1. PhD defenceService-oriented product development strategiesAdrian R. TanTechnical University of Denmark4th June 2010 Actor network BusinessstrategyBusiness planningDevelopment Development projectsCustomerPSSactivities Product development concept Service developmentOperationsProductionInstallation Use MaintenanceService deliveryProduct life cycle

2. Product/service-system (PSS) approachesInnovation strategies: From business based on the value of the exchange of productownership and responsibility,TRADITIONAL MANUFACTURING APPROACHPRODUCTSALE PRODUCTIONDESIGNMARKETING $ Integrated Product DevelopmentBusiness!2 3. Product/service-system (PSS) approachesInnovation strategies: From business based on the value of the exchange of productownership and responsibility, To business based on the value of supporting and enhancing theutility of products throughout their entire life cycle.PSS APPROACH INSTALLATIONPRODUCTION DESIGNUSEMARKETING $DISPOSALBusiness! $ Business!Business!$ 3 4. Towards sustainable consumption and production Business: better profits, on-going customer relations, competiveness Customers: providing performance, utility and satisfaction directly Sustainability: opportunity for greater efficiency and sufficiencyPSS APPROACH INSTALLATIONPRODUCTION DESIGNUSEMARKETING $DISPOSALBusiness! $ Business!Business!$ 4 5. An example:From photocopying machines to document services Monitoring Maintenance TrainingRepair Consulting UpgradeDeliverySpare Toner Paperparts5 6. Service-oriented product development strategiesContents 1. Introduction to PSS design and development 2. Research aims, objective and questions 3. Three perspectives to design 4. Research methodology 5. Theoretical basis 6. Five empirical case studies 7. Results 8. Discussion 9. Conclusion 6 7. Service-oriented product development strategiesContents 1. Introduction to PSS design and development 2. Research aims, objective and questions 3. Three perspectives to design 4. Research methodology 5. Theoretical basis 6. Five empirical case studies 7. Results 8. Discussion 9. Conclusion 7 8. New business opportunities for industry Services and integrated solutions have always existed Only recently there has been an interest in a systematic approach to developing integrated products and services Services are becoming more important also formanufacturing firms Greater share of revenue Greater profits Business potential for companies by expanding features,value and benefits not apparent with traditional product-oriented offerings Better fulfilment of customer needs Possibility for improved sustainability due todematerialisation and optimised use 8 9. Research is lacking in PSS design Plenty of PSS design methods but these have not be verified While many manufacturers are developing integratedsolutions, research on product/service development in a(manufacturing) company context is lacking and oftenmany no not succeed The synthesis and design-oriented aspects of PSS are notbased on existing theories in design research Engineering Design perspective on PSS is limited 9 10. Service-oriented product development strategiesContents 1. Introduction to PSS design and development 2. Research aims, objective and questions 3. Three perspectives to design 4. Research methodology 5. Theoretical basis 6. Five empirical case studies 7. Results 8. Discussion 9. Conclusion 10 11. Research objectivesAim: to provide industry with a better understanding of how products and services may be designed and developed in a manner that is both competitive and sustainable in economic, social and environmental terms.Objectives:1. to establish a theoretical foundation for the systematic and methodological approach to PSS design;2. to propose service-oriented development strategies, methods and techniques for manufacturing firms that wish to adopt PSS approaches. 11 12. Research questionsQ1. Compared to traditional product development, howcan PSS be understood?Q2. How may PSS be conceptualised?Q3. How may PSS be developed in manufacturingfirms? 12 13. Service-oriented product development strategiesContents 1. Introduction to PSS design and development 2. Research aims, objective and questions 3. Three perspectives to design 4. Research methodology 5. Theoretical basis 6. Five empirical case studies 7. Results 8. Discussion 9. Conclusion 13 14. Value propositionDESIGN OBJECT14 15. Value creation DESIGN PROCESSPRODUCTIONDESIGNMARKETING15 16. Business strategySTRATEGICBusiness MANAGEMENTstrategyBusiness planning PRODUCTION DESIGNMARKETING16 17. Three perspectives in design research Business strategyBusiness planningPRODUCTIONDESIGNMARKETING17 18. Three perspectives in design researchSTRATEGICBusiness MANAGEMENTstrategyBusiness planningDESIGN PROCESSDESIGN OBJECTPRODUCTIONDESIGNMARKETING18 19. Service-oriented product development strategiesContents 1. Introduction to PSS design and development 2. Research aims, objective and questions 3. Three perspectives to design 4. Research methodology 5. Theoretical basis 6. Five empirical case studies 7. Results 8. Discussion 9. Conclusion 19 20. Research methodologyResearch object:the design and development activities in a strategicbusiness unit of a manufacturing company that lead tothe employment of PSS approaches.Approach: Interplay between [Andreasen 2008]theoretical and empiricalinsights Exploratory, qualitative andengaging with practitionersand scholars20 21. Research methodologyResearch strategy: Theory: literature & academic discussions Empirical: five case studies RESEARCH QUESTIONSRESEARCH ANALYSIS Q1. Compared to traditionalLiterature review product development, how can PSS be understood?Case A. PSS design courseCase B. Steelcase Q2. How may PSS be conceptualised?Case C. Vits Q3. How may PSS be Case D. RiverSimple developed in manufacturing firms? Case E. SCA Hygiene Products 21 22. Service-oriented product development strategiesContents 1. Introduction to PSS design and development 2. Research aims, objective and questions 3. Three perspectives to design 4. Research methodology 5. Theoretical basis 6. Five empirical case studies 7. Results 8. Discussion 9. Conclusion 22 23. Literature reviewSUSTAINABILITY & ECO-DESIGN Sustainability-orientedService SocietyServiceExtended Economy ProducerServicizingResponsibility Product Life Closed ThinkingProductFunctionalService LoopsEconomyEngineeringProduct Life CycleEco-Efficient ManagementServices (PLM)PSS Product-oriented Functional SalesEngineering Design/ Product Functional DevelopmentProductsSolutionExtendedOriented BusinessPortfolio EnterprisesPartnershipsDevelopment managementValueRelationshipService Design/ Strategy Actor-orientedNetworks Marketing Development/INNOVATIONDevelopment & Marketing Formulation ServiceSUPPLY CHAIN MANAGEMENT ServitizationScience IntegratedService-orientedSolutions23 24. Literature review Design object perspective: Products, services and PSS are alternative value propositions that all aim to fulfil a need Focus on activities instead of products Service content and service channel Design process perspective: The product is supported and enhanced throughout customers activities With PSS customers play a more active role in value creation Strategic management perspective: PSS involves a strategic shift in business orientation Transition process from product-oriented to service-oriented24 25. Reconciliation of product and customerperspectivesTwo life cycle chains PRODUCT LIFE CYCLEINSTALLATIONMAINTENANCEPRODUCTION EXTRACTION TRANSPORT ASSEMBLYDISPOSALSALE USE PRE POST SUPPORTING CUSTOMERS ACTIVITIESCUSTOMERACTIVITYCYCLE after Olesen [1992] and Vandermerwe [2000][Tan, McAloone & Andreasen 2006]25 26. Strategies for the design of servicesPRODUCT-ORIENTED CUSTOMER-ORIENTED CustomerBusiness Product use Product lifeactivitysupportingProductservicesservicesservicesservices Supplies MaintenanceTraining Consulting Installation Repair Planning Financing Auxiliary input Spare partsDesigningManaging Upgrade Warranty Specifying Partnering DisposalEngineering Design OperatingOutsourcing MeasuringDesign for Serviceability Design for Supportability Design for ServiceService Design[Tan, Matzen, McAloone & Evans, 2009] 26 27. Service-oriented product development strategiesContents 1. Introduction to PSS design and development 2. Research aims, objective and questions 3. Three perspectives to design 4. Research methodology 5. Theoretical basis 6. Five empirical case studies 7. Results 8. Discussion 9. Conclusion 27 28. Five case studies Case study Organisation Size Type of Core Main method for Duration of businessoffering gatheringstudy informationAUniversity Approx. 45Education Engineers Action research 2 x 13 weeksstudents in (B.Sc. &using PSS design(Sep JanPSS Design2006/ 2007 &the courseM.Sc.)methodology in aCourse2007/2008) each yearcourse settingB ManufacturerLarge MainlyOfficeParticipant 15 months(< 500business- furniture observer in a (Oct 2006 DecSteelcase 2007)employees)to-business developmentprojectC Manufacturer/ Small MainlyShelvingAction research 3 months Design firm(> 50 business- systems using PSS design(May Jul 2008)Vitsemployees)to- methodology inconsumerworkshop meetingsDTechnology Small MainlyHydrogenAction research 2 monthsentrepreneur(> 50 business- car using PSS design(June Jul 2008)RiverSimpleemployees)to- methodology inconsumerworkshop meetingE ManufacturerLarge MainlyInconti-Interviews and3 months(< 500business- nence workshops (Nov 2008 JanSCA 2009)employees)to- productsHygienegovernmentProducts 28 29. Case study A: PSS Design CourseDescription:Action research using PSS design methodology in auniversity course setting.Based on a reference product (e.g. dishwasher, printer,shower, etc.) students had to design a PSS with the sameutility but with considerable less environmental impacts 29 30. Case study A: PSS Design CourseProduct life Gallery [McAloone 2007]Productlife cycle Value ProductdescriptionTrade offsActivity cyclesEnvironmentalanalysisActor networkMeetings (product, life ) phase system and actor) [Student project 2006]30 31. Case study A: PSS Design CourseCustomer Activity Cycle [Vandermerwe 2000][Student project 2006] 31 32. Case study A: PSS Design CourseActor Network [Latour 1991, Donaldson et al. 2006]WittenborgCoffee beansCoffee supplier Company/customerUser Coffee contactKeyMoney-flowServiceCommunication Products/materials[Student project 2004] 32 33. Case study A: PSS Design CourseInsights: Life cycle thinking approaches were effective tounderstand activities and behaviour Three perspectives are used: product, life phasesystem and actor 33 34. Case study B: SteelcaseDescription:Participant observer in a service-oriented developmentprojectMeasure ExploreManage PlanProvide 34 35. Case study B: SteelcaseFrom office furniture to sustainable workplace performance35 36. Case study B: SteelcaseFrom office furniture to sustainable workplace performanceEmployee satisfaction people Turnover Workspace satisfactionRESULTSMaintenanceOperating costsEconomicprocess Energy costs Indoor climate Sick daysSocialtools/ Energy consumption technology Employee health Environ-mental space ErgonomicsGreenhouse gas emissions [Tan & Bey 2008] 36 37. Case study B: SteelcaseInsights: Balance between product-orientation and service-orientation Alignment of product and service strategies based onuser-centred design and eco-design CONSULTINGREDEFINE REFINEAS IS 37 38. Case study C: VitsDescription: Action research using PSS design methodology in workshop meetings Products are configurablesystems designed by DieterRams Designed with longevity in [www.vitsoe.com]mind and backwardscompatible to be easilyextended, rearranged and help people live better withmoved less that lasts longer. Strong service culture 38 39. Case study C: VitsCustomer Activity Cycle Actor Network[Gonzalez & Tan 2008] 39 40. Case study C: VitsInsights: Sale of products with a strong service-orientation Design and life cycle thinking applied throughout thebusiness40 41. Case study D: RiverSimpleDescription:Action research using PSS design methodology inworkshop meetings Entrepreneurial technologycompany Hyrban, a lightweighthydrogen city car Sale of service model withuse, fuel and maintenanceincluded Distributed manufacturing Open source collaborativedesign 41 42. Case study D: RiverSimpleProduct concept Manufacturing conceptLighterLow tooling costscomposite Low minimum materials efficient scaleLess demandfor powerBusiness strategySmallerDistributed fuel cells manufacturingMulti-Less demand stakeholderfor power Open source governance Electricdesign motors ReleasesStores energyenergy whenwhen braking acceleratingUltra-Limited liabilitySale of servicecapacitors partnershipsmodelLowercosts per More energy driven mileefficientInclude Higher maintenanceunit costand fuel Quick, cleanservicingLonger serviceRecover Long termintervalscosts through customer longer life commitments and recycling[after Hugo Spowers] 42 43. Case study D: RiverSimpleInsights: Product is designed as a service from the start Development of product, supporting system andorchestration of actors Product characteristics linked to development,manufacturing and distribution strategies to supportbusiness strategy 43 44. Case study E: SCA Hygiene ProductsDescription:Interviews and workshops with company andcustomer representatives Incontinence care to healthcare institutions User-focus and customer-focus Sales based on total costsnot product costs Global product development Global and local servicedevelopment44 45. Case study E: SCA Hygiene Products 45 46. Case study E: SCA Hygiene ProductsLyngby-TaarbkkommunepengePolitikerekonomirsrappo Socialdirektr rter og besparelsekontr r aktKommunikationldrechefKey AccountManagerom nye produkterg Indkber Driftslederingn l Udviklings aninformationpl -konsulentg ls esivnin serviceid serviceidernerdg n r og da orte Lgeudrapprugsforb erfaringer og viden udredersttte netvrkopflgning og rdgivningKontinens- Kontakt-Distriktschef sygeplejerske personundervisning plejePrrendeService-bevilling produktiderPlejepersonaleudvikling Borgerforbrugs-rapporter bestillingbleerLegend: ordr ProductKundecenter eforecastingDepotService bleer bleerInformationProdukt-Money andudvikling contracts FabrikLagerhotelDistributr46 [Tan & McAloone 2009] 47. Case study E: SCA Hygiene ProductsInsights: Actor network used as a communicative tool Several value propositions offered at multiple levels Changing the focus from product to service based onthe use of products Interaction between product development and servicedevelopment47 48. Summary of case studies Case A: PSS Design Course Application and refinement of PSS conceptualisation methodology and tools Case B: Steelcase Understanding of a manufacturing organisations context for service-oriented product development Case C: Vits and Case D: RiverSimple Industry application and evaluation of PSS conceptualisation methodology and tools Case E: SCA Hygiene Products Describing design and development activities in a service-oriented manufacturing firm 48 49. Service-oriented product development strategiesContents 1. Introduction to PSS design and development 2. Research aims, objective and questions 3. Three perspectives to design 4. Research methodology 5. Theoretical basis 6. Five empirical case studies 7. Results 8. Discussion 9. Conclusion 49 50. New perspectives in PSS design Customers and their activities are a sourceof valuable resources during theCUSTOMERdevelopment of new products and services. Manufacturers that take upon theresponsibility of the physical productsthroughout their life phases have to definenew roles and responsibilities on the market. PSS approaches require a different set ofknowledge and competencies that can beaimed directly at the customers activities. The orchestration of a new value networkcollaborating with new business partnersand reaching different target groups. 50 51. Result 1: PSS conceptualisation Expanding with three essential perspectives Traditional Engineering Design perspectiveTS Hu Inf M&G AEnv I love Boris! Adrian++Customer activities +Actor network Product life phase systems 51 52. Result 1: PSS conceptualisation Analysis & DiagnosisFocus & Goal settingFocus & Goal settingValue PropositionEvaluation PSS CustomerProductActivity Life Phase Cycle SystemActor NetworkConceptualisation 52 53. Result 2: PSS development framework Operations Delivery of productsand services Partner operations Company operationsCustomer activities 53 54. Result 2: PSS development frameworkProduct life cycle and customer activityknowledge management OperationsDelivery of products and services Partner operationsCompany operations Customer activities54 55. Result 2: PSS development frameworkProduct and service DevelopmentPartner development projectsCompany Business oriented tasksPartner Pre-business oriented tasks ProductProduct developmentCompanydevelopment Cross-disciplinary tasks CustomerSupport tasksCompanyRenewal and maintenance tasksCustomer Product life cycle and customer activity knowledge management Operations Delivery of productsand servicesPartner operations Company operations Customer activities 55 56. Result 2: PSS development frameworkPortfolio StrategyBusiness/ PSS conceptualisation Product planningProduct and service DevelopmentPartner development projectsCompany Business oriented tasks Partner Pre-business oriented tasks ProductProduct developmentCompanydevelopment Cross-disciplinary tasksCustomerSupport tasksCompanyRenewal and maintenance tasksCustomer Product life cycle and customer activity knowledge management Operations Delivery of productsand servicesPartner operations Company operations Customer activities 56 57. Result 2: PSS development framework Business Strategy Actor networkPortfolio StrategyBusiness/ PSS conceptualisation Product planningProduct and service DevelopmentPartner development projectsCompany Business oriented tasks Partner Pre-business oriented tasks ProductProduct developmentCompanydevelopment Cross-disciplinary tasks CustomerSupport tasksCompany CustomerRenewal and maintenance tasks Product life cycle and customer activity knowledge management Operations Delivery of productsand servicesPartner operations Company operations Customer activities 57 58. Result 2: PSS development framework Actor network BusinessstrategyBusiness planningDevelopment Development projectsCustomerPSSProduct development activities concept Service developmentOperationsProductionInstallation Use MaintenanceService deliveryProduct life cycle58 59. Service-oriented product development strategiesContents 1. Introduction to PSS design and development 2. Research aims, objective and questions 3. Three perspectives to design 4. Research methodology 5. Theoretical basis 6. Five empirical case studies 7. Results 8. Discussion 9. Conclusion 59 60. Discussion 1/2 Understanding PSS design Theoretical foundation built on existing design research PSS design perspectives could also be appropriate in traditional product development PSS conceptualisation The expansion of design dimensions: product life phase systems, customer activities and the actor network seem to be comprehensive and complete The supporting tools can be easily used to generate and communicate PSS concepts Appropriate for systematic generation of service- oriented concepts that lead to competitive and more sustainable solutions60 61. Discussion 2/2 PSS development activities A first mapping of design-related activities relevant for PSS Only descriptive, does not say how the change to PSS should be organised Framework has not been validated 61 62. Key contributions Framing of the synthesis and design-oriented aspects ofPSS using Engineering Design and Product Development. Expansion of the design object beyond physical products toalso include service design. Identification of the fundamental perspectives of PSS designconcepts: product life phase systems, customer activitiesand actor network. A set of visual design tools that allow each of thefundamental perspectives of PSS design concepts to beeasily modelled. The mapping of design and development activitiesassociated with PSS approaches in manufacturingorganisations based on empirical case studies. 62 63. Service-oriented product development strategiesContents 1. Introduction to PSS design and development 2. Research aims, objective and questions 3. Three perspectives to design 4. Research methodology 5. Theoretical basis 6. Five empirical case studies 7. Results 8. Discussion 9. Conclusion 63 64. Conclusion PSS is different from traditional product development,but many existing theories can be applied The shift towards PSS approaches for manufacturingfirms is not trivial The methodology for PSS conceptualisation is directlyapplicable in manufacturing firms Early proposal for understanding and structuringdesign and development activities related to PSS inmanufacturing companies 64 65. Questions? 66. Theory of Technical SystemsOPERATORS: I love Boris! AdrianInformation/ ManagementTechnical Humanknowledge& goal ActiveSystems OperatorssystemsystemEnvironmentOPERANDS: TS HuInfM&G AEnvINPUT OUTPUT material materialinformationinformation I love Boris!energy A xox energyotherother TRANSFORMATION PROCESS 66 67. PSS development is different to traditionalproduct development the focus on activities instead of products as the mediator of value thedevelopment and providing activities within a company should be alignedwith their customers activities. the involvement of the customer and other partners in the design process. the redistribution of role and responsibility as the company takes greaterresponsibility of its products and also customer activities. the expansion of competencies required to offer and deliver PSSsolutions how should the partnerships with external companies beintegrated. the integration of products and services the development of the totalrange of products and services that are offered should be coordinated. the need for a structured, systematic and formalised approach tocapturing, storing and analysing data about the products use. the closer strategic relations between the actors in a PSS and how all thedevelopment activities are integrated and coordinated. 67 68. A PSS as a design process is a set ofcoordinated development activities atstrategic, tactical and operational levels ofthe providing company (or companies)including the customer activities. The model for PSS development shows development activities occurduring operations (based on a service platform), in the developmentprojects of products and services, during the product and servicedevelopment process, business/product planning and strategyformulation. The characteristics of services involve the customer in the co-creation ofvalue the role of marketing, production and design in manufacturingfirms should be prepared for increased user-orientation activities duringthe development process. 68 69. PSS approaches as an integrated businessstrategies are a set of strategies (i.e.business strategy, product strategy, servicestrategy) coordinated internally in anorganisation but also externally withcustomers, suppliers and other partners. The expansion of competencies required to offer and deliver PSSsolutions how should the partnerships with external companies beintegrated. The development and providing activities within a company should bealigned with their customers activities. The integration of products and services the development of the totalrange of products and services that are offered should be coordinated.69 70. Can the value ofDoes the potential Can the value of the actorsutility of the productthe products lifeactivities be match the utility be increased increased and/or derived from actors and/or made moremade moreactivities? resource efficient?resource efficient? Actor Product Activity Life Phase Chains Systems ValueAre there any proposition Are there any opportunities for opportunities for actors along theactors along theactors activity products lifechain?chain? Are the perceivedbenefits greater than the sacrifices for all actors?Actor NetworkHow the four dimensions of PSS concepts should be integrated and coherent 71. How the three dimensions of PSS concepts should be integrated and coherentVALUE RELATIONSHIPS ActorValue relations Networkbetween actors How are the actors related throughoutthe products life How are the actorsrelated through theiractivities?Value deliveryValue createdValuethrough activities proposition Actor Product Activity Life Phase Chains SystemsACTIVITIES How well is the product and product life suited to the activities they become part of? 72. How case studies contributed to framework Business StrategyActor network Portfolio Management Case study B: Business/SteelcaseProduct planning Partner Development ProjectsCompanyPartnerProductProductdevelopmentCompany development CustomerCompanyCustomer Case study C: VitsProduct life cycle and customer activity and Case study D: Knowledge Management knowledge management RiverSimple OperationsPartner operationsCase study E: SCA Company operationsHygiene ProductsCustomer activities 72 73. Morphology of service-oriented strategiesSTRATEGICVARIATIONS OF CHARACTERISTICSCHARACTERISTICS Resource MinimiseMinimise use of Increase ProlongClose material... efficiencyconsumption of product utility of product loop strategy productproductutility Responsibility orInstallation UseMaintenance Repair Upgrade ReclaimDisposal... management of product life Support orDesignOperation Finance Training SupportMonitoringOptimisationConsulting ... management of customer activityPSS DIMENSIONSPSS DIMENSIONSPSS DIMENSIONSPSS DIMENSIONS Partner or Suppliers DistributorsCustomersCustomers Customers... collaborate with supplierscustomers actor(end-users) Availability of Always available for theAvailable at the customer Available at certain times ... offering customer when needed (serial use)or places Degree of Core benefit alone Multiple benefitsMultiple benefits... integrationaggregatedintegrated RevenueTransfer of Value basedValue basedValue of theValue ofValue of the... mechanism ownership on per useon unit management of takingresult of useconsumedactivitiesresponsibility (performance(outsourcing)of the usebased)73 74. Suggestions for future work An Engineering Design approach to service design. Thesystematic and methodological approach to design that iswell established in Engineering Design research has yet toembrace the design of services. Collaboration with customers and users in PSSdevelopment. Customers and users represent valuableresources that can be actively employed in the developmentand delivery of PSS Capturing and managing knowledge in PSS development. Verification of PSS design methods and developmentprocesses in manufacturing firms. Management of customer consumption. Efficiency andsufficiency. 74 75. Perspectives Systematic design approaches well established for products inmanufacturing firms Systematic design approaches exist for services, although notwell adopted or coordinated with product development inmanufacturing firms PSS design should build upon existing methods andcompetencies in manufacturing companies PSS as a design object Conceptual elements of PSS Product life Customer activity Actor Network PSS as integrated strategies Coordinated strategies Operations Information and knowledge management Development process and projects Business planning Partnerships 75 76. PerspectivesPSS design New business paradigm opposes the existing operational businesslogic. Cultural change from offering a service to support a product todesigning a service and the product that supports it Multiple development tasks - what are the integration points ofbusiness, product and service development? How to harvest and feedback product life data/information/knowledge to designers? What are the organisational implications of PSS design? Potential for more sustainable business.76