Introduction

There is an ongoing trend of gradually increasing the amount of services product manufacturers offer. This is often referred to as servitization. Compared to products, services are considered to have longer life cycles and larger margins and to be more resistant to the business cycle. From a marketing perspective, services can be used to differentiate and increase value to the customer. Furthermore, services can also be a means of strengthening customer relations as they entail interacting with and understanding the customer. It is, however, often troublesome for product-oriented companies to handle services, partly due to lack of methods and tools. In this chapter, we present a narrative design-based method, CTN (Context Through Narratives) that captures users' current practices, experiences, situations, contexts, and expectations and integrates these in service innovation.

Servitization has been described as a multistaged change process. Common to different servitization models is that a supplier starts with offering services supporting its existing products in order to improve accessibility, for example, providing spare parts and maintenance. At the other end of the servitization spectrum is support for (at least parts of) the customer's operations, providing total solutions. Slightly simplified, servitization can be synthesized into three steps (Table 16.1): (1) services supporting the product; (2) services supporting product usage; (3) services supporting the customer's operations (processes). Servitization thus demands an increased understanding of the end user and/or the customer's operations. Providing spare parts and maintenance requires little understanding of the customer's operation.

In the last step, the supplier offers services that can also be independent of the physical robot, where the aim is to support the customer's operations by offering a total solution. For instance, if the customer is using a robot to spray-paint a specific component, the supplier can offer to design the whole process and assume overall responsibility for painting, that is, the service: “painting a component” according to customer requirements. The robot is only a means of performing the service.

There is a demarcation line between steps 2 and 3, where the supplier needs to gain a thorough understanding of the customer's processes, that is, what the product is used for, and also the customer's applications and context. This can thus be defined as the borderline to become a solution provider. The further a supplier goes through the servitization steps, the stronger the need for new methods and tools that innovate and develop the services since fresh knowledge regarding the use-side needs to be obtained by the producer.

Successful innovation requires two types of knowledge: technology knowledge and use knowledge. Technology knowledge concerns aspects related to implementing an innovation, including knowledge of the mechanics of materials, chemistry, thermodynamics, and so on. Technology also includes non-product-specific technology, such as service-supporting technology, and organizational routines. Accordingly, technology includes all the enabling organizational resources necessary to make products and services.

However, moving beyond providing only products but also solutions to customer problems implies the need to have “use knowledge,” also referred to as use experience, or application domain knowledge. Use knowledge involves understanding the use of an innovation/technology from a user/customer perspective. In other words, what the technology should do for its intended users, requiring a deeper knowledge of the customer's processes and needs, often called taking a customer, or service, perspective. The important thing is no longer what a company's products are, but what they do for the customer. Products are perceived as a means of creating value when used by the customer.

Use knowledge is more abstract than technology knowledge and is normally disconnected from innovation activities, at least as regards physical products. The nature of services is, however, quite different from that of physical products. Services are intangible and can be described as a series of activities where the customer is a co-producer. The active interaction of users during services, and the fact that these often take place in a context foreign to the supplier, puts greater demands on the supplier to understand the use side. Accordingly, use knowledge is much more important for services than for products, but can also be expected to lack when product manufacturers aiming to provide services.

A product-oriented company has, by definition, a lot of technology knowledge, but not the necessary use knowledge, depicted as a “Product Provider” in Figure 16.1. The added skills necessary to become a solution provider—and thus move to the next step of servitization—thus include use knowledge. Seeing use knowledge as a resource vital to competitiveness has implications for the company's innovation process. Gaining a deeper understanding of the use side is a necessity for providing more advanced services in the sense that these support not only the suppliers' products but also their processes and businesses.

Design has a long tradition of studying users in terms of understanding, interpreting, and translating their needs/problems into satisfying solutions—in other words, understanding the use side's problems and how proposing solutions can solve these. More recently, Service Design has emerged whereby the specific interest lies in designing solutions in terms of services.

16.1 Service Design

As discussed in previous chapters of this book, design has increasingly been seen and understood, over the past 15 years, as a possible driver of innovation. Design's contribution to the innovative capabilities of organizations can be ascribed to the iterative and user-centric approaches, the use of multidisciplinary teams, and the ability to externalize ideas and patterns using aesthetic skills such as visualization and prototyping. Furthermore, the designer's ability to interpret and reshape sociocultural relationships and configurations is even more prominent in service design than in traditional product design. Services are always co-produced together with the end user.

The core of service design is taking the user's perspective as a complete experience, giving an outside-in view of these experiences, as well as visualizing them and taking the iterative approach of involving users throughout the process. In service design, the approach of involving users both during the early stages and throughout the innovation process has been highlighted.

Designers involve users and other stakeholders, and their knowledge, in different ways and for differing rationales than traditional market research. Involvement through user-centered approaches is about gaining empathy and inspiration during the early design phases. This is done by entering the context of the user, or by creating situations where the designers themselves experience the situations. If this is not possible, staging situations are constructed whereby the users are given the opportunity to share their experiences. Compared with traditional market research, design thus provides distinctly different approaches to how users/customers should be involved.

16.2 Context, Stories, and Designers as Interpreters

The role of contextual understanding is to widen the focus to understand what broader role a product plays in the user's life. To understand the user's context, designers often move into that context to gain empathy via a deep understanding of latent needs, dreams, and expectations. Staging different workshop settings in which users, company (client) representatives, and designers interact is becoming an increasingly important part of the design profession. Approaches based on theories of play are gaining the interest of service design practitioners. In these approaches, users and other stakeholders are engaged in and encouraged to share their experiences, in addition to being a part of the co-construction of possible future solutions. The role of talk, stories, and dialogue is emphasized in order to understand the user's context and perspective.

Stories are one of the basic means by which we, as humans, communicate. We retell previous memories and experiences; we inform about our intentions, wishes, and dreams. In short, stories are one of the more dominant means by which we make sense of the world around us. In a story, actors, time, and contexts are often very efficiently captured and become beneficial for design purposes. Ethnographic stories can even serve as a bridge between the realm of the customer and the firm. Allowing customers to tell their own stories about their own experiences makes it possible to understand more about them than can be retrieved from an interview or a survey containing predefined questions. In the case (and model) offered here, designers are the interpreters of users' accounts. In design-driven innovation, designers are positioned as the interpreters of users' sociotechnical contexts and as brokers of knowledge across branches and organizations.

This intermediary role between the firm and its surrounding networks has been described as the brokering of knowledge, suggesting that designers, when moving between different companies, use and reuse known technologies in new areas. In the following section, we offer a method and a case whereby the means of involvement is stories rather than visualizations. We will point out the crucial role of the designer as an interpreter of these stories in order to achieve the intended outside-in focus.

16.3 Context Through Narratives—The CTN Method

A largely simplified description of the service design process can be illustrated using a double-diamond process containing four phases: (1) discover, (2) define, (3) develop, and (4) deliver. This process has a strong affinity with the design thinking framework presented in Chapter 1 of this book. The CTN method lies within the first diamond and represents the exploring and defining of needs and problem spaces for further innovation work. Discover largely focuses on extensive user and contextual research but is also aimed at exploring organizational prerequisites and strategies and potentially new or adjacent technologies that are suitable. It starts out from perceived problems/questions as defined by an organization; however, it attempts to go beyond specifics and explore a larger context.

The CTN method includes four steps: (1) preparation, (2) action, (3) processing, and (4) closure (Figure 16.2). We illustrate it using a service design pilot case. The aim of the service design pilot was to achieve a more extensive understanding of users' perspectives, situations, and experiences, rather than develop service innovations per se, which will come later on in the process. The service design pilot includes a repeatable workshop format whereby the facilitation experiences gained are both reused by the design company over time and, more importantly, transferred to the client company for future internal use.

The aim of the client company, IndComp (described in the box below), was to better understand one of its user groups, namely, farmers using automatic milking machines (AMMs). For this purpose, it had hired a design company, Veryday Agency; for a full description of this collaboration, see Wetter-Edman (2014).¹

16.4 Case Illustration of the CTN Method

We try to get to meet the customers but it is not that easy. We need to ask permission, and we need to have a good reason to ask permission. Because there are good reasons and bad reasons. But that we just should hang around with a farmer is not popular.”

Business Developer at IndComp, 2009.

As described in Exhibit 1, IndComp is an industrial company aiming for increased service offerings beyond traditional maintenance service. This reorientation was supported by a biannual customer survey. Overall, the ratings were good, as usual, and the customers were satisfied. However, the latest customer survey showed a slight decline in ratings, especially in comparison with IndComp's main competitor. IndComp thus wanted to understand its customers' needs and expectations more qualitatively; hereby, the decision was made to employ service design.

Action

The action step captures users' experiences through stories and images. It is important to have a framework for how to document the stories and for starting to make sense of these together with the users. The workshop participants included seven farmers, two company representatives who had made the preparations, and three designers.

After a presentation of the participants and the activity, the workshop started. The format was to work with the six themes in two parallel groups whereby each group worked with three themes (Table 16.2). A designer in each group took notes, documented the accounts using keywords and short sentences, and added an image to the prepared sheet of paper together with the farmers' narratives. Each theme session lasted for 30 minutes; in between these, the teams gathered and the situations were mapped out in a landscaped style. The aim was to make a collaboratively constructed landscape of the farmers' stories and experiences by the end of the day.

	Group 1	Group 2
Introduction 15 min	Presentation of format
Session 1, 30 min	Theme 1	Theme 2
Approx. 30 min	Collaborative Mapping
Session 2, 30 min	Theme 3	Theme 4
Approx. 30 min	Collaborative Mapping
Session 3, 30 min	Theme 5	Theme 6
Approx. 45 min	Collaborative Mapping and summary

The facilitating designer moved between the teams, kept up the pace and motivation, and directed the construction of the joint landscape (Figure 16.3), positioning the sheets of paper containing descriptions in accordance with themes and experience.

The introductory question for each theme was framed along the lines of:

1. Service is about activities during and surrounding a service.
2. How do you experience that the service of IndComp works?
3. Describe some situations:
   1. Two typical situations where the service encounter works fine.
   2. Two typical situations where the service encounter doesn't work.

This phrasing focuses the discussion on experiences and situations rather than on discussing the extent to which the AMMs were functioning, or not. The designer on each respective team first noted down, on Post-its, both keywords and snippets from the stories while the farmers discussed the situation, then decided, in conversation with the farmers, on a set of important situations to report on, after which a note of them was made on the prepared sheets of paper together with an image. In Exhibit 2, we present some edited stories that were told by the farmers. Although these describe direct interactions with the AMMs, the emphasis in the stories is on the surrounding situation and context, that is, the role the AMMs and IndComp's actions play in the farmers' lives. Using the terminology of Chapter 1, these stories form the basis of finding issues, big and small, for “placing small bets” around customer insights.

Closure

The final step of the CTN method is called closure, where the project in its current state comes to an end and is summarized and communicated to stakeholders. The preparations encompass arranging the meeting format and inviting the relevant participants.

People were invited from different parts of the organization who held positions from which they could actually act on some of the results of the project. In total, eight key members of staff from IndComp participated. In addition to the service division manager and Walter, the participants were managers from national and northern European markets including the global service coach.

Veryday presented the two scenarios that described present and future situations, thus revealing the gap between them and IndComp's need to act with purpose in order to move its positions forward. The scenarios consisted of five scenes, each focusing on one specific situation discussed during the workshop. The scenes were the same in both scenarios. The representation of the Service Day used in both scenarios is presented below.

The first scenario talks about the service technician in positive terms; however, it seems as if he does not really have the support and tools to do a proper job. The main focus is on attending to the equipment itself, changing spare parts, and the like (Figure 16.4).

In the corresponding scene in the 2015 scenario, many of the identified needs and problems are addressed via new service offerings. The farmer had ordered an additional wash, the service technician called to confirm his visit, the service protocols and other documents are accessible from different places. Thus, how the farmer wants to receive the service is in focus, rather than the way IndComp is capable of providing it today.

These scenarios, specifically the 2010 scenario, gave rise to a lot of discussion and involvement among the participants. The way in which the stories were retold and reframed by the designers made the farmers' situations and experiences urgent and important to act on for the organization. The design narratives helped them to empathize with the farmers, and to understand their perspectives.

16.5 Conclusion and Recommendations

This chapter has presented the increased interest in and need for servitization and the three basic steps that companies go through during the servitization process, and has argued that increased understanding of the customer is a prerequisite for this development. Further, service design is argued to be a design mind-set suitable for integrating a customer perspective. We presented the Context Through Narratives method exemplified using a case for moving toward an increased focus on customers' lives, contexts, and needs. In the following sections, we summarize this method's contribution to servitization and provide some hands-on advice about how to implement the CTN method.

Prerequisites and Recommendations for Successful CTN Usage

The presented CTN method suggests an approach to understanding the user's perspective through the use of narratives. The method is composed of four steps, all located in the first diamond of the Service Design process: preparation, action, processing, and closure. Each step puts the focus on different issues that need to be solved, negotiated, and attended to, as illustrated in the case. We strongly recommend that client representatives in service development or staff in customer responsibility positions are present at the workshop. Their role is to listen to the users' stories directly and not to defend the company. Below, we present checklists used to facilitate the workshop, and the analyses and interpretation steps:

Checklists for Implementing the CTN Method

Ahead of the workshop:

1. Invite knowledgeable and experienced participants: users and employees in service development positions.
2. Define subject areas covering the entire user experience and surrounding events.
3. Formulate experience-oriented questions for initiating discussions.
4. Prepare documentation templates for noting the users' stories.
5. Prepare images that show different situations from the users' day-to-day lives for triggering discussions.

During the workshop:

1. Be open and attentive during the workshop; the aim is to obtain and understand the users' stories.
2. Let the users present and describe their situations in their own words when constructing the landscape of use narratives.
3. Make notes on sticky notes, then on the situation template, and add images selected by the group.
4. Construct the landscape collaboratively with the participants.
5. Document the full landscape using photos.

Analyses and interpretation:

1. Revisit company visions and strategies for identifying where the use narratives can complement, strengthen, and/or threaten existing ideas.
2. Read and retell the use narratives with the purpose of remembering the nuances and aspects of the original story; pose the question “What are these situations ‘really’ about?”
3. Involve company representatives in aligning with company visions and facilitating implementation.
4. Cluster the use narratives according to affinity, good and poor, pros and cons.
5. Identify problematic and good situations, as well as possible solutions; allow for iterations with next checkpoint.
6. Combine use narratives and company visions.
7. Create design narratives, based on present and potential futures, for example, scenarios identifying gaps.

As described above, the users' stories (use narratives) are to be noted down on preformatted sheets of paper; sticky notes may be added containing keywords or adjacent stories; images that bring life to the story are to be added (Figure 16.5); and the paper is to be labeled “good” or “poor” to depict the quality of the experience.

CTN explicitly puts the focus on the end consumer's situations and priorities. Companies using this method will thus need to be open to fresh input and prepared to change their own perspectives accordingly. Although stories are told and collected in various forums, we see, in this case, that design competence is vital when it comes to interpreting and transforming the users' stories into actionable knowledge for the company. Design competence is also important when it comes to framing the situation and posing questions aimed at experience rather than functionality.

However, if the firm's strategy is to move along the servitization continuum and to fundamentally change how customers' experiences and contexts are taken into account regarding service innovation, then the company will need to develop internal design capacity. Servitization will also affect the company's strategy; product features will no longer be the focus of selling, but offering solutions to the customer will be. The link with strategic reframing turns design work into something that cannot be handled solely by external consultants, but by in-house staff. This can be done in two supplementary ways—first, through the internal learning of design methods and tools, building up internal service design knowledge and facilitating skills across different functions, for example, by using the CTN method.

Second, because we have presented the role of the designer in the above case, we firmly believe that professional design knowledge plays an important role in interpreting and articulating design narratives. Thus, we additionally suggest developing internal design capacity by employing professional service designers as a resource spanning across the marketing and research and development functions. Thus, the user's perspective will be integrated strategically and professionally within the organization.

The CTN method is a well-tailored method whose purpose is to explore, expose, and articulate what the service provider's offerings will actually achieve in the customer's life, for better or worse. Additionally, the method includes tools for designing and proposing new offerings.

References

1. Brandt, E., Messeter, J., & Binder, T. (2008). Formatting design dialogues—games and participation. Co-Design, 4(1), 51–64.
2. Magnusson, P. R. (2013). Service innovation in manufacturing. Managing industrial service in dynamic landscapes—A flexibility perspective: MTC., Fredrik Nordin, editor. Östertälje tryckeri, Sweden.
3. Wetter-Edman, K. (2014). Design for service: A framework for articulating designers' contribution as interpreter of users' experience (PhD dissertation). University of Gothenburg, Sweden. (No. 45)