THE FORGOTTEN SOURCE : EMPLOYEES AS A SOURCE OF CUSTOMER INSIGHTS

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Linköping University | Department of Computer and Information Science Master thesis, 30 credits | Master of Science – Design and Product Development Spring term 2020 | LIU-IDA/LITH-EX-A--20/069--SE

THE FORGOTTEN SOURCE

EMPLOYEES AS A SOURCE OF CUSTOMER INSIGHTS

Tobias Sjöberg

Tutor, Ana Kustrak Korper Examiner, Johan Blomkvist

Linköpings universitet SE-581 83 Linköping 013-28 10 00, www.liu.se

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ABSTRACT

The service economy is flourishing and due to high competition, manufacturers are turning to service innovation as way to distinguish and meet their customers increasing and changing demands. Service design and an increased utilization of employees are seen as way of improving the innovative capabilities. The aim of this thesis is to explore in a manufacturing company undergoing servitization, what is the role of front-line-employees (FLE) for service innovation and in what ways can front-line-employees be leveraged to enhance a firm’s service innovation capability? To do so, a hermeneutical research approach was adopted to interpret both FLEs collective customer understanding and the strategic view from management and service design within a company. Results reveal an encountered complexity and unstructured development of customer knowledge through long ongoing relations where the continuous identification of customer needs is a unformalized process and FLEs are relying on experience and tacit knowledge to do so. The study identifies FLEs as a resource to innovation, with aggregated customer knowledge, product knowledge and practice knowledge and are mainly contributing as a supporting actor in the innovation process. The study makes a contribution by emphasizing the needed support to empower FLEs as contributors to service innovation. Service design tools and techniques are a suggested way to provide structure and formalization in the involvement of FLEs into the innovation process. Future studies should aim to validate and explore the suggestions further through a comprehensive study of the inter-organizational customer knowledge creation and dissemination and its effect on service innovation.

Key words: Servitization, Service innovation, Service design, Customer knowledge, FLE

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ACKNOWLEDGEMENT

I’d like to thank ABB for the opportunity for doing this thesis, and all the participants for giving their time and effort and whose contribution has been vital for the making of this thesis. I especially want to extend my thank to Andreas Almqvist, I’m very grateful for your indubitable support and for all thought evoking and interesting conversations during this spring.

I’d like to give my sincere thanks to my tutor Ana Kustrak Korper, I’m very grateful for your continuous support, helpful guidance and feedback which have all contributed to an improved quality of this thesis. I would also like to thank my examiner Johan Blomkvist for your advice and valued input in the making of this thesis.

Finally, my family and friends, I want to thank you for undoubtable support over the past five years of studies that culminated in the making this thesis. Last but not least, thank you Lisa for your encouragement, support and always being the person who brightens my day.

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FIGURES AND TABLES

Figure 1:The use of the hermeneutical circle. ... 12

Figure 2: Sales interacting with several customer segments. ... 15

Figure 3: End-customers often have different roles. ... 16

Figure 4: The position of sales related to end-customers and ABB’s other departments. ... 17

Figure 5: Descriptions of the end-customer roles. ... 18

Figure 6: Customer life journey. ... 20

Figure 7: Visualization of gradual dissolvement of customer knowledge in the information flow. ... 22

Figure 8: Visualization of by-passing and involve the customer directly through lead-customers. ... 23

Figure 9: Actor map of a realization team. ... 26

Table 1: The roles of FLE according to Engen and Magnusson (2018). ... 5

Table 2: Summery of key service design tools and method. ... 9

Table 3: The underpinning constructs of the hermeneutical spiral (Paterson and Higgs, 2005). ... 11

Table 4: Participating respondents and their role, experience with the company. ... 12

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1 INTRODUCTION

The service industry is booming, and services plays an increasing role in the society. Many organizations are expanding their focus to include service with the hope of achieving a more competitive market position and create more sustainable business models. By doing so rethinking their offering from focus on the core product to expanding their view, to the multiple layers, making up a customer experience.

To create desirable services are a deep customer knowledge needed. But these important inputs are often latent and tacit and not easy to capture and identify. A company able to acquire, act upon such knowledge will have a greater ability to make fitting offerings, and therefore gain a more competitive edge.

One of the growing trends is the servitization of manufacturing firms that operate on business to business (B2B) markets (Neely, 2007).The phenomena of servitization is described as the process through companies shift their strategy from being product providers to a service-centered business model (Visnjic et al., 2016). By bundling products and services in a way that creates shared value for the company and its customers. As companies undergoing servitization, they are increasingly focusing on innovating new services. Innovation approaches such as service design have an increasingly important role due to the principles, tools and methods focused on understanding value creation for multiple stakeholders (Ostrom et al., 2015). However, understanding customers and their needs is still one of the key components in developing new services (Nudurupati et al., 2016; Patrício et al., 2018).

In big manufacturing organizations are business processes often long and building and maintaining customer relationships is a complex work that is dominantly in the domain of sales department (Reinartz & Ulaga, 2008). Employees are an interesting source for innovation inside an organization, since employees have in-depth and highly context-dependent operational knowledge (Kesting & Ulhøi, 2010). Thus, Hasu et al. argue that the interaction between frontline employees and users provide a unique and underutilized learning opportunity in the development of new services. Feng and Ma (2020) find that customers and frontline employee participation are “important promotors of service innovation and are the most important creative sources of service innovation” (Feng & Ma, p.10, 2020). FLE plays a role in accumulating customer experience and knowledge (Kesting & Ulhøi, 2010); as they are in direct contact with customers and understand their needs, therefore can deliver realizable, and customer-centric service innovations (Karlsson & Skålén, 2015). This implies that FLE's in the sales departments possess customer knowledge that can be useful for new service development and innovation. However, it is not always clear what kind of customer knowledge sales department possess, how structured this knowledge is and how it might become useful for innovation work across the organization. Ostrom et al. (2015) noted that changing contexts in which services are delivered require companies to increase “employee engagement to improve service outcomes” by “incorporating the voice of the employee in service innovation” (p.135). To address these challenges the purpose of this thesis is to explore:

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In a manufacturing company undergoing servitization, what is the role of FLE for service innovation and in what ways can FLE as a resource be involved to enhance a firm’s service innovation capability? This thesis draws on a hermeneutics research approach undertaken to interpret both FLEs collective customer understanding and the tactical & strategic view from management and Research & Development (RnD). Within the global manufacturing company ABB. A company that have been servitization and including services in their offerings for many years, moving towards developing more advanced services and circular offerings.

1.1 Overview of the thesis

The remainder of this thesis is structured as follows: The second chapter sets the context of servitization followed by a review of existing literature on frontline employee involvement in service innovation. Followed by further indulgent of the service design body of literature. The third chapter describes the methodological approach through hermeneutics and further elaboration on data collection method and analysis. Next the fourth chapter is divided into three parts. First, I present the sales perspective on customer knowledge followed by a sub-section representing the results on FLEs contribution in innovation from a service design and management perspective and lastly ways FLEs can be leveraged to enhance a firm’s service innovation capability. Followed by chapter five where the results are discussed in terms of implications, research contribution, limitations of the study are identified and suggestions for future studies are made. The final chapter outline the main conclusions.

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2 THEORY

This chapter sets the context of servitization followed by a review of existing literature on frontline employee involvement in service innovation. Followed by a further indulgent of the service design body of literature.

2.1 Servitization

Servitization is the process through companies shift their strategy from being product providers to a service-centered business model, by bundling products and services in a way that creates shared value for the company and its customers (Visnjic et al., 2016). The Increasing globalized economy have led to cost-based competition in many industries combined with market saturation and a general stagnation of equipment sales. Product innovation isn’t longer enough, and manufacturing companies are turning to a changed scope of their offering in order to seek new growth possibilities (Neely, 2007). Comparing manufacturing companies to service organizations, does service organizations tend to have a steadier revenue stream, higher profit margins, closer relationship to their customers (Ostrom et al., 2010). For the past 30 years have B2B companies been shifting from selling products to providing those products bundled with services. Well know examples are Rolls-Royce “Power-by-the-Hour” and Xerox “Pay-per-Copy”. These companies have built their business strategy around the service the product can provide. The Rolls Royce service model charges the user by the time their aircraft engines are being used. Xerox's new service model allowed users to take full use and benefits of having a copy machine, without having to own the machine itself. As companies undergoing servitization, they are increasingly shifting focus away from transactions of tangible resources to the intangible, such as skills, information and knowledge (Vargo & Lusch, 2004). As the distinction between goods and service are becoming blurred may tangible products be seen as enablers in the process of value creation in form of a service.

2.2 Service innovation

Innovation can be defined as "An idea, practice, or object that is perceived as new by an individual or other unit of adoption" (Rogers, 2003 (p.98)). Service innovation differs from product innovation, as the service sector includes a wide variation of markets, activities and use of technology. Sundbo (2008) describe the innovation of service a broad concept that integrate numeral dimensions, that often include product, process, organization and market innovation. Innovation in service is described as “ad hoc, based on ideas of employees and managers” (Sundbo, 2008 (p.28)) and not the results of a rigorous tweaking in a laboratory, as is typical in manufacturing.

In the service innovation literature are two streams identified on how services are innovated. One stream is sequential, planed and formalized and stems from an adoption of new product development and stage-gate-processes (Alam & Perry, 2002). Based on good-dominant logic

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where “service is treated as a kind of good (subset of product)” (Vargo & Lusch, 2006 (p.47)) with embedded value, leaving the customer and the FLE with non or only a small part in the value creation and service innovation. The second course recognize that service innovation activities occurs outside of development projects (Wetter-Edman et al., 2014) as the result of informal activities and takes a place in the day-to-day problem solving and creation of ad-hoc solutions (Høyrup et al., 2012) where the employee is seen as resource for innovation despite not being formally assigned the task (Kesting & Ulhøi, 2010).

Regardless what perspective chosen, the innovation process can be described consisting of four generic stages, initiation, ideation, integration and implementation: 1) Initiation, including activities aimed at understanding and monitor the surrounding ecosystem, i.e. identify customer value and change drivers. 2) Ideation aim to transform opportunities to ideas and tentative business models. 3) Integration include activities to refine the ideas and create alignment between all actors. 4) Implementation is the realization in practice. (Frankenberger et al., 2013)

Service innovation takes an understanding of the customer’s problems and needs as a starting point. Meaning that customers need to be involved in the process of developing new services. Therefore, can the employees that works at the customer interface (FLE) potentially provide a unique and underutilized learning opportunity in the development of new services (Hasu et al., 2015).

2.2.1 Front line employees and service innovation

Several studies conclude the importance of including FLE in the innovation process. Feng and Ma (2020) find that customers and frontline employee participation are “important promotors of service innovation and are the most important creative sources of service innovation” (Feng & Ma, p.10, 2020). FLE plays a role in accumulating customer experience and knowledge (Kesting & Ulhøi, 2010); as they gather bits of information from different sources, among them customers, and compare them with the actual situation (Toivonen & Tuominen, 2009). Karlsson and Skålén (2015) finds that FLE are able, through their unique positions, contribute with customer knowledge, product knowledge and practice knowledge to the service innovation process, and can contribute to realizable, and customer-centric service innovations. Where the customer knowledge means the gained knowledge of customers’ requirements, expectations and needs (Karlsson and Skålén, 2015). Product knowledge is detailed knowledge of the offered products and services, in terms of terms of processes, physical products and technical solutions Further, Karlson and Skålén describe the practice knowledge as FLEs knowledge of routines procedures in the ongoing practice.

Sundbo (2008) sets the idea, development and implementation phases apart and found that FLE are involved trough all phases, but not very involved during the development phase. Further, Sundbo points to the importance of involving FLE to some degree in the implementation phase to create understanding and acceptance for the service and make it a natural part of FLE’s practices. Ordanini and Parasuraman (2011) argue that FLE may contribute to idea generation as well as to implementing service innovations. Karlsson and

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Skålén argue that FLE make useful contribution during five innovation phases, namely: project formation, idea generation, service design, testing and implementation.

When it comes to how FLE contribute to service innovation have empowerment and teamwork been highlighted techniques for involving FLE (Daily & Bishop, 2003). Empowered team members provide by generating prosperous ideas and proposals to increase an organizations problem-solving ability (de Jong & Vermeulen, 2003). Karlsson and Skålén found that FLEs involvement ranges from active to passive contributors to service innovation. Moreover, they are arguing that active involvement is linked to positive contribution. By looking through an employee driven, and a management driven perspective, Engen and Magnusson (2018) identified that FLE plays six types of roles in the service innovation process. They find depending on which perspective can the FLEs role be seen as a leading role or as supportive role and are distinguished by whether the FLE have access to resources and control over their innovation activities. The leading roles are collaborative idea creators, developers and implementers, while the supporting role contributes to predefined tasks as reporters, advisors and executors. They are further described in Table 1.

Table 1: The roles of FLE according to Engen and Magnusson (2018).

The employee driven innovation processes (according to Engen and Magnusson, 2018)

The management driven innovation processes (according to Engen and Magnusson, 2018) The leading roles Characterized by The supporting roles Characterized by

Creator Problem and opportunity identifier.

Generate initial ideas and solutions to the problem.

Reporter Reports problems in existing processes

to a manager. This can become the beginning of a new idea.

Developer Using contextual knowledge to

develop idea into working solution

Advisor Provide advice to the new service

development led by others. Contribute to the innovation process but does not have control of the end result. Implementer Drives the implementation, often in

collaboration with other, colleges, customer and mangers.

Executor Contribute to the realization of new

service, as a participant of the introduction and initiation.

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2.3 Service design

Innovation approaches such as service design have an increasingly important role due to the principles, tools and methods focused on understanding value creation for multiple stakeholders (Ostrom et al., 2015). Service design is a key approach in service innovation that can support servitization, as is it may infuse the organization with service-oriented mindset from the ground level and provide the organization with a unifying language (Calabretta et al., 2013). Service design may provide benefits to manufacturers seeking both innovative and sustainable business models in form of: “new markets; customer segmentation; performance optimization; increased customer satisfaction; means to develop new value propositions; and improved information flow” (Prendeville & Bocken, 2017, p.298).

Although the generic service design process is similar to the generic innovation process including ideation, development and implementation, service design is an iterative and unifying practice that facilitate co-creation. If described linear, does the service design process usually begins with a phase of exploration, consisting of research of the system, visualizing the system, uncovering insights and frame the design scope. Followed by concept development, prototyping and implementation. Rooted in design thinking, service design inherits and shares many principles such as, user centered, iterative and the use of visual representations. Service design is differentiated as it takes a service perspective and recognize multi-actor value constellations. (Stickdorn et al., 2018)

In service design is the holistic picture emphasized (Stickdorn, et.al. 2018, Mager 2009), services are embedded in a larger system consisting of multiple relationships and interactions which are needed to take into consideration (Mager, 2009; Patrício et al., 2011; Stickdorn et al., 2018). Seeing the service as a whole and consider touchpoints and actions in the journey- ranging from before the service begins to after in ends. Understanding the context and the living system, that the service constitutes is a fundamental first step to (re)design the system or design within the system (Mager, 2009). This includes research and involvement across all the projects’ stakeholders from management to end-user and frontline employees to third party suppliers (Polaine et al., 2013; Stickdorn & Schneider, 2010).

2.3.1 Service design research

An understanding of the service eco-system and the customer is fundamental to successful service design (Van Dijk, 2010). As a mean to understand what people do, say, think and feel in their everyday life is ethnography adopted to the design context (Salvador et al., 2010). By understanding the customers context of use and value creation increase the probability of creating a desirable service and reduce the risk for failure due to lack of basic understanding of the customer/user experience (Salvador et al., 2010). Design research differs from more traditional marketing research and since it preferers a qualitative compared to a quantitative approach. It aims to dive deep into people’s lives, habits, social context and motivation. (Polaine et al., 2013; Salvador et al., 2010; Stickdorn & Schneider, 2010).

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Fayard et al. (2017) describe the way service designers conduct design research through interviews and observation, empathizing with customers and stakeholders, “collecting evidence by using diaries, pictures, sketches, and personas” (p. 282).

Visser et al. (2005) provide a detailed description of how service designers conduct design-led research in practice. Designers use an array of techniques depending on what knowledge they seek. Traditional techniques, such as interviews and observations, uncover explicit and observational knowledge. By using these techniques, the designer learns about the past and present experiences, but they provide little insight into possible future experiences. To learn about potential future experiences designers, need to access people’s dreams, fears, ideas and desires; designer seek to learn people’s tacit knowledge and latent needs. To this aim are generative techniques used, to make people aware of their experiences and start to reflect by guiding participants through a process of creating artifacts such as drawings, collages, maps etc. The artifact and stories connected to them becomes rich information for the designer to use in the creative process. (Visser et al., 2005)

Example of such generative techniques are probes (also known as cultural probes, design probes) and toolkits for expression. Sanders and Stappers (2014) provide a summary of toolkits. Toolkits are created by designer or researchers and given to users or other stakeholders to participate in the design process to make artifact about or for the future.The toolkit consists of a variety of components,

2D or 3D components such as pictures, words,

phrases, blocks, shapes, buttons, pipe cleaners, wires, etc.

and are typically created for a certain project (Sanders & Stappers, 2014).

Graham et al. (2007) find that probes work “both as a means of engaging and provoking responses from participants and as a resource for those involved in design” (p. 29). Probes are based on self-documentation and consist of a set of materials and questions aimed to stimulate users to observe, document, reflect and comment on their every-day life (Gaver et al., 1999). Example of probes are diaries, cameras, collages and postcards. Probes comes in several ways, forms and mediums all from physical kits to technological (Hutchinson et al., 2003) and mobile probes (Hulkko et al., 2004).

Probes can be used as source of inspiration for creativity, through interpretation of the response to the ambiguous and sometime provocative material (Graham et al., 2007). But also process of creating probes serves as inspiration, the designer starts to think of the participant creative imagination, and explore hypotheses concerning the potential responses (Mattelmäki, 2006). Probes can also be used for collecting information. These probes can aim to find signals of interesting opportunities and collect information about the users, their experiences, attitudes and needs. Typically, these types of probes are aimed to describe the present and supposed to prompt the recipient for self-reflection, analysis and interpretations of their experiences (Mattelmäki, 2006). Compared to inspirational probes are they leaving less room for creative interpretations. Typically resulting in subjective and fragmented material that can form an introduction to following step, determining further questions (Mattelmäki, 2006).

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Probes are not only resulting in material for the designer to receive and interpret it also spark reflection for the participants. Graham et al. (2007) describe this disclosure and self-reflection very vivid: “In completing the probe packs our respondents uncover and reveal their ‘culture’, they put their culture on display, aspects of their everyday lives, but not just to us, but to themselves: it is enquired into and ‘discovered’ by them as much as by researchers and designers.”(p.35). Although the interpreting the fragmented outcome is difficult and takes effort to build the empathic attitude (Mattelmäki, 2006).

2.3.2 Visualizations

In the business setting are understanding people’s needs, behavior and values not enough, it needs to be translated into something approachable for design, engineering and marketing to be useful (Salvador et al., 2010). Riege (2005) argues that efficient knowledge sharing within the organization leads to faster development processes and contribute to better services, and in turn resulting in a faster speed-to-market and better market performance. Design research aim to generate material that inform and inspire the design process (Van Dijk, 2010). Material that serve to communicate insights from the research and provide foundation for provide a rational and acceptance for the design among the stakeholders. A way service designer generates this material is through various visualizations during the research and design process.

Visualization have been highlighted as a key strength of service design. Blomkvist and Segelström (2014) define visualization of services as “depictions of current and/or future states of the service,” arguing that as service representations, “visualizations are primarily used as summarizations of research on a current service or as the deliverable of a project, showing how the new service is suggested to be structured” (2014, p.335). Segelström (2009) found three main reasons to why service designers visualize:

• Articulate insights. Visualizing research material enables detection of patterns that otherwise would be difficult to notice.

• Communicate insights. Visualizing provides a way to share insights and ideas with those who have not been part of the process.

• Maintain empathy. Creating visual summaries of human emotions, needs, and motivations helps to keep empathy with the people for whom the design is being made throughout the process.

Through the use of visualization, service designer simplifies complex systems and provide something that different stakeholders can understand and interact with (Stickdorn et al., 2018).Examples of tools used to visualize services are sketches, customer journey maps, service blueprints, scenarios, and personas (Stickdorn et al., 2018). Practitioners Reason, Løvlie, and Brand Flu (2016) believe that visualization is essential to move from insights to implementation, arguing that “it’s particularly useful to better understand systems, processes, and customer experiences. Simple sketches and drawings can help clarify ideas, aid communications, and support convincing superiors, peers, and implementation teams” (2016, pp. 9-10). A summary of service design tools and methods are provided in Table 2.

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Table 2: Summery of key service design tools and method.

Name Descriptions Reference

Customer journeys

Customer journeys are used to describe experience from the customer’s perspective. A customer journey describes the steps that customers go through when they use a service.

(Reason, et al., 2016, p. 167)

Customer lifecycle journeys

A customer lifecycle is a strategic tool to understand the business and how customers fit into it. It describes the phases and stages a customer moves through during their relationship with a sector. The four general phases of before, begin, during, and after applying to all customer relationships.

(Reason, et al., 2016, p. 168)

Customer profile

Simple portraits of an individual customer portraying the customer key characteristics in terms of specific context needs and experiences. They are created from direct testimony from customers through an interview, conversation, or observations.

(Reason, et al., 2016, p. 162)

Personas Fictional profiles often developed as a way of representing a particular

group based on their shared interests. They represent a “character” with which client and design teams can engage.

(Stickdorn & Schneider, 2010, p. 178) Stakeholder

maps

Visual or physical representation of the various groups involved with a particular service. By representing staff, customers, partner organizations, and other stakeholders in this way, the interplay between these various groups can be charted and analyzed.

(Stickdorn & Schneider, 2010, p.150)

2.3.3 Service design maturity and design capability

Service design and design thinking can add a strategic value to organization and impact company profitability (Design Council, 2018). Different models have been made to illustrate different levels of using design (i.e. the danish design ladder; Ramlau, 2004). The idea is by climbing the ladder the company expands the scope of the design practice. The danish design ladder (Danish Design Centre, 2015) describe four levels of maturity of using design in an organization:

1) Non-design. No trained designer involved, the solution is driven by involved

participants ideas about good function with little or no involvement of the user

perspective.

2)

Design as form-giving.

Design as the finishing touch and styling.

3) Design as process. Design is an approach from early development stages. The solution is driven by the problem and the users and requires the involvement of a variety of skills and abilities.

4) Design as strategy. Designers is part of rethinking business models, and design in relation to the business vision.

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If the ladder relates to scope of design, another understanding of building design capabilities relate to trained human resources. Expanding the design capability by facilitating initiatives to transmit design knowledge to non-professional designers with the aim to absorb and use the knowledge in their work (Wetter-Edman & Malmberg, 2016). Education of non-professional designers in service design and in that way embed service design into the organization have been given attention lately, especially in the healthcare and public sector, where service design is seen as a way to make more customer/patient centric organizations (Wetter-Edman & Malmberg, 2016).

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3 RESEARCH APPROACH

A hermeneutic research method was adapted from Paterson and Higgs (2005) in order to explore the overarching research question: In a manufacturing company undergoing servitization, what is the role of FLE for service innovation by interpreting both FLEs collective customer understanding and the tactical & strategic view from management and RnD.

Hermeneutical research is the theory and practice of interpretation, and is rooted back in ancient Greek and early days of western philosophy (Mantzavinos, 2020). The research strategy is based on three philosophical constructs (Table 3) when combined forms a spiral that moves and join the “horizon of the past” with the present and future understanding. The goal of hermeneutic research is to combine the horizon of the past, present and bridge future understanding trough a dialog between questions and answers, where the researcher moves between interpreting the part and the whole (Paterson & Higgs, 2005), as in Figure 1.

Table 3: The underpinning constructs of the hermeneutical spiral (Paterson and Higgs, 2005).

Fusion of horizons Dialog of question and answer Hermeneutic circle

Refers to the fusion of the researcher prejudices and previous knowledge, the past horizon, with new knowledge.

Knowledge is created through dialog or a conversation between the researcher and the text.

The researcher is part of a circle moving between interpretation of parts and how they fit (interpret) in to the whole. Like reading a book, to make sense of the story, the words and sentences need to be interpreted and reinterpreted in the context of whole.

3.1 Data collection

Semi structured interviews were undertaken, using a semi-structured format, with the operational oriented FLE (sales, contract managers), and the tactical & strategic oriented in form of, a business developer, designers and global project management (further detail in Table 4). Experienced representators for the company assisted in the sampling by identifying potential research participants and provide contact information. The purpose of the interviews was to understand the industry, the customer view and map the current state from an inside perspective. Also, how customer insights are communicated throughout the sales team and further in the organization. The interview topics was structured to obtain descriptions of the customer and who the key actors are, what their roles are, and how the customer journey look like. As well as how does sales capture customer knowledge and how do they pass it forward. Based on the interviews new topics emerged and formed base for new questions and subsequent interviews. The interview was carried out through telephone and ranged in length from 60 to 90 minutes, the majority were recorded to enable transcription and further analysis. Before the interview were the participant given the background and purpose of the interview as well as verbal information involving their rights to opt-out, data treatment and anonymization and asked to give their verbal informed consent.

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Table 4: Participating respondents and their role, experience with the company.

3.2 Analysis

The analysis of the empirical and the theoretical material follow a hermeneutic approach and the understanding was developed through abductive reasoning (Alvesson & Sköldberg, 2017). To interpret and understand the material, the analysis moved between theory and empirical data to identify patterns (Alvesson & Sköldberg, 2017). The complete analysis was made in different stages, focusing on the parts separately and in dialog with each other. This was done in relation to and in parallel with the collection of the empirical data. Therefore, the analyses have, to some extent, been affected by the initial observations and insights from the empirical material. Prior theoretical knowledge about the specific context of large manufacturing enterprises played an important role in the interpretations.

Respondent Role Experience Audio/notes Time

1 Digital, Business developer 20+ years Audio ~90 min

2 Front-end sales engineer [FLE] Several years Audio ~ 90 min

3 Front-end sales engineer [FLE] 20+ years Notes ~ 60 min

4 Contract manager [FLE] 5 years Audio ~ 40 min

5 Senior Contract manager [FLE] Several years Audio ~ 90 min

6 Front-end sales engineer [FLE] 20 years Audio ~ 60 min

7 Senior service designer 5-6 years Audio ~ 60 min

8 Global Project manager, service Some years Notes ~ 30 min

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The analysis of the empirical material is an ongoing process from the moment of collection begins, as seeing or hearing things will trigger connections to prior knowledge or understandings. Which in turn will in influence the remainder of the observations. However, as a basis for the structured analysis of the empirical material, a method inspired by thematic analysis (Braun & Clarke, 2006) was used. Starting with familiarization with the transcribed material, during which initial patterns become apparent. The material was read several more times while searching for aspects related to the identified patterns. And the final step of the analysis was writing and visualizing the results, which are presented in the following chapter. Through a synthesis of literature and the analyzed empirical material, were suggestions given of how to leverage FLEs in service innovation and is presented in sub-chapter 4.3.

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4 RESULTS

In the following paragraphs I present the results of this thesis. Results are divided in three parts. First, I present the sales perspective on customer knowledge followed by a sub-section representing the results on FLE contribution in innovation from a service design and management perspective and lastly ways FLE can be leveraged for service innovation.

4.1 The complex role of front-end-employees

The role of sales in a large company is multi-dimensional and complex, especially in companies focused on servitization where many operative functions work in parallel. In ABB, FLEs working in sales described their work as a mixture of consultant, customer support and sales, where the aim is to be proactive and help the customer with their needs. They viewed their role as trying to solve customer’s problems using an existing sales portfolio of products and services and addressing as well supporting several moments in the customer journey. They are working to form a close relationship to the customer, with daily contact, through physical meetings, and follow-up through phone calls and emails. They are interacting with several different customer segments, from system integrators, consultants, distributors to end-customers. This network of different segments is presented in Figure 2. However, as FLE emphasize is their work dominated by creating ongoing relationships with the end-customer and maintaining the first-person contact with the different departments within the end-customer company. As one FLE puts it:

“You have everything from warehouse/storage personnel to top purchaser and everything in-between, so we have a very wide span between our contacts and channels my colleagues and I” (R2, translated from Swedish by the author).

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The respondents described a layer of complexity referring to many organizational roles, both within ABB as well as with the end- customers. The number of roles depends on the type and size of the customer which effects who makes different purchasing decisions, or who the decider at the end-customer organization is. With large end- customers are there several varying decision makers and influencers (see Figure 3) while with smaller end-customers there might be the same person responsible for investments as well as ongoing maintenance plan and budget. Additionally, their goals and key performance indicators (KPI’s) differ.

Another layer of complexity refers to the number of deciders with end-customer organizations and the ways they are internally organized. This requires that the FLEs in sales department understands the combination and different roles that are relevant for their work.

“The maintenance manager may be subordinate a production manager or a site manager. The project manager may be subordinate the site manager, which isn’t super usual, but it can happen, most often subordinated to the maintenance manager or vice versa, they are not usually in the in the same level. Often is it difficult to draw a line between what is technology, maintenance or project” (R5, translated from Swedish by the author)

This complexity also exists on the provider side, with several departments that need to collaborate and communicate, as can be seen in Figure 4, FLE are the interface between the customer and the internal divisions. The customer might not be aware of this internal structure as they see the provider as one unit.

“My role is to work over divisions, follow up on the contracts are being fulfilled… The customer sees us as one organization they don’t perceive our divisions”. (R5, translated from Swedish by the author)

Figure 3: End-customers often have different roles.

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Figure 4: The position of sales related to end-customers and ABB’s other departments.

4.1.1 Identifying customer needs

The respondents describe the importance of identifying the customer need and elaborate how different customers value and are driven differently. One of their main tasks are to uncover customer needs to propose and deliver better fitted service. By having a close relation to the customer and keep contact through dialog they are able to understand these needs. Although how they practically are doing to understand and uncover these needs is vaguely described. As one of the respondents puts it:

“Regular conversations, there is no questionnaire. It’s, like, finding where it hurts the most. And needs of course, or how they reason and what they want to improve” (R6, translated from Swedish by the author)

The above quote indicates that FLE are aware of the unformalized process and are relying on experience and tacit knowledge to understand what the end-customer and the decisionmaker needs. Mainly aimed towards understanding explicit and observable needs.

A description, based on aggregated information derived from the interviews with FLE, of the roles within the end-customer organization and of who FLE are in communication with, can be seen in Figure 5. Followed by a journey describing (Figure 6), from the end-customer perspective: the general stages in the lifecycle, what they mean and who is responsible (the actors are following the color coding from Figure 5). These images illustrate the faced customer complexity, from number of involved actors and the length of the business processes. The journey shows knowledge in customer processes, mainly oriented towards functional jobs and business. Although FLE are also taking into consideration of some emotional and social aspects as well.

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4.1.2 Intra-organizational knowledge sharing

Sharing customer knowledge and collaborating is an important part of sales ongoing work. As a way to organize and share information across the organization are customer relationship management (CRM) platforms used to gather what business-wise is going on with a certain customer. Another point of internal interaction is the transfer of customer responsibility which occurs a couple of times per year, when people retire, change line of work etc., through an informal meeting. During these meeting general customer information exchanged, in form of who the key-actors are, sales figures, competition and ongoing projects. This is supposed to give the acceding a quicker start in building relations, minimize potential neglection and inform the acceding’s sale approach.

At times the customer is requesting something particular or have an idea at a general level. In those cases, are FLEs functioning as a consultant and help suggest different ways solving the problem and might provide a local solution. When FLEs are unable to solve the customer requests or identified needs, the FLE is seeking support or information that can be provided to the customer from the product owner. The responsibility ends with keeping the customer informed and the issue is transferred to the local product owner. The product owners are responsible to gather input from the market that in turn supports the initiation of improvements or new development of services and products. But how this information actually travels is unclear and seem to be being gradual filtered along the way to the RnD departments, according to R10, see Figure 7.

Figure 7: Visualization of gradual dissolvement of customer knowledge in the information flow.

This is a problem without access to the customer, a problem the service designer at ABB approach by bypassing the information chain and involve the customer directly through customers (see Figure 8).

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4.2 Front line employee involvement

This sub-chapter aims provide an inhouse service design and management/strategic point of view and describe examples of how FLE are involved in innovation?

4.2.1 Problematics

The analysis of interviews identified some problematics of involving FLE into the innovation process, namely, complex, goal discrepancies and design maturity.

Complex

In this complex world there are many variables to consider, and a huge task and effort to understand the multiple levels of functions and stakeholders. It’s not just about understanding the value for the end customer there is also the values for the partners, local sales units, the regional as well as the global level.

“We see it takes half year for trainees and consultancies: to understand the basics of the whole system we are talking about before they can start to create value. I felt I needed to study business to be able to add value to the company” (R10).

The above quote is describing the complexity to maneuver as service designer in this context, as well as that unalignment of goals, terminology and language is a factor to consider in service design and innovation.

Goal discrepancy

From a strategic view is there a perceived discrepancy of long-term goals in contrast to more short-sighted view from the FLE. Whereas the FLE have an existing sale-portfolio to solve the customers challenges with and are engaged with obtaining their sale goals. Therefore, not able to see how global development can help with their problem in the short term. From the FLE perspective were some of the FLE respondents, mentioning experience of neglection in collaboration with global development.

Design maturity

The organization haven’t reached a level of design maturity where every process is impacted of a designerly approach, but dissemination design skills into the organization is an interesting topic.

"In some cases, would I feel sales don’t have the skillset of a design researcher to see the unspoken/latent needs of the customer. That might be an opportunity for a new solution. I’ve been trying to train sales and product managers to go to the customer and just listen, observe and try to figure out these weak signals that can be utilized in the future when we are creating new solutions” (R10).

4.2.2 FLE in innovation phases

Below is the involvement of FLE in the innovation process structured over the phases: Initiation, Design & Evaluate and lastly Realization.

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Initiation

From a management perspective does frontline employees provide feedback on what offerings are suitable and what processes work or do not work and describe what is difficult to sell. But the market feedback from FLE is scarce, and generally “no news equal good news” apply. Some initiatives for involving FLEs have been taken. One of these initiatives are to develop a service ideation method aimed to involve several different key stakeholders, such as customer, partners, employees etc. Another initiative is built upon the ideas of open innovation through idea crowdsourcing with a database where the FLE are able to describe and deliver ideas but leaving it up to someone else to act upon.

Design and evaluate

In the service design process FLE are described to be involved when they are seen as primary source, a type of user in the service. Whilst as a secondary source the FLEs role is mainly seen as an evaluative resource and are therefore invited to critique service concepts, in order to assess the local market fit, and if they will be able to sell the service etc. Beside evaluators are they also seen as door openers to the customer. As the door opener of the customer, FLE are the one with responsibility and established relationship with the customer and facilitate first-hand access for the design team. According to R10 the FLE are usually taking part as an observer whilst the design team are interacting with customer and displaying new concepts. Afterwards, the FLE, often witness about that they learned something new about their customers.

Realization

In the realization phase where the FLE given a more active role and part of the peripheral team as advisors and contributed with their customer expertise and experience, trough workshops and meetings, giving the FLE opportunity to discuss insights. Aiding with identifying fitting pilot-customer, sales argument and how to pitch the concept. To my observations though where the main flow of information originating from project owner to the FLE in order to disseminate information and updates about the service innovation progress. A visualization of a realization project team can be seen in Figure 10.

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4.3 Ways FLE can be leveraged to enhance a firm’s service innovation

capability

Based on the analysis of the empirical material in synthesis with the literature were following recommendation created, which is presented in Table 5. The list is not aiming to be extensive.

Table 5: A list of ways to leverage FLE for service innovation.

Recommendations Description Design maturity level

Involve FLE as active participant.

Directly involve FLE as an active part in innovation and leverage the unique resource as part of the innovation the team.

Any level

Assimilate FLEs knowledge trough design-led generative research.

Taking a page in from the design research book of generative methods. Task FLE with interesting exercises in design probe-form like, collecting evidence by using diaries, pictures, sketches, and personas.

Level 3 or 4

Educate in service design principles and techniques.

A way to tackle the complexity and structure the FLE process of identify customers’ needs and systematically creating customer knowledge could be to educate FLE in the basics of service design research techniques and tools.

Provide with workshop materials and discussion topics/material.

Educate management in facilitation / support creativity.

Level 3 or 4

Tools and CRM. Integrating, created personas, journeys etc. with an

existing customer relationship management (CRM) system.

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5 DISCUSSION

In the following chapter will the results be discussed in terms of implications and research contribution. Limitations of the study are identified and suggestions for future research are made.

5.1 General discussion

This thesis aimed to explore what is the role of FLE for service innovation in a manufacturing company undergoing servitization, and in what ways can FLE as a resource be involved to enhance a firm’s service innovation capability. The findings reveal that FLE are facing several complexities: The first complexity is related to the number of customer segments to handle and adapt the role for (Figure 2). Second, the complexity in being the intersection and interface between the customer and to the various internal organizational departments (Figure 4). The third complexity refers to the size and organizational structure of the end-customer that they need to be aware of. As the end-customer consists of many actors with different roles, goals and KPI:s (Figure 3), the finding suggests that to handle the complexity, FLEs needs a good understanding of the customer. However, the extent of actors complicates the coping and identification of detailed information. Nevertheless, the findings indicate that FLEs possess three types knowledge that can contribute to service innovation, customer knowledge and product knowledge and practice knowledge, as can be seen in Figure 5 and Figure 6. As an outcome of FLE close customer relationship do they gain knowledge of the customer needs and requirements, expectation and are able to see things form the customer perspective through ongoing interactions and relationships. This customer knowledge is then used by the FLE with further integration of resources into new or modified value propositions. An example of the three knowledge types, is when the FLE is functioning as a consultant. They are using their product, process and customer knowledge to help and suggest different ways of solving the problem in form of different technical or project related solutions adapted to the customer’s needs.This result is in line with Karlsson and Skåléns (2015) findings of what FLE can contribute to service innovation. These results are important as it bridges the possible contribution to the servitization context as Ostrom et al. (2015) noted that changing contexts in which services are delivered require companies to increase “employee engagement to improve service outcomes” by “incorporating the voice of the employee in service innovation” (p.135).

5.1.1 Involve FLE as an active participant in innovation teams

The result indicates that FLEs are involved as providers of market feedback that supports the initiation of an innovation project. The FLEs role is mainly seen as the door opener to the customer and as an evaluative resource. The FLEs provide with customer knowledge when asked but do not have control of the end results. FLE are also taking part in the delivery phase as realizers of the service. These roles are consistent with the supporting roles of the reporter, the advisor and the executor (Engen & Magnusson, 2018). But as the results indicate, FLE have more to give to the innovation process in form of active involvement.

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The results also reveal possible tensions between the local sales and global RnD in form of misalignment of perception of customer preference and needs. This is evident in the findings of problematics with FLE involvement. This misalignment might be depending on the fact that FLEs are mainly seen as evaluators and are not given a big part in the innovation process. The role as evaluators are to make sure of the fit between the value proposition and the customer, as well as to FLEs procedures. Misalignment and late involvement of the FLE might render a deprived outcome and extensive time and resource consumption. By actively involving FLE in throughout service innovation process and leverage the unique resource as part of the innovation the team can they provide with to provide with contextual customer knowledge, product knowledge and practice knowledge. Beside improvements to the innovation process might other profits be gained as well. For instance, might involvement contribute to increased ownership, acceptance and understanding in regard to the intended value propositions, which in turn might facilitate the market launch (Karlsson & Skålén, 2015).

This would mean to give further responsibility to the FLE. A job enlargement which can prove to be challenging, as it could be in conflict with their main responsibility’s and KPI’s. This is evident in the perspective of service designer that indicates the different types of goals between sales (short-term) and RnD (long-term). While the customer interface forms a unique resource for service innovation, to leverage FLE is it important that employees are encouraged, recognized, and given time to develop their own innovation capabilities. Thus, the findings indicate the importance of provide FLE with tools, time, incentive and vison to structure, formalize and support innovative activities.

5.1.2 Generative research with FLE as participants/subjects?

Assimilate FLEs knowledge trough design-led generative research, by using FLE as an informant or customer proxy in the early design process might FLE tacit and latent knowledge be captured. A normal service design approach is to let the different actors map out their view, their interactions and their process in an interview or workshop. Taking a page from the design research book of generative methods and task FLE with interesting exercises in probe-form., Collecting evidence by using diaries, pictures, sketches, personas, creating maps and depict interactions. By letting FLE provide self-descriptions and self-disclosure, probes can allow communication of insights into their everyday processes and structures, which are difficult to observe or explore otherwise (Gaver, 1999).

Probes are not only a way to receive information or inspiration, they also serve as tool of dialog and invites to participation (Mattelmäki, 2005). The result in chapter 4.2.1 design maturity implicate that the organization might benefit of a more sensitive skillset of a design researcher to identify unspoken needs. In the form of the of simply observing, asking questions and thinking more like a designer. Although the method might be aimed towards obtaining ambiguous material in relation to the customer, it might also provide valuable insight or inspiration into the service delivery process from the FLE perspective. Probes could be mini tasks related to this aim and support the way of observing and make FLE more reflective upon their own role as well as thinking of the customer in other or new ways.

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The internal business setting will probably put different requirements than in an external setting. Although some requirements remain, such as: the probes should be design for the receiver, it should be engaging and strike the fine balance of not being too demanding of effort but still make the participant to reflect.

5.1.3 Educate organization in service design principles and techniques

Understand and identify customer needs are an important factor for service innovation (Ostrom et al., 2015). The findings suggest that the FLE process of identifying customer needs are done in an unstructured way by relying on their experience and tacit knowledge to understand what the end-customer and the decision maker needs. The unstructured process of gathering customer knowledge might be a sign of the overall complex sale process and the way that sales are being measured. A way to tackle the complexity and structure the FLE process of identify customers’ needs and systematically creating customer knowledge could be to educate FLE in the basics of service design research, techniques and tools.

Through the use of visualization, complex systems can be simplified, and provide something that different stakeholders can understand and interact with (Stickdorn et al., 2018). By encouraging employees to visualize may several benefits be gained. For instance, visuals can be utilized in order to articulate knowledge and enable detection of patterns that otherwise might be difficult to notice. Visualizing can also serve as a communicative tool and provides a way to share ideas and insights with those who hasn’t the same contextual knowledge as the FLE. Moreover, service designers are using visualizations, (creating visual summaries of human emotions, needs, and drives) to maintain empathy during the design process (Segelström, 2009). In the FLE perspective might it also come handy as a way of conveying their ‘emotional’ customer knowledge to others within the organization. Through the use of visual communication can the anecdotal form tranced into more rich, descriptive, trust- worthy observations and actionable knowledge. It may also align the perception about the customer and creating a unified language (Calabretta et al., 2013; Stickdorn et al., 2018). Thus, using service design as an overarching mechanism and guiding principle can be beneficial for organizations going through servitization for developing a more customer-centric organization (Calabretta et al., 2013).

As FLE are organized in regional groups to support the coordination and knowledge sharing could the same group formation provide a place for systematically exchange of experience, capture ideas, etc. Example of tools to learn are personas, customer journeys etc., where they are able to describe their customer as an organism, consisting of several actors, and journey’s ranging in levels. Externalizing and humanizing the customer company to the rest of the organization, who are not able to meet them. But just to provide tools and focus on the individual will probably not be enough when aiming to integrate design at scale into the organization. Therefore, is it important to provide with engaged management to support FLE in further use and development of their newly obtained tools and skills.

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5.1.4 Scaling with digital integration

Simply having the knowledge isn’t enough, the knowledge needs to be shared and disseminated throughout the organization to be fully exploited. This could be done through management channels upward in the hierarchy as described in Figure 8. Riege (2005) argues that efficient knowledge sharing within the organization leads to faster development processes and contribute to better services, and in turn resulting in a faster speed-to-market and better market performance. By involving employees in knowledge sharing activities may individual tacit knowledge become organizational capacity. A solution could be by integrating, created personas, journeys etc. with an existing customer relationship management (CRM) system. Having a database with a collection of journeys and blueprints ranging over several types of customers, situations and timeframes available, editable and actionable all around the organization, might make the insights both useful for innovation as well to sale initiatives.

5.2 Discussion in wider context

As business are pursuing servitization for several reasons, sustainability is a large factor. More and more responsible initiatives are taken towards doing business in more ethical ways. Adopting service design principles of cross disciplinary collaboration and emphasis on the big picture is one way to approach these wicked problems. To create desirable services are a deep customer knowledge needed. But these important inputs are often latent and tacit and not easy to capture and identify. As a designer for services are there several ethical decisions to be made. But if the customer knowledge isn’t known it might lead to a deprived outcome and extensive time and resource consumption. Without customer knowledge will it be more difficult to adapt to changing behavior or circumstances as, it can lead to decisions based solely on opinions. Not having the complete picture, can also lead to other negative effects. For instance, one thing to consider while pursing circular economy is to think of how to do business in a more empathic way, by creating circular systems might you (un)deliberately designing out access to secondhand products and opportunities of overlooked and less privileged market segments.

Involving FLE into the innovation process are therefore merely one aspect to consider in this complex world. However, taking the employee perspective and provide FLE with the opportunity to take part in innovation is surly an act of empowerment and democratization.

5.3 Limitation and future studies

As all research, this study also has limitations. One of these limitations is the potential for generalization which is related to the research design. Although the study provided insights, the qualitive aim limited the sample size, while a wider sample size would be beneficial as further foundation for generalization. This study was conducted within a single firm, an increased number of companies or case studies could be beneficial for future studies and provide more nuanced accounts and yield further insights.

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This study has been focused primarily on FLEs and their role and only marginally touched upon their integration with service design & RnD departments and the relationship with the management. Secondly haven’t the management perspective, into how they would like to organize, or influence employee initiatives been explored. Nor has it enclosed if FLEs motivations are high for being part of innovative work. Moreover, future studies should aim to test, validate and explore presented suggestions and their impact. Future research should also aim towards a more comprehensive study of the inter-organizational customer knowledge creation and dissemination and its effect on service innovation by adopting a research through design approach to explore these topics in more depth.

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6 CONCLUSION

This thesis explores what the role of FLE for service innovation in a manufacturing company undergoing servitization, and in what ways can FLEs be leveraged to enhance a firm’s service innovation capability. With a context in servitization and building on the literature of service innovation FLE are identified as a resource to innovation with aggregated customer knowledge, product knowledge and practice knowledge. Their role is varying and depending on which phase of the innovation process, but in this context are FLE mainly partaking as a supporting role.

Increase “employee engagement to improve service outcomes” by “incorporating the voice of the employee in service innovation” is noted as a research priority (Ostrom et al., 2015, p.135). This study addressed this in a large manufacturing context and support that front-line employees can play a key role in acquiring a deeper understanding of customers’ requirements for service innovation. The continuous identification of customer needs is an unformalized process and FLEs are relying on experience and tacit knowledge to do so. The study makes a contribution by emphasizing the needed support to empower FLEs as contributors to service innovation. Service design, tools and techniques, are a suggested way to provide structure and formalization in the involvement of FLEs into the innovation process. Further suggestions are to involve FLEs as an active part in innovation, assimilate FLEs knowledge trough design-led generative research, primarily with use of design probes. Lastly to integrating, created personas, customer journeys etc. with an existing customer relationship management (CRM) system to disseminate the knowledge throughout the organization.

Concluding thoughts, although talking to sales are not a new idea, especially in manufacturing companies, but learning to leverage FLEs will likely be beneficial given the growing service economy. This should be explored further in order to develop as a proactive and sustainable business.

THE FORGOTTEN SOURCE : EMPLOYEES AS A SOURCE OF CUSTOMER INSIGHTS