[Question 3] Service-logic innovations cases

I think of Michelin's Tourist guides. They are asking for tourists' co-operation. As the existing books are not exhaustive, tourists are welcomed to make comments on places, restaurants and hotels. If the comments are relevant and in quantity, Michelin is dispatching one of its staff to verify the information sent and decide to add or not on the next edition. So through the years, the guide is closer to the tourist expectations.

I think another example could be PC Mag. The magazine based on computers and technology, but you can read about users experiences and the magazine has contributions from many users, and on many different aspects of computers and technology. This has made it much easier for users to find information and with always being current they are always covering the consumers needs.

sophie_pelling wrote:I think another example could be PC Mag. The magazine based on computers and technology, but you can read about users experiences and the magazine has contributions from many users, and on many different aspects of computers and technology. This has made it much easier for users to find information and with always being current they are always covering the consumers needs.

Your example made me think about Imdb.com, which is a movie review and information website. It is made by professionals, but every day viewers leave their comments and rate the movie, so what you see in not a rating made by some critics who look at it differently to normal people

Still, I believe that every company, that offers a totally innovative product/service can be placed here. even facebook at the beginning could have been considered this way.

Here is the most popular cosmetics, beauty products website in TW. You can find almost every new products' comments by customers, reviews by experts, free makp-up tutoring videos, famous blogs...etc. I think the content is generated by users up to 70% and other sponsers / advertisers by 30%. It is really successful in the cosmetics sector.

http://www.fashionguide.com.tw/

I'm not sure how they make money beyond advertising, but www.hypem.com (hypemachine) is a cool integration of blogging with music sharing that puts the user at the heart of the value cluster. The user creates an account and can follow artists, friends, and bloggers to automatically create their music 'watchlist'. A watchlist is an amalgamation of the playlists of friends, your favorite artists, and bloggers that you 'follow' (ie: everything you link to from your account). The experience is very viral and interactive for the user, and value is in use by all who share the experience.

This is not an existing company who adapted its product-focused innovation to service-logic focused, rather, this website has the service-logic model from the very beginning. It is a combination of existing technologies (blogging, like/dislike ratings, music streaming) mashed together to form a user centered service. It's free to use, so they don't make money from users, so revenue must be based on advertising only.

Facebook (https://www.facebook.com/) is a very good example. It is a global socail networking website. This website provides users with the tools to create online games, mental tests, and other kinds of applications. I think that it is a "smart offering." Facebook takes advantage of mass collaboration to add values to its platform and it is a very successful strategy as we can see.

I think a lot of new e-tourism website, such as priceline, or eazyfly in TW are sort of adopting service-logic innovation. Because people in the past need to call the travel agency to arrange their travel plan, but now customers could do it themselves online to search a cheaper tickets or packages, by pass the service of a travel agency.

In the same way as the Michelin Tourist Guides, the famous Lonely Planet and the French "Guide du Routard" are welcoming tourist's information whenever they travel: If something has changed from the informations provided by the guides, or whenever tourists discover any interesting place which worth to be visited, they can inform the guides.
These latter will improve the provided information after checking by themselves.

I dont agree with the people mentioning several webpages, where users can blog and give their opinions on different products they have tried. That is in my opinion not what sevice logic innovation is about. You (company), needs to do something different that adds value to your customer. Having peer reviews is not being innovative or special.

I have one example of how Audi have used their customers to improve their products. Some years ago Audi offered to drive people home from the airport. Meaning that the driver was person going home. This potential customer then got to try to drive the promoted audi, give their review and get a free ride home. Audi was the first automobile manufacture to offers this kind of service. This way, they can get insight of what customers want and dislike. By doing so, Audi actually got complaints reagading their sound systems. As a direct consequense, AUdi enganged in a contract with Bang & Olufsen (A high quality speaker manufacture from Denmark) in order so satisfy customer needs. At that time this was service logic innovation. They included the customer, added value to their brand name and benefited by improving their products. They did something different from their competitors.

What do you think?

I agree with Walter’s comments. It is really about doing something different from your competitors. It is about satisfying a demand or a need that is not currently being met. According to the paper it is about developing new ways to create value for customers. A perfect example of a company that does this is EASYJET AIRLINE. It is a low cost airline company which operates in Europe.
How do they create value for customers? They integrate all their processes to reduce cost, and pass those cost savings to customers by offering cheaper flights than their competitors. They:

• Minimize distribution costs by using the Internet to take bookings. About 90% of all EasyJet tickets are sold via the Web. This makes the company one of Europe's largest Internet retailers.
• Maximize efficient use of their assets, by decreasing turn-around time at airports. (No interconnecting flights)
• A 'simple-service model is used. ( no free on-board catering), ( only one class of service, which means there is no division on the plane, so capacity is greater than that of an airline offering 1st class and 2nd class service)
• Ticketless travel, where passengers receive an email confirming their booking, cuts the cost of issuing, distributing and processing tickets, no boarding pass(reusable plastic cards is used)
• Intensive use of IT in its administration and management, aiming to run a paperless office.

Thus we can see that EasyJet strategy was more customer oriented. They focused on customers who were more price sensitive, and who did not mind their simple business model. So, by creating value for customers, and serving a need that was unmet by competitors they were able to succeed and become one of the most successful low cost airline. This shows that it pays to focus on consumers needs, and to do things differently from your competitors, just like IKEA did.

I mentioned it in one of the other questions already, but how about the smartphones? and iPhone in particular? I think the concept of combining functions like camera, mp3, video, internet and email, PDA options, GPS and so on, completely changed the way people use their cell phones, and created a new offering that answered a need that many people had - especially as technology improves, the different functions offered by smart phones are with better quality and thus become substitutes for other devices that we basically don't need anymore. For example I think the PDA has become redundant and no longer has a market, now that most smart phones offer the same things and so much more. Or the camera - although many phones have had a camera in them for a long time already, but until recently it wasn't really a substitute as the quality was very bad. However some of the new phones have cameras that are pretty good and the average user basically doesn't need to take a camera- can just use his phone when going out.

The iPhone goes even further with the Apple's app store, that offers the users many different functions to add to their phones, many of them user-generated - and is one of the most successful example for open innovation.

So smartphone- smart offering, for sure, as well as value integration.

I want an iPhone.

I have another example in mind: web services from Windows Sharepoint services: provide a set of integrated tools of collaboration to windows office 2003 designed and developed during the time when Microsoft was beginning to heavily push Web services.In fact, there's not just one Web service involved; there are 16. Each one supports multiple methods, making a rich sets of Web services of any current product in order to help people to integrate windowns office

I agree with Naomi. That the smart phone is difenately adding value to the customers. It provides a one stop for its users, Mp3, phone, internet, kamera. Everything at the same place. This is being innovative. But now that other people have similar functions than the Iphone. Can apple sustain this advantage? What i mean is that eventhough companies have applied service logic innovation, it can be for a short period of time. So what can companies do to sustain their competitve advantages.

Walter has made an excellent point. Service-logic innovations are about how firms can invite customers to co-produce, which are the means to the end of better innovations. Unlike open source or social networking where customer participations, not innovations, are the end.