Developing a business modeling approach to realize
innovative service ideas through consensus building.

Kayoko Kanno1a, Kanako Matsuoa, Kahoru Tsukuib, Hiroshi Yamaguchia and Masanao TakeyamabaDai Nippon Printing Co., Ltd., Communication & Information Operations, 3-5-20, Nishigotanda,
Shinagawa-ku, Tokyo 141-8001, Japan; b Keio University, 2-15-45 Mita, Minato-ku, Tokyo 108-8345,
Japan

Abstract:
Most of business incubation projects applying service design techniques usually proceed from the ideation phasethrough the feasibility test phase to the service launch phase. In order to utilize the strength of service design
techniques such as co-production or co-design, it is necessary for the project to apply effectual design tools andalso involve appropriate stakeholders depending on the phase and step of a design project.
However, many of such projects often have problems before launching a service due to the conflicts andmisunderstandings among stakeholders who participate in different phases or steps of the project with differing
perspectives and interests.. Besides the knowledge about the usage of service design tools to promote a
consensus building among different stakeholders has been not yet well formulated. In this paper, we introduce anideal framework to organize service and business modeling processes to facilitate the collaboration among
stakeholders with applying design tools appropriate to the design phases and steps. For this purpose we divide
the whole process of service and business modeling into several steps, identify key problematic issues that mightinterfere with the consensus building in each step, and select the ideal design tool for resolving those issues..
Key words: Co-Creation, Service design, Service business models1INTRODUCTION

Recently, the value customer seek for and firms competes on is changing from the functional value of a productto the experience value generated by using various and products and services in combination as a service system.
For example, Nike provides Nike+2 as a service system by integrating Nike’s running shoes and otherstakeholder’s services such as Apple’s iTunes, demanding that these companies coordinate their products andservices consistently to offer a holistic experience to the customer.
Many of ideation methods have been developed recently to create such innovative experience (OEJD1)). Various
design tools to examine technical and business feasibilities for implementing and launching a service, such as
Service Blueprint2) and Business Model Canvas3), have been popularized among designers and businesspractitioners.
Most of business incubation projects applying service design techniques usually proceed from the ideation phasethrough the feasibility test phase to the service launch phase. In order to utilize the strength of service design
techniques such as co-production or co-design, it is necessary for the project to apply effectual design tools andalso involve appropriate stakeholders depending on the phase and step of a design project. However, many ofsuch projects often have problems before launching a service due to the conflicts and misunderstandings among
stakeholders who participate in different phases or steps of the project with differing perspectives and interests.
1
2

Further author information: (http://www.dnp.co.jp/cio/servicedesignlab/index.html)
Nike+: (https://secure-nikeplus.nike.com/plus/)1Moreover the knowledge about the usage of service design tools to promote a consensus building among
different stakeholders has been not yet well formulated.
To overcome such problems, we introduce an ideal framework to organize service and business modelingprocesses to facilitate the collaboration among stakeholders with applying design tools appropriate to the designphases and steps. We divide the whole process of service and business modeling into several steps and thenidentify key problematic issues that might interfere with the consensus building in each step. We further selectthe ideal design tool for resolving those issues. In Section2, the feature of our service and business modelingapproach and the procedures are explained. This approach has been actually applied to a real service design
project to create a new business for a real client. Based on the evaluation of the project, we examine the future
prospects in the conclusion.

2METHOD

2.1 Emphasis of the approach
The main feature of the proposed approach is to specify key factors for consensus building in each step ofservice/business modeling process and arranges correspondingly the design tools to solve each key factor. The
approach consists of six steps of service/business modeling process assigned with specific design issues, design
tools, and project members required to solve the issue. Such an organization makes it easy for the approach to beapplied to various business cases (Fig.1).

Fig.1 The service/business modeling process framework

2.2 The service/business modeling process framework
The service/business modeling process framework consists of six steps. Each of these steps and the procedure
are explained below in order.

2Step1: Proposing service idea to managements
The first step of the proposed process framework is to explain the value of service idea to the managements inorder for gaining agreement on launching the service. In particular, the design team needs to explain both theprocess of the service design project and the value of the derived idea. It is also necessary for them to clarify thecriteria to assess the idea. To attain the purpose the team uses a movie prototype, a physical mock-up, and theidea evaluation technique using a 2 x 2 chart.
The physical mock-up conveys the important experience value of a service idea by giving visual andinteractive expressions to the concept. The 2 x 2 chart defines two most important criteria for assessing service
ideas to gain approval for its development, also allowing the design team to evaluate the value of the idea easily
from the a viewpoint of managements.
Step2: Revealing the economical/technical issues for service realization
The purpose of this step is to reveal economical/technical issues in the service practice, and clarify the issue tobe solved as priority. Here, it becomes important to define practical issues arising in the realization of a service
concept by visualizing the service ecosystem depicting the relationship of stakeholders and their concerns.
Therefore, a stakeholder map4) and a positioning map are used in this step.
A stakeholder map can be used to investigate the stakeholders who are necessary for service realization, andvisualize their roles, collaborations, and demands. A positioning map clarifies some advantages of the proposedservice idea in comparison to its competing services and also helps the design team to build consensus on thedirection of service development. To draw a more realistic service model, it is desirable for the design team toinvolve not just service implementing body but also other related stakeholders to participate in this step.
Step3: Ideation to solve the issue for service realization
In this step, the design team examines the way to resolve the important issues defined in Step2. It is important tofor the project members to execute this process based on the shared understanding of the characteristics ofalternative solutions and also the merits and demerits assumed by each of the solutions. Therefore a 2 x 2 chart,
which can consider the relationship of two elements, is used for the ideation of a solution.
Step4: Redesigning service experience
In this step, the service experience is redesigned based on the solution derived in the previous step. The goal ofservice redesign to make the service experience to be more practical with maintaining the experience value
proposed in the original service idea. A storyboard5) is used to describe the experience value of service and theservice system.
Step5: Examining technical/economic possibilities of service
The purpose of this step is to examine the service idea on the aspects of technological feasibility as well as
business viability, and then elaborate the service model. The important point here is to develop the mostappropriate and feasible service model to realize the experience value for users proposed in the original service
idea. Therefore we apply a service blueprint to design the service model and formulate the income andexpenditure to examine the viability of the business model.
We first draw a service blueprint to represent an ideal service system that realizes experience value best, andthen design the front and back yard processes referring the opinions of service manager and developer. Throughthese procedures, we can investigate the service system desirable for both users and service provider. In addition,
an appropriate income and expenditure plan should be designed considering the opinions of the primarycontractor.
Step6 Sharing service/business model with managements and executors
The purpose of this step is to share the service and business models and their values with the managements andexecutors. It is important for the design team in this step to explain the progress of the project and the values of3the service idea to members who have not participated in the design project. We use the Business Model Canvas
to describe the service and revenue models in addition to the user experience value in a concise integrated format.
We also use a service blueprint drawn in Step3 to describe the service system in detail.

2.3 Experimental service design project
To test the service/business modeling process described in 2.2 in a real business setting, we executed a service
design project aiming at developing a new service and its business model for “Mangakocchi3” an online digitalcomic store, managed by DNP. We indeed applied the service/business modeling process to develop a serviceand business model for the new service idea called Gift Quotes, which came out through the design project. Gift
Quotes is a smart phone application that users can pick up and send various quotable lines appeared in comics as
gifts to encourage their friends. Resorting to such quotable lines, users can express their feeling with the words
that they would hesitate to tell directly by their own words, and thus they appreciate the experience value ofgetting more chance to feel sympathy with others. Those quotable lines are sorted into several categories so thatusers can easily find the best quotes they want to send. The member of this project is constituted of several
service designers, the manager and executor of the business entity, and other stakeholders. The project has
executed from December 2013 through April 2014.

2.4 Summary of the service design project
Step1: Proposing service idea to managements
An application screen of Gift Quotes was developed as a hot mock-up using Adobe Creative Cloud4. In addition,a movie prototype was also produced to represent a series of service experiences and the experiential value of theservice idea depicting the user’s performance and interaction with the application (Fig2). Using the hot mock-upto represent the user interaction in detail and the movie prototype to represent the experience value of the service
idea in a story, we explained the advantages of the proposed service idea to the managements and other members
who have not participated in the idea generation phase.
Moreover, we evaluated the value of the service idea based on the two evaluation criteria, “Strength of Desire”
and “Innovativeness of Experience”, to push forward the service idea to the next step.

Fig.2 A movie expresses the experience value of “Gift Quotes”

Step2. Revealing the economical/technical issues for service realizition
Several new stakeholders were invited in this step to collaborate on increasing the feasibility of Gift Quotes. We
investigated required stakeholders to realize the service in cooperation (Pink rectangles in Fig.3), and drew
3
4

Mangakocchi: (http://manga.chch.jp/)
Adobe Creative Cloud: (http://www.adobe.com/creativecloud.html)

4money and information flow exchanged between those stakeholders (arrows in Fig.3). As a result, we confirmedthat the acquisition of the profit source in terms of the application usage charge on a user and the expenditure by
way of the payment of the license fee to the publisher for the usage of quotable lines were regarded as priority
issues to advance the project.
In addition, possible barriers for the users to entry for Gift Quotes were confirmed. Here we regarded Gift
Quotes as a gift service utilizing digital comics/books so that it would compete with existing other casual giftservices Therefore a positioning map of casual gift industry was drawn to confirm entry barriers (Greenrectangles in Fig.3).

Fig.3 Stakeholder Map of “Gift Quotes”

Step.3 Ideation to solve the issue for service realization
Regarding the priority issues confirmed in Step2; 1)"the revenue from application usage charge" and 2)"thepayment of license fee to the publisher", we considered two choices of imposing or not imposing usage charge
on the user, and also two choices of paying or not paying the license fee to the publisher. Since these two kindsof choices could be combined to become four alternative approaches, we draw a 2 x 2 chart composing of thetwo axes representing the choice on usage charge and the choice on license fee payment respectively such thatthe four possible approaches are located in one of the four quadrants of the chart (Fig.4).
Based on the examination of the appropriate monetizing approach, we derived the final plan to monetize theservice in the way that the business entity charges users by selling them a gift product consisting of a koma5, aframe including a quotable line and a digital comic book that includes the koma (as the solution for 1)), and uses
a koma and its quotable lines without paying any license fee to the publisher in return for promoting the sales ofthe digital comics/books (as the solution for 2)).

5

A single frame in a comic.

5Fig.4

Examination of the monetizing approach by a 2x2 Chart.

Step.4 Redesigning service experience
Based on the monetize solution decided in the previous step, we redesigned the service model keeping its
original experience value. Entire user experience was represented as a storyboard and visualized every single
touch point to support the user experiences well as the relations among touch points in a sketch of the servicesystem.

Fig.5 Storyboard (Left) and a sketch of Service System (Right)

Step.5 Examining technical/economic possibilities of service
Based on the redesigned user experience and service interactions depicted in the storyboard, A service blueprint
was drawn to design both the front and the back yards of the service operation and also estimate the cost andprofits to implement the service model (fig.6). We executed this step with the members who have specificknowledge of service development and creation. The other member of service operation also estimated the6

income and the expenditure for the proposed business by simulating the cost and profit relationship analyzed in
the service blueprint.

Fig.6 Service Blueprint of “Gift Quotes”

Step.6 Sharing service/business model with managements and executors
We integrated the service and business models developed in the process through Step1-5 into a Business ModelCanvas, and proposed the entire project and the value of the idea to the members who were in charge ofdeveloping the service for a pilot business experiment.

Fig.7 Business Model Canvas of “Gift Quotes”

73CONCLUSION

Through this research, we succeeded to develop a framework to systematize the process of a service andbusiness modeling such that a new service idea is transformed into a feasible service and business models withkeeping the experience value proposed in the original idea. This framework also has been proved to facilitate
successfully the collaboration among various stakeholders. The framework introduced in this research organizes
the major consensus as well as design issues and resolving techniques for the 6 consecutive steps of service andbusiness modeling. Such a systematic process framework enables smooth and effective communication throughwhich a design team and stakeholders can easily share the understanding and the assessment of proposed service
ideas, making it easier for the design project to advance to the implementation stage.
However, the validity of the proposed framework has to be proved by testing it in kinds of design projects
and in different organizations. It is also necessary to develop a knowledge base on the effective uses of design
tools appropriate for the context of a project. Through continual case studies in practical design projects, we will
improve the framework for service and business modeling to be effective for more various business settings.

REFERENCES
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2. Bitner, Mary Jo, Amy L. Ostrom, and Felicia N. Morgan. "Service blueprinting: a practical technique forservice innovation." California management review 50.3 (2008): 66.
3. A. Osterwalder, Y. Pigneur, Business Model Generation: A Handbook for Visionaries, Game Changers,and Challengers, John Wiley & Sons, Inc., New Jersey, 2010.
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