Why Service Design, CX and UX are all part of a bigger customer-led world

One of Forrester’s analysts, Kerry Bodine, recently wrote an excellent article on how Service Design relates to CX and UX. The main hypothesis was based around the following diagram that service design (SD), customer experience (CX) and user experience (UX) all overlap in the following way:

CX SD UX 3

The best description of these overlaps is given in Kerry’s article, but in summary:

  • UX primarily focuses on the design and development of digital journeys, whilst CX covers the whole multi-channel journey (both off-line and online); therefore, UX is a sub-set of CX
  • SD encompasses the whole customer journey in the same way that CX does
  • However, there are differences between service designers and customer experience people, most notably:
    • There are elements of CX that fall outside the normal scope of service designers (such as measurement and governance)
    • By contrast, service designers often focus on areas such as social innovation – something outside the common definition of CX
  • Finally, SD does not fully overlap with UX because in today’s business world, we simply do not use service design in digital marketing

Kerry then went on to state that as businesses evolve, there will be a merging of these areas into a more succinct structure as follows

CX SD UX 2

Whilst I agree with Kerry on what she said, I would actually argue that this merging of skills is actually a precursor to a larger, and more fundamental change to business that is being driven by the corporate desire to “put the customer at the heart of their business”. This hypothesis is based on the following argument.

Unfortunately, most corporate clients cannot explain what they mean when they tell the market that they are going to “put the customer at the heart of their business”. To be fair, this is not a new phenomenon – consultancies and agencies have been making money for decades from the fact that their clients are unable to describe their problem.

The fundamental difference today however, is that these traditional advisors no longer have the answers themselves.

The phrase itself highlights the problem: “Putting the customer at the heart” is an emotional connection – something that has always been the hunting ground of the agency because it is about communications, engagement and brand promise. “The heart of the business” however, is where the consultancy has always focused because it is infers changes to operating models, technical architectures and financial plans.

In this brave new world of constant change and consumer power, the future will be driven by those companies that successfully combine emotional relationships with hard-nosed logic.

To take an overused example: The Apple experience is a beautiful thing that people have a strong love for.  However, it would never have reached such emotional bliss had it not been underpinned by a technical architecture, digital supply chain, operating model and financial structure that is second-to-none.

This is where Kerry’s article links in nicely. Service design agencies are one of a new breed of Cogencies (the hybrid offspring of consultancy and agency) that are successfully providing an end-to-end link between customer-led insights and business operations. The reason why companies like them is not just that they are quick, agile, customer focused and relatively inexpensive (when compared against 3 year, $30M major infrastructure programmes). It is because they are also able to cross the divide between emotion and logic that enables them to speak sense to both the CMO / Head of Brand as well as the CFO / COO / Customer Services Director. They are providing a solution that everyone on the Board can buy into (if done well). And an aligned Board – well, that is the cornerstone to a successful implementation.

The issue with service design agencies is that all too often they are given a business problem and make a shiny solution only to find that they have, in fact, just beautifully fixed the wrong problem. They are arriving too far down the corporate chain, often used by companies that are looking for a quick fix. It would be far better if they were involved up-front during the strategy development process.

This is where there is a need for a fundamental change towards the creation of the true Customer-Led business model (CLB). Service Design in of itself are not adequate to create business strategies. However, the underlying principals of emotion + logic + agility are.

In the world of the customer-led business model, we need to combine the emotive elements of brand, purpose and corporate soul with the logical building blocks of market reviews, customer analysis, agile prototyping and financial modelling. Think WPP meets McKinsey meets IDEO – without them killing each other!

CX SD UX 1

As stated, Service Design is not a panacea that will turn companies into customer-led organisations. You do still need market analysis a la McKinsey, along with brand champions, big data geeks, cultural evangelists and all the other skill sets to be successful. The key point is that Service Design is you can mix the logical and the emotional to build a better offer. Take that thinking to a corporate level and you can build a true customer-led organisation.

You never know, you may even give yourself a chance of being able to explain what “putting the customer at the heart of your business” actually means.

 

 

 

11 thoughts on “Why Service Design, CX and UX are all part of a bigger customer-led world

  1. This article makes a fantastic case for needing to intimately know their core group of customers so they can infer the impact that might occur when making business model changes and experience changes.

  2. Hi Martin

    An interesting post that raises a number of questions. Here goes.

    Bodine’s Venn diagram is meaningless. I have worked with many CX, UX and SD practitioners over the past few years and most of them have quite different views about what their discipline does and does not encompass, and what the others encompass. All three disciplines overlap to a certain extent but all three also stand apart to a certain extent too. It is most certainly false to suggest that UX is simply a member of a larger CX set (or an SD set come to that).

    If a Venn diagram is a useful metaphor for a more complicated mapping, I wonder what it would really would look like.

    Companies would be foolish to literally ‘put the customer at the heart of the business’. Business has always been a series of complex trade-offs between the needs of customers (and different groups of customers have widely different needs), the needs of the company (and again, there are different groups involved) and the needs of other stakeholders (yet more groups). Currently, the interests of the company generally dominate the other two. Who comes next depends upon the industry. In retail banking other stakeholders generally come next (regulators like the FCA and PRA in the UK). In mobile telecoms generally customers come next (highly profitable, high ARPU ones). If companies put customers at the heart of the business, the company will likely lose out financially. This has been demonstrated time and time again in many different industries.

    If the optimal trade-off between the company, customers and other stakeholders were to be calculated, I wonder where it would lie?

    The recent Design Council survey of Service Design showed that most Service Design agencies were small, design-driven, often didn’t manage to implement their designs and struggled to show the return-on-design when they did. I wish it were otherwise, but we have to face the facts. The smallness and designerly orientation of most agencies means that they lack the technical expertise required to analyse large quantities of unstructured data, to implement enabling digital technologies, to redevelop the organisation and to manage the often complex transformational changes required for business success. This in turn means that the agencies’ designs typically do not get implemented and do not work well if they do. Some of the larger service design agencies, like LiveWork and Engine Service Design in the UK do have some of the required technical and transformational change expertise, but they all suffer from having a lack of the required scale to take on anything other than departmental or piecemeal assignments.

    If we were to look at the optimum combination of knowledge, skills and experience to effect transformational service change, I wonder how many new and what different new people service design agencies would require.

    The smart and well-funded strategy and technology consultancies are now entering the service design fray. Accenture recently bought Fjord (and is struggling to work out what to do with it). McKinsey is developing its Customer Decision Journey practice. IBM has invested heavily in building its Service Science capabilities. All the other consultancies are doing likewise. Service design skills are easy to find and cheap to buy if you are a multi-billion dollar consultancy. And unlike service design agencies, the consultancies have a long track record of implementing transformational service changes in business.

    If we were to look forward five years from now, I wonder who will be doing service transformation work – because it is about transformation, NOT abut design – the small service design agencies or the giant consultancies.

    I know where my money is. What about you?

    Graham Hill
    @grahamhill

  3. Hi Graham,

    Excellent reply and a good spring board for a few more discussions. It is probably best to take each point in turn:

    1. Is Kerry’s diagram pointless?
    If talking to the CX, UX and SD communities, it is fair to say that the venn diagram massively over-simplifies a complex situation where there are a lot more subtleties. However, in Kerry’s defence, most of her life is spent educating corporates. Therefore, we feel that the picture is valid in trying to convey complex issues to people that often have limited knowledge (in some cases no knowledge of SD) – i.e. it acts as a good introduction.

    2. Companies are foolish to “put the customer at the heart of the business”.
    The critical word in this phrase is actually not “customer” but “business”. The dot.com bubble proved that, in 99% of cases (Twitter being a more recent successful example of that 1%), building something that customers love and then hoping you can generate undefined revenues was a brilliant short-cut to wasting billions of dollars.

    Today, however, this phrase is actually being used by our clients (not us). This is because most companies now believe that they will generate better value for their shareholders if they move from being product-led to customer-led. “Putting the customer at the heart of the business”, in our world, actually means linking your corporate goals to a strategy based on building value by understanding what your customers want and then serving them in a better way.

    On this basis, we believe that, for most businesses today, the needs of the company do come first (although there is ultimately a need to make an argument against this if you consider Plan B, the need for corporate purpose, social businesses, etc.).

    3. SDs are generally design driven and struggle to show a return on design
    The point of our blog was not to state that SDs were going to take over the world. It was to comment on the fact that good SD’s were starting to combine agency and consultancy skills in a more holistic way. Fjord’s ability to build a prototype whilst also understanding the commercial, operational, technical and financial elements was a case in point. However, we do agree that SDs today are struggling because:
    a). They do not spend adequate time at Board level working on the strategic direction of the business
    b). They are often too focused on digital service design rather than looking at the overall offer
    c). They do not have the delivery / transformational change skills

    That said, this is an evolving industry and there are some examples of companies that are getting this right (Strategic & Creative in Sydney being one to note).

    4. Smart and well-funded strategy / technology consultancies are now entering the service design fray.
    That is definitely true. However, we believe that they are trying to move into a new space so that they can sell more of their existing services. Take Accenture’s acquisition of Fjord for example. It makes a lot of sense because they can use the initial work undertaken by Fjord as a way to sell more back-end Accenture-style implementation work. Unfortunately the companies that buy Fjord style SD work generally do not want Accenture-style implementation work (i.e. they want delivery partners that have more empathy / understand the softer issues of change).

    At this moment in time, the strategy and technology consultancies believe that service design is an add-on to their existing business model. We believe that SD should be treated as a catalyst to evolve their model. Accenture will always do transformation / implementation. However, they need to react to a market that no longer wants 5 year programmes costing $100M, which never give the promised return on investment. They need to retain the skills they are excellent at, whilst becoming more agile, human, creative and empathetic.

    Do that and they are on to a winner. If you can give me Accenture with an SD mind set – my money is with yours.

  4. Hi Rob

    Thanks for commenting about my comment about Martin’s blog post. Here’s my comment about your comment. Enough homage to Dr. Seuss!

    Bodine’s Venn Diagram

    I am not quite so sure that Bodine’s venn diagram is as benign as you suggest. If it is a gross simplification of a more complex reality, the question one should ask is; does it over-simplify things so much that it becomes misleading? I believe that it IS over-simplistic and thus, is misleading. I note that Bodine is a Forrester analyst, not an experienced UXer, CXer or SDer. Perhaps this explains the over-simplification.

    To Put Customers at the Heart of Business. Or Not…

    Most of the contemporary work on strategy emphasises a three pronged approach: one can focus on being the best at innovating new products, one can focus on minimising costs and one can focus on serving customers. This was probably appropriate for businesses in the 1980s when the ‘Delta Model’ was created, but it isn’t fit for purpose any more. Today’s businesses must do all three in a measured way to be successful in hyper-competitive markets.

    The Marketing Science Institute’s research programme into ‘Market Orientation’ in the 1990s showed quite clearly that having a strategic customer-orientation produced worse business results than focusing on all three elements of the Delta Model. The implications are clear; any business that puts the customer at the heart of its business will likely do worse than one that balances the needs of customers with those of other actors in the business ecosystem. Of course, that doesn’t mean that businesses should ignore the needs of customers entirely, as so many seem to do.
    The question about ‘what is the business of business’ as Milton Friedman so eloquently put it in the 1980s requires a much more substantive discussion than can be provided in this brief comment. In passing I note that calls for business to become more ‘socially-oriented’ are largely made by people who sit outside of business. There are obvious exceptions to this rule, Michael Porter’s work on Shared Value for example, but currently most remain exactly that, exceptions.

    The Role of Service Designers

    I agree with you that some of the larger SD agencies are starting to think about building a much broader range of the capabilities and micro-foundations required to enable transformational service change. But most still do not have the knowledge, skills or experience to do so reliably. And they are unlikely to be in the position to do so until they grow significantly larger and can afford to bring in specialists such as data analysts, SOA architects and organisation developers for projects. This places them in a difficult Catch-22 situation; SD agencies need larger projects to justify bringing in specialists, but they need the specialists on-board to have a realistic chance of winning larger projects. A chicken and egg paradox.

    In my corporate service transformation work for banks, insurers, telcos, high-tech and automotive businesses I prefer to bring in service designers to work on those aspects of the work where their knowledge and skills are appropriate. I wouldn’t rate the chances of a project where service designers were bringing in other specialists quite so highly, due to a combination of an over-emphasis on customers (at the expense of other actors in the service ecosystem) and the general lack of corporate business experience of most service designers.

    Consulting’s Trojan Horse

    To a certain extent I agree with you about management consultancies bringing in service designers to complement their existing services. As CX expanded in the early 2000s it was only a matter of time before the thinking behind it started to permeate business strategy. There is hardly a CEO today that doesn’t openly state that CX is critical to their businesses’ future success. SD is a subtly different flavour of the same underlying theme: the increased need to compete for profitable customers by providing a superior experience.

    What the recent arrival of McKinsey, with its Customer Decision Journey practice, bring to the party is an inductive approach that uses much more quantitative data to support decisions about service design, service transformation and on-going service operations, that simply is not available to any service design agency to-date. As vast quantities of real-time data about service operations starts to become available to businesses (Prof. Irene Ng’s Hub-of-All-Things Project at Warwick Uni is planning to recruit 1 million wired-up homes providing real-time contextual data by 2015), the traditional ‘arts and crafts’ approach taken by most service designers will rapidly become obsolete, replaced by what IBM’s Jim Spohrer calls Service Science. When you can simulate millions of potential service designs in-silico using agent-based models as a replacements for customers and neural network algorithms as an alternative to abductive prototyping, which will be possible very shortly, traditional service design is in danger of being superseded. Service designers need to wake up and smell the coffee. Or be prepared to work on small projects for poorer clients rather than in the big league of corporates (which is where the money is).

    I have seen the future, and it is Service Science, not Service Design.

    Graham Hill
    @grahamhill

  5. As Jakob Nielsen’s usability maturity model research indicates, many organizations still have what can only be described as contempt for the end-user and/or customer. User advocacy and empowerment is different from what many companies see as their option insofar as designing the user experience effectively is concerned. We have a ways to go in this conversation, still.

  6. Joesphine, thanks for your comment. Jakobs work on usability was seminal for me as I found my way into UX via usability via an HCI focussed psychology degree and I remember his maturity model. My experience is that since this was first published in 2006 the average maturity in UX has indeed improved and I’m not sure it was ever totally fair to cast most companies in the ‘contempt’ bucket (although for an example of contempt you can see any recent coverage on RyanAir).

    Most companies were guilty of an arguably worse sin of ignorance or indifference!

    I think Rob and Kerry’s articles highlight the interconnectedness of these skills sets in delivering end to end experiences to customers and the way in which the different levels of detail can be addressed in a customer-centred way.

    I’d be interested to know who, beyond RyanAir, you feel still treats their customers with contempt (at a UX level) and agree that there are many conversations still to be had. I feel what has happened though is that UX has led to more customer-centred thinking in organisations – that service design and CX have made that more strategic and begun to integrate customer-led approaches but that there are still more fundamental conversations at a board level to be had and companies need to understand how to best deploy/use these skills for maximum return.

    what is your experience?

    Martin

  7. Hi Martin, Josephine

    I agree with you that many organisations still place obstacles in front of their customers through poor design. Ryanair’s web presence is but an isolated example. I tried to book a hire car through Europcar today but I couldn’t for the life of me get the button to work. So I gave up and went to another car hire company instead. Poor design comes in many forms: from poor product design (this is not the prodict that I really want to buy), poor service design (you want me to do what to get the product I want?), poor interface design (how do I use this damned web page?) all the way to unintelligible Ts&Cs (you must be kidding, right?).

    But all this is missing the point. What exactly is the ‘Return on Good Design’? Good design costs money. It has to be researched, it has to be designed and implemented, and it has to be maintained. Thoughtless design (how I think of the opposite of purposefully good design) is a whole lot easier. The choice to spend money on good design ought to be based on a hard-nosed calculation of the financial benefits to be gained over and above thoughtless design. But all of the articles I looked at prior to writing this comment were rather wooly and qualitative. ‘Good design will increase user customer retention’ went one article. That may be so, but prove it. What exactly do you mean by retention? By how much did it improve and what was it before? What did you do differently that demonstrably improved it? How much did it cost to do this versus what you were doing before? Show me the hard data. Do the financial maths. You get the point.

    It is one thing to suggest that companies should be more customer-centred and that good design has a role to play. It is another entirely to show the CFO the hard numbers that prove without a shadow of a doubt that good design is worth it financially, versus thoughtless design. Do either of you have any hard numbers by chance?

    Graham Hill
    @grahamhill

  8. All very interesting and valid. In my experience, service design can add value by bringing a perspective that is new to many organisations, namely, a focus on the emotional journey and the visualisation of ideas. The early testing of lo-fi prototypes also represents a useful departure from the traditional ‘test at the end’ methodologies. The barrier is risk. Most organisations are simply too busy or too entrenched to consider ‘new’ thinking (Livework and Engine started around 2000/011). Budgets may or may not be significant but either way they are constrained by the need to demonstrate to shareholders and other influencing stakeholders that the best possible advice has been sought and, certainly for corporations, this means the ‘Top 5′ global consultancies. Executives will not risk their budgets and reputations on SME service design agencies. They’d rather spend more, feel safe and (hopefully) look good; that’s why service design still doesn’t have the traction it needs to really make a difference. Also, the overlap confuses the picture, diluting the service design proposition. As suggested, the winner will be the agency that manages to blend creative thinking, design skills and DELIVERY.

  9. Stephen,

    I was just having a similar conversation with my colleague Ian Golding yesterday – the Human Factors tripartite of CX/UX/SD – with their roots in ethnography and understanding the human in the interactions have done much to give executives a more solid way to connect with customers and to have tangible ‘actions’ to take as a result.

    It is however, as you say, a huge leap for many boards to go from a managerial or shareholder value model of running a business towards a customer-led one.

    The conversations people are having around this tend to veer towards the extreme (it’s all about culture, it’s all about people, employee engagement) because we noticed the difference between great and average companies. the difference is indeed these things because it is the human connection, the shared values that make us able to make the right decisions for our customers (and therefore our organisation) but not to the exclusion of other things like operational excellence and an ability to brand and sell well!

    The journey towards doing it all well is not an easy path and, in practice may not always start with making the changes around the key differences. We find that sometimes you need to improve your measuring, insight, operational execution, core design skills before you can make a cultural change that people will believe. Sometimes you need to make the cultural change in order to truly transform the other core skills with integrity and sustainability.

    It always depends on the company.

    One thing I do believe is inevitable though and your comment sums it up – we have entered an age where values are balanced against price and service and it is the human factors people that are furnishing us with the skills to do design our businesses around this.

  10. I have to agree with the other comments above. Kerry Bodine and Forrester are influential and I worry when they make misinformed statements like “UX primarily focuses on the design and development of digital journeys.” Had Kerry just looked up Wikipedias’s definition of UX Design it would be evident that that is an oversimplification. Hopefully a professional analyst would do much more research than that.

    I also cringed this week when reading an article in Businessweek that was using the term “focus group” when I’m pretty certain the author was referring to usability testing. At least I hope the author was oversimplifying, otherwise the design research was pretty poorly done.

    I was recently asked on a panel at the UX STRAT conference about the confusion between UX & CX in executives minds. I advised the audience to think about e-ecommerce, and the concept of conversion, which helps clarify the UX/CX distinction. What kind of business doesn’t care about the user who is not yet a customer?

    Think about all the mistakes made by unprofessional researchers who just survey existing customers to learn how to increase market share or to design an offering that doesn’t currently exist. The only thing that scares me more is businesses that invest significantly in CX/UX based on an ill informed/defined view of what these things all mean.

    My thoughts on this topic (if you care) are now posted at: http://www.uxmatters.com/mt/archives/2013/11/customer-experience-versus-user-experience-whats-the-difference-and-why-does-it-matter.php

  11. Jon,

    Thanks for your comments. I do agree that conference organisers and research analysts alike can have a tendency to over-simplify or mis-understand the fields in which they operate. I don’t think this holds true for Kerry and her colleagues at Forrester – having read their book I think they have totally understood what CX is, having followed their research for many years I think they also very much understand the state of the UX market (whether the UX pro’s like the look of it or not).

    I thought your article in UX Matters was great btw – can I clarify though – you seemed to be drawing a distinction between UX and CX that was somewhat to do with prospects vs customers. We all have varying interpretations of the fields but my understanding about the distinction was about User as someone interacting with an interface to a system whereby CX takes a broader view of the interaction with an organisation – either can and do deal with customer or prospect. What they both share is their reliance on deep understanding of the human beings involved and the associated ethnographic techniques, something they share with Service Design – hence the overlaps in Kerry’s article and our response.

    I share your dismay at journalists misunderstanding of consumer research and just how much it has moved on.

    I have to say though that the vast majority of UX people I talk to are incredibly digitally focussed – it is no wonder as the primary focus of many (not all) business improvement initiatives is in the sphere of digital – that’s where the money is and so that is where the majority of UX happens (not all I grant you but most). Hence I am not at all surprised by the link drawn by Kerry. Digital has matured over the last 2 years and is heavily supported/enabled by the UX profession.

    What has happened, in my opinion, within UX is that the profession has become increasingly frustrated with the client situation, with not being as strategic as it could be – because Clients have looked to UX for Digital Strategy – but Digital functions within companies can still be marginalised in terms of the overall corporate strategy. Hence the UX profession having internal discussions about ‘UX’ Strategy. CX typically comes in at multi-channel and gets a slightly closer look at the overall strategy but still talks about ‘CX strategy’. SD typically comes in at specific service offering level and inherits the strategy.

    Neither CX nor SD nor UX have truly been able to take on the mantle of working on board-level strategy however they have so much to offer that level of the organisation in terms of approach to becoming customer-led. This was the jist of our positioning of the need for a ‘Cogency’ which we believe can address at a board level what it takes to be a customer-led business.

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