Why Service Design Will Shine in the Next Recession
How do companies find differentiation and value streams in a recession? In a strong economy features and breadth of offering define differentiation; but in a weak economy efficiency and value are the name of the game. What about a full-blown recession? How will organizations create competitive and profitable offerings when the value exchange has to be clear? Service design, because of its holistic nature, customer centricity, and inherent adaptability, will be the key because it aligns everything an organization does around the services it offers. Economic downturns catalyze innovation because organizations have to simplify while taking a hard look at how they compete for market share, train their employees, and measure new and existing services. Service design allow us to extend beyond design thinking and human-centered design by adding a makers mentality that brings innovation to life.
Economic Realities
We are over eight years removed from the start of our last recession. According to the National Bureau of Economic Research (the official scorer of the US economy), the average economic expansion lasts for around 59 months. Our current bull market is in 98th month of expansion (the longest expansion ever was 120 months). We are, by historical standards, three years overdue for a recession. Earlier this month the Department of Labor published the federal unemployment report for March, which indicated a 10-year low of 4.5%. In a column for Market Watch, Howard Gold highlighted a historical correlation between low unemployment rates and the beginning of a bear market, leading to a recession within 10 months. So if we follow this pattern there will be a bear market in the coming months followed by a recession in early 2018 or sooner.
Simplify to Grow
When organizations change their service offering in order to save money, the service suffers. When organizations change their service offering in order to improve it for customers and employees, cost savings often follow. Recessions provide an opportunity for organizations to simplify and strengthen across the whole system. Why? Because economic factors dictate a focus on the essentials, not the frills, which enables organizations to get leaner and deliver on their core competencies.
Customers don’t think about your organization’s structure when they consume your service experiences. When a customer sends your organization an email or calls your contact center, they expect that the person responding to be empowered to take action on the issue. No one makes the distinction between the digital, physical, or media sides of your organization when things go wrong. They just know your service let them down. If your organization is not aligned with how people create value in a service experience, you lose to organizations that deliver better service experiences.
In the next recession, money and resources currently being poured into separate channels will have to be reallocated to support the most efficient ways of creating value. Talking about your service does not create as much value as offering a better service. A responsive website does not create a responsive service. Provide a valuable service, and people will market them for you.
Everyone Will Be a Service Designer
In 2008, every consultancy, design agency, and product design firm was an “Innovation” firm, and every company was “green.” Design had a renaissance. Over eight years later service design is still emerging and maturing– many companies who offer service design as a capability are actually repackaging a more well understood field (experience, business, or strategic design), in order to gain client buy in and ease the sales process. As competition grows the depth and flexibility of a service designer to research, strategize, make, and implement will become invaluable as organizations work to remove friction and cultivate a stronger relationship with their employees and the people they serve.
Service design as both a toolkit and a discipline will become an anchor of the design community and the enabler of meaningful innovation in the impending recession. Why? Because at its core, service design is built on principle of adaptability. It brings research, strategy, and design implementation into one big tent with a customer-centric, organizationally-sensitive point of view. This perspective will be the differentiator. Recessions are an inevitable part of a capitalistic economy. But that doesn’t mean we can’t be prepared, and service design will be the key.
