Available online at ScienceDirect. Procedia CIRP 47 (2016 ) Product-Service Systems across Life Cycle

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1 Available online at ScienceDirect Procedia CIRP 47 (2016 ) Product-Service Systems across Life Cycle Front-end conditions for product-service system design Ivo Dewit* Product Development, Faculty of Design Sciences, University of Antwerp, Antwerp, Belgium * Corresponding author. Tel.: ; address: ivo.dewit@uantwerpen.be Abstract This research shows the preliminary results of ongoing research in the understanding of front-end conditions that lever the organization s general disposition toward creating new product-service systems. Semi-structured expert interviews served to build empirical data to exemplify these conditions. We follow a synthesis approach that provides knowledge for manufacturing as well as service providers. We highlight twenty conditions that enable a synergy between products and services when thinking about innovation strategies. More specifically, it aims to ensure both product and service components and their characteristics are continuously discussed in three consecutive front-end of innovation levels; exploration, ideation and definition The The Authors. Authors. Published Published by Elsevier by Elsevier B.V This B.V. is an open access article under the CC BY-NC-ND license ( Peer-review under responsibility of the scientific committee of the 8th Product-Service Systems across Life Cycle. Peer-review under responsibility of the scientific committee of the 8th Product-Service Systems across Life Cycle Keywords: Product-service system design; user experience; propensity; front-end of innovation; synthesis approach Abbreviations PSS FEI 1. Introduction Product-service system Front-end of innovation 1.1. Social and scientific relevance The past few years design academics and practitioners work hard sensitizing product service systems. Servitization, service innovation and service design gain ground and help manufacturers to extend their businesses by adding, redesigning or creating new services to their products. We also observe service providers attempting to evidence their offering through tangible elements and step up their competitive advantage. Both are promising approaches for an integrated logic in their transition toward creating successful PSS. However, often the skills come from outside the organization, as optimal knowledge and organization in one field of expertise - the design and/or development of the product or the service part - are absent or inadequate. Tools and methods to support PSS design already exist, often with a specific focus on sustainability (ecologic value) and business model innovation (economic value). However in this paper and previous research [1] we focus on the delivery of (experience) value to the customer as the distinguishing factor to build new competitive advantage with the vast variety of product-service combinations. Additionally the findings can provide support for both service and product integration. We hypothesize that - following a synthesis approach [2-5] - previous neglected characteristics of innovation will surface, relevant for both manufacturing and service provider context. Furthermore, we assume similar underlying mechanisms of innovation but anticipate differences in relative importance relative to that context. The paper targets current academic research activities and design practice in the field of PSS The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license ( Peer-review under responsibility of the scientific committee of the 8th Product-Service Systems across Life Cycle doi: /j.procir

2 Ivo Dewit / Procedia CIRP 47 (2016 ) Fig. 1. Front-end conditions for PSS design 1.2. Methodological approach and exposition of chapters This research paper builds on a previous literature review on the design research field PSS as emerging area and as a phenomenon. Terminological analysis, concept mapping and chaining were used as search methods within a conceptcentric approach and contributed to the representation of conditions enhancing customer value through PSS design with a focus on the front-end of innovation [6]. In-depth interviews served as qualitative and interrogative research method for exploratory purpose, empirical descriptions about these front-end conditions for PSS design and fact generation in industrial context opposed to literature. The research required opinions of people with specific knowledge and involvement in PSS design projects. Therefore purposive-expert sampling was used as a non-probability method. Built on these experts experience, the interviews aim to clarify the relative importance, impact and practicality of the twenty front-end conditions. The four interviewed experts represent their institutions respectively in Belgium, the Netherlands and Germany. The first two experts represent Flanders InShape (BE), a program manager for knowledge transfer and a design management coach. In order to create capacity and competences in Flemish SME s, they develop knowledge and tools in the areas of product and service development, design and design management, with the user as source and inspiration for innovation. The third interviewed expert lead the Competitive Advantage through Strategic Design (CASD) project related to the Creative Industry Scientific Programme (CRISP) at TU Delft (NL). The project was about achieving effective strategic design thinking that enhances the competitive position of PSS. The last expert is a project manager for service design and innovation at the Service Science Factory. Their innovation projects focus on design and development of a new/improved service concept, complex service systems, technology-intensive services and transformative services both at Maastricht (NL) and Köln (DE). The paper is organized as follows: first, we briefly set the boundary for the findings of the analysis to the front-end of innovation. Subsequent we describe the background of the proposed front-end conditions for PSS design which served as guideline for the expert interviews. The analysis resulted in practical insights for each of the twenty conditions and describes the levers that add to the capacity to integrate and design products and services in close relation to the user experience. Finally, we present the findings with respect to the PSS specific conditions. 2. A front-end approach for product-service systems 2.1. Front-end of innovation In industry innovation projects generally move along three major activity domains [7]; (1) pre-development activities where future products or services are defined and decided, (2) development activities where these products and services are actually developed and (3) launching or commercialization activities where these newly developed products and services are brought to the market. Adding to Jacoby [8], the innovation processes of products and services depend to a large extent on the input for the process, the reason why we focus on the first domain, the front-end of innovation. Pointed out by prior research [9,10], FEI decisions impact both product and service parts in the supposed offer, decisions taken in the development phase can only have an impact on partial aspects of the product or service. A description of the FEI differs from author to author and a universal model cannot be applied easily because the activities are determined by the specific context of the company. But uniformly, NPD and NSD start where the FEI in the process ends Front-end conditions that set the propensity for PSS For each distinctive FEI-level; exploration, ideation and definition, Fig. 1 depicts several clusters of conditions that may positively affect early stage PSS design, depending on the type and extent of adoption of these conditions. Taking these conditions into account, relates to an organization's general disposition or propensity toward products-services transition [11] and the resources, capabilities and competences to enable that [12]. New products and services show increased complexity and put additional pressure on an approach that holds not only the design of separate elements but also the integration of product and service and how they work together, and if not coordinated and connected enough, it leads to sub-optimal results [15]. Therefore, we justify the front-end as boundary to ensure the capacity to address both product and service parts and their integrated characteristics when designing for and thinking about PSS as innovation strategy. 3. Practical implications to the front-end conditions Subsequent (see Table 1.) we elaborate more into detail on the type of level, cluster and condition in the front-end of innovation. Respectively, the conditions from literature precede a tentative interpretation of the expert statements.

3 44 Ivo Dewit / Procedia CIRP 47 ( 2016 ) Table 1. Practicality of front-end conditions for PSS design. Conditions Literature conditions for PSS design Tentative interpretation of expert statements exploration level value constellation 1 Recognize PSS potential and think more in terms and opportunities of product service systems [16]. 2 State early freedom to operate requirements for an IP strategy, constructing good contracts with other providing stakeholders in the (eco-) system [16]. 3 Discuss and explore a possible longer or different pay back. Modern business PSS no longer have linear supply chains made up of producers, assemblers and distributors, but by groupings of firms that operate in what authors have termed value constellations tied together by a business innovation strategy [17]. The PSS flow is therefore not directly linked to the money flow, making it difficult to compare costs, benefits and economic reward [11,18,19,20]. 4 Allocate means for a higher brand execution (design) versus lower brand promise (marketing) [21,22,23]. 5 Consider co-creation in a broad sense, build strategic relations with executors, actors, stakeholders, customers, clients, (information) network(s) and a range of separated disciplines for the design of PSS [2,16,24,25]. The multiplicity of needs and inputs are essential elements in the front-end of PSS development and design [26,27]. User centered and service-dominant principles are vital to ensure that the design addresses the whole user experience [28]. ideation level evaluation criteria 6 Since a precise separation between products and services is not feasible during the development or during the delivery phase [29], decide on similar project gates for products and services. In order to integrate product and service design processes, the same semantics that are used to describe product attributes should be used for service attributes. It is vital that managers and engineering designers recognize both the differences between product and service design and the strategic linkages between the two areas [30]. 7 Include explicit evaluation and selection criteria [31], there is more at stake than a trade-off between function and cost of realization only [32]. Go/No Go decision criteria should also include immaterial value created by PSS (e.g. market position, convenience, customer relation) [16]. 8 Expect differences in testing a PSS idea, because intangible aspects (e.g. user experience) set different expectations on product and service part in the offering [16]. integration 9 Acknowledge the integration of how product and service work together instead of designing of separate elements [19,24,33]. Companies still regularly design a product and then a service, afterward they put it together. 10 Consider product-service interdependencies already in the front-end of PSS development [26,31,33,34]. 11 Decide whether the product has to be designed to meet the service aspects and vice versa [16,33]. 12 Recognize differences in the design and strategic linkages between products and services [11,30,34,35]. A clear understanding of the concept of PSS (value from product and service) is necessary; on C-level management for hierarchical organizations and widespread involvement for flat structures. What's in it for them (to buy-in)? You cannot (up-front) know the real advantage of the PSS and where the value comes from. Have a mediator to facilitate the process to embrace this complexity - services, interactions and experiences are hard to patent (influencing the offering) - making entropy inherent to PSS. The capital intensive argument; the PSS flow is not directly linked to the money flow, making it difficult to compare costs, benefits and economic reward. Not every company considers shutting down their primary source of income. Stepwise grow toward secondary sources of income (impact on financial structure and business model). The cultural driven argument; the degree of innovativeness, risk taking, etc. is decisive. Also bear in mind that a shift in ownership has consequences on the relationship of the user with the PSS beyond the exchange. Can you own a service? If sales and marketing are closer to the C-level management, it has a rather sales-driven, short term effect on business (brand promise). However, blurring boundaries between marketing and design are favorable to a more long term user lock-in (brand execution), integrating product and service far beyond the sale. Belief in pure 'co-creation' has significantly diminished. But user experience and human centered approaches to design PSS are of utmost importance. If you want to improve aspects of someone's life, you have to keep the user (and his/her) experience as the focus of your effort. Important, is to align the stakeholders from the beginning onward, however they are easier bought-in after ideation - because of unfamiliarity with the creative process and related insecurity - when they see a more tangible version of the PSS. For product and service (project) gates, the process of continuous discussion helps convergence toward a solution that is agreed on by everyone. Building up a project dictionary helps to merge disciplines, because a more SD logic, service, brand and (user) experience vocabulary comes into play. Products are more easily comparable, but opposed to product development (and process) efficiency, the mistakes for (new) services still have to be made to close the feedback loop. Use different checks to enable faster and constant user testing and iteration (easier for the service part). Problematic for brainstorms 'as-usual', is the inability to evaluate and select what s on the table afterward. Up-front criteria are necessary to evaluate the ideas throughout the process; (1) criteria derived from the business strategy, (2) criteria recurrent for each project they encounter, (3) criteria formed throughout the process, together with the gradually growing PSS concept and (4) testing it with the user, over and over. User experience and human centered design tend to put a focus on different value(s) subject to the context, frequently busting traditional assumptions. Therefore, an external facilitating role is able to put a specific focus on that. Calculations should be performed after the PSS scenarios and concepts roll out. ideation level When product and service meet at the first user test, it s too late. Both disciplines should match their work and iterate as often as possible, a continuous process of diverging, converging and cooperation toward milestones to check the project's performance and progress (without setting the condition for accountability). At the moment of the strategic planning of the project, both product and service side stakeholders should articulating how far they want to engage. This enables modularity in PSS later on. It s an interesting point of view to have the product or service adapt to each other, enabling essential diverging and converging. For the provider there are some differences in the metrics for services versus products. It s interesting to know to what extent product and/or service are responsible for value to optimize different options or recalibrate PSS combinations.

4 Ivo Dewit / Procedia CIRP 47 (2016 ) Table 1. Practicality of front-end conditions for PSS design (continuation). ideation level scenarios 13 Co-creation on different levels, actively involves different actors and stakeholders in the front-end of PSS design. Put customer needs and input central in different stages of the development process, according to user centered and service-dominant logic principles [2,16,24,25,26,27,28]. Stakeholder involvement in the ideation phase should be called cogeneration instead; you're not creating anything yet. Besides recurrent user testing, co-creation after the FEI becomes difficult. However, there should be someone that makes sure that efforts are coordinated, creating a momentum for the PSS. 14 Provide insights in front and back office implications and their lines of visibility [11,19,35,36,37,38]. 15 Characterize the use phase in PSS through planned or designed events and organize the flow [25,39,40]. 16 Align different time frames and generate product and service are in interaction with user [25]. Enable possibilities for early prototyping and open-ended releases, providing a means for a better assessment of the outcome. The most appropriate design for a PSS cannot be achieved without iteration [28]. Evidencing is an important issue in the ideation stage, because front and back end implications come into play (easier to imagine for the service part in scenarios). If the company takes it into account, they should postpone their judgement, otherwise you put constraints where you should actually just develop and prototype the concept. Once the prototypes have been tested, you can see it accepted with the user. Only then the feasibility, costs and implementation implications should be discussed. Using human centered design principles, the user (experience) is put at the center as early in the process as possible and makes it easier to characterize the use phase (easier for the service part). Probably easier for the service component, prototypes trigger conversation and early customer feedback (continuous feedback loops). If the company needs additional input, it can launch the PSS open(-ended) into the market, testing parts or scenarios, already enabling your customers to lock-in really early and refine and reconfigure the product and/or service part. 17 Aim to design for a higher brand execution (design) versus a lower brand promise (marketing) [21,22,23]. If you want a consistent brand (promise) and corporate identity, you want to convey this through every channel as early as possible, it increases credibility later in the process. It s probably easier for the service component, but worth the discussion for the product part, growing from value-in-exchange toward value-in-use (execution) and long term customer relation. definition level evaluation selection 18 Use the criteria to evaluate and select the PSS idea, because the inclusion of intangible aspects set different expectations on product and service part [16,28]. 19 Describe value in each part and make explicit to what extent products and services are mixed [16]. system 20 Consider prerequisites for products and services, rather than for product or service separately [11,36]. By adding products or services to the offering, consider their consequences in the design, determine utilization and reactions to PSS, effects and side-effects [39,40]. Consequently ensure that all variables are catered for as far as possible [25]. Consider that provision of services involves a number of tangible and intangible elements, the supply of products relies on culmination of a chain of services [16, 20]. Reconsider the criteria from condition 7, use multiple ways to evaluate and put emphasis on variation because of the integral character of PSS. Try to make the criteria measurable (attach weight to them), in function of filters instead of solutions, continuous evaluation (discussion) and selection (convergence). For the company it is interesting to know when to evaluate or relatively benchmark the system itself and provide possibilities for modularity - the weight of the product/service part - of the PSS. Noteworthy for companies, since society is sliding from products to services (away from pure ownership), the real value for the customer grows toward the overall experience. definition level Lacking the core competences to add the service part has its consequences on a proper component distribution. Coherence and consistency of the PSS comes in later on as a differentiation strategy in the market, because end users grow toward standards, the norm and the expectancy level goes up. Service (design) input is delivered throughout the process, the research, the interactive sessions and creation process (and usually takes utilization, effects, side-effects into account). It depends on all iterations and grows with the project. For the product part, this doesn t come back enough later in the process, because of value-in-exchange focus. 4. Findings with respect to PSS specific conditions In line with a synthesis approach, we stress that the product and service parts and their characteristics should be envisioned together when thinking about innovation strategies, relevant for and relative to both manufacturing and service provider context. Some of the twenty front-end conditions for PSS design surface promising characteristics of innovation and are briefly summarized below. The exploration level of the front-end regards a set of conditions that build (a constellation of) value. Intellectual property can form an obstacle in the progress and is specifically problematic (hardly patentable) for the design and/or development of the service component, interaction or experience part in the PSS. Contrarily, continuous growth is essential to keep the PSS alive. Constant innovation of the ecosystem is indispensable, because entropy is inherent to systems and has to be taken into account, a patent kills that (condition 2). PSS flow is not directly linked to the money flow, making it difficult to compare costs, benefits and economic reward. A shift in ownership has consequences on the relationship of the user with the PSS beyond the exchange; can you own a service (condition 3)? Keep the user and his/her experience as the focus of your effort in the design of PSS to ensure value delivery to the customer. Buy-in should be best considered after ideation when there is a more tangible version of the PSS (condition 5).

5 46 Ivo Dewit / Procedia CIRP 47 ( 2016 ) On the ideation level of the FEI, we describe two conditions particular to evaluation criteria. Product and service (project) gates should be replaced by multiple checks to enable faster and constant user testing and iteration, soliciting a continuous discussion and convergence approach. Additionally, the mistakes for (new) services still have to be made to close the feedback loop (condition 6). Furthermore, to enable a better evaluation and selection, multiple criteria should be considered up-front, derived from the business strategy and recurrent for each project they encounter (condition 7). On the ideation level of the FEI, a second set of conditions on integration enables product and service side to match their work and iterate as often as possible, and check the project's performance and progress without setting the condition for accountability (condition 9). At the moment of strategic planning, stakeholders should articulate how far they want to engage to enable modularity in PSS at this stage (condition 10). Correspondingly interesting it is to know to what extent product and/or service are responsible for value delivery to optimize different options or recalibrate PSS combinations (condition 12). A final cluster in the ideation level of the FEI are the conditions related to the roll-out of concepts and scenarios. Belief in pure co-creation has significantly diminished, cogeneration could be used as alternative term providing necessary input from stakeholders and supporting ideation. More important it is to coordinate the efforts of both product and service side and rather focus on the creation of a momentum for stakeholders to buy into the idea (condition 13). Ideation actually implies a postponement of judgement, to not set the constraints where you should actually just develop and prototype the concept. Once the prototypes have been tested, you can see product-service interaction and a use flow influencing user acceptance. Only then feasibility, costs, front/back-end implementation and its implications should be discussed with the company (condition 14). The earlier you prototype product and/or service parts in the scenario(s), the earlier you get customer feedback, locking in your customers through iterations in the design process (condition 16). In a first set of conditions on the definition level of the FEI, evaluation and selection should reconsider the criteria from condition 7. In addition, new criteria have been formed throughout the process together with the gradually growing PSS concept and recurrent user testing. It provides a variation in measuring the integral character of PSS in function of filters instead of solutions (condition 18). In addition, companies can attach weight to the different criteria and even product/service part, to relatively benchmark the PSS concepts or provide possibilities for modularity in the offering. The peculiar shift in ownership that comes with PSS, provides an interesting discussion on reallocating value that associates more to the overall experience than to the product or service part itself (condition 19). We conclude with the (product-service) system conditions on the definition level of the FEI. Growing toward the design brief, consider the necessary competences that add to a proper component (product-service) distribution in the PSS concept yet to be developed and commercialized. And moreover safeguarding its intended delivery of (user) experience value, essential in times of growing standards and expectancy levels. 5. Discussion The aim of the research is to better understand front-end conditions that lever the organization s product service system design capacity. Additionally, the research question is crucial for organizations and theory, as existing research addresses the issue inadequately from the user s (experience) perspective. This paper shows ongoing research on practical insights and implications for twenty front-end conditions for PSS design. We discuss them in close relation to delivery of value to the customer (experience value), central to get to stronger overall benefits for people and possibly adding to value for planet and profit. The subjects in this small (4) nonprobability sample were selected on the basis of their accessibility and purposive personal judgment. Therefore, it can be subject to bias and error and does not attempt to generalize its results. However, the results are likely to benefit from a reflected respect and to be more credible with an audience who accepts those institutions and its people as experts in the matter. 6. Conclusions The set of twenty front-end conditions helps companies to set priorities regarding PSS. Strategic support is necessary to create a culture for integrated logic, which forms the basis for operational capabilities and expertise in both product and service side. The following propositions could be derived from the research: Proposition 1: The research provides understanding of the front-end conditions that lever PSS design capacity for both manufacturing and service provider context. Proposition 2: On a strategic level, these conditions offer a method to judge on PSS design propensity and capacity and serves to support the design process of new product-services. Proposition 3: The conditions provide a normative approach and operational lever for PSS design in order to achieve a valued outcome from the user s perspective. Proposition 4: Value created by PSS cannot be compared to the value of a traditional product or service, because it results from user interaction with the systems components in which the value relates to the associated experience. Proposition 5: Though each condition shows similar underlying mechanisms of innovation, they also demonstrate some important differences considering both product and service component in the design of PSS. Acknowledgements I would like to thank the following institutions for their assistance with the collection of my data: Flanders InShape, TU Delft (and the Creative Industry Scientific Programme) and the Service Science Factory.

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