Customer integration within service development—A review of methods and an analysis of insitu and...

Technovation ] (]]]]) ]]]–]]]

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Technovation

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Customer integration within service development—A review of methods andan analysis of insitu and exsitu contributions

Bo Edvardsson 1, Per Kristensson 2, Peter Magnusson 3, Erik Sundstrom n

Service Research Center, Karlstad University, 65188 Karlstad, Sweden

a r t i c l e i n f o

Keywords:

Customer integration

Service development

Customer involvement

Customer information

insitu–exsitu

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016/j.technovation.2011.04.006

esponding author. Tel.: þ46 54 700 2177, ce

6 54 83 65 52.

ail addresses: [email protected] (B. Edvar

[email protected] (P. Kristensson), peter.magnu

[email protected] (E. Sundstrom).

l.: þ46 54 700 1555; fax: þ46 54 83 65 52.

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e cite this article as: Edvardsson, Bsis of insitu and exsitu contribution

a b s t r a c t

This article aims to contribute to a better understanding of how to integrate customers within service

development by assessing different methods of obtaining use information. The article reviews and

classifies methods for customer integration and it also presents a new framework that suggests four

modes of customer integration in which data is classified either as insitu (data captured in a customer’s

use situation) or exsitu (data captured outside the use situation) and as either incontext or excontext.

Context is defined as a resource constellation that is available for customers to enable value co-creation.

Accordingly, incontext refers to methods in which the customer is in the actual use context and has

access to various resources, while excontext refers to a situation in which the customer is outside the

use context and, therefore, has no direct access to the resources.

& 2011 Elsevier Ltd. All rights reserved.

1. Introduction

Users are a potential goldmine of information for servicedevelopment; not only in the idea generation phase but through-out the development process. Many existing approaches haveaimed to understand the interplay with potential users in order toco-opt user competence and experience. Such approaches includeuser contribution systems (e.g., NASA), open source techniques(e.g., Microsoft, Cisco), social media (e.g., Facebook, YouTube),simulations (e.g., IKEA’s kitchen planner), independent customerwebsites (e.g., airlinequality.com), and company websites thatinclude certified users and super users (e.g., Lego). These are allexamples of users playing active and important roles in develop-ing services. Nevertheless, the understanding of how to metho-dically integrate users in service development process remainslimited.

Involving key stakeholders like customers, suppliers and evencompetitors in innovation processes, has proven to be beneficial.Ritala and Hurmelinna-Laukkanen (2009) discussed the impor-tance of, and challenges in, the cooperation with external stake-holders and argue that ‘‘the ability of a firm to reap benefits in

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[email protected] (P. Magnusson),

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11500.

., et al., Customer integrats. Technovation (2011), do

innovation-related cooperation is contingent on factors thatenable collective value creation and on those that facilitate theindividual isolation of the innovations and any subsequentprofits’’ (p. 819). Collective value co-creation is argued to beespecially important in high-tech service contexts. Chang et al.(2006) found that supplier involvement contributed positively tothe innovation of manufacturing flexibility. Knowledge manage-ment systems (KMS) often fail to capture insights from custo-mers; although there are studies and ways of designing and usingKMS that are successful. See e.g. Lai et. al. (2009) have identifiedcritical factors that affect employees’ satisfaction with KMS andput forward the facilitation of personalization as a particularimportant factor. This implies a deep interaction with potentialusers. However, instead of working through employees in order tocapture customer needs, companies can with various methodscapture the information directly from customers, which will bethe focus in this article. Prahalad and Ramaswamy (2000) showedhow customer competencies can be obtained and how customerscan be integrated within service and quality development byusing open source platforms.

The concept of service is currently undergoing a paradigmshift, from defining services as a category of market offering to aperspective of value creation; emphasizing value-in-context andthe resulting customer experiences. While the old school ofthought focused on the differences between goods and services,the new school focuses on what goods and services can do for thecustomer, the experienced customer value. This renders the olddichotomy between goods and service obsolete. The new school ismost often referred to as service-dominant logic (SDL), a termcoined by Vargo and Lusch (2004a). An implication for service

ion within service development—A review of methods and ani:10.1016/j.technovation.2011.04.006

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development is that customers should be involved and that usesituations are critical for understanding value creation. Valueshould be evaluated through the lens of the customer’s useexperiences. The focus is not on the service or product, per se,but on the value-creating process and the outcome of thatprocess. Although SDL brings a fresh perspective to service andco-creation, scholarly research has done little so far to developand assess methods for involving customers in the co-creativedevelopment process.

The main premise of this article is that issues related to thenature of service (activities, collaboration, customers as resourceintegrators and value co-creation) are important when selectingand using methods for providing useful and critical information inorder to better understand customers’ experiences of service andvalue co-creation. However, the article’s main argument is that itis important to capture information on value in the use context inorder to understand customers and the aspects of value co-creation that are critical for them. We will develop four modesof relating use information to methods for service developmentfrom the categorization of the situational and contextual aspectsof value co-creation and suggest which methods are most appro-priate to capture information from customers in each mode.

The article aims to provide a basis for a better understandingof how to appropriately integrate customers in service develop-ment processes. We review different methods of obtaining userinformation and suggest a new framework that includes fourmodes of customer integration. The article starts by describing itstheoretical framework. It then defines customer integration inservice development and continues with an overview and analy-sis of the methods for service development and innovationreported in scholarly journals. Based on this critical review, thearticle suggests a new framework with four modes of customerintegration in service development, based on customers’ usesituations and resource contexts. The paper concludes with adiscussion of its research contributions and managerialimplications.

2. Theoretical perspectives and framework

2.1. The concept of service and service development

The current debate regarding what has been termed service-dominant logic (SDL) (Lusch et al., 2007; Vargo and Lusch, 2004a,2008) or service logic (e.g., Gronroos, 2000, 2006; Norman, 2001)raises the question of how service development can best con-tribute to the creation of value for both customers and providers.Vargo and Lusch (2004a, b) defined service as ‘‘y the applicationof specialized competences (knowledge and skills), throughdeeds, processes, and performances for the benefit of anotherentity or the entity itself’’. In a similar vein, Edvardsson et al.(2006) defined the ‘service concept’ as ‘‘ylinked activities andinteractions provided as solutions to customers’ problems’’. Bothdefinitions consider the notion of a positive outcome (‘benefits’ or‘solutions’), in the eye of the beholder, to be an essential elementin terms of the purpose of a service.

The outcome of the service development process is a valueproposition and a supporting configuration of resources forcustomers to integrate and operate on creating value for them-selves and thus for other stakeholders. In this article, the term‘configuration of resources’ refers to the set of resources madeavailable for the intended user. Value is co-created by the userwhen they apply their skills and knowledge to the resources,thereby creating value and the experienced value differs depend-ing on their needs and preferences. A service business that isbased on the paradigm of SDL is essentially customer-oriented

Please cite this article as: Edvardsson, B., et al., Customer integratanalysis of insitu and exsitu contributions. Technovation (2011), do

and relational (Vargo and Lusch, 2004a, 2008). This represents amajor conceptual shift from an emphasis on output to anemphasis on mutually satisfying interactive processes. It alsorepresents a shift from static resources (such as plants andequipment) to dynamic resources (such as employees, compe-tences, value-creation partners, and customers). In its ideal form,SDL envisages the co-creation of value through resource integra-tion (Vargo and Lusch, 2008).

When arguing for value-creation, Vargo et al. (2008) made adistinction between two categories of resources: operand andoperant. Operand resources are typically physical (such as rawmaterial, physical products, information), while operant resourcesare typically people; customers and employees (e.g., their knowl-edge, skills and motivation). Knowledge and skills are used whenthe operand resources are activated. The resources brought intoand used in the co-creation process may also come from thecustomer or the service environment.

SDL holds that value is co-created with the customer and isexperienced and assessed when the service is realized within theuser’s own context (Vargo et al., 2008). Accordingly, customersuse their knowledge and skills, in conjunction with the resourcesof a company (or several companies), when value is co-createdand assessed, for example, when using a mobile phone tocommunicate.

Vargo et al. (2008) stated that value is uniquely and phenom-enologically determined by actors on the basis of value experi-enced in a certain use context. Value-in-context implies not onlythat value is co-created but also that it is dependent on theintegration of other resources and is therefore defined andassessed contextually. To illustrate, consider the purchase of amobile phone. The benefits of using the mobile phone representvalue-in-use but the total value – the effect that the user isseeking and willing to pay for – is dependent on the integration ofother resources from the user (e.g., operating skills, maintenance,etc.), resources from other companies (e.g., subscriptions to otherrelated service offerings, functions made available by the mobilephone), and on the use context, when integrating the mobilephone and its services with daily activities such as communicat-ing at work or with family members.

The implication of the SDL for service innovation is thatcustomers should be involved in various states of the servicedevelopment process, and those customers’ use situations andvalue co-creation activities and interactions are critical. Whendeveloping a new and attractive service, it is essential to learnfrom and with users in their own habitat or use situations. Someof the common reasons why service does not create value-in-context as intended include the service not fitting customers’needs, being too complicated for users or not allowing the user tointegrate or interact with other resources. Part of the reason forthis lack of accurate, complete and action-oriented customerinformation is that the research methods used have mainlyfocused on the expressed needs of customers, which is far toonarrow a focus (Matthing et al., 2004).

Therefore, the challenge in service development is to developcompetitive value propositions and the resource constellationthat is necessary for value co-creation, which will result inattractive customer experiences. The potential success of a valueproposition depends on its ability to understand customers’value creation. Consequently, since customers are a resource invalue networks (Lusch et al., 2010) and the value creation process,this article advocates that customers should be integrated withinservice development in order to achieve attractive use value.While customer integration has always been an issue in servicedevelopment, previous research has shown that the particularway in which customers are integrated has a major impact on thequality of use information gained, and therefore on service



Use situation(activities and interactions at a

specific situation)Insitu Exsitu

B. Edvardsson et al. / Technovation ] (]]]]) ]]]–]]] 3

development (Magnusson et al., 2003). Service development froman SDL perspective requires methods that can grasp not onlyresources (operant and operand) but also the activities andinteractions during co-creation of value-in-context.

The tester, reporting from thevirtual heaven

The dreamer, the creativewho generates wild and

imaginative ideas

The reflective practitionerreporting from the armchair

The correspondent, reportinglive from the situation

Ex

Con

text

In C

onte

xt

Res

ourc

e co

ntex

t(r

esou

rce

cons

tella

tions

ava

ilabl

e to

the

cust

omer

)

Fig. 1. Framework for relating use information to methods for service development.

2.2. A framework for analyzing methods for customer integration

within service development

‘Customer integration’ in this article refers to value co-creationand that value emerges and is assessed in different use situations.The term ‘use situation’ refers to activities and interactions at aspecific moment when resources are integrated, operated on witha specific intention to create value. The customer could provideinformation either inside (insitu) or outside a use situation(exsitu). Insitu therefore refers to information from customers/users that originate from a real-life, value co-creation situation;the information is thus created and documented in the usesituation as or just after it occurs. Accordingly, exsitu refers tomethods that capture use information outside the actual usesituations, that is, in retrospect or in anticipation. In practice itcan be difficult to determine whether the information is gatheredinsitu or exsitu. As an example, consider the case of an informantwho takes the train one day and experiences some problems butdoes not document or report this incident when it occurs. Thenext day, the informant recalls the incident, writes it down andsubmits a report to the train operator concerning the problem.The informant also suggests what could be done to solve or avoidthe problem in the future. Should this information be regarded asexsitu, simply because it was not reported when the incident firstoccurred? The answer depends on whether the person is con-sidered as still being in the service process or not. Such uncer-tainty requires the proposal of yet another dimension—theresource context.

All situations occur in some ‘context’, referred to here as aresource constellation that is available to customers in usesituations. The user, in a specific context, co-creates value indifferent ways depending on their intention and capability.Intention refers to what the user wishes to achieve, whereascapability refers to the user’s skill and knowledge regarding theuse of available resources. Accordingly, different instantiations ofvalue are created when different users operate on the sameresource configuration. However, with regard to the contextdimension, information can also be obtained from persons whoeither have or have not had a direct experience from the actualcontext. This allows methods to be divided along the contextdimension in either incontext or excontext. Put together, the twodimensions use situation and context form four types of custo-mer-related use information and, consequently, four groups forclassifying methods that enable customer integration withinservice development (see Fig. 1).

In order to analyze the appropriateness of the methods, it isnecessary to take into account how they capture both static(contextual) and dynamic (activities) aspects. This can be ana-lyzed from a knowledge resource-based perspective (Grant,1996). At least two different types of knowledge are essentialfor developing a service, or any innovation: use knowledge andtechnology knowledge (Luthje, 2004; Magnusson, 2009; vonHippel, 1994). Use knowledge refers to the actual use; that is,knowledge regarding what the service should do to create valuefor the user. Technology knowledge refers to an understanding ofthe underlying resources used to realize the actual service. Thisincludes technical systems but also, for example, equipment,organizational routines and instructions (in other words, allservice-enabling resources). Users are mainly utilized for thecollection of use knowledge.


Users are involved in providing information that can help afirm gain necessary knowledge when developing a service. Useknowledge can be gained in different forms that concern, forexample, (1) problems and difficulties, (2) ideas and opportunitiesof interest, (3) behaviors and emotions that are important orsought-after and (4) solutions or prototypes. All of these forms ofinformation are tightly linked to use knowledge, for which usershave a clear advantage over a company in terms of identifyingand communicating them to another party. Users may reportdiscovered problems in their use context that need to be solvedand they can also express information regarding opportunitiesthat are of interest to them or an idea for a service they demand.Users may also report emotions that stem from certain actionsthey have performed that did or did not result in the creation ofdesired value for them. Solutions are understood as informationpertaining to how users would like a service to be executed orperformed; that is, the actual design or configuration of a certainresource constellation. Fig. 1 illustrates users’ positions in relationto situation and context, the two dimensions that form the basisfor the four use information modes.

Fig. 1 elaborates on service-related customer conditions andshows potential customer information in the form of four modesfrom the categorization of the situational and contextual vari-ables. The four modes are presented as stereotypes representingdifferent typical users and should therefore be understood asideal types:

�

ioni:1

The correspondent. A customer who is in or has experience in areal service context and who is in or just about to enter a real-life, value-creating situation. Information made possible by theposition is resource-anchored from the actual service contextand from a use situation when value is created.
� The reflective practitioner. A customer who is in or has experi-
ence in a service context and who is not connected to a real-lifevalue-creating situation. Information made possible by theposition is resource-anchored from the actual service contextand is decoupled from a real-life value-creating situation.
� The tester. A customer who has learned about the service
context from outside and who tests a simulated real-lifevalue-creating situation. Information made possible by theposition is decoupled from the actual service context experi-ence and comes instead from a simulated or imagined usesituation.
� The dreamer. A customer who has learned about a service
context from outside and who is not connected to a real-lifevalue-creating situation. Information made possible by theposition is decoupled both from the actual service contextexperience and from a real-life value-creating situation.

within service development—A review of methods and an0.1016/j.technovation.2011.04.006



Informants who have experienced the resource context byactually being within it and have interacted with its resourcesgain a type of knowledge that is different from those informantswho have learnt about the context indirectly from the outside. Itis difficult to imagine every kind of resources that could be in playfor a user in a use context. It is possible to obtain information thathas been derived from outside the context from, for example,advertisements, information on the Internet, discussions withfriends or inspiration from observing competitors’ products orservices. Information that originates from an informant who hasbeen or is currently inside the resource context is referred to hereas incontext; the opposite is excontext. Yet another way ofexperiencing context is by simulation, but whether simulatedcontexts should be classified as incontext or excontext can beproblematic. Should the incontext be reserved only for true ‘real’experiences, or could it also be used for simulated envisionedexperiences? We argue that all simulations are simplifications ofthe real world and, on this basis; the term incontext is reservedfor experiences made in the real context.

The two proposed dimensions, ‘situ’ (insitu and exsitu) and‘context’ (incontext and excontext), are linked to the establishedSDL concepts of ‘co-creation’ and ‘value-in-context’. SDL highlightsthe fact that various resources form the necessary prerequisites fora value-creating experience, which is the implication of the ‘value-in-context’ concept. Similarly, the user integrates these resourcesin the act of co-creation. The situation in which value occurs isdifficult to comprehend or foresee, and this poses a challengewhen involving the customer in the development of a service.

3. Review of methods for customer integration

All of the reviewed methods for customer integration aim tocapture use-related information. However, the methods differ interms of their ability to capture different use information.

The reviewed methods have to a varying extent been empiri-cally tested, related to service and reported in scholarly journals. Inmany cases, the reviewed methods consist of several data acquisi-tion techniques, such as interviews or observing. The review showsthat methods and techniques are both used in different ways andfor different purposes. For example, while interviews and focusgroups are usually used to capture exsitu- and excontext-based useinformation, they are also used to capture use incontext informa-tion. These methods are also used for insitu- and excontext-baseduse information if the questions are hypothetical and aim to allowinformants to imagine that they are in a particular situation and/orcontext. In essence, however, methods have an overriding field ofuse and are grouped on this basis. At the same time we acknowl-edge that some of the methods are fruitful to use in more than oneor in many modes, for example the SQFD-method (Li et al., 2009).

Table 1Qualities for methods related to the mode ‘correspondents’.

Type of information generated Innovation knowl

Empathic design Ideas for solutions for new

and existing service. User

behavior descriptions.

How users intera

which resources

The lead-user method User trends, novel service

solutions

Solutions contain

propositions and,

information on re

realizing service

The CUDIT experiments Novel service solutions Solutions contain

propositions, and

information on re

realizing service


This section deepens the four use information modes by relatingmethods that are suitable in each of the modes. It also brieflydiscusses the contribution made by each method and presents, intable form, the four core qualities for customer integration for eachmethod. The first quality deals with the form of the informationthat each method generates: problems, opportunities, emotions orsolutions, or perhaps a combination of outputs. Secondly, themethods are, to varying degrees, able to provide use informationregarding situational and contextual factors related to potentialvalue and to use and technology knowledge. This innovationknowledge is to be encapsulated in the service concept duringthe service development process, mirroring the ‘what’ and ‘how’for service provision (Meyer Goldstein et al., 2002). Thirdly,methods differ in terms of the degree of interactivity betweencustomers and the investigating party. Interaction is essential forlearning, which is fundamental for methods relating to customerintegration. The fourth quality that distinguishes methods is whoidentifies the use-related needs and reports information. For somemethods, it is customers themselves who both identify and reporttheir own needs, problems and solutions. For other methods,especially those based on observation, it is the observing partythat identifies and reports user needs.

3.1. Mode 1—the correspondent

This mode is characterized by customers who are either in aservice use situation or intending to co-create value in order tofulfill a need. The dynamic of the services either has been or couldbe realized; in other words, it includes activities and interactionswithin a service process. This means that users in this positionhave the opportunity to generate information related to problemsand solutions based on real customer needs in relation to serviceuse. The customer is also in the current or desired service’s realcontext, which means that the service’s static resource structureis available. Hence, the position has the potential to generate use-related information on the most important value drivers, based onboth dynamic and static prerequisites of the service. Both use andtechnology knowledge can be generated to various degrees,depending on the method.

This article illustrates the use information mode through threemethods that have been used to capture information originatingfrom ‘correspondents’ who have entered, or are just about toenter, a value-creating situation (Table 1).

Empathic design (Leonard, 1995) is based on observation ofuser behavior (for example, watching someone trying to use aphotocopier) and interacting with their context. This set oftechniques investigates customers’ use in order to find a suitablesolution to service or product issues (Leonard and Rayport, 1997).Users are involved in the situation and the context. This is a

edge Degree of interactivity Reporting and need

identification

ct and with Interaction is low; users are

passive, a resource for

observations

The observing party

normally does the reporting

and need identification

ing value

generally,

sources for

The user is active in the

process; interaction is fairly

high from the early stages

throughout the process

The user identifies need and

solutions; reports in and/or

to the development team

ing value

occasionally

sources for

Interaction is low during idea

generation and capturing

User identifies needs and

solutions




process in which the development team is in control of thedevelopment of a service but the team has a customer focus.

The Lead User Method (Urban and von Hippel, 1988; vonHippel, 1986) focuses on pursuing trends (from lead users) thatmost users will experience at a later stage. The user identifies theneed and solution in its natural context, and the method’s aim isto develop novel ideas that will lead to a new service outcome.The data collection is done by involving the lead user in adevelopment team, which means that the lead user becomes anactive participant in the development of a new service. The user isinvolved in the service situation to a higher degree than inmethods such as participatory design.

The CUDIT experiments (Kristensson et al., 2004; Magnussonet al., 2003) started as experimental trials that compared usersand their idea creation with that of professional service devel-opers. The methods used to collect use information were task-based within a specified time frame, and involved ordinary user-generated service ideas that captured problems and solutions.Users created ideas in the normal use context and took diarynotes on these ideas. The method generated ideas on what theservice should provide, as well as ‘how’ and from ‘what’ theservice should be realized.

To conclude, the mode ‘the correspondent’ contributes withinformation that often takes the form of ideas and solutions.Methods within this mode are primarily beneficial in the earlydevelopment stages, i.e. when ideas and solutions for service aresought after, as is input for new service concepts. The informationis anchored in real-life situations and is based on actual customerneeds. As a result, the associated methods are used to captureinformation when and where customers are experiencing realvalue-creation.

3.2. Mode 2—the reflective practitioner

Much of the information used in service innovation originatesfrom users who are not in the service situation or do not reallyhave an actual need for service but instead have experience fromthe service’s resource context. The mode is characterized by userswho are in, or have experience in the actual service context but areexsitu; in other words they are not in a real-life service situationthat creates or intends to create value. The information generatedis based on static resources rather than on dynamic resources

Table 2Qualities for methods related to the ‘reflective practitioner’ mode.


Participatory design Use problems, ideas for

solutions and opportunities;

also behavioral aspects

Design, contextua

usage. Understan

needs, capabilitie

limitations of con

users.

Toolkit for user innovation Service idea customized to the

heterogeneous needs of the

customer

Input of user prob

and preferences,

solution coupled

context

Living labs Mainly ideas for service Information and

understanding of

customers actuall

how they do it.

Customer group

involvement

Reflections on concepts Ideas, capabilities

limitations of use

to service context

user as co-creator

Conversational approach Ideas for new and improved

service

Ideas from and ca

and limitations o


related to actual use. The risk of obtaining information from thisposition is that it generates use information that is too heavilybased on static resources rather than on interactions and inter-activity, which are core elements of value creation through service.

A large part of professional development occurs with useinformation from this mode. Professional developers often haveexperience in the service context and its resource structure butare usually not in a position to use or need to use a service. Thetimeline from the point at which they experience the servicecontext until active development can also mean that theresources on which a service is to be realized are not up-to-date.The existence of these distances presents a risk that the devel-oped service could be unable to create potential value.

Customers in this mode are usually ordinary users who arequestioned spontaneously in polls and Internet-based surveys. Insome methods, ordinary and potential users become physicallyinvolved in the development process and, in so doing, becomefamiliar with the static recourses. In some methods, the resourcesare modeled; that is, the provider brings or creates a resourcecontext upon which the customer can act. In this way, theinformation is evoked and then captured, but these customersare not in real situations, generating real-life needs, problems andsolutions. Nonetheless, it is often possible to provoke an adequateservice situation. The mode is illustrated through five methodsthat generally aim to capture use information from this mode orevoked information related to the mode (Table 2).

Participatory Design (Ellis and Kurniawan, 2000) is a methodbased on collaboration with intended users through parts of thedevelopment process, mainly during concept testing. Conse-quently, developers can derive users’ reactions to various con-cepts that have already been developed. The users interact withresources that are intended to be used later in service provision,although they are not in the actual service situation.

The Toolkit for User Innovation method (von Hippel, 2001; vonHippel and Katz, 2002) enables customers to innovate customizedservice from existing contextual prerequisites. The method isconstructed in such a way that ordinary users can work with itand it does not demand any special knowledge from the custo-mers. From a service context, represented by the toolkit, users areencouraged to fabricate a service situation and to suggest asolution that could ultimately result in a service concept withthe potential to generate value for other users.


identification

l factors and

ding of

s and

cept and

First passive then, during

concept testing, very

interactive and participatory

Basic needs by developers,

value concept tested and

improved in interaction

with user and developers

lems, needs

generating a

to the

Relatively low interaction.

Users integrated in a semi-

prepared context.

User mainly identifies needs

and solutions related to

customized solution

what

y do and

Ranging from low to high Normally the user but

sometimes an observing

party when behavior is

studied

and

rs in relation

. Input on

.

Quite high The user and the developer

mainly identify needs in

interaction

pabilities

f users

Quite high The user and the developer

mainly identify needs in

interaction




Living Labs (Bergvall-Kareborn et al., 2009; Schaffers et al.,2007) is a ‘family of methods’ that contains many different toolsusually involves constructing a virtual spatial context, either withphysical material or with computer software. Living Labs users actalone, in interaction with other users or other stakeholders.Instead of ‘tools for user innovation’, Living Labs can be seen asa ‘context for user innovation’. Within the context, situations aresimulated to create conditions to generate customer-driveninformation.

As with Participatory Design, Customer Group Involvement

(Dahlsten, 2004) aim to customize a service by holding regularmeetings with special customer groups in order to understandneeds. Potential customers act as a test sample during theprocess; this method can be regarded as a longitudinal focusgroup that tests ideas, concepts, models, sets of the servicecontext, and ready-to-release services.

In the Conversational Approach (Lundkvist and Yakhlef, 2004),the service provider uses conversation to achieve customerintegration. The method is based on a conversational frameworkfor understanding the dynamics of customer integration. There-fore, its focus is similar to that of the Customer Group Involve-ment method. The need identification is made by the producerand users together, outside the users’ actual use situations.

To summarize, the mode ‘the reflective practitioner’ contri-butes with information that is anchored in experience from theactual resource context. Methods within this mode are primarilybeneficial when the final service performance is highly dependenton the interplay of other resources when it is used. The informa-tion generated by methods within this mode provides validinformation from customers who are familiar with the resourcecontext. Therefore, methods are used at locations where otherresources are present. Because the information is gathered afterthe actual situation occurred, informants have the opportunity toreflect on what actually happened and, in so doing, come up withmore elaborated ideas. However, the time gap can cause details ofthe situation to be forgotten or wrongly reconstructed.

3.3. Mode 3—the tester

Because the tester has no real-life experience regarding theresource context, they will only have limited knowledge aboutwhat makes a service possible. Conversely, the customers areinsitu, which means that they have a real need and they want aservice solution to a real-life problem. Therefore, the customersare in a position where they know what service will fulfill theirneeds, but they do not know the resources that could realize thepotential service.

The resource context can be simulated by ICT creating a virtualenvironment. The simulated resource context distinguishes themode from the reflective practitioner in that the tester has noreal-life physical experience in the resource context. At the sametime, the dynamic aspects in service are simulated and tested.

Table 3Qualities for methods related to the ‘tester’ mode.


Information acceleration Behavioral aspects; mainly

purchase decision,

prospective selling positions

User preferences

behavior, ideas fo

Avatar based innovation Solutions with real-world

potential

Both use and con

knowledge can be


One potential way that a company could harvest this type ofcustomer information would be to try out different serviceconcepts on them. Both the ‘what’ and the ‘how’ aspects onservice are feasible (Meyer Goldstein et al., 2002). The mostcommon way to envisage a situation is through ordinary inter-view questions that begin with ‘‘Suppose that you are in situation

X; what would you do if y’’. This represents a trial-and-errorsituation—an assumption about reality.

Apart from ordinary interviews, in which the respondents areasked to imagine a situation, few methods are able to capture userinformation from a virtual value position. One common denomi-nator is that the methods build on a virtual, or imaginative,aspect. The respondent must either imagine him or herself in asituation or context or be placed in a virtual physical world;alternatively, he or she can act in a constructed, virtual ICT-basedworld. On the basis of the perception from the virtual position,the user generates information that the company needs. Thispaper argues that such methods will be subject to increasedinterest in the future, as the situation and the technology thatcreates virtual context develop further (Table 3).

Researchers using the Information Acceleration method (Urbanet al., 1996) construct a virtual buying environment that simu-lates the information that is available to consumers at the timethat they make a purchase decision. The user can actively use amodeled service in this setting, making it possible for thedeveloper to observe how it will be used and whether there areany problematic aspects that need to be addressed before amarket launch. This method focuses on the prospective sellingposition of the product or service.

Another example is the use of Avatars in Virtual worlds inservice innovation. Kohler et al. (2009) highlights the active rolesavatars can play throughout the whole development processinstead of using face-to-face interaction with customers in thephysical world. Customers can contribute not only with ideas butalso with feed-back on different designs and thus contribute tothe development of innovation in a virtual world.

To conclude, the mode ‘the tester’ contributes with informa-tion that is difficult to capture in any other way than by creating atest of a situation and the resource context. The mode contributesto service development in areas in which the concept is capable ofbeing simulated, such as home decorating or creating a 3-Denvironment in which customers can experience various servicealternatives. These methods are normally used during the backend of the service development process. Flexibility and reducedcosts are the major advantages of this mode. However, the lack ofa direct link to any real service and use context is a problem.

3.4. Mode 4—the dreamer

Much of today’s user information that is put into servicedevelopment originates from users who have no past real-lifeexperience in the service context and are not in an actual service


identification

and buying

r concepts

Quite low, mainly observation The need identification is

made by the user in a

simulated context of use

textual

generated.

Depends on the virtual

world’s population.

Interactivity can be very high.

The user identifies need and

solutions, reports to

company; or company

assess and discover needs

and ideas in solutions.




situation and have only limited knowledge about the dynamicaspects of service. Rather than real users, the customers areprospective users who dream about what the future might holdfor them.

The most common way to capture customer-oriented informa-tion from this position is through methods in which the user andthe party asking for the information do not face each other, suchas a survey or similar approach. Prospective users are encouragedto indicate their priorities, preferences and other attributesrelated to the products and uses. Customer information is soughtafter even if a customer has limited experience and knowledge ofthe service and its resource context and little understandingabout what value the service can provide. The information thatoriginates from this position is of questionable validity in terms ofservice development. The main advantage of ordinary surveys isthat they are cheaper to execute than many other methods.

Some methods are more elaborate than ordinary surveys. Thispaper identifies three methods that, to various degrees, are basedon, or try to capture, use information that is not rich in real-lifeexperience from a service resource context, nor in the interactivedynamic side of service (Table 4).

The TRIZ method is based on the assumption that thereuniversal principles of invention exist that form the basis forcreative innovation. TRIZ is highly versatile and can be used forideation, customization and problem-solving. Instead of includingcustomers or users, the example from Chai et al. (2005) usescontents based on customer needs. The final output is a list ofpossible innovative conceptual solutions to service design. Thedisadvantages are the inherent complexity of such a method andthe absence of empirical support as a customer innovation model.

In the Free Elicitation method (Bech-Larsen and Nielsen, 1999),users are asked to express their feelings and preferences inrelation to probes or cue by verbalizing the first thing that comesto mind. The method is suitable for implementing graduallydeveloped products, such as upgrades, or for repositioning exist-ing products, as it provides companies with knowledge about theassociations that customers have regarding a product or service.However, the method is not ideal for revealing latent needs or as atool for generating innovative ideas.

Li et al. (2009) argued that Service Quality Function Develop-

ment (SQFD) is a useful approach in new service development.The model is based on the notion that there are five gaps in theservice development process. In the initial stage, companiescollect information about customers through interviews, ques-tionnaires and customer complaints analysis. In the fifth and finalstage, the customers evaluate the service offering and compare itagainst their expectations. If the discrepancy between the serviceand the expectation is too wide, a gap will be revealed.

To conclude, the mode ‘the dreamer’ contributes with infor-mation about service that is based on little or no experience,either in a real resource context or in the real dynamic aspects inservice. An example is when companies need to create radicallynew service ideas that break from existing patterns and, in so

Table 4Qualities for methods related to the ‘dreamer’ mode.


TRIZ method For ideation and solution for

concepts

Builds mainly on

principles than on

Free elicitation Ideas on existing services or

service during

implementation

Associations in re

past experiences

GAP-based QFD Idea generation and concept

testing

Use knowledge in

quality gaps


doing, apply various creativity techniques. The captured informa-tion is often inexpensive but it may not always be valid. Althoughthe mode suffers from the informants’ lack of actual situationalexperience, the generated information could be of high inspira-tional value, partly because of the customers’ potential to thinkoutside the box (Table 5).

4. Discussion and contributions

The argument upon which this article has elaborated is theimportance of gaining use information in order to successfullydevelop the capabilities, prerequisites and enablers that willresult in attractive service. As Vargo and Lusch (2004a, 2008)argued, value is experiential, subjective and meaning laden andthus appear during usage in a context. It thus becomes evidentthat in order to develop the prerequisites for successful value co-creation, it is necessary to integrate the user in the servicedevelopment process as well as other stakeholders in the widervalue creation network (Lusch et al., 2010). This knowledge,which is developed in collaboration with customers, suppliers,partners and companies, must be integrated into the servicedevelopment process in order to accomplish value-creationthrough service. Integrating a new service in an existing servicesystem is reported to be a major management challenge (Tax andStuart, 1997) (Table 6).

The article makes both practical as well as theoretical con-tributions which will now be discussed.

4.1. Implications for practice

We put forward at least three implications for practice. First,the paper contributes with a framework that can be used as adecision tool for choosing appropriate research methods whendeveloping new service. Second, we argue that the informant’sexperience and situation (insitu or exsitu) must be taken intoaccount when interpreting the information gained. Third implica-tion is that we contend that practitioners should strive towardsduplex methods in order to accomplish co-creation. These threeissues are discussed below.

4.1.1. Different purposes different methods

There is hardly any news that the purpose of the researchshould decide the appropriate mode (see Fig. 1) and methods tobe used. However, in this paper we contribute with a new framingfor deciding and selecting appropriate methods. For example,‘Correspondent’ type methods (insitu and incontext) are excellentfor capturing live data regarding use value experience and servicefailure. However, this mode is probably inferior to the ‘ReflectivePractitioner’ (exsitu and incontext) method in relation to theability to generate creative solutions. Creativity research hasshown that there is normally an incubation period betweenencountering the problem and creating the solution creation


identification

predefined

user input

Interactive in the beginning,

then quite low in interaction

Made by the investigating

party

lation to

and values

User is passive, simply

responding to cues.

Interaction is quite low.


party

relation to Somewhat unclear; stresses

collaboration


party



Table 6Compilation of methods for customer involvement (part 2 of 2).

Customer GroupInvolvement

Conversational approach Information acceleration Avatar based innovation TRIZ Free elicitation GAP-based QFD

Purpose with method Customization,understanding ofcustomer reality

Ideation from customerunderstanding

Anticipate sales Using virtual worlds forreal-world innovation

Ideation, customization,problem solving

Identify feeling amongcustomers regardingproducts or brands

Service developmentwith quality-drivenspecifications

Phase in servicedevelopment process

Design process andforward

Early Late Early, concept design andtesting.

– Late Early

Types of users Ordinary users Ordinary users Ordinary users Ordinary users – Depends Ordinary usersType of context B2C B2C B2B, B2C B2C B2C B2C, B2B B2CInteraction and user

activenessActive discussionsregarding expectationsfor already decidedproduct

Users are an integral partof the development team,relationship ischaracterized by mutualtrust

Passive in using theproduct/passive in thedevelopment stage

Passive, companyobserves users. Activewith other users.

Active User is not active in thedevelopment, but isactive in the response to acertain product/service

Quite high in thebeginning and end, butlow during specificationdetailing work

Output A product more in tunewith customerexpectations and wishes

New service that fitscustomer needs,customization of existingservices, betterrelationship withcustomers

Product/service Service concept that fitscustomers’ needs.

New service, finding bestsolution to a problem

Understanding of howcustomers feel regardinga product or brand

A service in line withcustomer expectations

Timing of needidentification,problem solving andreporting

Exsitu Exsitu Exsitu Insitu Exsitu Exsitu Exsitu

Requirements ofcompetence frommethod

Low High High, expensive method Quite high Complex method Low Fairly high

References Dahlsten (2004) Lundkvist and Yakhlef(2004)

Urban et al. (1996) andUrban et al. (1997)

Kohler et al. (2009) Chai et al., (2005) Bech-Larsen and Nielsen(1999)

Li et. al. (2009)

Table 5Compilation of methods for customer involvement (part 1 of 2).

Empathic design Lead user method CuDIT (customer driven

development)

Participatory design Toolkits for user innovation

and design

Living labs

Purpose with method Ideation Ideation Ideation Customization Customization To build a network that can

solve problems and come

up with innovative ideas

Phase in service

development process

Not actively involved at all Mainly very early but also

throughout the process

Very early Late Very late in the process Early

Types of users Ordinary users Lead users Ordinary users Ordinary, with interest in

technology

Ordinary users Ordinary users

Type of context B2C B2B, B2C B2C B2C B2C B2B, B2C

Interaction and user

activeness

Passive Very active Active Active Very active Very active, network dialog

is the focus in this method

Output Product or services that solve

needs that are observed

New product/service Service, understanding of

customer needs and wishes

Customized service/product Product Solutions to problems,

novel ideas, based on the

business model

Timing of need

identification, problem

solving and reporting

Insitu Both insitu and exsitu Insitu Exsitu, and provoked Insitu Exsitu, and provoked Insitu Exsitu, and provoked Insitu

Requirements of

competence from

method

Low High, finding Lead Users is

time consuming

Quite high Medium Very high in initial stage,

then very little

Not high when the Lab is

up and running.

References Leonard and Rayport (1997) von Hippel and Katz (2002)

and Olson and Bakke (2001)

Magnusson et al. (2003) and

Kristensson et al. (2004)

Ellis and Kurniawan (2000) von Hippel and Katz (2002)

and Franke and Piller (2004)

Schaffers et al. (2007)

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(Dodds et al., 2002), which suggests a preference for the ‘Reflec-tive Practitioner’ method type for creative problem solving.Methods in ‘Dreamer’ category can be justified on the basis ofboth low cost and convenience. Here, a simulated reality iscreated that enables respondents and can, in turn, enable aninteractive testing of different scenarios and/or environments.The mode that is hardest to justify is the ‘Correspondent’ mode.More research is needed in order to reach a more definitiveconclusion about the advantages and disadvantages of each ofthe modes.

4.1.2. The significance of the informants’ experience

Even though the use information framework presented inFig. 1 gives a static picture, it also contains a dynamic side. Thiscustomers, now presented as static ‘ideal types’, represent adynamic aspect in that customers change over time with regardto on the one hand knowledge, skills and motivation to co-createand the other as a result of their evolving experiences andchanges in needs, wants and preferences, which adds yet anotherdimension. A customer who has frequently been in a specific usesituation and/or resource context is assumed to able to providedetailed and valid information for the intended service. We arguethat informants should be divided into three groups depending ontheir experience: very experienced, ordinary, and greenhorns. Thevery experienced informants’ show resemblance to the concept oflead user’s (von Hippel, 1986). From a knowledge perspective thelead users are in the possession of a great amount of use knowl-edge as well as technology knowledge. Technology knowledgehas a flip side, as shown by Magnusson (2009); too muchknowledge regarding the underlying technology can hampercreativity. In other words, with experience comes also a con-formance in suggesting ideas that are more feasible regardingpresent technological limitations (Magnusson, 2009). In compar-ison, ‘ordinary’ experienced individuals can be expected to not‘suffer’ from having too much technology knowledge.

Experience functions as priming that, in some ways, affects theideas that people come up with without them being aware aboutit (Marsh et al., 1999). In other words, the information that a freshcorrespondent reports will probably be different from those thatan experienced one would. With experience comes increasedknowledge, both concerning use and technology. Veteran usersusually become institutionalised over time and do not reflect onor react to things that a greenhorn might perceive as an anomaly.All three categories contribute to our understanding in differentbut complementary ways.

The customers’ knowledge and skills can be more or less usefulto facilitate and direct a service development process; e.g.depending how long ago an experience occurred. A ‘correspon-dent’ who generates use information that is both insitu andincontext, can, if they are not constantly updated about the everevolving resource context, change their user position over time,perhaps becoming a ‘tester’ with an innovation knowledge that isfar from what is required. Of course, this is especially delicatewhen it comes to professional developers who dissociate them-selves over time from valid use-information and thus requiredinnovation knowledge.

4.1.3. From simplex to duplex methods for customer integration

The reviewed methods are mostly simplex methods, whichmean that they merely collect data, and provide little or nofeedback to the respondents. The respondents are asked questionsor are observed. If the methods were to include a feedback loop,they could encourage a learning process. If the information couldmove in both directions rather than to just one receiver, it wouldprobably enable learning that would be beneficial from a value-


in-use point-of-view. The methods upon which this review hasfocused are mostly static, which means that information is mainlydevoted to the company. We therefore recommend the develop-ment and use of dialog based methods that is ‘duplex methods’.Customers could learn more about the technology, which wouldimprove their ability to combine generated use knowledge withenabling resources. This would probably lead to methods thatcould generate innovation knowledge that is suitable for a servicedevelopment project.

Many methods have been categorized as incontext, either bytrying to capture use information directly or by setting up anartificial physical context to evoke use information. One methodis not usually able to provide the most valuable and usefulinformation at every stage of the service development processand the same method may be used in various ways and modes.Some methods, such as those when customers are in a usesituation, and are describing, analyzing or interpreting, serve toactivate the customers, while other methods do not do so to thesame degree. This paper advocates the use of a dialog approach, inwhich data is fed back to the respondents. As a result, respon-dents are also involved in the interpretation of information, theprioritization and actions to be taken. Learning from and withcustomers suggests that customers can become more than justpassive informants (Matthing et al., 2004). Lusch et al. (2010)emphasized the importance of ‘‘learning to serve in a valuenetwork’’ (p. 21) and both customers and other actors in thenetwork can provide a basis for learning how to serve. Further-more, the same methods used for customer integration couldprobably be used to learn from and with other actors.

4.2. Implications for theory

The article makes a theoretical contribution. We introduce anew framework for classifying methods for customer integrationbased on user information. The framework is theoreticallyanchored in SDL-thinking. A criticism towards the service-domi-nant logic (SDL) approach has been that it is conceptual givinglittle guideline how to link it to practice.

We argue that there are certain key elements to servicedevelopment within SDL: (1) designing value propositions, and(2) resource configurations that enable and support the realiza-tion of the value proposition. This requires information andunderstanding of resource contexts and how to (re)configureand mobilize both operand and operant resources to enablecustomers to co-create value in different – and, for them, relevant– situations. Furthermore, (3) aligning the value proposition andthe service resource configuration forms the basis for serviceexchange, intended value co-creation and value in context. Thiscalls for a new categorization of methods which we aim toprovide by our new framework.

4.2.1. Categorization of methods based on user information

Essentially, there are two ways to categorize methods used forcustomer integration. First, one can take the procedural simila-rities in the implementation of methods as a starting point andlook at how the different methods are being carried out. This isthe most common breakdown and results in categories likeobservation methods, questionnaire-based methods amongothers. The second way to categorize and discuss methods forcustomer integration is to start with the results; that is, theoutcome from the methods related to service innovation.

The outcome is the information that the methods render, thegeneral value they have for service development process and, byway of extension, the value they have for customers. We do thisby categorizing methods for customer integration – captured




from customers in different positions – that have the potential togenerate important use information. In addition to previousstudies’ focus on how customer integration is carried out, thisstudy highlights why and, partly, when companies should inte-grate customers in service innovation. Customer information isdeveloped on the basis of the customer situation in the servicedevelopment process. Methods that have been tested in thedevelopment of services are related to these categories, or modesof user contribution. The categorization used herein is based onuse situation and resource context, knowledge of the dynamicaspects of service related to operant resources and knowledge ofthe static aspects of service related to operand resources. Thismeans that the categorization of methods for customer integra-tion also maps how different methods can help companiesdevelop services while emphasizing different resources for valuecreation.

As to which type of method, or combination of methods, ismost useful and appropriate, we argue that any method is betterthan no method at all. However, methods that permit users toidentify their own needs and solution/ideas, and which are alsoelicited in the natural use context, could have a higher likelihoodof providing important information regarding prerequisites forbetter value creation in service.

4.2.2. Methods capturing the dynamics in value co-creation of

service

We make a distinction between static and dynamic/interactivemethods. Most methods provide ‘static’ information, such asattributes, quality factors, and important customer need dimen-sions, and are based on a goods-dominant logic understanding ofservice. A service-dominant logic-informed understanding ofservice development requires not only ‘static’ information butalso information that is related to mechanisms in value co-creation and service exchange. Some methods are more suitablethan others in terms of grasping customer activities and theinteractive nature of value co-creation. This article shows thatcustomer integration should provide information related toresource contexts (mainly static information) as well as mechan-isms (dynamic) in use situations. Identifying and understandingkey mechanisms in value co-creation is fundamental for servicedevelopment to result in value-creation for a user.

5. Concluding remarks

The article has presented a nuanced picture of how customerintegration can be managed by means of different methods.Customer integration is based on learning from and with custo-mers and integrating the resulting information for service inno-vation. The article shows that various methods are suited for andable to generate and capture various types of use informationwhich is important for managers who are planning to integratecustomers to develop new services.

The article contributes with a framework for classifyingdifferent methods for customer integration anchored in the SDL-logic. It consists of four modes based on information related to theuse situation and resource contexts that are available to thecustomer. We show how information captured in different cus-tomer use situations provides information of different character-istics which implies different feasible ways to integratecustomers. We also discuss and put attention to the impact ofthe informer’s experience on the information obtained. Further-more we advocate the development and use of duplex method topromote co-creation by learning from and with customers.

Customer integration is becoming increasingly important forthe development of service. It is no longer enough to simply


follow customers nor can companies expect to lead them; theroute to the future lies in walking together with the customers in‘pari passu’ to accomplish this, the use of appropriate methods forcustomer integration is essential.

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