1. Innovation and design in services and products
Chapter 5
Innovation and design in services and products

2. Product/service design
Direct
Design
Develop
Deliver
Operations management
Process design
Supply network design
Layout
and flow
Process technology
People, jobs and organization
Product/service design
Figure 5.1 The design activities in operations management covered in this chapter

3. Key operations questions
In Chapter 5 – The design of products and services – Slack et al. identify the following key questions…
How does innovation impact on design?
Why is good service and product design important?
What are the stages in service and product design?
What are the benefits of interactive design?

4. Nature and purpose of the design activity
Products, services and the processes which produce them all have to be designed.
Decisions taken during the design of a product or service will have an impact on the decisions taken during the design of the process which produces those products or services and vice versa.

5. Designing the product or service
The design of products/services and processes are interrelated and should be treated together
Products and services should be designed in such a way that they can be created effectively
Designing the product or service
Processes should be designed so they can create all products and services which the operation is likely to introduce
Designing the process
Product/service design has an impact on the process design and vice versa

6. The overlap of activities is greater in service design
Design of the product
Design of the process
Design of the service
Design of the process
In most service operations the overlap between service and process design is implicit in the nature of service
In manufacturing operations overlapping the activities of product and process design is beneficial

7. Why is design so important?
UK Design Council Survey…
Design helps businesses connect strongly with their customers.
90 per cent of businesses growing rapidly say design is significant to them, only 26 percent of static companies say the same.
Design reduces costs by making processes more efficient. It can also reduce the time to market for new products and services.
Almost 70 per cent of companies seeing design as integral have developed new products and services in the last three years, compared to only a third of businesses overall.
Companies who were ‘effective users of design’ had financial performances 200 per cent better than average.

8. What is designed in a product or service?
A concept
the understanding of the nature, use and value of the service or product.
A package
the group of ‘component’ products and services that provide those benefits defined in the concept.
A process
the way in which the component products and services will be created and delivered.

9. The S-shaped curve of innovation
Idea approaches its natural limits
Obstacles to further development overcome
Performance
Performance
Progressive introduction of new innovative ideas
Slow introduction
Time
Time
(a) The basic S-shaped improvement in performance
(b) Innovation following multiple S-shaped curves
Figure 5.2 The S-shaped curve of innovation

10. The Henderson–Clark model
Innovation in primary healthcare example...
High impact on architectural knowledge
Direct call-up service
Telemedicine
Architectural innovation
Radical innovation
Low impact on component knowledge
High impact on component knowledge
Incremental innovation
Modular innovation
New scanner
Walk-in service
Low impact on architectural knowledge
Figure 5.3 The Henderson–Clark model

11. The product and service design activity as a process
Transformed resources, e.g.
technical information
market information
time information
The product/service design process whose performance is measured by the
quality
speed
dependability
flexibility and
cost
of how designs are created.
Product/ service concept
Product/ service package
Product/ service process
Inputs
Outputs
Transforming resources, e.g.
test and design equipment
design and technical staff
lead user (customer) feedback
supplier advice
collaborators
Figure 5.4 The design activity is itself a process

12. The stages of product/service design
Evaluation and improvement
Prototyping and final design
Concept generation
Concept screening
Preliminary design
Figure 5.5 The stages of product/service design

13. Concept generation…
Ideas from customers formally through marketing activities.
Listening to customers – on a day-to-day basis.
Ideas from competitor activity – for example, reverse engineering.
Ideas from staff – especially those who meet customers every day.
Ideas from research and development.

14. Concept screening…
Broad categories of evaluation criteria for assessing concepts
Feasibility – How difficult is it?
What investment both managerial and financial will be needed?
Overall evaluation of the concept
The criteria for screening concepts
What return
in terms of benefits to the operation will it give?
Acceptability –
How worthwhile is it?
Vulnerability – What could go wrong?
What risks
do we run if things go wrong?

15. Design involves progressively reducing the number of possibilities until the final design is reached
Large number of design options
CONCEPT
Choice and evaluation ‘Screens’
Uncertainty regarding the final design
Certainty regarding the final design
TIME
One design
FINAL DESIGN SPECIFICATON
Figure 5.6 The design funnel – progressively reducing the number of possibilities until the final design is reached

16. Preliminary design… The component structure for remote mouse LEVEL 0
Upper casing
Control unit
Lower casing
Packing
LEVEL 1
Logo
Moulding
Battery housing
Mould-ing
Spring base
Button
Leaflet
Outer
LEVEL 2
Lead
Plug
Cover
Speaker
LEVEL 3
Figure 5.7 The component structure of a remote mouse

17. Delay in financial breakeven
A delays in the ‘Time to Market’ disproportionally delays the financial breakeven point
Cash
Sales revenue
Cash flow
Delayed sales revenue
Delayed cash flow
Development costs
Development costs of delayed project
Time
Delay in Time to Market
Delay in financial breakeven
Figure 5.9 Delay in the time to market of new services and products not only reduces and delays revenues, it also increases the costs of development. The combination of both these effects usually delays the financial break-even point far more than the delay in the time to market

18. Sequential and simultaneous arrangement of the stages in the design activity
First stage in the design activity
(a) Sequential arrangement of stages
Second stage in the design activity
First stage in the design activity
Third stage in the design activity
Communication between stages
etc.
Second stage in the design activity
(b) Simultaneous arrangement of stages
Third stage in the design activity
etc.
Figure (a) Sequential arrangement of the stages in the design activity; (b) simultaneous arrangement of the stages in the design activity

19. Where should the management attention be?
KNOWLEDGE AQUISITION
CONCEPT INVESTIGATION
BASIC DESIGN
INITIAL TESTS
PILOT PRODUCTION
MANUFACTURING RAMP-UP
LAUNCH
Ability to influence the final design
Management activity profile
Time

20. Sorting out problems early saves greater disruption later
Slow time to market
Low
Fast time to market
Degree of agreement over design decision and changes in design
High
Early stages of the total design activity
Later stages of the total design activity
Figure Sorting out problems early saves greater disruption later in the design activity

21. Organization structures for the design activity
P.M.
F.M.
Pure functional
organization
F.M.
P.M.
F.M.
Increasing project
orientation
F.M.
P.M.
Pure project
organization
P.M.
F.M.
P.M.
P.M.
F.M.
= Functional manager
= Project manager
Figure Organization structures for the design activity

22. Chapter 5 ‘end-of-chapter’ case
Chatsworth – the adventure playground decision
Source: Alistair Brandon-Jones

23. The concept, package and process for the adventure playground
Task...
Suggest some key words that could be included in a service concept
(You may like to categorize their answers as... nature, use and value)
Nature
What does the service provide?
 Use
Who is intended to use the service?
 Value
What should users get out of the service

24. The concept, package and process for the adventure playground (Continued)
Task...
Suggest some key words that could be included in a service concept
(You may like to categorize their answers as... nature, use and value)
Nature
What does the service provide?
 Use
Who is intended to use the service?
 Value
What should users get out of the service
safe (ish) play and adventure 
children (maybe specifically ages 8–12)
enjoyment, fun

25. The concept, package and process for the adventure playground (Continued)
Task...
Put your key words into a sentence that conveys the service concept
 A well-designed adventure playground suited to children aged from 8–12 which provides a challenging, enjoyable but reasonably safe environment for children, on their own or with other children, while being supervised by their parents.

26. The concept, package and process for the adventure playground (Continued)
Task...
Suggest the elements that could be included in the service ‘package’ for the adventure playground
(You may like to distinguish the elements of the ‘package’ intended for the children and those for their parents)
For the children
For their parents
For example
Climbing frames... ..bridges walkways..... swings......chutes..... slides ‘interesting’ access via the ‘secret tunnel’
For example
Seating...clear visibility ....easy access for pushchairs For safety, ground covered in bark and first aid post

27. The concept, package and process for the adventure playground (Continued)
Reminder – the process is the way in which the concept and package will be delivered to the customer.
Task...
Outline
the organization’s process, and
the co-production process (with the children and parents)
...that allows the service to be delivered.

28. The concept, package and process for the adventure playground (Continued)
The organization’s process
Includes activities such as the inspection of all the equipment in the morning before opening time. Staffing the admission office, café and first aid post, opening the farmyard and playground, providing first aid cover throughout the day, closing the playground and cleaning and tidying the areas ready for the following day.
The co-production process (with children and parents)
This process is somewhat more freeform, but starts with entering the playground via the secret tunnel, running from one component to the next, asking parent(s) for help, showing parent(s) how high/upside down/stuck they are and objecting when its time to leave

29. Describe the four options highlighted in the case in terms of feasibility, acceptability and vulnerability.
Feasibility
(How difficult is it? What investment will be required?)
Acceptability
(Is it worthwhile? What are the returns?)
Vulnerability
(What could go wrong? What are the risks?)
Remove it
Relatively easy. It would require several person –days to dismantle it plus removal costs of the equipment.
Having no adventure playground better fits with Chatsworth’s concept of country estate. Income would still be gained from entrance fees to the farmyard.
The risk is that there is less (indeed little) for children to do so parents may be much less inclined to visit and in particular not visit again.

30. Describe the four options highlighted in the case in terms of feasibility, acceptability and vulnerability (Continued)
Feasibility
(How difficult is it? What investment will be required?)
Acceptability
(Is it worthwhile? What are the returns?)
Vulnerability
(What could go wrong? What are the risks?)
Do nothing
The easiest option of all but with increasing maintenance costs.
Visitors continue to pay to use the playground. Income not likely to be affected at least in the short term. This option would allow the decision and investment to be delayed.
In the longer term increasing risk of equipment failing and potentially causing injury.

31. Describe the four options highlighted in the case in terms of feasibility, acceptability and vulnerability (Continued)
Feasibility
(How difficult is it? What investment will be required?)
Acceptability
(Is it worthwhile? What are the returns?)
Vulnerability
(What could go wrong? What are the risks?)
Replace with similar
Somewhat difficult. This would require removing the old one and replacing it during the closed season. Cost about £100,000.
Would minimize the maintenance costs and keep the equipment in good repair. The returns would be as at present.
The equipment may start to appear dated (old fashioned) and be less appealing to children who have seen/used newer equipment.

32. Describe the four options highlighted in the case in terms of feasibility, acceptability and vulnerability (Continued)
Feasibility
(How difficult is it? What investment will be required?)
Acceptability
(Is it worthwhile? What are the returns?)
Vulnerability
(What could go wrong? What are the risks?)
Replace with substantially better
Somewhat difficult. It would require removing the old one and replacing it during the closed season. Cost about £200,000–250,000.
Before the event it was impossible to forecast what the impact would be, at worst, there would be no discernible impact on visitor numbers at all. At best...who knows?
There are two risks, firstly an untried layout and state-of-the-art equipment and secondly that visitors wouldn’t see it as much different than before (therefore have no impact on visitor numbers or at worst not like it and visitor numbers reduce!)