Service design and innovation
Those soup can paintings that Andy Warhol created or that funny scene with Buster Keaton riding a steam engine illustrate part of the nature of the 20th century. They allow us to remember that the last century was characterized by an industrial boom, the economic driver of great nations.
After overcoming the industrial revolutions we find ourselves, at this very moment, in a technological services re-evolution that began with the introduction of the Internet and that in the last few decades and years has led to the consolidation of services as the driving force of societies. Service design seeks to create solutions that satisfy the needs of the customers/consumers through valuable experiences. In turn, it is a demanding process since chage is so fast (artificial intelligence, virtual and augmented reality, machine learning, among others) that we were not used to it. However, it poses an opportunity for growth and development for the country and for the people since it paves the way for society to reach higher levels of wellness.
The services sector (tertiary) is the one that encompasses all types of activities that do not directly produce goods and are intangible, such as transportation, trade, telecommunications, healthcare, banking, government institutions or education, among others. This sector represents in turn, 80% of the country’s economy.
The services paradigm has not gone unnoticed for Isthmus – School of Architecture and Design, which has created a Master’s Degree in Design and Service Innovation. Isthmus, founded in the City of Knowledge in 2000, will celebrate its 20th anniversary in 2020 and it is rising in the region due to its peculiar and very special teaching methodology with a clear objective: train excellent professionals who are capable of working anywhere in the world.
This university’s vision escapes the Prussian system and embraces a teaching model that is human, liberal, dynamic, and deep, both in its form and content, where there are no admissions requirements, grades, or subjects in the traditional sense. This university teaches continuous and theme-based cycles that last between two and four weeks, led by professionals and scholars.
Carlos Morales, its director, is aware of the realities of the Isthmus when he states that “Panama is a service-oriented country, we have to innovate and have an impact on this, from the coffee they bring you, if they offer it, to our mindset and attitude, in any discipline. Design and innovation are not restricted to anything, it is about generating attitudes in different people.” The spirit of behavioral agitator, reminiscent of Dead Poet’s Society, is certainly part of Morales’ identity, who says that in this new master’s program he expects to welcome heterodox profiles to achieve a diverse experience where everyone can learn as a group.
Maybe at this point it is still complex to differentiate between a product and a service. The definition offered by Marc Fontein, Airbus Group’s Director of Digital Transformation, is insightful: “Imagine two cafeterias, one next to the other. Both sell exactly the same coffee at the same price. What makes one of them be full and the other empty is the service design.”
Design is closely linked to innovation and according to Morales, “keeping up with the information, having an attitude of curiosity, permanent dissatisfaction, and looking for new alternatives,” is the key.
However, in order to channel these attitudes, it is necessary to have a local fertile context, business talent, a collaborative spirit and a deep social sense that favors the development of an innovation culture and awareness that is essential to create, nurture, and obtain scalable results. This context, commonly known as the quadruple helix, entails a cross-disciplinary work coordinated by the State, universities, businesses, and civil society.
“The context of Panama is not comparable internationally but demand is also on the rise here. It is not enough to be a crazy inventor and have a checkbook, management and implementation are essential,” he says.
We are at the City of Knowledge because one of its main initiatives is innovation and entrepreneurship. At the Innovation Center of the City of Knowledge they work with a wide and diverse portfolio that is in the seed or pre-seed stage. Monica Fernandez, Specialist of the Investment in Startups Program at the City of Knowledge, who was also a student at Isthmus, is part of the team in charge of catalyzing and helping startups take off until transforming them into sustainable businesses.
“Over the last few years, we have raised more awareness about the opportunities for entrepreneurship and this has generated more robust projects, we see that progress reflected in high quality startups. Historically, our Innovation Center invested in one or two startups every year but in 2019 we closed the year with five investments in different industries after analyzing over 150 startups. One related to fintech (financial technology), a data analysis one, a digital platform that connects pet owners with potential caretakers, a platform to digitize sports performance of athletes, and an interaction platform for small and medium businesses,” Fernandez lists the five startups, all of them with elements in common, beyond achieving a positive social impact: technology development, generating value and new applied knowledge, creation of experiences – and improvement of the quality of these experiences – among others.
Fernandez stresses that one of the crucial aspects for service design is to “build a system around the service or turning that service into a player that can generate impact within the context, society or city, where it is adopted by human beings.”
It is in this point where one of Fernandez’s roles lies, for she says that the Achilles heel is to turn that service into a business that fits the customers’ needs, “in the City of Knowledge Startup Investment Program we are searching for startups that are potential solutions to regional and global problems and that are scalable in order to penetrate other economies.”
“Since Panama is a service country, we have a greater field to innovate, there are many fractured industries that today operate just as they did 20 years ago and it is these companies in which we have to implement different types of innovation.”
Although customer service remains a pending task, Fernandez notes that progress has been made in other fields, “the way we transport ourselves, the way we make payments or receive food at home, we see innovation in some areas and we do not realize that the customers’ expectations have changed. The customer expects to receive a service just as quickly as he does a bank transfer, deals with a real estate or insurance company.”
The fourth floor of Banistmo headquarters in Calle 50 is a different area from the rest of the bank. It is home to the Vice-Presidency of Innovation and Digital Transformation Strategy, created in 2016 to respond to the change that was taking place in the industry and to incorporate and adapt new methodologies for the design of services and products. A simple glance at this place allows you to see that the infrastructure itself is intended to avoid the routine: unassigned open spaces without separations to foster collaboration, teamwork, and the flow of ideas. The few glass walls that are filled with numerous post-it notes in different colors stand out, which in turn bring together present and future projects.
“Innovation has to be done as a team, it benefits from the divergence of many points of view to eliminate the cognitive bias that makes each of us see things conditioned by its background, and therefore, when we see things differently we can find opportunities,” says José Francisco Flores Junco, Director of Innovation and Digital Transformation Strategy at Banistmo Panama.
For one month, Isthmus students conducted a project with Banistmo in order to identify needs and provide solutions for one of the bank’s services, managing for some of their proposals to be implemented with good results.
In this center, several solutions for digital products and services were successfully devised, with the case of Nequi being one of the most well-known. “Nequi was the first 100% digital bank in Panama that allowed people to open a bank account in minutes without documents and from your cell phone and is a model in terms of consumer satisfaction.”
Fernandez points out a very common mistake, “that a bank thinks that only banks are its competitors,” an example that can resonate in any industry, and a mistake that Banistmo did not make since it has managed to innovate by seeing how fintech, or the great giants of technology, among others, began to venture into services that were previously offered only by the financial sector.
“One of the big industry changes,” Flores notes, “is that for the first time in the bank there are people who are only in charge of the design of the user/customer experience. We start talking about technology architects, people who study people’s behavior by incorporating many elements of sociology into consumer analysis.”
Service design is based on considering the experiences of both the employee and the user, because if employees can properly perform their work it will improve the service they offer to their customers in the medium/long term.
What sets apart a successful project from one that doesn’t take off? “When a company launches or creates a service that anticipates solving a need you didn’t know you had,” Fernandez replies. It is, therefore, a matter of creating solutions that meet the needs of the customers, “you have to think about the customer and the consumer, think about their expectations in order to implement innovative solutions that do not always consist of making a platform or website but go beyond that: creating new experiences,” Fernandez says. To achieve this, the segmentation of customers by gender, place of residence or economic level is not enough, you need to discover the motivations, what their dreams are and their pain triggers, “it is not enough to conduct a consumer survey, companies need to talk to their customers to find patterns of behavior to start creating an experience that fits the customer’s expectations,” she says.
In this search for patterns, Flores claims that they try to identify and understand the behavior of the various actors who are part of a problem, “generating empathy and identifying inconsistencies between what they do, say and think in such a way that their needs become clear, that is when we can work.”
From this innovation center in Banistmo they test ideas at a small-scale within the organization itself to later escalate them, “innovation leads you to fail early, unlike in the past when we were told that we were not going to be wrong, today you can acknowledge that it is likely that you will be wrong. Therefore, instead of carrying out long-term projects where you can only see if you are wrong when you finish them, now you try to fail as soon as possible,” Flores says.
In this process of creating solutions he highlights an example of collaboration between academia and the private sector, so necessary in the development of that ecosystem that we talked about earlier.
For a month, students from Isthmus carried out a project with Banistmo in order to identify needs and propose solutions for one of the bank’s services, and some of their proposals were implemented with good results.
In short, service design places the needs and expectations of people as its main axis and creates valuable experiences to respond to them, considering the space where the interaction will occur and all the actors who will interact with this service. It is about preventing you from having to call the phone or insurance company three times to fix a problem, and instead of waiting in line for 30 minutes, you can do it with two clicks from home.
The challenge in suggesting a new service model is to ensure that changes in the dynamics and forms of work, mindset, culture and established habits are accepted and adopted; technology can always be copied but service is something that defines a brand.