© Richard Welke 2002 CIS 4120 Fa12: Define/Innovate BP’s Richard Welke Director, CEPRIN...

© Richard Welke 2002

CIS 4120 Fa12: Define/Innovate BP’s

Richard WelkeDirector, CEPRIN

Professor, CISRobinson College of Business

Georgia State UniversityAtlanta, GA

Session 11:Process/Service Innovation

CIS4120Fa12 Session 11: Process/Service Innovation

© Richard Welke 2008-12 2

The multiple meanings of “innovation”

Ideation:The “act” of innovating

Realization:Transforming

the idea into a result

Acceptance:Seen as

something new and

useful by the client/custome

r

1970’s:Innovation

synonymous with creativity & new idea generation

(verb)1980’s:

Innovation synonymous with

the process of bringing new

ideas into production (verb)

1990’s +:Innovation

synonymous with recognition by consumers that

the result offered is new and

desired (noun)

Is the proposed innovation seen by the

client as a more complete or better

solution to solve their problem?

“Outside-In” view of improvement and

innovation



Forms of innovationCommon view of innovation

Product innovationExample: the Spoke-less bicycle:



Another product innovationThe airless tire

Why is this an "innovation" (or is it?)Is it incremental or disruptive?What are the consumer dimensions that it potentially disrupts (the "unserved")?



Other forms of innovation

Service innovationCreating or substantially changing the means by which your organization’s resources are loaned to a consumer to aid in solving their problem

Example: eBusiness (transacting business via the Internet)

Hybrid product/service innovationProviding product platform and extending its usable functionality by adding services to it

Example: the Apple iPhone (platform) and App Store (services)

Structural (business model) innovationChanging the way in which the organization approaches its market and extracts value from it

Example: IBM’s restructuring for aligned service delivery



Hybrid Product/Service innovation

Platform (product) as service-delivery vehicle

Computer (services)Smartphone (services)Tablet (services)

Automobile (services)Residential/commercial buildings (services)

MaintenanceEntertainmentEnergy management

Appliance (services)Apparel (services)

OLED and paper-based “electronic” clothing

Build “intelligence” into the product as

platform (razor)Sell them the on-going

services for this intelligence (blade)

PodcastsPodcastsPodcastsPodcasts

iVideoiVideoiVideoiVideo

Etc.Etc.Etc.Etc.

iTunesiTunesiTunesiTunes

PodcastsPodcastsPodcastsPodcasts

iVideoiVideoiVideoiVideo

Etc.Etc.Etc.Etc.

iTunesiTunesiTunesiTunes

For add-in services & innovation



Structural innovation: Services as building-blocks

Dynamic, scope-able, configurable services

Service stack

Business Business UnitUnitAA provided serviceprovided service

ActivityActivity11 ActivityActivity22 ActivityActivity33 ActivityActivitynn

Business Business UnitUnitAA provided serviceprovided service


Business Business UnitUnitBB provided serviceprovided service


Business Business UnitUnitBB provided serviceprovided service


Business Business UnitUnitNN provided serviceprovided service


Business Business UnitUnitNN provided serviceprovided service


Build, acquire, rent

& bundleservice

s

ServiceA

ServiceB

ServiceN

3rd party provided service (BPO)

Deliver tailored services to customer, or let them

configure to suit their need

End-Serviceoffered

“V

alu

e C

hain

”



Our definition of serviceOperational definition of a service:

Something you rent to get a job/task done and a problem solved

From: Clayton Christensen, Innovator’s Solution (HBP)

Focus is on customer need expressed as a problem he/she has to be solved (not what you can solve)

Not a “solutions looking for problems” approachMarketing view of innovation -- as seen by the customer/client

Not the provider (process owner)The nature of the service provided as the source of inspiration for innovationHow do we do a more complete job of solving the PTBS?



Christensen’s types of (customer) innovation

Cu

rren

t P

erf

orm

an

ce

Metr

ics

(Im

pro

vem

en

t)Low-end Disruption

Address overserved customers witha lower-cost service or business model

Sustaining strategyBring improved service into an

established market

Adapted from: C. Christensen: The Innovator’s Solution, HBP, 2004Innovation

Diff

ere

nt

Basis

of

Perf

orm

an

ce

New market Disruption

Compete against non-consumption by solving more of customer problem or differently characterized

problem

time

time

Bell curve ofcustomer

performance needs



Two approaches to service innovation

Establishing the PTBS and broadening its definition

What’s the “real” problem your clients are trying to solve?Provide a more complete solution via your to-be underlying process

Examining MOT’s (Moments of Truth)Identifying themReducing/eliminating themRationale and process for doing this

NB: This is adapted, with permission, from Terry Schurter’s Bennu Group Level-3 Certified Process Professional (CPP) certification program

(There are others such as TRIZ, but we’ll only look at two in this course)



PTBS: Where to begin –the customer

What can I (a prospective client) rent (buy) to solve the problem I

have?

What measures do I use to evaluate:1. The adequacy of alternative solutions?

2. The trade-offs between available alternatives?

What measures do I use to evaluate:1. The adequacy of alternative solutions?

2. The trade-offs between available alternatives?

You: Develop alternative descriptions of the

client’s full problem (the “PTBS”)

You: Develop a set of measures that describe the trade-offs client’s

make when assessing alternative choices (the “value metrics”)Adapted from: Clayton

Christensen, Innovator’s Solution and Session 2

And their problem-to-be-solved (PTBS)

The initiating

event (start event)

The processes response to the trigger

The underlying business process

(encapsulated as a service)

Client



PTBS Innovation Questions

What is your client’s actual “problem to be solved”?By what means do they judge:

How completely it’s solved with your serviceWhich other services must they also consume to solve it?Can you provide a more complete solution?

How well it is solved (the value metrics that matter)Which ones really matter?To existing clients and to those you don’t have but want?Which of these do you wish to serve, by what channels?What could you do to effect a dramatic change to these?

How can you then re-define (or augment) the service currently on offer (scope, reach, segment, value)?

May necessitate taking a “greenhouse” approach, i.e. parallel offering e.g. B&N when introducing e-commerce



Example for discussion (IC-11a)GSU Student Housing process

Who’s the client?GSU’s view of the PTBS …

Provide a listing of on-campus, GSU housing opportunitiesAllow application for one of these based on basic criteria related to student’s preferences for room matesNotify if/when a student housing opportunity exists

What’s the client’s view – their “real” PTBS?How would this affect the underlying process?



“Moments of Truth”1) Moments of Truth are a Process

Diagnostic2) They occur ANYWHERE a customer

“touches” a process3) Typically arise as a result of “errors”

in the process – non-”Happy Path” (e.g. baggage didn’t arrive)

4) They can be people-to-people, people-to-system, systems-to-people, system-to-system, and people-to-product

5) ANY contact with a customer is a Moment of Truth

6) Moments of Truth are both process Points of Failure and Causes of Work



Quotes on MoT from Jan Carlzon“Last year, each of our ten million customers

came in contact with approximately five employees, and this contact lasted an average of 15 seconds each time. Thus the company is “created” 50 million times a year.”

“These 50 million moments of truth are the moments that ultimately determine whether the company will succeed or fail as a company. These are the MoT’s when we must prove to our customers that we’re their best alternative.”

If they’re not handled well “and 15 seconds elapse without a response, we will have lost an opportunity to earn a loyal customer.”



Types of client-facing process innovation

Broad range of “forms” the process could take at various stages of innovation.

1) Radical - Completely changes current Customer Expectations for Market

2) Trendsetting - Extends beyond boundaries of current Customer Expectations for Market

3) Differentiating - Pushes boundaries of current Customer Expectations for Market

4) Competitive - Significantly improves Customer Experience

5) Improved - Reduction in Causes of Work and process Points of Failure



Where do we find MoT’s?

In BPMN (employee on-boarding example):

At the interface between the client and the processWhile our case examples have been fairly simple (in terms of process/client interactions), most “real” processes will have many touch-points of interaction with the client

Inside-out approach …



MOT and InnovationThe Innovation question is:

How would we Eliminate each Moment of Truth entirely?

1) Identify an ACTION that could be taken to eliminate each Moment of Truth.

2) The Action MUST ELIMINATE the Moment of Truth – not change it or replace it.

3) DO NOT make assumptions regarding if the Action is something the business would reasonably be willing to take.

4) Avoid using Actions that simply make things FREE – with no other innovative element(s) to the Action.



MoT innovation guidelines (1)

Layout the clients sequential encounter with your organization in seeking to solve an identified PTBSNote each (potential) customer touch-point and number it (note the below is a form of process diagram)




The innovation question is:What we would do if we had to Eliminate this Moment of Truth entirely?

Steps:1. Identify an action that could be taken to

eliminate each Moment of Truth2. The action must eliminate the Moment of

Truth – not change it or replace it3. Do not make assumptions regarding if the

Action is something the business would reasonably be willing to take.

4. Avoid using actions that simply make things “free” – with no other innovative element(s) to the action




Identifying Expanded Action AffectsFor each Action identified, you will also need to uncover additional affects that will impact the Process Innovation Landscape, i.e.

…other Moments of Truth that would be eliminated if the action were taken

We do this by:Reviewing each of our actions to determine if any additional Moments of Truth in the process would be eliminated if the Action was takenThen adding this information into our Innovation analysis



Using the full MoT methodology



MoT innovation guidelines Q&A (5)

What process (or aspect of a process)?A: The process we are innovating on is the process as experienced by the customer! Make sure you capture the Moments of Truth the customer would experience i.e. – the process as they experience it!!!

Eliminating MoT’s means we cannot:Move themChange themPush them onto someone else (anyone else!).Our Actions MUST ELIMINATE Moments of Truth from the process entirely!

Actions are not limited by what we think is reasonable – regardless of why we think that

OK to identify actions that may be very difficult or even impossible for the organization to take at times



IC-11b Process InnovationStart with the PTBS statement of your team project definitionState this PTBS as part 1 of your responseExpand your view based on what the real/larger problem is that your client is trying to solve

Provide a Revised PTBS and a one paragraph rationale for each, as part 2 of your response

Discuss in a paragraph or two what the likely implications for adoption would be on the existing, underlying process (what kind of additional processing would be entailed)

Adopt the viewpoint that you’re arguing for this change to an organization executive-level meeting and you have five minutes of their time

i.e., brief and to the point focused on what they care about (revenue)

© Richard Welke 2002 CIS 4120 Fa12: Define/Innovate BP’s Richard Welke Director, CEPRIN...

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