovate

The eight opportunity areas can easily be tagged to the four elements of a business model (who, what, how, why), the three layers of the Golden Circle (why, how, what), the two dimensions of dual transformation (what we do, how we do it), and the five questions in the play-to-win strategy (e.g., where will you play, how will you win) (Gassman et al., 2014; Sinek, 2009; Gilbert et al., 2012; Lafley & Martin, 2014).

In my next blog post, I will unpack the third tension in service innovation.

References

Galvagno, M. & Dalli, D. (2014). Theory of value co-creation: A systematic literature review. Managing Service Quality, 24(6), 643–683.

Gassman, O., Frankenberger, K. & Csik, M. (2014). The business model navigator. FT Publishing.

Gilbert, C., Eyring, M. & Foster, R. (2012, December). Two routes to resilience. Harvard Business Review.

Grönroos, C. (2011). Value co-creation in service logic: A critical analysis. Marketing Theory, 11(3), 279–301.

Lafley, A.G. & Martin, R. (2013). Playing to win: How strategy really works. Harvard Business Review Press.

Sinek, S. (2009). Start with why – how great leaders inspire action [Video]. YouTube. TEDx talk.

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Robert Bau 2/15/21 Robert Bau 2/15/21

Get the balance right! • 1

Three tensions in service innovation

Before diving into the intricacies of innovation portfolios, we need to expand the scope of innovation beyond the unimaginative, product-centric definitions of innovation that merely pay lip service to services (see, e.g., Keeley et al., 2013; Viki et al., 2019). Let’s do this by unpacking three tensions in service innovation. The first one is below.

Tension 1: Innovation for core businesses vs. innovation for new businesses

Service providers need to get the balance right between investing in core/legacy businesses (to unlock value) and investing in new, transformational endeavors (to create new sources of value). This is ultimately about determining the overarching purpose and desired outcomes of innovation efforts.

Incremental innovation: Service providers can unlock value in core/legacy businesses by identifying and exploiting opportunities to

drive growth (↑ desirability, ↑ inclusion, ↑ differentiation, ↑ loyalty, ↑↓ price, ↑ revenue streams, ↑ channels, ↑ segments, ↑ geographies), and
improve organizational performance (↑ focus, ↓ waste, ↑ service productivity, ↑ service quality, ↑ employee engagement, ↑ customer experience).

Transformational innovation: Service providers can uncover new sources of value by identifying and exploiting opportunities to

adapt, reinvent, and reposition the core businesses (think Netflix),
create adjacent, ‘close-to-the-core-business’ businesses (think Facebook, Virgin, or Easy),
create ‘new-to-the-core-business’ businesses (think Amazon Web Services), and/or
create uncontested market spaces (think Cirque du Soleil).

This tension rhymes with influential frameworks and mental models such as Product-Market Strategies for Business Growth (Ansoff, 1957), Seven Degrees of Freedom for Growth (Baghai et al., 2000), ‘little i’ and ‘Big I’ Innovations (Day, 2007), Hierarchy of New Service Categories (Wirtz & Lovelock, 2010), Innovation Ambition Matrix (Nagji & Tuff, 2012), and Transformation A and B (Gilbert et al., 2012).

In my next blog post, I will unpack the second tension of service innovation.

References

Ansoff, I. (1957, September–October). Strategies for diversification. Harvard Business Review, 113–124.

Day, G. (2007, December). Is it real? Can we win? Is it worth doing? Managing risk and reward in an innovation portfolio. Harvard Business Review.

Gilbert, C., Eyring, M. & Foster, R. (2012, December). Two routes to resilience. Harvard Business Review.

Keeley, L. et al. (2013). Ten Types of Innovation: The Discipline of Building Breakthroughs. Wiley.

Nagji, B. & Tuff, G. (2012, May). Managing your innovation portfolio. Harvard Business Review.

Viki, T., Toma, D. & Gons, E. (2019). The corporate startup: How successful companies can develop successful innovation ecosystems. Management Impact Publishing.

Wirtz, J. & Lovelock, C. (2010). Services Marketing: People, technology, strategy (8th ed.). World Scientific.

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Five strategic ways to reduce/minimize/eliminate wastes 1-9

Waste in software/product development

Dysfunctional and high-performing teams

Self-organizing teams

Visualizing tension 1 (WHY) and 2 (WHAT)

Visualizing tension 3 (WHEN)

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