The Move From Product to a Service Mindset

BY ANDY BUDD ON MAY 26, 2017

In 1999, the economist Joseph Pine wrote a prophetic book which outlined a fundamental change in the way we live our lives. He provided ammunition for an emerging field in digital design, potentially signalling the death of product-centric thinking.

Pine saw that it was becoming easier and easier to create products. The barriers, tariffs and specialist skills that were once used to build highly defensible products were disappearing or being democratised. Products were starting to become commodities.

In order to defend themselves from the inevitable march towards commoditisation, companies needed to add services to their product ecosystems. Consumers would pay for this service layer, allowing brands to maintain their margins and extract additional value.

The example he used was the simple cup of coffee. The raw materials to make a cup of coffee cost a few  pennies. There is little or no mark-up in the sale of coffee beans. Turn those beans into a product—a humble cup of Joe—and you can sell it for dollars instead of cents. Regular filter coffee quickly became a commodity. But when you wrap a service around it, in the form of a trained barista who will personalise the drink any way you like, suddenly the value you generate goes up.

The commoditisation of digital products happened very quickly—faster than anybody thought. Within six months of the app store opening, the market was flooded with identikit products, hoping to capitalise on being first to market. Jump forward a few years and every category is swamped by hundreds, if not thousands, of undifferentiated copycats.

Selling a Service

If you look at the majority of category leaders, they all have one thing in common. They aren’t really selling products—they are selling solutions to problems. In the language of “jobs to be done,” they’re not selling a quarter-inch drill bit, they’re selling quarter-inch holes. This is the very definition of a service.

These companies are also selling a brand, or to be more specific, a brand promise. “If you use our tool, you can expect a certain level of service,” the brands will claim, “and if you don’t receive a satisfactory level of service, you can hold us publicly accountable”. This is one reason why brands put so much investment into customer service. It’s also why customer service teams hold so much sway in the corporate hierarchy. They act as the glue that holds the service ecosystem together, and they clear up the mess when services break down.

So what does this mean for product management? I don’t believe product management is going away anytime soon. However a product-centric mindset has the tendency to produce islands. Some products in an ecosystem are good, others are poor or disjointed. I’m sure we’ve all used different products from the same company, only to be frustrated that our log-ins don’t work across the silos, or we’re shunted from one call centre to another because “that’s not my department”. Some of these gaps can be mitigated by a good programme manager or VP of product, but ultimately the solution needs to be a deeper, cultural change.

Service Design

This is where the field of service design comes in. While product managers are largely concerned with their own individual products, it’s a service designer’s job to map out the whole ecosystem, understand how people move across services, and design the connective tissue.

Service design has been around for many years, and shares much of its DNA with UX design. While UX design has largely concerned itself with digital products, service design looks to co-ordinate a much wider set of touch points, from writing call-centre scripts and training customer service staff, to designing in-store experiences. I expect to see more and more product companies move to a service mindset and start hiring service/design teams. I also expect to see more and more product managers and UX designers make the leap to service design. In fact this is why we added a service design day to the UX London programme.

The Final Frontier

There is a footnote to this article. Joseph Pine could have called his book The Service Economy. But this was only part of the story. Eventually, Pine observed, even services become a commodity. When that happens, the final frontier is to deliver an experience. In the coffee example, selling the experience of sitting in a nice coffee shop generates more value than the service alone.

In today’s society, people are increasingly willing to forgo material possessions for individual experiences. We’re buying less stuff, in return for going out more, eating more, and going on more holidays. In short, we’re moving towards The Experience Economy, which incidentally was the title of Pine’s book.

You could argue that delivering a faultless experience is everybody’s responsibility. In the world of The Experience Economy, the responsibility falls most heavily on marketing, brand, customer experience and user experience design. As the industry matures, everything eventually comes back to UX.

 

About ANDY BUDD

As a renown UX Designer and CEO of Clearleft, Andy helps companies like The BBC, John Lewis and Penguin Random House with issues of digital transformation. Andy is a regular speaker at international conferences like Mind the Product, SXSW and The Next Web. He also curates the UX London, dConstruct and Leading Design conferences. In 2011, Andy co-founded the Brighton Digital Festival, a citywide celebration of digital culture attracting 40,000 visitors and over 190 events. Andy is a serial entrepreneur, dabbles in Angel investing, and mentors at Seedcamp. These are just some of the reasons his company has won Netmag Agency of the Year on several occasions, and he's appeared on both the Wired 100 and BIMA 100 lists. Never happier than when he's diving some remote tropical atoll, Andy is a qualified PADI dive instructor and retired shark wrangler.

326 Shares
Share
Share
+1
Email
Tweet