This document presents a lecture by Dr. Stephen K. Kwan on service systems, value propositions, and service innovation. It defines key concepts in service science like service systems and value co-creation. It describes a framework for understanding service systems and stages in customer empowerment. Finally, it discusses how this framework can be used to complement innovation methods and provides examples of applying these concepts to teaching and student projects.

1. Service Systems, Value Propositions,
and Service Innovation
Dr. Stephen K. Kwan
Professor, Service Science
Management Information Systems
College of Business Administration
San José State University, CA, USA
http://www.sjsu.edu/ssme
Contact: stephen.kwan@sjsu.edu
Presented at National Tsing-hua University
December 7th, 2012, Taiwan
Download these slides at: http://www.slideshare.net/StephenKwan

2. Some Definitions
Service Science is short for Service Science, Management,
Engineering and Design (SSMED1).
Service Science is concerned with the study of Service Systems.
cf. Computer Science is concerned with the study of Computer Systems.
Service Systems are man-made complex systems designed to
improve the quality of life by co-creating value through value
propositions among the stake-holders.
1 Spohrer, J., Kwan, S.K. “Service Science, Management, Engineering, and Design (SSMED): An Emerging
Discipline – Outline and References”, International Journal of Information Systems in the Service Sector, 1(3),
2009.
Kwan 2012 2

3. Service System Worldview1
Service
Customer
Provider
Service
Experience
A Service System and Its Entities
1Kwan, S. K. & Min, J. H. (2008) “An Evolutionary Framework of Service Systems”.
Presented at the International Conference on Service Science, Beijing, China, April 17-18.
Kwan 2012 3

4. A Service System Network
Service Service Interactions
System A
Service
System B
Service Service
System E System C
Service
System D
Service
System F
Kwan 2012 4

5. Service System Worldview
Employees &
Stockholders
Community
Service
Customer
Provider
Service
Partners
Experience
Service System Competition
Society
Kwan 2012 5

6. Value Co-Creation Through Value Propositions
Employees & Value
Stockholders
Community
Value Service
Value Customer
Provider
Value
Service
Partners
Experience
Service System Competition
Society
Kwan 2012 6

7. Service Systems, Computing, and IT Services1
Service Provider’s Back Stage Support
Back
Stage
Processes
Information
Technology
Platform
Front
Stage
Front Stage Processes
ITSM – Management of the Processes
Service Computing
and Infrastructure of IT Services
(e.g., SOA)
1 Kwan, S. K. & Hefley, B., “Service Systems”, 2008.
Kwan 2012 7

8. Stages in Customer Empowerment
in Value Co-Creation
Stage 1: Value Chain
Value Proposition
Focal Service
Customer Relationship Provider
Service
Experience
5 Kwan, S. K. & Yuan, S. T. ”Customer-Driven Value Co-Creation in Service Networks”, to appear in Demirkan, H.,
Spohrer, J.C. and Krishna, V. ed., The Science of Service Systems, volume in Service Science: Research and Innovation
(SSRI) in the Service Economy series, Springer, 2010.
Kwan 2012 8

9. Stage 2: Traditional Service Value Network
Value Proposition
Focal Service
Customer Relationship Provider
Provider
Service Partner
Experience Network
Value Proposition
cf. ICT-enabled service networks,
mobile applications, etc.
Kwan 2012 9

10. Stage 3 – Improved Value Chain
Value Proposition
Focal Service
Customer Relationship Provider
Value
Proposition
Service
Customer’s Experience
Social
Network
Kwan 2012 10

11. Stage 4: Customer Driven Service Value
Network
Value Proposition
Focal Service
Customer Relationship Provider
Value
Value
Proposition
Proposition
Provider
Service Partner
Customer’s Experience
Social Network
Network
cf. “Resource Integrators” in Service Dominant Logic literature
Kwan 2012 11

12. Variety of Value Propositions
Maslow’s
Hierarchy
Of Needs
Service Provider
Society Hedonic
Stakeholders
Spiritual
Community Cultural
Corporal
Employees Emotional
Intellectual
Stockholders Familial….
Partners
A point in this 3-D space is a potential
Customers
Value Proposition e.g. Service Provider
/ Society / Environmental
Kwan 2012 12

13. Disposable
Income &
Desire for
Services
Needs
vs.
Wants
Kwan 2012 13

14. Value Systems and Value Dimensions
Provider’s Value System

  





   Opportunities for
  Value Co-Creation

Customer’s
★ Value System
★ ★ ★
★ ★
★ ★ Kwan, S.K., Hottom, P., Kieliszewski, C. “Moving from B2X to
B2X2Y Value Propositions in Service System Networks”,
1st International Conference on Human Side of Service
His Customer’s Value System Engineering, HSSE 2012, San Francisco, 24 July, 2012.
Kwan 2012 14

15. Constructing a Value Proposition
** Expected ** VPj = [SE,B,C,P,Q,Sc,R,M]j
Service Performance
Experience Metrics
Benefits
Stakeholder
Roles
Costs Quality
The Customer will will
will Probability Schema for Data
have a lot of VP’s do not
do of Success
to choose from for +$ do Exchange
Kwan, S.K., Muller-Gorchs, M. (2011). "Constructing Effective Value Propositions for Stakeholders in Service System Networks," Proceedings >
Proceedings of SIGSVC Workshop . Sprouts: Working Papers on Information Systems, 11(160). http://sprouts.aisnet.org/11-160
Kwan 2012 15

16. Innovation
혁신
創新 Innovation resides at the intersection
of invention and insight, leading to the
创新 creation of social and economic value.
革新 National Innovation Initiative
CREATING Innovation can happen
SOMETHING anywhere on the Value Chain!
(business model, organization,
NEW environment, process, technology, etc.)
Kwan 2010 16

17. How the Framework could complement
the Foresight Method applied to Services
Divergent Converge
Thinking nt
Thinking
© Cockayne and Carleton
Kwan 2010 17

18. How the Framework could complement
the Foresight Method applied to Services
Business Models &
Value Propositions
Service System
Thinking
© Cockayne and Carleton
Kwan 2010 18

19. Example of how the Framework could complement an
Innovation Method applied to Services
BPMN UML – Use Cases
Service Blueprint
Story Boards
UI Prototyping
MANGA textbooks
etc.
Kwan 2010 19

20. Teaching MBA Class at Sogang University
Kwan 2010 20

21. Using the Foresight Method
Kwan 2010 21

22. Sample Project from SJSU MBA Students
Kwan 2010 22

23. Teaching the method for
“Service Made in ?country?” Taiwan?
Kwan 2012 23

24. Fall 2012 SJSU MBA Class
Semester Team Projects:
Innovative Service Systems of the Future
• 3-D printing as a Service
• Enhancing a Dining Experience
• Concierge Services for Two-Income Families
• Improving Grain Distribution in India
Kwan 2012
24

25. Service Systems, Value Propositions,
and Service Innovation
Dr. Stephen K. Kwan
Professor, Service Science
Management Information Systems
College of Business Administration
San José State University, CA, USA
http://www.sjsu.edu/ssme
Contact: stephen.kwan@sjsu.edu Fin
Presented at National Tsing-hua University
December 7th, 2012, Taiwan
Download these slides at: http://www.slideshare.net/StephenKwan