Arts 2014 Omar Avesta

SERVICE DESIGN IN INFORMATION TECHNOLOGY

STARTUPS

Unpacking Opportunities and Challenges Through Three Case Studies

Avesta Omar

SERVICE DESIGN IN INFORMATION TECHNOLOGY

STARTUPS

Unpacking Opportunities and Challenges Through Three Case Studies

Avesta OmarMaster of Arts Thesis // 2014

Aalto University School of Arts, Design and Architecture

ABSTRACT

What is the role and value of service design in startup companies in the Information Technology (IT) industry? And how can service design help startups develop their [MZ^QKM[�UWZM�MٺMK\Q^MTa'

Increased global competition forces new ventures to create useful and unique service experiences, as customers rarely make purchasing decisions based on function alone. <PM�VMML�\W�\PQVS�IVL�IK\�LQٺMZMV\Ta�PI[�[PQN\ML�\PM�[MZ^QKM�QVVWÎ\QWV�XIZILQOU�IVL�[QOVQÅKIV\Ta�QVKZMI[ML�\PM�ZWTM�IVL�ZMTMÎVKM�WN �LM[QOV��XIZ\QK]TIZTa�[MZ^QKM�LM[QOV��I[�IV�important contributor to service innovation. However, unlike in manufacturing, startups in the Information Technology industry rarely have a tradition of utilizing the full potential of design in their business innovation.

<PQ[�\PM[Q[�_I[�KWVL]K\ML�\W�M`XTWZM�PW_�[MZ^QKM�LM[QOV�KW]TL�JMVMÅ\�1<�[\IZ\]X[�QV�WZLMZ�\W�LM^MTWX�\PMQZ�VM_�[MZ^QKM�WٺMZQVO[�QV�I�UWZM�MٺMK\Q^M�_Ia��I^WQLQVO�\PM�common pitfalls faced by most startups. First, the contemporary literature was reviewed \W�ÅVL�W]\�_PI\�XW\MV\QIT[�NZWU�\PM�XZQWZ�[\]LQM[�QV�[MZ^QKM�LM[QOV�KW]TL�JM�ZMTMÎV\�and applicable for a startup company in the IT industry. Then, an empirical study was

Author Avesta OmarTitle of Thesis Service Design in Information Technology Startups: Unpacking Opportunities and Challenges Through Three Case StudiesSupervisors Jung-Joo Lee, Håkan MittsDepartment DesignDegree programme International Design Business Management Year 2014 Number of pages 120 Language English

KWVL]K\ML�Ja�IXXTaQVO�I�Y]ITQ\I\Q^M�UM\PWLWTWOa��KWV[Q[\QVO�WN �\_W�LQٺMZMV\�XPI[M[��participatory observation and in-depth interviews.

The existing literature showed that there is a lack of research into the integration of service design practices with agile software development. This gap formed an interesting foundation for the two-phased empirical study. Participant observation was conducted as an in-house designer in a Finnish IT startup, followed by two case studies with IT [\IZ\]X[�\PI\�LM^MTWX�VM_�[MZ^QKM�WٺMZQVO[�NWZ�VM_�UIZSM\[��<PM�IQU�WN �\PM�\PZMM�KI[M�studies was to investigate how service design could be applied in startups. Based on the ÅVLQVO[��I�TQ[\�WN �ZMKWUUMVLI\QWV[�NWZ�1<�[\IZ\]X[�Q[�XZW^QLML�QV�WZLMZ�\W�JM\\MZ�]\QTQbM�service design in research and development (R&D) to attain its true potential in terms WN �UISQVO�[MZ^QKM�LM^MTWXUMV\�UWZM�MٺMK\Q^M��<PM�IQU[�WN �\PM�ZMKWUUMVLI\QWV[�IZM�\_WNWTL"��ÅZ[\��\W�PMTX�LM[QOVMZ[�LM^MTWX�\PM�[\IZ\]X¼[�LM[QOV�KIXIJQTQ\a�\WOM\PMZ�with other teams; and second, to help the management-level decision makers yield the advantages of service design thinking in R&D by integrating a service design approach as part of the overall strategy.

Keywords startup, service design, agile, lean

TIIVISTEMÄ

Mikä on palvelumuotoilun rooli ja arvo IT-alan kasvuyrityksissä? Ja miten palvelun suunnittelu auttaa kasvuyrityksiä kehittämään palvelujaan tehokkaammalla tavalla?

Lisääntynyt kansainvälinen kilpailu pakottaa uusia yrityksiä luomaan hyödyllisiä ja ainutlaatuisia palvelukokemuksia, sillä asiakkaat harvoin tekevät ostopäätöksensä perustuen pelkkään funktioon. Pakottava tarve ajatella ja toimia toisin on muuttanutinnovaatioparadigmaa ja korostanut huomattavasti muotoilun roolia ja merkitystä, etenkin palvelumuotoilua tärkeänä palveluinnovaation osatekijänä.

Tämä opinnäytetyö tutkii, miten IT-alan kasvuyritykset voisivat hyötyä palvelumuotoi-lusta voidakseen kehittää palvelutarjontaa tehokkaammin, välttäen yleisiä kasvuyritysten kohtaamia haasteita. Ensinnäkin, nykykirjallisuus tarkastelee, miten palvelumuotoilua ja sen metodeja voitaisiin mahdollisesti soveltaa kasvuyrityksissä. Sen jälkeen loppu-työn empiirinen tutkimus toteutettiin soveltamalla laadullista menetelmää, joka koostuu kahdesta eri vaiheesta - osallistuvasta havainnoinnista ja haastatteluista kahden case- yrityksen kanssa.

Tekijä Avesta OmarTyön nimi Palvelumuotoilu IT-alan kasvuyrityksissä: mahdollisuuksien ja haasteiden kartoittaminen kolmen tapaustutkimuksen avullaOhjaajat Jung-Joo Lee, Håkan MittsLaitos Muotoilun laitosKoulutusohjelma International Design Business Management Julkaisuvuosi 2014 Sivumäärä 120 Kieli English

Olemassa oleva kirjallisuus osoitti, että alalla on puutetta tutkimuksesta, joka keskittyy palvelumuotoilun käytäntöjen soveltamiseen ketterässä ohjelmistokehityksessä. Tämä muodostaa mielenkiintoisen perustan kaksivaiheiselle empiiriselle tutkimukselle. Osal-listuva havainnointi oli toteutettu talon palvelumuotoilijana suomalaisessa IT-kasvuyri-tyksessä, minkä jälkeen tutkimus keskittyi kahteen case-yritykseen, jotka kehittävät uusia palvelukonsepteja uusia markkinoita varten.

Kolmen tapaustutkimuksen tavoitteena oli tutkia miten palvelumuotoilua voitaisiin soveltaa ketterään ohjelmistokehitykseen. Perustuen havaintoihin, tutkimuksen lopputuloksena on kehitetty suosituksia IT-kasvuyrityksille, jotta ne voisivat paremmin hyödyntää palvelumuotoilua tuotekehityksessä saavuttaakseen sen todellisen poten-tiaalin. Suositusten tavoitteita on kaksi: auttaa suunnittelijoita kehittämään muotoilun käytäntöjä ja integroimaan niitä tuotesuunnitteluun yhdessä kehitysryhmän kanssa, sekä auttaa johtotason päättäjiä saavuttamaan palvelumuotoilun etuja käyttämällä palvelu-muotoiluajattelua tuotekehityksessä kokonaisstrategian osana.

Keywords kasvuyritys, palvelumuotoilu, ketterä ohjelmistokehitys, lean

0101. Introduction 1.1.Background 11 1.1.1. The Current State of Startups in Information Technology (IT) Service Sector 11 1.1.2. Design Thinking as a Rising Phenomenon in Businesses 121.2. Research Gap and Research Questions 13 1.2.1. Thesis Structure 15

0162. Literature Reviews

2.1. Service Design 17 2.1.1. What is Design 17 2.1.2. What is Service 19� ��,MÅVQVO�;MZ^QKM�,M[QOV� � � � � � ��2.2. Startups 22 2.2.1. Agile 24 2.2.2. The Lean Startup 26 2.2.3. Decision-Making in Startups 282.3. Service Design as an Integrated Process with Software Development 30� ��?Pa�=[M�[MZ^QKM�,M[QOV�IVL�0W_�Q\�;PIXM[�;MZ^QKM�7ٺMZQVO�� 2.3.2. Role of Service Design in Decision-Making 35 2.3.3. Reported Challenges and Opportunities of Applying Service Design 37

TABLE OF CONTENTS

0393. Case Study Design

3.1. Framework for the Empirical Study 403.2. The Research Approach 42 3.2.1. Phase 1: Participant Observation 44 3.2.2. Phase 2: Case Studies on Two IT startups 45 3.2.3. Sampling 46 3.2.4.. Pragmatic Considerations 48 3.2.5. Entering the Field 483.3. Trustworthiness of the Study and Possible Shortcomings 493.4. Case Study Interviews 50 3.4.1. Semi-Structured Interview Method 51 3.4.2.. Interview Design and Implementation 51 3.4.3. Data Documentation 533.5. Data Analysis 54

0574. Case Study Results

4.1. Participant Observation: Company A 59 4.1.1. Development Practices 59 4.1.2. Decision-Making 60� ��,M[QOVMZ¼[�?WZS�IVL�\PM�:WTM�WN �,M[QOV� � � � �� 0W_�\PM�+WUXIVa�Q[��VW\��*MVMÅ\QVO�NZWU�,M[QOV� � � �� 4.1.5. Status in the Customer Development Model 65 4.1.6. Challenges 664.2. Company B 67 4.2.1. Development Practices 68 4.2.2. Decision-Making 69

� ��,M[QOVMZ¼[�?WZS�IVL�\PM�:WTM�WN �,M[QOV� � � � �� 0W_�\PM�+WUXIVa�Q[��VW\��*MVMÅ\QVO�NZWU�,M[QOV� � � �� 4.2.5. Status in the Customer Development model 76 4.2.6. Challenges 774.3. Company C 78 4.3.1. Development Process 79 4.3.2. Decision-Making 80�� ,M[QOVMZ¼[�?WZS�IVL�\PM�:WTM�WN �,M[QOV� � � � �� 0W_�\PM�+WUXIVa�Q[��VW\��*MVMÅ\QVO�NZWU�,M[QOV� � � �� 4.3.5. Status in the Customer Development model 84 4.3.6. Challenges 854.4. Summary and Discussion 86 4.4.1. Approaches to Service Development 86 4.4.2. The Role of Design in R&D 88 4.4.3. Decisions on Service Features 91 4.4.4. Challenges 93 0975. Conclusions

5.1. Recommendations 985.2. Evaluation of the Study 1015.3. Future Research Opportunities 102

1046. References

LIST OF FIGURES

Figure 1: Thesis structure 15Figure 2: The Danish Design Ladder 18Figure 3: The Lean Startup 27Figure 4: Service design process by Stickdorn and Schneider (2011) 31Figure 5: The stakeholder map of Company A 36Figure 6: Framework for service design driven approach to R&D 41Figure 7: Phases of empirical research 43.QO]ZM� "�)ٻVQ\a�UIX�UM\PWL�� Figure 9: The state of Company A within the Customer Development model 65Figure 10: The state of Company B within the Customer Development model 76Figure 11: The state of Company C within the Customer Development model 85Figure 25: Key drivers for decision making 92

LIST OF TABLES

Table 1: Case companies 58Table 2: Interviewees from case company B 68Table 3: Interviewees from case company C 78<IJTM��"�)�[]UUIZa�WN �KI[M�KWUXIVQM[¼�LM[QOV�XZIK\QKM[�� !

IMAGES

Image 1: Paper prototype for the mobile service of Company A 63

APPENDixes

Appendix A 117

ACKNOWLEDGMENTS

This thesis would not have been possible without the support and help I had received from many great people. Their advice, ideas and inspiring words have helped me move forward with my work and believe in it.

I would like to thank my supervisors Jung-Joo Lee and Håkan Mitts for guiding me with inspiring advice and insights. Thank you for your time, patience, interest and KWUUQ\UMV\��AW]Z�MVKW]ZIOMUMV\[�X][PML�UM�NWZ_IZL�IVL�OI^M�UM�KWVÅLMVKM�_PMV�I felt uncertain and confused. I am also grateful to Professor Peter McGrory for sharing QV\MZM[\QVO�\PW]OP\[�IVL�QLMI[�\PI\�PMTXML�UM�[MM�[WUM�\PQVO[�NZWU�I�LQٺMZMV\�IVOTM��

I would like to express my deepest gratitude to the companies and, most importantly, every participant of the three case studies for sharing experiences and expressing a keen interest in this research. Without your input this thesis would not have been as insightful and rich as it is now, and I feel very proud of having such great companies taking part in Q\��<PIVS�aW]�NWZ�aW]�XZMKQW][�\QUM��MٺWZ\�IVL�[\WZQM[��1�\Z]Ta�PWXM�\PM�ÅVLQVO[�_QTT�PMTX�you further in your work.

<PQ[�RW]ZVMa�_W]TL�PI^M�JMMV�U]KP�UWZM�LQٻK]T\�_Q\PW]\�Ua�_WVLMZN]T�NZQMVL[��Special thanks to Aino Hanttu and Michelle Vandy for connecting me to the right XMWXTM��1�LWV¼\�SVW_�_PI\�1�_W]TL�PI^M�LWVM�_Q\PW]\�aW]��)VL�ÅVITTa��ITT�WN �\PQ[�_W]TL�not have been possible without the love and support from my lovely family and Tuomas, who created such a warm and comfortable environment around me. Thank you Tuomas for being there and encouraging me when I needed help, and thank you so much for the intense proofreading.

INTRODUCTION

1

This Chapter provides an introduction to the study, including an overview of what led to its implementation, plus a description of the study’s structure and goals.

11//INTRODUCTION

The inspiration for this study came from my personal interest in services, interaction design and new ventures. This interest increased in the summer of 2013 when I landed I�RWJ�I\�IV�1<�[\IZ\]X�QV�0MT[QVSQ��.QVTIVL��IVL�JMKIUM�Q\[�ÅZ[\�QV�PW][M�LM[QOVMZ��<PM�service development process provided an interesting environment for investigating how service design practices can be applied in a fast-paced agile development process. I saw service design as a particularly relevant discipline due to the nature of tech startups - \PMa�LM^MTWX�[MZ^QKM[�\W�IV[_MZ�\PMQZ�K][\WUMZ¼[�XZWJTMU[�IVL�VMML[��5a�WJ[MZ^I\QWV[�I[�an in-house designer made me ask: _PI\�Q[�\PM�ZWTM�IVL�[QOVQÅKIVKM�WN �[MZ^QKM�LM[QOV�QV�IV�MIZTa�[\IZ\]X��QV�\MZU[�WN �[PIXQVO�I�[MZ^QKM�IVL�UISQVO�\PM�:�,�XZWKM[[�JM�UWZM�MٺMK\Q^M'

In this context, to be MٺMK\Q^M�means to perform the right things with the resources available, whereas to be�MٻKQMV\ means perform things in the right manner. This study I[[MZ\[�\PI\�MٺMK\Q^MVM[[�Q[�M[XMKQITTa�I\\ZIK\Q^M�NWZ�[\IZ\]X[�I[�\PMa�WN\MV�TIKS�XZM�LMÅVML�XZWKM[[M[�IVL�UM\PWLWTWOQM[��8T][��[\IZ\]X[�IZM�XIZ\QK]TIZTa�]VKMZ\IQV�IJW]\�UISQVO�QVKZMUMV\IT�KPIVOM[�QV�[\ZI\MOQK�LQZMK\QWV��\P][�MٺMK\Q^MVM[[�Q[�I�KZQ\QKIT�I[XMK\�for startups. The question formed the background for this research, which aims at expanding the current understanding about service design and its value to tech startups.

1.1.1. The Current State of Startups in Information Technology (IT) Service Sector

?MQ[\��!��LMÅVM[�QVNWZUI\QWV�\MKPVWTWOa�I[�a tool that implements computer systems and application software as a complement or replacement for humanistic actions (p. 1). He highlights

1.1. Background

12 Avesta Omar // Master’s Thesis // Aalto University // 2014

that in the knowledge-based economy prevailing today, creating products and services with large software content has become increasingly important, and IT services are constantly becoming weighty components of business operations. When aligned with business and consumer needs, IT services provide companies with a competitive advantage in a highly competitive market (Weist, 2009; p. 1). The role of design as one of the key contributors to successful services has been increasingly emphasized, as it brings technology the human factor that can make services more empathetic and user-friendly (Weist, 2009; Larsen et al. 2007; Cooper, 2007).

Due to advancements in technology, the barriers to start new ventures, startups, and to internationalize are now lower than ever before. However, increasing global competition brings new challenges to the service economy and to IT startups - one common characteristic for them is that their failure rate is extremely high (Blank, 2006). In addition to the constantly increasing competition, the state of the service sector has changed as services have become a commodity and the focus has shifted from delivering services to delivering experiences. Some scholars have referred to the emergence of an “experience economyº��_PMZM�\PM�K][\WUMZ[¼�JI[QK�VMML[�IZM�N]TÅTTML�IVL�\PMa�XMZKMQ^M�the value of a service based on the emotional experience that it delivers. The shift NWZKM[�[MZ^QKM�XZW^QLMZ[�\W�ÅVL�W\PMZ�UMIV[�\PZW]OP�_PQKP�\W�KWUXM\M��*MT\IO]Q�M\�IT��2012; Pine & Gilmore, 1998), since creating a unique and pleasant user experience has become a key factor that can make a service successful (Kujala, 2003). In the globally competitive market of today, new ventures need to understand their target users, develop new customer experiences, and quickly adapt to changes (Tekes, 2007).

1.1.2. Design Thinking as a Rising Phenomenon in Businesses

In his book Change by Design��!��<QU�*ZW_V��\PM�+-7�WN �IV�QV\MZVI\QWVIT�LM[QOV�ÅZU�IVL�QVVW^I\QWV�KWV[]T\IVKa�1,-7��QV\ZWL]KM[�LM[QOV�\PQVSQVO�I[�IV�IXXZWIKP�\PI\�WٺMZ[�tools that enable people to apply design, solve problems, and foster innovation within organizations. He emphasizes the shift from a manufacturing economy to one that favors knowledge work and service delivery, where design has the potential to foster innovation IVL�UISM�I�LQٺMZMVKM�QV�XZWKM[[M[��[MZ^QKM[��1<�XW_MZML�QV\MZIK\QWV[��MV\MZ\IQVUMV\[��and other human-centered activities (2008, p. 86). The rising importance of design

13//INTRODUCTION

became a widely discussed topic, also highlighted by other scholars such as Larsen et al. (2006), who suggest that due to the increasingly demanding markets, companies need to innovate through the design of new services. Moreover, companies need to encourage the use of design, not only in their processes, but also as a means of adding value.

The role of design is not the only thing that has changed in the shift from a traditional manufacturing-oriented thinking to a more holistic discipline, as the role of designers PI[�]VLMZOWVM�[QOVQÅKIV\�KPIVOM[�I[�_MTT��8ZWNM[[QWVIT�LM[QOVMZ[�IZM�VW_�ZMY]QZML�to apply strategic and systems thinking, participate in transformation processes in organizations, look for new business model opportunities, reframe service systems, and participate in community development, to name a few (Meroni & Sangiorgi, 2011).

As a result of this shift in the paradigm of innovation, disciplines such as strategic design, transformation design, social design, user-centered design and service design have also emerged. This study focuses on service design as an important contributor to service innovation. ?PQTM�[\QTT�IV�M^WT^QVO�LQ[KQXTQVM��[MZ^QKM�LM[QOV�PI[�\PM�XW\MV\QIT�\W�WٺMZ�I�KWUXMTTQVO�approach to answer the needs of IT startups due to its human-centered qualities, exploration, discovery, early prototyping, and generative learning philosophies (Meroni and Sangiorgi, 2011). These methods and tools are seen as potential drivers for innovation.

1.2. Research Gap and Research Questions

This study is built around the use of service design in the development of new service WٺMZQVO[�I\�1<�[\IZ\]X[��;\IZ\QVO�NZWU�\PM�OMVMZIT�XZIK\QKM[�WN �[MZ^QKM�LM[QOV�IVL�\PM�prevailing characteristics of IT startups, the research moves to the empirical part, focusing on participant observation and two case studies conducted with startups developing business-to-consumer (B2C) services.

<PQ[�[\]La�[MMS[�\W�ÅTT�I�ZM[MIZKP�OIX�NW]VL�QV�KWV\MUXWZIZa�ZM[MIZKP��_PQKP�_I[�


uncovered following an extensive literature review and participant observation. Research exists around the contribution of design and service design to shaping services in an MٺMK\Q^M�_Ia��;MOMT[\Z�U��#�;\QKSLWZV��;KPVMQLMZ��#�4I]ZMT��#�5IZ\QV��2009; Meroni & Sangiorgi, 2011; Leonard & Rayport, 1997; Steen et al., 2011; Kujala, 2003, Hyysalo, 2009). Also, there are studies on the common challenges that startups NIKM�_PMV�LM^MTWXQVO�VM_�[MZ^QKM�WٺMZQVO[��:QM[��#�*TIVS��#�*TIVS��#�*TIVS�2009; Nielsen, 2009; Hollins, 1993; Feinleib, 2012). All of these studies provide evidence on a number of characteristics through which service design can help IT startups shape [MZ^QKM[�QV�I�[\Z]K\]ZML�_Ia��UISQVO�ZM[MIZKP�IVL�LM^MTWXUMV\��:�,��UWZM�MٺMK\Q^M��;MZ^QKM�LM[QOV�UM\PWL[�PI^M�JMMV�[PW_V�\W�XZW^QLM�J][QVM[[M[�_Q\P�KMZ\IQV�JMVMÅ\[�and competitive advantages through multiple successful cases (Steen at al., 2011). On the other hand, those methods have also been shown to have certain challenges when it comes to applying them in corporate settings (Postma et al., 2012). There is a knowledge gap in how the practices and qualities of service design could be applied in the context WN �[\IZ\]X[��OQ^MV�\PMQZ�NI[\�XIKML�IVL�IOQTM�MV^QZWVUMV\��<W�ÅTT�QV�\PQ[�OIX�QV�M`Q[\QVO�research, the qualitative methods used throughout this study are aimed at gaining a deep understanding of the role and value of design in startups, as well as insights into how [MZ^QKM�LM[QOV�KIV�JM�][ML�\W�PMTX�[\IZ\]X[�MٺMK\Q^MTa�LM^MTWX�XZWL]K\[�\PI\�][MZ[�ÅVL�valuable. To establish a link between the advantages of service design and challenges faced by startups, current perceptions of service design and prevailing culture in startups are presented.

The primary research question (1) and secondary research questions (SQ (1), SQ (2), SQ (3)), derived from the research gap, are the following:

0W_�KIV�[MZ^QKM�LM[QOV�PMTX�[\IZ\]X[�JMKWUM�UWZM�MٺMK\Q^M'

;9��"�0W_�Q[�[MZ^QKM�LM[QOV�IXXTQML�QV�[\IZ\]X['�?PI\�Q[�\PM�K]ZZMV\�[\I\M'�� ;9��"�?PI\�IZM�\PM�XMZKMQ^ML�KPITTMVOM[�IVL�WXXWZ\]VQ\QM[�NWZ�ILWX\QVO�� [MZ^QKM�LM[QOV�IXXZWIKP�QV�I�[\IZ\]X�KWV\M`\'�� ;9��"�?PI\�IZM�\PM�NIK\WZ[�\PI\�QVÆ]MVKM�[MZ^QKM�ZMTI\ML�LMKQ[QWV�UISQVO'

Questions SQ (1), SQ (2) and SQ (3) are explored through participatory observation,

15//INTRODUCTION

\PZW]OP�Å^M�UWV\P[�WN �MUXTWaUMV\�I\�IV�1<�[\IZ\]X�KWUXIVa�JI[ML�QV�.QVTIVL#�IVL�two case studies of startups, one based in Finland and the other in the U.S.

1.2.1. Thesis Structure

<PQ[�[\]La�Q[�LQ^QLML�QV\W�Å^M�XPI[M[#�[MM�.QO]ZM��8PI[M��Introduction, covers the background of this study, research questions and thesis structure. Phase 2, Literature Reviews, covers startup characteristics and processes, the role of design and its potential role in the startup context, plus the advantages and challenges of service design. Phase 3, Case Study Design, focuses on participant observation, in order to get hands-on experience, and two case studies and documentationt. Phase 4, Case Study Results, covers how service design process have been used, explicitly or implicitly, in practice and how it has aided startups in R&D. Finally, phase 5, Conclusions, covers practical implications for using service design in an agile startup environment, plus suggestions for further research.

Figure 1. Thesis structure

INTRODUCTION LITERATUREREVIEWS

CASE STUDYDESIGN

CASE STUDYRESULTS

CONCLUSIONS

LITERATUREREVIEWS

This Chapter presents the theoretical concepts related to this study. The conducted literature review covers the following sections: (1) Service Design; (2) Startups; and (3) Service Design as an Integrated Process with Software Development. The overall purpose of looking at these topics is to study them from a critical point of view in order to identify opportunities, strengths and weaknesses of service design and some common processes in IT startups.

2

17//LITERATURE REVIEWS

2.1. Service Design

In this section, the concept of design is discussed in order to set the background and clarify the underpinnings for further study. Then, the basic concepts of service design IZM�KW^MZML�QV�WZLMZ�\W�OIQV�I�[]ٻKQMV\�]VLMZ[\IVLQVO�WN �[MZ^QKM�LM[QOV�XZIK\QKM[��Finally, the advantages of service design are discussed in order to illustrate its role.

2.1.1. What is Design

<PM�_WZL�¹LM[QOVº�LWM[�VW\�PI^M�I�[QVOTM�LMÅVQ\QWV�QV�\PM�M`Q[\QVO�IKILMUQK�TQ\MZI\]ZM��*]KPIVIV��!!��_PQKP�KI][M[�LQٺMZMV\�QV\MZXZM\I\QWV[�WN �\PM�_WZL��LMXMVLQVO�WV�\PM�KWV\M`\��,]M�\W�\PQ[��[WUM�I[[]UX\QWV[�IZM�UILM�IJW]\�\PM�LMÅVQ\QWV�WN �LM[QOV�QV�WZLMZ�to frame the research in this study.

3IZT�<��=TZQKP��LMÅVM[�LM[QOV�Q[�XIZ\�WN �I�P]UIV�¹problem solving activity beginning with a perception of a gap in user experience, leading to a plan for a new artifact, and resulting in the production of that artifact” (pp. 394). He sees design, like many other scholars, as a problem-solving process, which aims at seeking the right answers and providing a means \W�JZQVO�KTIZQ\a�\W�I�KWUXTM`�IVL�]VKMZ\IQV�KWV\M`\��+WV[QLMZQVO�\PQ[�[\]La¼[�NWK][�WV�IT startups and the nature of services within that context, this research views design as a process for solving the “wicked problemsº��WZ�QTT�LMÅVML�XZWJTMU[��I[�[\I\ML�Ja�:QKPIZL�*]KPIVIV�QV�PQ[�IZ\QKTM�?QKSML�8ZWJTMU[�QV�,M[QOV�<PQVSQVO��!!��<PQ[�LMÅVQ\QWV�PI[�I�UWZM�M`\MVLML�UMIVQVO�QV�\MZU[�WN �LMÅVQVO�\PM�XZWJTMU[�\W�[WT^M��QV[\MIL�WN �TQUQ\QVO�\PM�LM[QOV�XZWKM[[�\W�[WT^QVO�XZM�LMÅVML�XZWJTMU[��5WZMW^MZ��LM[QOV�KIV�JM�[MMV�I[�I�conscious ongoing activity that puts humans and human factors at the center. This


Figure 2. The Danish Design Ladder, re-drawn (Design Ladder, 2011).

being said, design can potentially be an important contributor to service development practices at startups.

The role and potential of design, however, depends on how it is used in a company. The _Ia�IV�WZOIVQbI\QWV�QV\MOZI\M[�LM[QOV�Q[�[]OOM[\ML�\W�QVÆ]MVKM�\PM�MKWVWUQK�JMVMÅ\[�of such integration reference. In this study, the Danish Design Ladder (Figure 2) is used as one of the main tools to analyze the results of the empirical study. According to the research conducted by Danish Design Centre (DDC) in 2003, the level of creativity, innovation, and competitiveness of companies is aligned with the level at which design is used within an organization (Design Ladder, 2011). So, this model provides with a compelling way to compare companies and understand the correlation between how \PMa�][M�LM[QOV�IVL�PW_�\PMQZ�XZIK\QKM[�PMTX�LM^MTWX�\PMQZ�[MZ^QKM�WٺMZQVO[�MٺMK\Q^MTa�

Stage 1:No Design

Design plays no role in product/service

development

Stage 2:Design as Styling

Design is only relevant in

terms of style

Stage 3:Design as Process

Design is integral to the development

process

Stage 4:Design as Strategy

Design is a keystrategic means of

encouraging innovation


2.1.2. What is Service

<PM�LMÅVQ\QWV�WN �¹[MZ^QKMº�PI[�JMMV�_QLMTa�LQ[K][[ML�IVL�[MMV�I[�IV�QUXWZ\IV\�XIZ\�of service design. Similarly, as with the concept of design, the concept of service has LQٺMZMV\�LMÅVQ\QWV[#�PMVKM�Q\�Q[�QUXWZ\IV\�\W�LMÅVM�\PM�TMV[�\PZW]OP�_PQKP�\PM�LM[QOV�process will be investigated in this study.

Like products, services can be seen as a combination of components, such as processes, people, skills, and materials that must be combined in the best possible way for a XTIVVML�WZ�LM[QOVML�[MZ^QKM��/WTL[\MQV�M\�IT��?PMV�LMÅVQVO�[MZ^QKM[��UW[\�KQ\ML�characteristics were traditionally captured with the long-established IHIP model to distinguish services from goods. The following make up the IHIP model: intangibility, heterogeneity, inseparability and perishability (Zeithaml et al., 1985). This rather backward-looking framework of services follows the traditional goods-dominant (G-D) logic that sees services as value-building add-ons to goods, and does not contain the characteristics that are relevant from the viewpoint of this study. Considering the co-creative, human-centered, and collaborative nature of service design that embraces learning, it is more relevant to look at the shift towards the service-dominant (S-D) logic that is central to service design. This logic sees consumers as collaborative partners who co-create value with the company through joint activities (Moeller, 2010; Lusch et al., 2007), which drives innovation and enhances the generation of new knowledge (Vargo et al. 2008).

In this thesis, the concept of service is used with the S-D logic as that logic resonates with characteristics and principles of service design. Another reason for choosing the S-D logic as a lens for this study is that it considers goods as vehicles that deliver services. This aligns well with digital services that are technology-mediated and are delivered \PZW]OP�LQٺMZMV\�LM^QKM[��<P][��[MZ^QKM[�JMKWUM�TM[[�IJ[\ZIK\�I[�\PMa�IZM�WN\MV�LM[KZQJML�in traditional terms, and the distinction between products and services is irrelevant (Patrício & Fisk, 2012).


Design for Digital Services

Design for digital services has evolved from tackling usability issues in the 1980s, to OZIL]ITTa�NWK][QVO�WV�][MZ[�IVL�WV�QV\MZIK\QWV�LM[QOV�QV�\PM��!!�[��;MOMT[\Z�U��Digital services have also been traditionally considered as a combination of the device and the service. Currently, this traditional thinking needs to take a step forward and look at services beyond the technical device. A common characteristic for a digital service is that while it is being consumed, the direct contact with the personnel is almost non-existent. On the other hand, digital services can also act as platforms with the other ][MZ[�JMQVO�QV^WT^ML��1V�\PI\�KI[M��Q\�Q[�VW\�\PM�[MZ^QKM�XZW^QLMZ¼[�[QLM�\PI\�IٺMK\[�\PM�perception of value and quality, but rather other users (Meroni & Sangiorgi, 2011).

For service designers, this requires a deep understanding of user behavior and motivations in order to ensure a consistent and pleasant experience throughout the whole service system. According to Tinworth (2013), the digital industry has reached a certain level of maturity, which requires a new way of thinking of digital services that TWWS[�UWZM�QV\W�XMWXTM¼[�TQ^M[�\W�[MZ^M�\PMU�QV�I�UMIVQVON]T�_Ia��<P][��IXXTaQVO�;�,�logic to digital services has also become increasingly important, and means focusing on \PM�M`XMZQMVKM�IVL�[WT^QVO�K][\WUMZ¼[�XZWJTMU[�ZMOIZLTM[[�WN �\PM�KPIVVMT�\PZW]OP�_PQKP�the service is delivered.

2.1.3. Defining Service Design

;MZ^QKM�LM[QOV�_I[�ÅZ[\�QV\ZWL]KML�QV�\PM�MIZTa��!!�[��_PMV�\PM�KWVKMX\�WN �LM[QOV�was strongly associated with styling products and the concept of service was based on 1018�KPIZIK\MZQ[\QK[��8IKMV\Q��;IVOQWZOQ��<PMV�LM[QOV�ÅMTL�\PMV�JMOIV�\W�NWK][�on more holistic approaches, such as emphasizing conceptual, analytical, and social competencies of design. This was due to the change in the overall understanding of the ZWTM�WN �LM[QOV��[MM�*]KPIVIV��!!��\PI\�MUJZIKML�\PM�QUXWZ\IVKM�WN �LMÅVQVO�XZWJTMU[�and fostering innovative solutions to answer them (Brown, 2008). Despite the original LMÅVQ\QWV�WN �[MZ^QKM�LM[QOV�\PI\�_I[�JI[ML�WV�1018�KPIZIK\MZQ[\QK[��IVL�PIL�JMMV�WN\MV�associated with designing services with the traditional G-D logic, S-D logic has been


increasingly important in the service design process (Kimbell, 2011). It is argued that service design with S-D logic can also be referred to as design for services, as presented by Meroni & Sangiorgi (2011), where the focus is not only on tangible and intangible I[XMK\[�WN �[MZ^QKM[��J]\�IT[W�WV�\PM�QV\MZIK\QWV[��JMVMÅ\[�IVL�M`KPIVOM[�

)[�LM[QOV�PI[�JMKWUM�JZWILMZ�IVL�][ML�QV�QVKZMI[QVOTa�»VWV�\ZILQ\QWVIT�_Ia[¼��\PM�new design approaches have evolved into various disciplines, such as service design, transformation design, and strategic design that are also generally referred to as design thinking to describe the new role of design (Hakio, 2010, p. 9). The distinctions between \PM�LQٺMZMV\�LQ[KQXTQVM[�IZM�[WUM_PI\�JT]ZZa��[W�\PMZM�Q[�VW�[QVOTM�LMÅVQ\QWV�NWZ�[MZ^QKM�design. The existing practices, methods and tools of service design, are the result of over a decade of experimentation and collaborative projects within industrial, private and public sectors (Miettinen & Koivisto, 2009). Service design is still an evolving ÅMTL�\PI\�QVKWZXWZI\M[�\PM�NWTTW_QVO�[M\�WN �UM\PWLWTWOQM["�XZWL]K\�LM[QOV�_Q\P�[MZ^QKM�applications, graphic design, interaction design, UX design, user-centered design (UCD), human-computer interaction (HCI), social design, strategic management, operations management, design ethnography, to name a few (Stickdorn & Schneider, 2011).

What distinguishes service design from other disciplines is that it is a multi-disciplinary practice that “generally results in the design of systems and processes aimed at providing a holistic service to the user” (Stickdorn & Scheider, 2011; p.30). Ultimately, service design goes beyond service concept creation and involves implementation and going to market. Service design combines design, management, and process engineering, incorporating new business models that address user needs (The Copenhagen Institute of Interaction ,M[QOV�� <PM�UW[\�[QOVQÅKIV\�LQٺMZMVKM�WN �[MZ^QKM�LM[QOV�QV�ZMTI\QWV�\W�W\PMZ�disciplines is that it emphasizes looking at services from an outside-in perspective that [\IZ\[�_Q\P�K][\WUMZ¼[�XZWJTMU[��VMML[��IVL�_IV\[��0WTUQL��-^MV[WV�� #�3QUJMTT��2011). This human-centered interpretation of service design will be used as a lens throughout this study.


2.2. Startups

In his book The Lean Startup��-ZQK�:QM[�LMÅVM[�I�[\IZ\]X�I[�¹a human institution designed to create a new product or service under conditions of extreme uncertainty” (p. 27), which also ZM[WVI\M[�_Q\P�\PM�LMÅVQ\QWV�WN �[MZ^QKM�LM[QOV�\PI\�MUJZIKM[�IUJQO]Q\a�IVL�[MZMVLQXQ\a��Many startups share the characteristic of uncertainty, whereas other factors, such as the size of the company, organizational structure, funds, business models, or industry-related QLMV\QÅMZ[�UIa�LQٺMZ��:QM[��

;\M^M�*TIVS��2IV]IZa��QV\ZWL]KM[�IVW\PMZ�LMÅVQ\QWV�WN �[\IZ\]X[��[\I\QVO�that a startup is “an organization formed to search for a repeatable and scalable business model”. Repeatability refers to searching for “a pattern that can be replicated by a sales organization WZ�Ja�K][\WUMZ[�ZMO]TIZTa�^Q[Q\QVO�\PM�_MJ[Q\M��QV[\MIL�WN �IQUQVO�NWZ�WVM�Wٺ�ZM^MV]M�PQ\[” (Customer Development Manifesto, p. 4). Scalability, in turn, refers to “getting many customers and ILLQVO�ZM^MV]M�IVL�XZWÅ\�NWZ�MIKP�ILLQ\QWVIT�K][\WUMZº�(Customer Development Manifesto, X��*TIVS¼[�LMÅVQ\QWV�WN �[\IZ\]X[�IT[W�PQOPTQOP\[�\PM�NIK\WZ�WN �]VKMZ\IQV\a��[\IZ\]X[�are searching for a repeatable business model with a set of untested hypotheses. The ÅZ[\�\PQVO�\PI\�[\IZ\]X[�VMML�\W�LW�Q[�^ITQLI\M�\PW[M�PaXW\PM[M[��7VKM�\M[\ML��I�[\IZ\]X�develops a business model and moves on to execution (Blank, 2012).

Since the mid-1960s, technology has provided entrepreneurs with all the necessary tools to set up businesses with relatively small investments (Mann & Sager, 2007). Consequently, software startups have become increasingly popular in the service business due to the low barriers for starting a new venture at a low cost. One factor that characterizes the IT business today is globalization due to the constant and rapid growth in the number of software products that can gain easy access to markets at lower costs. The industry dominated by entrepreneurs and small companies on a global scale


increases the pressure for new venture to gain competitive advantage in the marketplace. Due to the uncertain circumstances and high failure rates, startups have the pressure to attract and retain talented human capital, have the necessary resources and develop \PMQZ�WٺMZQVO[�_Q\P�NI[\�XIKML�[KPML]TM[��6W_IS��/ZIV\PIU��#�*Z]\WV��:]JIVQS��2002). The prevailing situation raises the need for innovation with means other than technology alone in order to attract both investors and customers.

This uncertainty in both internal and external environments leads to constant product iterations and changes in product strategy or value proposition. To tackle this common factor, every startup develops a methodology for product or service development, as well as launch and cycle management. One thing that scholars and practitioners agree upon is that traditional paradigms and ways of working (such as the waterfall model) are not enough in the context of startups (Ries, 2011). In that traditional paradigm, ITT�ZM[W]ZKM[��XTIVVQVO��IVL�MٺWZ\�IZM�TM^QML�\W_IZL[�J]QTLQVO�IVL�[PQXXQVO�\PM�ÅZ[\�XZWL]K\��0W_M^MZ��\PQ[�ÅZ[\�XZWL]K\�][]ITTa�NIQT[�\W�UMM\�K][\WUMZ�VMML[�WZ�_IV\[��<PM�execution is done based on initial assumptions, and eliminates the ability to recognize new opportunities and change direction rapidly.

Despite the weaknesses of the traditional model, it is still heavily used amongst entrepreneurs and even investors for planning and executional purposes. Today, however, companies need new ways of handling their projects (Ries, 2011; Nielsen, 2009; Blank, 2009). Many of them have started to embrace new methods, and the most popular approaches have been agile and lean. In the following sections, both approaches, \WOM\PMZ�_Q\P�\PMQZ�JMVMÅ\[�IVL�XW[[QJTM�KPITTMVOM[��IZM�KW^MZML��<PQ[�KWUXIZQ[WV�UISM[�it easier to understand the potential role of design and how service design thinking could address challenges faced by startups.

<PZW]OPW]\�\PM�MUXQZQKIT�ZM[MIZKP��;\M^M�*TIVS¼[�LMÅVQ\QWV�WN �I�[\IZ\]X�KWUXIVa�Q[�used. In particular, two aspects are taken into account – repeatable and scalable. As every company aims for growth, it is important to look at the advantages of service design through this lens, and to see its potential to contribute to forming a repeatable and [KITIJTM�J][QVM[[�UWLMT�QV�IV�MٺMK\Q^M�_Ia�


2.2.1. Agile

)OQTM�Q[�I�[M\�WN �[WN\_IZM�LM^MTWXUMV\�UM\PWL[��IVL�I�[M\�WN �[XMKQÅK�^IT]M[�IVL�principles of working (Fowler & Highsmith, 2001; Shore & Warden, 2008). Agile software development was formed as a reaction to the traditional waterfall model, after many practitioners saw it as inferior in uncertain environments. The driving NWZKM�JMPQVL�IOQTM�Q[�VW\�IJW]\�_WZSQVO�NI[\MZ��ZI\PMZ�IJW]\�_WZSQVO�QV�I�LQٺMZMV\�_Ia��According to Shore and Warden, agile looks to achieve personal, technical and organizational success (2008, p. 6). The development teams are responsible for adopting the methods IVL�_WZS�QV�I�[MTN�WZOIVQbML�_Ia�\W�\ISM�N]TT�ZM[XWV[QJQTQ\a�IVL�U]\]ITTa�LMTQ^MZ�\PM�ÅVIT�outcomes (Shore & Warden, 2008; Stickdorn & Schneider, 2011).

<PM�UIQV�NWK][�QV�IOQTM�Q[�WV�\PM�ÅVIT�XZWL]K\��_PQKP�QUXTQM[�MIZTa�IVL�KWV\QV]W][�delivery of working software. Also, the main value is ensuring customer satisfaction by using their insights and feedback throughout the development - since building software is seen as a learning process, the possible changes in product requirements are welcomed during the development process (Agile Manifesto, 2001). The development process is divided into short development cycles, often called sprints, in order to encourage early feedback. This way, the projects are able to adapt to changing situations, environments or people. Other strengths of agile product development are embracing and accepting KPIVOM��XZMNMZZQVO�ÆM`QJQTQ\a�\W�XMZNMK\QWV��[PQXXQVO�XZWL]K\[�MIZTa�IVL�WN\MV��MTQUQVI\QVO�_I[\ML�\QUM�IVL�ZM[W]ZKM[��QUXTMUMV\I\QWV�WN �\M[\[�\W�XZM^MV\�J]O[�IVL��ÅVITTa��continuous improvement of the service (Blank, 2006). Agile development is also part of service design process (Stickdorn & Schneider, 2011) with which it has the iterative nature in common. Often, companies adopt agile practices to complement existing processes (Salo & Abrahamsson, 2008, p. 58).

The most used and well-known methods in agile software development are Scrum and Extreme Programming (XP) (Salo & Abrahamsson, 2008). Short overviews of each term are presented next in order to build a clearer picture of the nature of software development.


Scrum

Scrum methodology is widely used in software development as a framework to organize the work. While it helps manage projects, scrum is not a standardized process that guarantees a high-quality product. It is used to foster transparency, empowerment, and collaboration during the development process, and every company adopts it in its own way (Salo & Abrahamsson, 2008, p. 58; Rubin, 2013, p. 13).

Scrum consists of short development cycles – sprints – that are each typically one \W�\PZMM�_MMS[�TWVO��,]ZQVO�MIKP�[XZQV\��\PM�\MIU�KWUXTM\M[�I�[XMKQÅML�V]UJMZ�WN �tasks from the backlog – the assumption is that the high-level design is completed and ZMY]QZMUMV\[�IZM�[XMKQÅML�JMNWZM�[\IZ\QVO�\PM�LM^MTWXUMV\�XZWKM[[��)N\MZ�MIKP�[XZQV\��\PM�\MIU�ZM^QM_[�\PM�KWUXTM\ML�_WZS��LMUWV[\ZI\M[�\PM�QUXTMUMV\ML�KPIVOM[��QLMV\QÅM[�learnings, and plans the next sprint. Overall, scrum emphasizes rapid iterative learning through testing, integrating and releasing the software, as well as delivering it in short lead-time. The work is carried out in individual and cross-functional development teams that organize their work independently. Their aim is to deliver the product LMÅVML�Ja�\PM�product owner, who acts as the customer and decides on which features and functionalities should be included in the product or service. Additionally, there is a ;KZ]U�5I[\MZ�_PW�O]QLM[�\PM�LM^MTWXUMV\�\MIU�IVL�NIKQTQ\I\M[�\PM�\MIU¼[�XMZNWZUIVKM��making sure the work progresses smoothly and the team is able to learn (Schwaber, 2004; Rubin, 2013).

Extreme Programming (XP)

Extreme Programming (XP) has similar characteristics to Scrum and is becoming more important for fast-paced development. In contrast to Scrum, XP focuses more on the project level activities (Salo & Abrahamsson, 2008, p. 58). By nature it is a very iterative XZWKM[[��][QVO�I�V]UJMZ�WN �LQٺMZMV\�][MZ�[\WZQM[�\PI\�IZM�LM^MTWXML�L]ZQVO�MIKP�Q\MZI\QWV�period. The method encourages collaboration between the customer and developer as well as feedback collection with the aim of shipping the product fast, which can lead to changes in the service requirements for next iteration as a system is gradually put into


use. Testing in XP and just-in-time (JIT) decision making are, thus, highly encouraged as the requirements are done in parallel with implementation. XP, however, neglects usability and usability practices. Usability is thought of before the actual implementation XZWKM[[��IVL�][IJQTQ\a�\M[\QVO�Q[�IT[W�KWVL]K\ML�[MXIZI\MTa��@8�X]\[�\PM�MٺWZ\�\W�UISQVO�the development simple and serve the customers better, and usability practices are seen as too heavy to be involved in the XP process (Sohaib & Khan, p. 51 – 56; Salo & Abrahamsson, 2008).

2.2.2. The Lean Startup

Lean is a philosophy that introduces a novel and widely discussed approach to QVVW^I\QWV�IVL�XZWL]K\QWV��1\�KW]TL�JM�ZMNMZZML�\W�I[�I�LQٺMZMV\�SQVL�WN �WZOIVQbI\QWVIT�thinking that was developed in order to address challenges imposed by traditional product development model (Blank, 2006) that is too product- and process-focused, and often referred to as being linear. The concept of Lean Startup has been elaborated by -ZQK�:QM[��KWUJQVQVO�;\M^M�*TIVS[¼[�+][\WUMZ�,M^MTWXUMV\�UWLMT��*TIVS��and agile software development principles (see Figure 3). Since agile process assumes that it starts with a set of product requirements and existing knowledge about the ][MZ[��K][\WUMZ�LM^MTWXUMV\�PMTX[�LMÅVM�I�J][QVM[[�UWLMT�IVL�XZWL]K\�[\ZI\MOa�][QVO�customer insights before the product goes to production.

Lean has four stages: 1) Customer discovery 2) Customer Validation 3) Customer Creation 4) Company Building. According to Blank (2010), Customer Development model allows startups to search for an executable business model through exploration of external factors outside of the building. The search phase has a strong focus on testing the hypothesis about the business model on early adaptors, and collecting feedback NZWU�W]\[QLM�WN �\PM�WٻKM�\W�UQVQUQbM�XZWL]K\�NIQT]ZM��*TIVS��#�*TIVS��<PM�KWUUWV�KPITTMVOM�[MMU[�\W�JM�ÅVLQVO�IXXZWXZQI\M�_Ia[�\W�]VLMZ[\IVL�JM\\MZ�\PM�external actors, such as end users, ecosystem and partners (Mäkilä & Wuk, 2013).

The core values of lean approach are waste elimination, continuous learning, fast product delivery, team empowerment, and keeping the focus on the customer to provide


Figure 3. The Lean Startup. Re-drawn based on the model presented by Blank (2010, April 29).

the best value (Ries, 2011). That way, the aim is to reduce errors and save time by developing products or services with a minimal set of features in quick cycles, as well as LWQVO�QVKZMUMV\IT�QUXZW^MUMV\[�JI[ML�WV�][MZ[¼�NMMLJIKS��;]KP�XZWL]K\[�IZM�ZMNMZZMLto as Minimum Viable Product (MVP). MVPs are developed in order to test the product with real users and learn based on received feedback and failures – spending time on

ArchitecturalSpike

Release Planning

Iteration AcceptanceTests

SmallReleases

EXTREME PROGRAMMING

USER STORIES

NEXT ITERATION

TEST SCENARIOS

REQUIREMENTS

LATESTVERSION

BUGS

SPIKE

AGILE DEVELOPMENT

DataFeedbackInsights

HypothesesExperiments

Insights

1

PIVOT

SEARCH EXECUTION

2 3CUSTOMER CREATION

4COMPANY BUILDING

CUSTOMERDISCOVERY

CUSTOMER VALIDATION


any features beyond that is seen as a waste of resources.

Eric Ries (2011) emphasizes that it is extremely important to pivot (see Figure 3) to ensure that the service or product matches market needs. By pivoting, he means testing business hypotheses and seeking changes to the service through feedback, all while keeping the same vision. Pivoting can be understood as a new hypothesis that requires a new prototype to test (Ries, 2011, p.177). Thus, it is wrong to focus too much on OZW_\P��ZM^MV]M��IVL�XZWÅ\[�_Q\PW]\�XQ^W\QVO��IVL�M^MV�_PMV�I�[\IZ\]X�IKPQM^M[�[]KKM[[��it needs to keep up the practice. What often happens is that once startups reach success, they get stuck in doing small-scale incremental changes without investing in building a sustainable culture of innovation (Ries, 2011).

2.2.3. Decision-Making in Startups

)[�MٺMK\Q^M�LMKQ[QWV�UISQVO�Q[�IV�QUXWZ\IV\�XIZ\�WN �:�,��IVL�QV^WT^M[�UIVa�LQٺMZMV\�stakeholders (van de Kar, 2008), it is important to look deeper into the common LMKQ[QWV�UISQVO�XI\\MZV[�\W�]VLMZ[\IVL�PW_�\PMa�[PIXM�\PM�[MZ^QKM�WٺMZQVO[�IVL�IٺMK\�the overall success of a startup. Indeed, Eric Ries (2011) suggests that the common problem in startups is the process of decision-making and lack of profound knowledge of the customers.

There are two common patterns in decision-making that are faith-based and fact-based decision-making (Blank, 2009, June 5). In faith-based entrepreneurship, a startup is NW]VLML�JI[ML�WV�\PM�MV\ZMXZMVM]Z¼[�PaXW\PM[Q[�IJW]\�\PM�J][QVM[[�UWLMT��K][\WUMZ�IKKMX\IVKM��IVL�LMUIVL��;\IZ\]X[�WN\MV�X]\�I�TW\�WN �MٺWZ\�QV\W�OM\\QVO�\PQVO[�LWVM��and fast, and the emphasis on execution leads to using existing knowledge and prior experience instead of embracing learning. Many startups falter by solving problems for the wrong target customer, or solving the wrong problems altogether (Ries, 2011). ?PQTM�\PQ[�PQOPTQOP\[�\PM�QUXWZ\IVKM�WN �SVW_QVO�\PM�KWZZMK\�XZWJTMU�I\�ÅZ[\��WN\MV�\PM�product is being built with an assumption that the problem is already known (Feinleib, 2012; Ries, 2011). Consequently, this leads to low customer satisfaction or even lack of K][\WUMZ[��I[�KWUXIVQM[�MVL�]X�[XMVLQVO�\QUM�IVL�[QOVQÅKIV\�IUW]V\�WN �ZM[W]ZKM[�WV�


developing products people do not want to use. Even if startups are picking a big market to target, they can fail by targeting the wrong market (Hollins, 1993; Feinleib, 2012: Blank, 2012).

Many startups do not realize that they are missing the continuous contact with their end users and sometimes neglect the importance of the iterative development based on the ZMIT�][MZ[¼�NMMLJIKS��5K+IPQTT��6M_�^MV\]ZM[�WN\MV�NWTTW_�\PM�[WT]\QWV�NWK][ML�\PQVSQVO��IVL�[XMVL�I�TW\�WN �\QUM�IVL�ÅVIVKQIT�ZM[W]ZKM[�WV�LM^MTWXUMV\��1LMV\QNaQVO�I�^QIJTM�K][\WUMZ�^IT]M�XZWXW[Q\QWV��PW_M^MZ��KWV\QV]M[�\W�JM�I�[QOVQÅKIV\�KPITTMVOM�in the domain of IT startups as they end up misunderstanding their customers. Blank (2009, June 5) claims that building something based on faith soon leads to failure after \PM�ÅZ[\�TI]VKP��_PMZMI[�\M[\QVO�\PM�I[[]UX\QWV[�W]\[QLM�WN �\PM�WٻKM�PMTX�\W�OM\�M[[MV\QIT�facts that the business needs (ibid.). The approach he suggests to tackle the issue is using Customer Development process.

Similarly, Ries (2011, p. 182) emphasizes the importance of understanding of what services or products customers really want, which customers are more important to listen \W��IVL�_PW�Q[�\PM�K][\WUMZ�QV�\PM�ÅZ[\�XTIKM��4MIZVQVO�IJW]\�\PM�K][\WUMZ[�Q[�KZ]KQIT�when it comes to a new venture, regardless whether or not the startup has a B2C or B2B WٺMZQVO��*TIVS��!��-^MV�QN �\PI\�TMIZVQVO�TMIL[�\W�UQ[[M[��\PW[M�UQ[[M[�]T\QUI\MTa�TMIL�to success, which makes activities that encourage learning and discovery more relevant \PIV�M`MK]\QWV��*TIVS��*TIVS¼[�XWQV\�ZM[WVI\M[�_Q\P�_PI\�[MZ^QKM�LM[QOV�Q[�ITT�about – exploration and learning where serendipity and surprises are embraced.

It is, however, not always easy for founders to encounter the users and face the reality \PI\�UQOP\�KWV\ZILQK\�\PMQZ�I[[]UX\QWV[��<PMZMNWZM��NW]VLMZ[�IVL�+-7¼[�PI^M�I�JQO�QVÆ]MVKM�WV�\PM�LMKQ[QWV�UISQVO�XZWKM[[��IVL�LM^MTWXUMV\�\MIU[�\ZILQ\QWVITTa�N]TÅTT�\PM�ZMY]M[\[�ZMKMQ^ML�NZWU�\PMU��:QM[��X��·��"�?I[[MZUIV��Being closer to customers might require organizational and cultural change as well as NW]VLMZ¼[�QV^WT^MUMV\��[QVKM�\PM�MUXTWaMM[�LW�VW\�IT_Ia[�NMMT�MV\Q\TML�\W�LMTQ^MZ�XW[[QJTa�disappointing messages to the leadership level. Consultants, who work with startups, are QV�I�UWZM�LQٻK]T\�XW[Q\QWV��JMKI][M�\PMa�KIVVW\�KWV\ZILQK\�\PM�^Q[QWV�WN �\PM�NW]VLMZ[�QV�order to maintain a lasting client relationship (Blank & Dorf, 2012).


2.3. Service Design as an Integrated Process with Software Development

The earlier sections presented the agile software development and the common practices WN �[\IZ\]X[��?PQTM�IOQTM�Q[�IV�MٺMK\Q^M�_Ia�WN �WZOIVQbQVO�\PM�QUXTMUMV\I\QWV��\PMZM�IZM�also certain weaknesses in the methodology. First, the development starts from pre-LMÅVML�[MZ^QKM�ZMY]QZMUMV\[�IVL�KWLM��I[[]UQVO�\PI\�][MZ�VMML[�IZM�ITZMILa�[XMKQÅML�and understood. Second, the business requirements are often left unclear or poorly LMÅVML��3]T[M��#�.Q\KP\VMZ��#�*]L_QO��2MWVO��3MTSIZ��!��<PM[M�KPITTMVOM[�in the agile way of thinking seem to be failing to acknowledge user needs, the target market, and validate business hypotheses (Blank, 2006).

Unlike service design, agile does not provide means for generating the user stories that would help drive service development, nor does it provide access to understanding \PMQZ�K][\WUMZ¼[�JMPI^QWZ�IVL�PW_�\PMQZ�XZWL]K\[�_W]TL�JM�ZMITTa�][ML��.MQVTMQJ��Finally, agile product development is broken down into small parts that are completed at LQٺMZMV\�\QUM[��<PQ[�SQVL�WN �IXXZWIKP�KIV�MI[QTa�TMIL�\W�I�JZWSMV�\W\IT�][MZ�M`XMZQMVKM�I[�\PM�XZWRMK\�XZWOZM[[M[��)[�I�ZM[]T\��\PM�[MZ^QKM�KIV�MI[QTa�MVL�]X�PI^QVO�LQٺMZMV\�XIZ\[�\PI\�IZM�VW\�VMKM[[IZQTa�KWVVMK\ML�\W�MIKP�W\PMZ��WZ�LW�VW\�XMZNMK\Ta�Å\�\WOM\PMZ��6QMT[MV��2008).

There seems to be a potential to combine agile software development and service LM[QOV�XZIK\QKM[�[W�\PI\�\PMa�KW�M`Q[\�IVL�KWUXTMUMV\�MIKP�W\PMZ�QV�I�JMVMÅKQIT�IVL�MٺMK\Q^M�_Ia��;MZ^QKM�LM[QOV�Q[�WN\MV�[MMV�I[�I�LQ[KQXTQVM�\PI\�X]\[�KWVKMX\�LM^MTWXUMV\�and testing as central activities, and service concept is seen as a typical outcome of the service design process (Goldstein et al., 2002). According to Edvardsson and Olsson (1996), a service concept can serve as “detailed description of what is to be done for the customer,


starting with the needs and wishes on the target user, and how this is to be achieved” (p. 149). Although concept development is seen as a critical stage, service design is also viewed as a set of activities that enhance iterative learning throughout the whole development process (Stickdorn & Scneider, 2011).

There is a view of service design as a constructive process involving both professional designers and managers, but also other stakeholders such as present or past customers and service personnel (Kimbell, 2011). Lucy Kimbell (2011) describes design for services as an exploratory process that aims to create new kinds of value relation between diverse actors who are involved in the context of a service. Service design is a very human-focused discipline – it has, since its origins, considered the role and presence of users in the service delivery process (Meroni & Sangiorgi, 2011). Startups easily lose their focus on real customer needs and wants during development process (Feinleib, 2012), which UISM[�\PQ[�P]UIV�NWK][ML�I[XMK\�WN �[MZ^QKM�LM[QOV�Å\�\PM�VMML[�WN �[\IZ\]X[��.QO]ZM��illustrates the process of service design, as introduced by Stickdorn and Schneider (2011; p.122-123).

Figure 4. Service design process redrawn based on the illustration by Stickdorn and Scheider

(2011).

(1) Exploration: this phase starts with identifying a problem from the � WZOIVQbI\QWV¼[��XWQV\�WN �^QM_�IVL�]VLMZ[\IVLQVO�\PM�VMML[��K]T\]ZM��IVL�OWIT[��1\�� does not start with customers, but it is more about looking at problems from the

Exploration Creation Reflection Implementation


perspective of customers.

(2) Creation: this phase concentrates on multidisciplinary teamwork, involving, testing iteratively the ideas and learning from failures as early as possible.

�� :MÆMK\QWV" this stage is all about prototyping the visualized ideas with the stakeholders to collect feedback and retest until the concept is on the right track.

(4) Implementation: in addition to the actual implementation work, this stage � ZMY]QZM[�XMWXTM�\W�IK\�LQٺMZMV\Ta��1\�Q[�IT[W�QUXWZ\IV\�\PI\�\PM�KWVKMX\�Q[ communicated well and has a strong emotional aspect in it. In IT this phase is connected to engineering.

+WV[QLMZQVO�\PM�[\ZWVO�MUXPI[Q[�WV�\PM�M`XTWZI\QWV��KZMI\QWV��IVL�ZMÆMK\QWV�XPI[M[��it is important to note that service design does not seem to have clear process for implementing those service concepts. Especially when taking into account digital services, service design is missing the engineering aspect, which would take the concept further. Agile, in turn, lacks the exploration and creation phases but focuses heavily on implementation, providing startups with a good way of organizing the work. In other _WZL[��[MZ^QKM�LM[QOV�LMÅVM[�what�\W�QUXTMUMV\��IVL�IOQTM�[WN\_IZM�LM^MTWXUMV\�LMÅVM[�how�\W�QUXTMUMV\�·�\P][��][QVO�IOQTM�ITWVM�Q[�VW\�MVW]OP�\W�ÅVL�W]\�\PM�][MZ�VMML[�IVL�service requirements. This being said, integrating service design and agile development can provide companies with great value, and it can be potentially done by introducing ÅZ[\�XPI[M[�WN �[MZ^QKM�LM[QOV�·��M`XTWZI\QWV�IVL�KZMI\QWV�·��\W�JM�KWUJQVML�_Q\P�\PM�ZM[\�of agile IT startup processes.

It is also worth pointing out, that the Lean Startup approach and service design seem to be very close to each other in terms of their emphasis on understanding and observing users. The Lean Startup approach, like service design, provides companies with a set of principles that guide new ventures through the whole development process to create desirable experiences and services. Similar to service design, it emphasizes generative TMIZVQVO�IVL�QV^WT^MUMV\�WN �ZMIT�][MZ[�QV�WZLMZ�\W�]VLMZ[\IVL�\PMQZ�VMML[�IVL�LMÅVM�relevant product requirements. However, while service design is aiming at exploring


possibilities, the lean approach aims at eliminating waste and reducing variation, which UISM[�Q\�LQٻK]T\�\W�R][\QNa�\PM�W]\KWUM[�WN �\PM�KZMI\Q^M�IVL�[MZMVLQXQ\W][�XZWKM[[�WN �service design. Also, while learning from the past is at the core of lean, service design encourages prototyping in order to explore possibilities and future opportunities. Finally, \PM�4MIV�;\IZ\]X�UWLMT�[MMS[�NWZ�JM\\MZ�MٻKQMVKa�J]\�LWM[�VW\�XZW^QLM�_Q\P�QUXTQKI\QWV[�for utilizing design or methods in order to exit the search phase of Customer Development model by Steve Blank, which involves Customer Discovery and Customer Validation, and move on to Customer Creation and Company Building phases. While acknowledging the similarities between the principles of service design and Lean Startup approaches, this research uses the Customer Development model as a lens while exploring how service design practices are utilized to reach the Company Building phase _Q\P�I�[WTQL�[MZ^QKM�WٺMZQVO�

Just like in manufacturing, where designers need to work in multidisciplinary teams to bring the designs to life, service design is also dependent on other disciplines. It complements other activities within an organization, and the best value is achieved when design, marketing, engineering, and other functions work together, involving users and seeking a balance between analytical and creative thinking (Six, 2011; Moilanen, 2011, *ZW_V�� ;MZ^QKM�LM[QOV�KIV�LMÅVM�\PM�JQO�XQK\]ZM�L]M�\W�Q\[�PWTQ[\QK�IXXZWIKP��J]\�without engineering the service will not work, and without operational excellence the business will not be sustainable in the long run.

The aim of this study is to investigate the phenomena avoiding any dogmatic attitudes IJW]\�[MZ^QKM�LM[QOV��IOQTM�LM^MTWXUMV\��IVL�\PM�LQٺMZMV\�N]VK\QWV[�\PI\�M`Q[\�I\�[\IZ\]X[��The purpose of this study is to look at all disciplines from an objective point of view, accepting possible impracticalities that can emerge during the study.

2.3.1. Why Use service Design and How it Shapes Service Offering

,M[XQ\M�\PM�NIK\�\PI\�\PM�JMVMÅ\[�WN �LM[QOV�QV�OMVMZIT�IZM�_QLMTa�ZMKWOVQbML��LM[QOV�Q[�VW\�]\QTQbML�QV�1<�[MK\WZ�\PM�[IUM�_Ia�I[�QV�UIV]NIK\]ZQVO�ÅZU[��+WWXMZ��IVL�decisions done by business management are usually based on quantitative data that is


generally considered as reliable, predictable and easily measurable (Martin, 2009). The interpretations of that data, however, vary depending on who is viewing it (Martin, ��!��)[�I�U]T\QLQ[KQXTQVIZa�ÅMTL��[MZ^QKM�LM[QOV�WٺMZ[�UM\PWL[�IVL�\WWT[�NZWU�^IZQW][�LQ[KQXTQVM[�\PI\�NWZU�Å^M�KWZM�XZQVKQXTM[�IVL�O]QLM�\PM�[MZ^QKM�LM[QOV�XZWKM[[��I[�summarized by Stickdorn & Schenider (2011):

Customer-centered: service design emphasizes the role of the customers as a co-creator of value and the importance of the presence of the user. The aim is to create services, that are usable, desirable, useful and pleasant to use (Hyysalo, 2009, p. 20).

Co-creative: stakeholders and their perspectives are involved in creation of services, prototyping and the testing of service concepts.

Sequencing: considering every touch point of the service that form a customer journey during three stages: pre-service period, actual service period, and post- service period.

Evidencing: designing tangible components of the service, according to its touchpoint sequence and inherent story.

Holistic: service design does not only take into account the end user, but also the market, resources and the environment where the service takes place. Also at the level of the service provider, service design focuses on the organization and corporate objectives (p. 45).

<PM�KWVKZM\M�JMVMÅ\[�WN �][QVO�LM[QOV�IVL�\PM�ZM\]ZV�WV�QV^M[\UMV\��:71��IZM�OMVMZITTa�hard to measure, due to the unknown and qualitative nature of success factors �?MQ[\��!��1\�Q[�LQٻK]T\�\W�[M\�LM[QOV�IXIZ\�NZWU�W\PMZ�I[XMK\[�\PI\�TMIL�\W�ÅZU¼[�performance, such as marketing, sales, or the prevailing market condition (Press & Cooper 2003, p. 38). Therefore, there have been attempts to research the extent to _PQKP�QV^M[\UMV\�WV�LM[QOV�XIa[�JIKS�IVL�IٺMK\[�\PM�W^MZITT�ÅZU¼[�XMZNWZUIVKM��.WZ�instance, ETLA – the Research Institute of the Finnish Economy – has conducted a


[]Z^Ma�IJW]\�\PM�ILÎV\IOM�WN �][QVO�LM[QOV��KWVKT]LQVO�\PI\�ÅZU[�\PI\�QV\MOZI\M�LM[QOV�as part of their strategies and use design on a continual basis have more successful sales, KWUXM\Q\Q^M�ILÎV\IOM��IVL�JM\\MZ�:�,�XMZNWZUIVKM��4QVL[\Z�U��6aJMZO��ATq�Anttila, 2006, p. 71).

According to the existing literature and case studies, design practices have the potential \W�PMTX�VM_Ta�M[\IJTQ[PML�[MZ^QKM�XZW^QLMZ[�ZM\PQVS�IVL�ZMUIZS�\PMQZ�WٺMZQVO[��?PMV�[KQMVKM�IVL�\MKPVWTWOQM[�IZM�VW^MT��[MZ^QKM�LM[QOV�WٺMZ[�MV\ZMXZMVM]Z[�_Ia[�\W�ZMKWVÅO]ZM�[MZ^QKM[��_PQKP�UIa�TMIL�\W�N]Z\PMZ�QVVWÎ\QWV��5MZWVQ��;IVOQWZOQ��Most importantly, service design reduces design cycles by avoiding building unnecessary product features, allows adapting to changing needs, encourages evaluation of ideas and concepts, supports decision-making, and reduces time to market (Koljonen, 2012; Borja LM�5WbW\I��#�;KPIٺMZ��#�-LUIV��*I[ML�WV�\PM�Y]ITQ\QM[�XZM[MV\ML�Ja�Stickdorn & Schneider (2011) and Patrício (2012), the hypothesis is that service design approach can be utilized in a startup context to help new ventures develop their service WٺMZQVO[�QV�I�UWZM�MٺMK\Q^M�_Ia�

2.3.2. Role of Service Design in Decision-Making

*MKI][M�MIKP�LMKQ[QWV�QV�\PM�LM[QOV�WZ�LM^MTWXUMV\�XZWKM[[M[�QVÆ]MVKM[�\PM�ÅVIT�[MZ^QKM�WٺMZQVO�IVL�\PM�W^MZITT�MٺMK\Q^MVM[[�IVL�[]KKM[[�WN �I�KWUXIVa��Q\�Q[�M[[MV\QIT�to understand how service design could guide decisions and support R&D. Just like in agile software development, during any design process that involves other stakeholders, decision-making is an indivisible part of designing (Van de Kar, 2008; p. 107). Thus, managers and designers need to make and manage decisions related to each component WN �\PM�[MZ^QKM��JITIVKQVO�JM\_MMV�LQٺMZMV\�ZMY]M[\[�IVL�WXQVQWV[��<PM�UIRWZ�KPITTMVOM�for the service organization is to ensure that decisions are made consistently, focusing on delivering the correct service to targeted customers (Goldstein et al., 2002, p. 121). Figure 5 demonstrates the complexity of the network that surrounds a single service. The presented stakeholder map was drawn during the participant observation conducted at Company A.


Service design provides tools that can support decision-making and make sense of user insights (Hyysalo, 2009, p. 13). Prototyping is considered as one of the cornerstones of service design practices, although detailed information about how prototypes are implemented is scarce (Blomkvist & Holmlid, 2010). They encourage collaboration and facilitate communication through visualization both internally and externally, making ideas and thoughts tangible (Blomkvist & Holmlid, 2010). Prototyping is also helpful for TMIZVQVO��ÅVLQVO�NIQT�XWQV\[��IVL�\M[\QVO�IVL�KWTTIJWZI\QWV�JM\_MMV�[\ISMPWTLMZ[��][MZ[��and designers. Especially when prototyping is combined with observing users and their behavior in their natural environment, companies can gather extremely valuable insights and valid information about the users and the possible futures (Postma et al., 2012). In summary, prototyping can be an important aspect for supporting decisions and proving the basic assumptions of the service requirements and user needs.

Figure 5. The stakeholder map of Company A

Users Major

Minor

Communities & NGO’s

Future Users

Friends ofUsers

Advertisers

First-Time Users

Test Groups

Goverment

Retail

Retail

Goverment

Companies

Company A

Travel Agencies

SuppliersPartners

Partner 1

Partner 2

Partner 3

Company 1

Company 2

Company 3

Company 4


2.3.3. Reported Challenges and Opportunities of Applying Service Design

As previously mentioned, service design has not been studied in the context of IT [\IZ\]X�KWUXIVQM[��;WUM�ÅVLQVO[�ZMTI\ML�\W�\PM�KPITTMVOM[�WN �IXXTaQVO�[MZ^QKM�LM[QOV��found from existing literature and research, have been used to understand the possible shortcomings related to using service design methods in startup context.

What comes to user-involvement in new service development, technology-based service companies have little face-to-face interaction with their end users, which makes it LQٻK]T\�NWZ�\PMU�\W�ÅVL�W]\�K][\WUMZ¼[�TI\MV\�IVL�M`XZM[[ML�VMML[��1V�KWV\ZI[\�\W�JQO�companies, they do not have the same possibilities to interact with their customers, WJ[MZ^M�\PMU�QV�LQٺMZMV\�[Q\]I\QWV[�IVL�ZMKMQ^M�KWUXTIQV\[�IJW]\�[MZ^QKM�ZMTI\ML�problems. The challenge with co-creation of technology-based services is that the users are not as technology savvy and are not able to foresee innovative solutions. Due to this reason, it is challenging for tech companies to initiate co-creation sessions (Kristensson et al. 2008, p. 478). This is especially challenging for startups, considering their scarce ÅVIVKQIT�ZM[W]ZKM[��1[W\ITW��

Prototyping, one of the key principles of service design, (Blomkvist & Holmlid, 2010, p. 7) also imposes certain challenges, and is often not implemented frequently enough QV�XZIK\QKM��8IZ\�WN �\PM�KPITTMVOM�Q[�\PI\�M^MZaWVM�LWM[�VW\�IT_Ia[�[MM�\PM�JMVMÅ\[�WN �it, or designers cannot motivate more time for more iterations. That especially applies \W�XZW\W\aXQVO�QV\IVOQJTM�\PQVO[��[]KP�I[�M`XMZQMVKM[�IVL�[WKQIT�QV\MZIK\QWV[�QV�ÅK\QWVIT�situations. While its purpose is to keep the user input throughout the design process and make sure it is not forgotten, those insights get forgotten over time nonetheless. Consequently, this can lead to self-centered design rather than user-centered design �;MOMT[\Z�U��!��X��

Postma et al. (2012) refer to challenges related to applying empathic design, since team members and stakeholders are usually anticipating solid evidence in a form of proof points, facts, and hard claims (p. 66). This contradicts the stories collected through empathic design methods that are seeking experiences and meanings that tend to be


personal in nature. When it comes to interpreting results, stakeholders tend to focus on \PM�ÅVLQVO[�IVL�KWVKMX\[�\PI\�\ISM�\PM�QLMI\QWV�QV\W�I�KMZ\IQV�LQZMK\QWV��IVL�TWWS�NWZ�[\ZIQOP\NWZ_IZL�QUXTQKI\QWV[�NWZ�LM[QOV��1V�W\PMZ�_WZL[��[\ISMPWTLMZ[�[MTMK\�ÅVQVO[�\PI\�are most convenient for them and their positions. The data analysis is often lacking the use of creative understanding, and ends up focusing on small issues that have been M`XTQKQ\Ta�M`XZM[[ML�Ja�\PM�][MZ[��)N\MZ�OI\PMZQVO�\PM�ÅZ[\�QV[QOP\[��Q\�Q[�WN\MV�QVNMI[QJTM�\W�accommodate user involvement over time (Postma et al., p. 67). Also, while empathetic design uses people to drive innovation, in corporate settings the innovation is often driven by technology development, and user involvement is seen as one component that IٺMK\[�Q\�

CASE STUDYDESIGN

?PQTM�\PM�IVITa[Q[�WN �TQ\MZI\]ZM�XZW^QLM[�\PMWZM\QKIT�SVW_TMLOM�IJW]\�\PM�KPIZIK\MZQ[\QK[�of startups and potentials of service design, real-life observation can help to gain QV[QOP\N]T�]VLMZ[\IVLQVO�WN �XZIK\QKIT�JMVMÅ\[�WN �[MZ^QKM�LM[QOV��<PM�IQU�WN �\PQ[�KPIX\MZ�is to outline the empirical part of the study, by explaining the research methods used to N]TÅTT�\PM�ZM[MIZKP�WJRMK\Q^M[��.QZ[\��LM\IQTML�QVNWZUI\QWV�IJW]\�\PM�ZM[MIZKP�NZIUM�IVL�data collection is presented, followed by a description of the data analysis methods used. Third, the trustworthiness of the study is presented to ensure the validity of empirical methodology.

3


3.1. Framework for the Empirical Study

The literature review covered the most common characteristics of IT startups, and the potentials of service design. Based on the presented theories and themes that emerged, a simple framework was developed to illustrate how service design can potentially aid [\IZ\]X[�QV�LM^MTWXQVO�\PMQZ�[MZ^QKM[�QV�I�UWZM�MٺMK\Q^M�_Ia��[MM�.QO]ZM��*MKI][M�\PMZMis no existing literature or research discussing the integration of service design with agile development, this conceptual framework serves only as a guide to structure the further research in the empirical part of this thesis.

The framework consists of two key challenges that startups face based on the existing TQ\MZI\]ZM�IVL�ZM[MIZKP"�TW_�K][\WUMZ�[I\Q[NIK\QWV�IVL�QVMٺMK\Q^M�:�,��;QUQTIZTa��it presents three key advantages, or qualities, of service design that are assumed to potentially answer the

1) Collaborative - Aligning customer needs, services and business goals through co-creation: Service Design explores ways to create value for business by MVIJTQVO�LQٺMZMV\QI\QWV��MVPIVKQVO�K][\WUMZ�[I\Q[NIK\QWV��IVL�TWaIT\a��<PM�[MZ^QKM�LM[QOV�UM\PWL[�JZQVO�KTIZQ\a�\W�\PM�KWUXIVa¼[�KWZM�IQU[��QLMV\QNaQVO�Q\[�[\ZMVO\P[��weaknesses, and priorities, and choosing most relevant touchpoints for service delivery. <PZW]OP�LQZMK\�QV^WT^MUMV\�WN �LQٺMZMV\�[\ISMPWTLMZ[��\PM�LQٺMZMV\�VMML[�KIV�JM�[PIZML��negotiated, and aligned in such a way that the service brings value and relevancy (Weist, 2009; Stickdorn & Schneider, 2011, p. 94-97; Steen, Mahschot & De Koning, 2011).

2) Generative learning - early prototyping and internal learning:Iterative learning through creation of personas, storytelling and testing, visualizing

41//CASE STUDY DESIGN

and prototyping ideas, leading to gradual improvement of the service and internal learning within an organization (Beckman & Barry, 2009; Blomkvist & Holmlid, 2012; ;MOMT[\Z�U��!��

Aligning customerneeds, services and

business goals

InefficientR&D

Early prototyping& internal learning

Low customer

satisfaction

User-centredmethods &

tools

COLLABORATIVE EMPATHETICGENERATIVELEARNING

STARTUPS

SERVICE DESIGN

Figure 6: The framework representing the potentials of Service Design to aid Startups to develop service

offerings in a more effective way, leading to desired outcomes. The blue color represents the qualities of

Service Design, and the red color represents the common challenges faced by IT startup companies.


��-UXI\PM\QK - human-centered methods and tools: Service design emphasizes observing and talking to end-users throughout service development process, using their insights as a starting point for design in order to validate ideas and ensure value (Steen, Mahschot & De Koning, 2011).

This framework served as a lens for interrogation during the empirical research, in terms WN �KI[M�KWUXIVQM[¼�][M�WN �LM[QOV�

3.2. The Research Approach

The research process was guided by the overall research question: “how can service LM[QOV�PMTX�[\IZ\]X[�JMKWUM�UWZM�MٺMK\Q^M'” It is important to note that the assumption is that companies do that both explicitly and implicitly. The empirical study aimed to seek answers to the three secondary research questions that help build a structure for exploring in the subject matter:

SQ (1): 0W_�Q[�[MZ^QKM�LM[QOV�IXXTQML�QV�[\IZ\]X['�?PI\�Q[�\PM�K]ZZMV\�[\I\M' SQ (2): ?PI\�IZM�\PM�XMZKMQ^ML�KPITTMVOM[�IVL�WXXWZ\]VQ\QM[�NWZ�ILWX\QVO�� service design approach in a startup context SQ (3):�?PI\�IZM�\PM�NIK\WZ[�\PI\�QVÆ]MVKM�[MZ^QKM�ZMTI\ML�LMKQ[QWV�UISQVO'

As suggested by Marshall & Rossman (1995), Eriksson & Kovalainen (2008) and Zelditch (1962), a qualitative study approach is employed for the empirical study. It provides the UW[\�KWUXMTTQVO�_Ia�\W�N]TÅTT�\PM�ZM[MIZKP�WJRMK\Q^M[��L]M�\W�\PM�M`XTWZI\WZa�VI\]ZM�of the research questions and the need for in-depth information. Furthermore, these secondary research questions will aim to answer the main research question.

As opposed to quantitative research, qualitative research allows the researcher to play a key role in the research process. It also allows for investigating the subject matter within its natural context by combining multiple methods, such as participatory


observation, social networking, in-depth interviews, analysis of artifacts and documents, and audiovisual material (Marchall & Rossman, 1995, Hyysalo, 2009; Creswell 2013). Studying the use of service design in a natural setting is important in order to build new knowledge about the roles and values of service design in startup context.

7VM�WN �\PM�UIQV�JMVMÅ\[�WN �\PM�Y]ITQ\I\Q^M�IXXZWIKP�Q[�\PI\�Q\�XZW^QLM[�\PM�UMIV[�\W�describe the phenomenon by answering questions “what”, “how”, and “why” (Creswell, 2013; Kvale & Brinkman, 2009). This allows generating meaning from the gathered data, deriving a set of themes, and making interpretations to identify shared patterns of JMPI^QWZ��+ZM[_MTT��X��4IKSQVO�IV�MV\ZMVKPML�[QVOTM�LMÅVQ\QWV��[MZ^QKM�LM[QOV�and its application in the development process is highly dependent on the prevailing attitudes, interpretations of design, ways of working and culture in startup companies. Gaining a good understanding of this would not be possible with the quantitative research.

In compliance with the previously described characteristics of qualitative study, this MUXQZQKIT�ZM[MIZKP�MUXTWa[�UM\PWL[�\PI\�N]TÅTT�\PMU��<W�J]QTL�I�U]T\Q�LQUMV[QWVIT�understanding of the subject matter and enhance validity, the research was conducted

Figure 7: Phases of empirical research: 1) Participant observation, 2) Case studies. The main emphasis

of this research is on the case studies that comprise of three in-depth interviews with each company.

Participant observation in Company A serves as a support for the findings from each case company.

Participant observation: Company A

Case study, Company B

Case study, Company C

PHASE 1 PHASE 2


using a triangulation��.TQKS��X��_PQKP�MUXTWa[�I�KWUJQVI\QWV�WN �LQٺMZMV\�UM\PWL[�IVL�KZW[[�^ITQLI\M[�\PM�ÅVLQVO[��-TTQW\\��<QU]TIS��X��<PM�ZM[MIZKP�is designed to consist of two phases: participatory observation and case studies (see Figure 7). Studying one case company gives only one perspective of the phenomenon in question (Creswell, 2013, p. 44), hence two cases were chosen to make the study more comparative and in-depth.

3.2.1. Phase 1: Participant Observation

Considering the exploratory nature of this empirical study, for in-person study of the environment and use of design at an IT startup, participant observation was the most adequate method. As an ethnographic research method, participant observation is QUXTMUMV\ML�QV�\PM�ÅMTL��_Q\P�I�[QOVQÅKIV\�IUW]V\�WN �\QUM�[XMV\�JM\\MZ�]VLMZ[\IVLQVO�the context and culture. The researcher acts as the primary tool for data collection and analysis, being a part of the daily lives of the subjects of the study, and building a PWTQ[\QK�XQK\]ZM�WN �\PM�K]T\]ZIT�[M\\QVO��<PQ[�ÅZ[\�PIVL�M`XMZQMVKM�ITTW_[�\PM�ZM[MIZKPMZ�to see things that people within the setting take for granted (Quinn, 1980; Hancock & Algozzine, 2006; Creswell, 2013, p. 90). Hence, this method can be a very valuable way of building knowledge, which also complements formal interviews and uncovers issues that people may not willing to vocalize.

The scope of the participant observation process in this study limits itself to a period of approximately four months, between July 2013 and October 2013, and in the context of Finnish IT startup company (Company A). The observations are limited to a team of nine people, including the Researcher (myself) as in-house service designer, and board UMUJMZ[��<PM�XIZ\QKQXIV\�WJ[MZ^I\QWV�_I[�KWVL]K\ML�I\�+WUXIVa�)¼[�XTIKM�WN �J][QVM[[��where the startup met on a daily basis, and included active participation in meetings, workshops, and design tasks.

These activities provided an opportunity to explore the culture and characteristics of the startup through its core values, personal experiences as an in-house designer, tacit knowledge, company artifacts, informal discussions, workshops, and general observation.


The design work-related observations were made through an extensive project involving the creation of a new mobile service for the company. Observations about the use of design, decision-making, and culture were then complemented by informal conversations, company artifact analysis, and review of other documentation.

As suggested by Eriksson & Kovalainen (2008, p. 141), the observation period was LWK]UMV\ML�_Q\P�ÅMTL�VW\M[�IVL�][QVO�VI\]ZITQ[\QK�ZMKWZL[�WN �\PM�UW[\�[QOVQÅKIV\�insights and opinions from informal conversations. The notes were descriptive and observational, although they additionally included initial interpretations and impressions. The aim was not to collect information that supported personal viewpoints, but to look into alternative ways of looking at service design and software development. Most importantly, special attention was paid to things that did not happen, and the reasons behind them. Participatory observation provided an opportunity to better understand the reality by listening and seeing how people behave, how they think, how they use design, and how they work.

3.2.2. Phase 2: Case Studies on Two IT startups

Considering the exploratory nature of this research, looking at how service design is used in each IT startup company, and why things are done in a certain way is very important. The aim of the second research phase was to research the contextual conditions as \Z]\PN]TTa�I[�XW[[QJTM��IVL�KI[M�[\]La�IXXZWIKP�WٺMZ[�I�KWUXMTTQVO�_Ia�\W�IKPQM^M�\PQ[�(Yin, 2009).

Case study research aims to create a profound understanding of the dynamics within MIKP�[M\\QVO��Ja�KWUJQVQVO�LQٺMZMV\�LI\I�KWTTMK\QWV�UM\PWL[�\PI\�PMTX�M`XTWZM�\PMUM[�emerging from human behaviors (Eisenhardt, 1989, p. 534). Within such a study, the incentives of employing service design, limitations and opportunities cannot be considered without considering the context around it. It is important to take into IKKW]V\�MIKP�QVLQ^QL]IT¼[�UMIVQVO[�IVL�QV\MZXZM\I\QWV[�WN �KWVKMX\[��I[�_MTT�I[�XMZ[WVIT�JIKSOZW]VL[��)T[W��\PM�\aXM�WN �[MZ^QKM�IVL�WZOIVQbI\QWVIT�NIK\WZ[�IٺMK\�\PM�_Ia�\PQVO[�work in each setting.


According to Yin (2009), multiple case studies�IZM�I�[]Q\IJTM�[\ZI\MOa�NWZ�ÅVLQVO�[QUQTIZQ\QM[�IVL�LQٺMZMVKM[�IKZW[[�KI[M[��JMKI][M�[QVOTM�KI[M�[\]La�KIV�JM�^]TVMZIJTM�L]M�\W�Q\[�uniqueness. While participant observation methodology gives the researcher the access to the real-world context in order to understand one unique case, the multiple-case study allows for analyzing the phenomenon both within each setting, and across the LQٺMZMV\�[M\\QVO[��<P][��TWWSQVO�I\�UWZM�\PIV�WVM�KI[M�PMTX[�\W�QLMV\QNa�\PM�[QUQTIZQ\QM[�IVL�LQٺMZMVKM[�JM\_MMV�\PMU��*I`\MZ��2IKS�� .WZ�\PM[M�ZMI[WV[��Q\�Q[�QUXWZ\IV\�to select the cases carefully in order to make those comparisons happen – regardless of whether or not the results turn out to be similar or contradicting (Yin, 2003).

The case studies consist of semi-structured interviews as the primary method of data collection, and artifact analysis of two IT startup companies as secondary data. These ^IZQW][�[W]ZKM[�PMTX�J]QTL�I�PWTQ[\QK�XQK\]ZM�WN �I�[XMKQÅK�ZMIT�TQNM�KWV\M`\��K]T\]ZM�IVL�ways of working in each setting, as suggested by Guba & Lincoln (1994), Crotty (2003), Marshall & Rossman (1995), Creswell, (2013) and Yin (2009).

3.2.3. Sampling

Sampling needs to assure that the essential topic areas are covered and the relevant LI\I�Q[�IKKM[[ML�\W�Å\�\PM�X]ZXW[M�WN �\PQ[�[\]La��-TTQW\\��<QU]TIS��X��<PQ[�JMQVO�[IQL��\PM�LI\I�NZWU�\PM�[MKWVL�KI[M�_QTT�JM�][ML�\W�ÅTT�I�OIX�Ja�\PM�ÅZ[\�KI[M��IVL�together all three cases will comprise a stronger study. This kind of richness could not be achieved by random sampling (Reybold, Lammert & Stribling, 2012). The aim is, however, not to generalize the information (Creswell, 2013) but to understand cultural issues (Maykut & Morehouse, 1994). Because of the limited amount of cases, snowball-sampling was used to ensure the quality of the case studies. Since gaining access to the IXXZWXZQI\M�KI[M�KWUXIVQM[�_I[�LQٻK]T\��XMZ[WVIT�KWV\IK\[�_MZM�][ML��<PM�[IUXTQVO�started by identifying individuals who are relevant to the study, such as previous colleagues and peers from the university, who were asked to identify other useful informants and potential case companies. The selection of case companies was aligned with Company A, and was scoped according to the following criteria:


The startup company is at its early stage Both companies are operating within a similar domain: companies were from health and wellness service sector The startups are developing a consumer product Both startups have in-house service designers

By drawing upon personal networks, it was possible to get more information about the KWUXIVQM[�IVL�XMWXTM�QV^WT^ML�\PI\�UI\KP�ZM[MIZKP�ZMY]QZMUMV\[��)VW\PMZ�JMVMÅ\�WN �this sampling strategy was that people became more receptive to the research and the researcher when the sampling was done through peers. This tactic tends to lead to better openness of respondents, eliciting deeper insights and improving the trustworthiness of the study (Small, 2009, p. 14). Finally, building trust and making interviewees feel more comfortable was achieved by avoiding contacting them through persons in managerial positions or superiors. Rather, each participant was contacted personally, and provided with the information about the purpose of the study.

.ZWU�MIKP�KI[M�KWUXIVa��\PZMM�M`XMZ\[�NZWU�LQٺMZMV\�LQ[KQXTQVM[�_MZM�[MTMK\ML�NWZ�\PM�QV�LMX\P�QV\MZ^QM_[��1UXTMUMV\QVO�\PM�[\]La�_Q\P�LQٺMZMV\�IK\WZ[�_Q\PQV�MIKP�[\IZ\]X�[M\\QVO�PMTXML�^ITQLI\M�\PM�ÅVLQVO[��IVL�\M[\QVO�\PMQZ�ZMTQIJQTQ\a�IVL�MVPIVKQVO�LI\I�credibility, as suggested by Yin (2009, p. 2). To achieve that, individuals holding the following positions were targeted from each company:

The founder The in-house designer Person responsible for the development and engineering

The respondents were selected under the assumption that they have an expert understanding of service development due to their professional experience. The founders were targeted as the key stakeholders in service and strategy-related decision-making, since it was important to understand how service had been developed and evolved from the early days. The person from engineering, in turn, could provide valuable insights related to the agile development processes, and describe the value of design from an objective point of view. Finally, the designer was a key actor who is


ZM[XWV[QJTM�NWZ�\PM�LM[QOV�XZWKM[[�QV�I�KWUXIVa��-IKP�ZM[XWVLMV\¼[�SVW_TMLOM��QV�\PQ[�respect, was considered as appropriate and relevant to the research objectives.

3.2.4. Pragmatic Considerations

One of the most important pragmatic considerations for this study was time and ÅVIVKQIT�ZM[W]ZKM[��_PQKP�LM\MZUQVML�\PM�[\]La�UM\PWL�KPWQKM[�IVL�\PM�V]UJMZ�WN �cases. Hence, the saturation criterion (Elliott & Timulak, 2005, p. 151) of qualitative research was challenging to reach, and purposeful sampling was used instead. Other acknowledged challenges were related to accessibility of founders and geographical TWKI\QWV[��<PW]OP�Q\�Q[�XZMNMZZML�\PI\�LI\I�OI\PMZQVO�Q[�LWVM�I\�\PM�[\]La�XIZ\QKQXIV\¼[�“home grounds” to enhance realism (Stake, 1995, p. 57: Hancock & Alcozzine, 2006), some of the interviews had to be implemented over Skype due to the geographical distance. Due to the holiday season and busy schedules of respective startups, the interviews were pushed to January and the beginning of February 2014. This proved to be especially challenging for getting the founders to participate in the interviews. The limited access to companies and people in Finland and San Francisco and the timing, thus, slowed LW_V�\PM�MٺWZ\[�

3.2.5. Entering the Field

When approaching the participants of the case studies and the company for the participant observation, the relationship between the participants and the researcher was considered. In addition to the tacit knowledge and past professional experiences, existing TQ\MZI\]ZM�IVL�JTWO[�_MZM�ZM^QM_ML�NWZ�TMIZVQVO[�IJW]\�MUMZOQVO�Q[[]M[�QV�\PM�ÅMTL�WN �service design. Experts were also consulted to collect their viewpoints and information about contemporary issues. Acting in the role of listener was taken, along with allowing the interviewees to act as narrators (Denzin & Lincoln, 2005). Providing people with space to talk is an important feature of qualitative research, as it can uncover valuable insights (Dickson-Swift, James, Kippen & Liamputtong, 2007). When interacting with the respondents, however, the challenge was to avoid personal interests from biasing


\PM�[\]La�IVL�Ua�M`Q[\QVO�XZMKWVKMX\QWV[�NZWU�IٺMK\QVO�WZ�TMILQVO�\PM�KWV^MZ[I\QWV[�(Marshall & Rossman, 1995).

Finally, the ethical requirements of the study were considered throughout the whole case study and participant observation process (Eriksson & Kovalainen, 2008), and the possible impacts of the study on each individual were considered when designing the interviews for case studies (Creswell, 2013). Unless interviewees wanted public QLMV\QÅKI\QWV��QVNWZUI\QWV�KWTTMK\ML�L]ZQVO�\PM�QV\MZ^QM_[�ZMUIQVML�IVWVaUW][�IVL�KWVÅLMV\QIT��1V\MZ^QM_MM[�PIL�\PM�ZQOP\�\W�MVL�\PM�QV\MZ^QM_�IVL�_MZM�LMJZQMNML�IN\MZ�\PM�research ended.

3.3. Trustworthiness of the Study and Possible Shortcomings

The criteria of trustworthiness of qualitative studies include credibility, transferability, LMXMVLIJQTQ\a�IVL�KWVÅZUIJQTQ\a��I[�LMÅVML�Ja�/]JI��4QVKWTV��!!��X��Considering the novelty of research about applying service design in IT startup context, \PM�NI[\�WVOWQVO�KPIVOM[�QV�\PM�ÅMTL�WN �\MKPVWTWOa�IVL�\PM�[KWXM�WN �\PQ[�\PM[Q[�ZM[MIZKP��\PM�ZM[MIZKP�LI\I�IVL�ÅVLQVO[�IZM�[]JRMK\�NWZ�N]Z\PMZ�ZM[MIZKP��?PQTM�KZMLQJQTQ\a�[MMS[�\W�M[\IJTQ[P�KWVÅLMVKM�QV�\PM�¹\Z]\Pº�WN �\PM�[\]La��/]JI��4QVKWTV��!!��Q\�Q[�acknowledged that there is no single truth due to uniqueness of the case startups. To QVKZMI[M�\Z][\_WZ\PQVM[[�WN �\PM�[\]La��XMWXTM�PWTLQVO�LQٺMZMV\�XW[Q\QWV[�_Q\PQV�MIKP�company were interviewed. The empirical study used a cross-case tactic, and participant observation complemented the pair of case studies implemented (Eisenhardt, 1989; Lincoln & Guba, 1985; Manning, 1997).

<PM�[IUM�Q[[]M�IXXTQM[�\W�\ZIV[NMZIJQTQ\a��_PQKP�Q[�\PM�IXXTQKIJQTQ\a�WN �ÅVLQVO[�\W�W\PMZ�[M\\QVO[�IVL�IKZW[[�LQٺMZMV\�KWV\M`\[��-Q[MVPIZL\��! !��<PM�]VQY]M�ÅVLQVO[�QV�\PQ[�study cannot be generalized to a larger number of cases. Dependability refers to the ZM[MIZKPMZ¼[�ZM[XWV[QJQTQ\a�\W�LWK]UMV\��[\WZM��IVL�XZW\MK\�KWTTMK\ML�UI\MZQIT��/]JI��Lincoln, 1994). All collected data and material used to make decisions were recorded in detail, and the study participants had the right to review the collected information to ensure the validity of this study and provide comments if necessary. All names of the


ZM[XWVLMV\[�IVL�KWUXIVQM[�PIL�JMMV�SMX\�KWVÅLMV\QIT�\PZW]OPW]\�\PM�_PWTM�ZM[MIZKP�XZWKM[[��.QVITTa��KWVÅZUIJQTQ\a�ZMNMZ[�\W�\PM�WJRMK\Q^Q\a�QV�\PM�[\]La��<W�QUXZW^M�\PM�WJRMK\Q^Q\a��\PM�UI\MZQIT�_I[�TWWSML�I\�NZWU�LQٺMZMV\�^QM_XWQV\[�WN �ZM[XWVLMV\[��-ZQS[[WV�& Kovalainen, 2008; Yin, 2009).

According to Holtgraves (2004, p. 161 - 171), interviewees evaluate their thoughts before giving a response to the researcher. Especially when people acknowledge that their colleagues and management will be involved in the study, they do not necessarily talk about issues in a truthful manner. Also, there is a risk of having the respondents answering what the researcher wants to hear, instead of telling what they really think. 8IZ\�WN �ZM[MIZKPMZ¼[�ZM[XWV[QJQTQ\QM[�Q[�\W�UISM�[]ZM�\PI\�\PM�QV\MZ^QM_MM[�IZM�MUXW_MZML�to be honest and open when talking about their perceptions and experiences.

3.4. Case Study Interviews

The design of interviews requires careful planning and preliminary research. The X]ZXW[M�WN �\PM�QV\MZ^QM_[�_I[�\W�PI^M�ZM[XWVLMV\[�ZMÆMK\�WV�\PMQZ�JMPI^QWZ�IVL�experiences. Through those, the goal was to build in-depth knowledge of practices _Q\PQV�MIKP�KWUXIVa��IVL�\PM�NIK\WZ[�\PI\�IٺMK\�[MZ^QKM�ZMTI\ML�LMKQ[QWV�UISQVO�TMILQVO�\W�\PM�ÅVIT�[MZ^QKM�[\ZI\MOa��

The interviews were conducted with two case companies (B and C) outside of the participant observation context. From each startup, a total of three experts from various disciplines participated in the study in order to provide insights based on their diverse backgrounds. First, conducting interviews with selected experts can provide substantial support and new information for the academic and theoretic literature that is scarce when it comes to combining service design with agile development and Lean Startup philosophy. The interviews can also help further construct the literature by providing insights from the interviewed experts. Second, within a conversational setting, the respondents were asked to describe their personal interpretations of certain concepts, their accounts of certain events, their experiences and how they had mutually built the way of working as a team. These insights help answer the research questions and elicit


practical implications.

3.4.1. Semi-Structured Interview Method

The two case studies were conducted through semi-structured interviews with each participant. Semi-structured interviews are well suited for this research, because they allow, through open-ended questions and conversational nature, for the uncovering of valuable insights that help build in-depth understanding. With a loose structure, the QV\MZ^QM_[�KIV�JZQVO�]X�I�JQO�IUW]V\�WN �QVNWZUI\QWV�IVL�[QOVQÅKIV\��M^MV�[]ZXZQ[QVO��QV[QOP\[�NZWU�XIZ\QKQXIV\¼[�XMZ[WVIT�XMZ[XMK\Q^M��-TTQW\\��<QU]TIS��X��-Ta�1991). Additionally, open-ended interviews can enhance evaluation and comparability WN �ZM[]T\[��UQVQUQbM�\PM�QV\MZ^QM_MZ¼[�JQI[�IVL�ÎZQI\QWV�IUWVO�QV\MZ^QM_MM[��Ja�UISQVO�\PM�QV\MZ^QM_[�UWZM�NWK][ML�IVL�\PM�ZM[XWV[M[�MI[a�\W�ÅVL�IVL�KWUXIZM��8I\\WV��<PQ[�UM\PWL�UILM�Q\�XW[[QJTM�\W�M`XTWZM�QV\MZ^QM_MM¼[�XMZ[WVIT�QV\MZXZM\I\QWV[�WN �KWVKMX\[�IVL�M^MV\[�QV�I�UWZM�MٺMK\Q^M�_Ia��PIZVM[[QVO�\PMQZ�M`\MV[Q^M�M`XMZQMVKM�NZWU�the industry.

All interviews were conducted individually in a conversational manner (Silverman, 2010). As opposed to group interviews, individual interviews do not impose the risk WN �PI^QVO�\PM�ZM[XWVLMV\[�JMQVO�QVÆ]MVKML�Ja�WVM�IVW\PMZ¼[�WXQVQWV[�IVL�^QM_XWQV\[�(Hancock & Alcozzine, 2006).

3.4.2. Interview Design and Implementation

1V�WZLMZ�\W�JM�IJTM�\W�ÎTQLI\M�IVL�KWUXIZM�\PM�ÅVLQVO[�NZWU�ITT�\PM�KWUXIVa�representatives, as well as to enhance the systematic evaluation of the study, the interviews followed pre-set themes (Marshall & Rossman, 1995; Hancock & Alcozzine, ��#�+ZM[_MTT��.QZ[\��\PM�NWK][�WN �\PM�QV\MZ^QM_[�_I[�LMÅVML�Ja�\PM�XZM^QW][Ta�presented detailed secondary questions. From these questions, general themes were derived and further developed into broad and open-ended interview questions. Some of \PM�Y]M[\QWV[�_MZM�IT[W�JI[ML�WV�\PM�WJ[MZÎ\QWV[�KWTTMK\ML�NZWU�\PM�ÅZ[\�ZM[MIZKP�XPI[M��


IVL�KMZ\IQV�Q[[]M[�NW]VL�NZWU�TQ\MZI\]ZM��1V�WZLMZ�\W�ZMTa�WV�\PM�QV\MZ^QM_MM[¼�XMZ[WVIT�views and understandings of the studied phenomenon and allow them to take the role of a co-researcher, the questions were broad and general.

The interviews were implemented both face-to-face, whenever possible, and over telephone (Skype) due to geographical locations. The length of the interviews was designed to be approximately 60 minutes long, and structure of all interviews loosely followed the following themes:

Interpretations of service design Use of design at the company and exposure to service design Service development process� .IK\WZ[�IٺMK\QVO�LMKQ[QWV�UISQVO The evolution of the service over time

1V�WZLMZ�\W�JM�IJTM�\W�UIQV\IQV�KWV[Q[\MVKa�IKZW[[�\PM�QV\MZ^QM_[�_Q\P�LQٺMZMV\�participants, a general interview guide was developed (Hancock & Alcozzine, 2006) to KW^MZ�IV�W]\TQVM�WN �\WXQK[�_Q\P�[]OOM[\ML�WXMV�MVLML�Y]M[\QWV[�QV�I�XZM�LMÅVML�WZLMZ�(see Appendix A). The same themes were discussed with each participant to make the ÅVLQVO[�KWUXIZIJTM��<PM�XZM�LMÅVML�[\Z]K\]ZM�IQUML�I\�UW^QVO�NZWU�UWZM�OMVMZIT�topics to more detailed issues towards the end of the interview. For example, the interviews started with personal associations and perceptions of service design, moving on to the use of design as part of service development strategy. Towards the end, respondents were asked to describe the way they make decisions in the context of a concrete project. The order in which the themes and interview questions were covered ^IZQML�LMXMVLQVO�WV�\PM�ÆW_�WN �\PM�KWV^MZ[I\QWV�

During the interviews, the aim was to avoid commenting on the answers and stay detached from the interviewee to avoid the risk of leading the conversation. Additionally, professional and design related jargons were avoided, and neutral language was used QV[\MIL��LMXMVLQVO�WV�\PM�QV\MZ^QM_MM¼[�JIKSOZW]VL��<PM�ZM[MIZKP�Y]M[\QWV[�QV�\PM�guides were formulated in theoretical language, while in practice those questions were expressed in the everyday language of the interviewees. For instance, the term “product


development process”, was not used due the risk of having the respondents saying or thinking that they do not have a process at the company. To ensure the questions were open-ended and understandable (Ely, 1991), the interview guide was tested beforehand, _Q\P�I�KW]XTM�WN �Q\MZI\QWV[��JMNWZM�XZMXIZQVO�\PM�ÅVIT�[M\�WN �Y]M[\QWV[��

When facilitation was needed or the conversation was lacking depth, the pre-determined probing questions were used to support the interviewee. Probing (Kvale & Brinkmann, 2009) was used for further description of a particular issue in order to open up XIZ\QK]TIZ�I[XMK\[�WN �\PM�QV\MZ^QM_MM¼[�[\WZa��7^MZTa�XZWJQVO�Y]M[\QWV[�_MZM�I^WQLML��J]\�_PMV�[WUM�KTIZQÅKI\QWV�_I[�VMMLML��\PMa�_MZM�][ML�\W�MV[]ZM�\PI\�ZM[XWV[M[�PIL�JMMV�understood correctly.

3.4.3. Data Documentation

<ISQVO�VW\M[�QV�\PM�ÅMTL�_I[�IV�QUXWZ\IV\�XIZ\�WN �\PM�ZM[MIZKP�XZWKM[[��IVL�Q\�QV^WT^ML�observation, perceptions, analysis, records of activities, and initial interpretations. The ÅMTL�VW\M[�IT[W�QVKT]LML�\PM�QUXZM[[QWV[�\PI\�IZW[M�L]ZQVO�\PM�XIZ\QKQXIV\�WJ[MZ^I\QWV�IVL�KI[M�[\]LQM[��1\�_I[�IV�WV�OWQVO�XZWKM[[�WN �ZMÆMK\QVO�WV�TMIZVQVO[�NZWU�KMZ\IQV�observations.

7\PMZ�\PIV�KIX\]ZQVO�I�NM_�SMa_WZL[�WV�XIXMZ�NWZ�TI\MZ�ZMNMZMVKM��UWZM�[QOVQÅKIV\�VW\M�taking was avoided during the interviews to help keep the focus on catching key details IVL�UIQV\IQVQVO�\PM�ÆW_�WN �\PM�KWV^MZ[I\QWV��<PQ[�_Ia�Q\�_I[�XW[[QJTM�\W�[\Ia�ITMZ\�to new or surprising details that came up during the conversation, and select probing questions accordingly. As suggested by Yin (2009, p. 69), the collected information was reviewed continuously in-between the interviews, to see if additional information is needed. When certain issues needed further validation, special attention was paid to them during interviews with other respondents.

Also, to understand the contexts of each company better, the information from the QV\MZ^QM_[�_I[�KWUXTMUMV\ML�_Q\P�VM_[��JTWO[�IVL�_MJ[Q\M[�_Q\P�KWUXIVa�XZWÅTM[�I[�secondary source of data. Additionally, the services of each company were researched


before the interviews, in order to be able to discuss certain issues in the light of the M`Q[\QVO�[MZ^QKM�WٺMZQVO[��<PM�[MKWVLIZa�LI\I�[]XXWZ\ML�IVL�O]QLML�\PM�XZQUIZa�LI\I�collection for this study.

3.5. Data Analysis

Collection of the data involved participatory observation in one Finnish IT startup KWUXIVa�IVL�KI[M�[\]La�QV\MZ^QM_[�_Q\P�[Q`�ZMXZM[MV\I\Q^M[�WN �\_W�LQٺMZMV\�1<�[\IZ\]X�KWUXIVQM[��<PM�ÅMTL�VW\M[��KWUXIVa�IZ\QNIK\�IVITa[Q[��WJ[MZÎ\QWV[��LWK]UMV\I\QWV[��IVL�QV\MZ^QM_[�XZWL]KML�I�[QOVQÅKIV\�IUW]V\�WN �LI\I�\PI\�VMMLML�[\Z]K\]ZML�IVITa[Q[��The collected material was dealt with in two phases: 1) writing down the impressions and perceptions from company artifact analysis and the interviews and 2) analyzing the information using IٻVQ\a�UIXXQVO.

The purpose of the analysis was to answer the what and how of qualitative study, form ZMTQIJTM�ÅVLQVO[��IVL�J]QTL�VM_�SVW_TMLOM��-Q[MVPIZL\��! !��<PM�KI[M�[\]La�IVITa[Q[�was done with an inductive approach. An inductive researcher is not restricted to the interviews, observations and archival sources, which are typically common to theory-J]QTLQVO�ZM[MIZKPMZ[��1V[\MIL��\PM�IQU�_I[�\W�OM\�QUUMZ[ML�QV�\PM�LM\IQT[�IVL�[XMKQÅK[�of the data to discover important patterns, themes, and interrelationships. The analysis XZWKM[[�JMOIV�Ja�M`XTWZQVO��KWVÅZUQVO��IVL�\PMV�ÅVITTa�MVLQVO�]X�_Q\P�I�KZMI\Q^M�synthesis (Patton, 2002). Throughout the whole research process, early data analysis was implemented after each interview in order to keep track on the direction of the research (Silverman, 2010, p. 7).

<PM�QVL]K\Q^M�IVITa[Q[�WN �\PM�ÅVLQVO[�IVL�WJ[MZÎ\QWV[�_I[�KWVL]K\ML�Ja�][QVO�IV�ILR][\ML�)ٻVQ\a�5IXXQVO�UM\PWL��ILIX\ML�NZWU�3MQVWVMV��IVL�/][MaVWÎ��<PM�UM\PWL�PMTX[�\W�WZOIVQbM�KWUXTM`�IVL�JQO�ÅVLQVO[��1\�Q[�M[XMKQITTa�applicable when dealing with qualitative information containing chaotic thoughts or Q[[]M[��)ٻVQ\a�5IXXQVO�Q[�M`XTWZI\WZa�QV�VI\]ZM��JMKI][M�Q\�TM\[�\PM�KWV\MV\�LMÅVM�


structure of the analysis by helping organize insights into groups, which in turn allows the researcher to see themes, similarities and possible patterns (Keinonen, 2011). The analysis process is illustrated in Figure 8, and was done through the following steps:

� ��<ZIV[KZQJML�QV\MZ^QM_[�_MZM�XZQV\ML�W]\�IVL�ZM^QM_ML�QV�WZLMZ�\W�ÅVL�QV[QOP\[ that are relevant for the study and answer the secondary questions of the � ZM[MIZKP��?PQTM�PQOPTQOP\QVO�\PW[M�QV[QOP\[��[WUM�QUXWZ\IV\�SMa_WZL[�IVL�ÅZ[\� impressions were written down in the margins to help in further analysis of the� ÅVLQVO[��

(2) The highlighted insights were written down on post-it notes and placed on a wall for better visibility and clarity of existing data. The insights were collected for each secondary research question.

� ��:MTI\ML�QV[QOP\[�NZWU�MIKP�ZM[MIZKP�Y]M[\QWV�_MZM�QLMV\QÅML��IVL�[QUQTIZ�� insights were placed together into clusters.

(4) The clusters were then named according to emerged theme or certain meaning.

Figure 8. Affinity map method adapted from from Keinonen (2011) and Guseynova (2013).Data

1.

Transcribed

interviews

2.

Key insights for

each secondary

question

3.

Grouping

similarities

4.

Naming the groups


from the individual in-depth interviews was combined together within each case, and \PM�QV[QOP\[�NZWU�LQٺMZMV\�ZM[XWVLMV\[�_MZM�][ML�\W�^ITQLI\M�MIKP�W\PMZ��<PM�KWTTMK\ML�QV[QOP\[�IT[W�PMTXML�QLMV\QNa�WXXWZ\]VQ\QM[�\PI\�_MZM�][ML�TI\MZ�NWZ�LMÅVQVO�ZMTM^IV\�future implications.

�,]M�\W�\PM�TIZOM�IUW]V\�WN �KWTTMK\ML�LI\I��][QVO�IٻVQ\a�UIXXQVO�QV�KI[M�IVITa[Q[�_I[�QUXTMUMV\ML�ÅZ[\�I[�[]OOM[\ML�Ja�-Q[MVPIZL\��! !��<PM�X]ZXW[M�_I[�\W�IXXZWIKP�MIKP�KI[M�I[�I�[\IVL�ITWVM�MV\Q\a��<PQ[�ITTW_ML�NWZ�ÅVLQVO�\PM�]VQY]M�XI\\MZV[�WN �MIKP�KI[M�before comparing and juxtaposing patterns across cases. Further, cross-case data analysis _I[�KWVL]K\ML�Ja�ZM^QM_QVO�\PM�SMa�ÅVLQVO[�\PZW]OP�\PM�+][\WUMZ�,M^MTWXUMV\�UWLMT�by Steve Blank. It was used as a lens in order to discuss the use of service design across LQٺMZMV\�KI[M[�IVL�]VLMZ[\IVL�XI\\MZV[�\PZW]OP�KWUXIZQ[WV[�IVL�KWV\ZI[\QVO��;\ISM��!!��8I\\WV��*MKI][M�MIKP�KI[M�Q[�]VQY]M�IVL�\PM�ÅVLQVO[�KIVVW\�JM�OMVMZITQbML��this study aims at examining the practices of each company as unique entities.

CASE STUDY

RESULTSThe empirical part of this thesis consisted of a participant observation in Company A and two case studies about Company B and Company C (see Table 1 for details). The six formal semi-structured interviews from two case companies were conducted with key personnel to build a clear picture of how services are designed in each company. Each case study focuses on the following areas: 1) Development practices; 2) Decision-making; 3) Designer’s work and the role of design 4) How the company Q[��VW\��JMVMÅ\QVO�NZWU�LM[QOV#��;\I\][�QV�\PM�+][\WUMZ�,M^MTWXUMV\�UWLMT#�IVL��Challenges.

4


Table 1: Case companies. All three companies develop business-to-consumer digital services that aim

to change people’s lifestyles. The differences in company size and stages of funding, especially between

Company C and Companies A and B, helped to form a comparative study. The details presented in the table

are based on the information collected at the time of the study.

COMPANY A

Helsinki, Finland

2012 Stage 2: Seed round

The startup has raised funding from business angles and public facets, reaching a total of approximately

700.000 euros.

Self-Help

The service is provided globally.

Digital platform for companies, communities and individuals to share their stories and visual material about achivements and aspirations.

The service is provided as a web application and mobile application.

10 persons

1) Two co-founders2) Chief Operating Officer (COO)3) Two community managers4) Development team: 5 developers5) Design team: the reasearcher as the in-house service designer and a freelance designer working remotely in USA.

COMPANY B

Helsinki, Finland

2012 Stage 2: Seed round

Funding is raised from public facets, with the total of 1.24M USD

(techcrunch.com).

Health & Fitness

The service is provided in Helsinki, Finland, and New York, USA

Digital platform that connects individuals interested in sports activities and corporate partners who provide health and wellness products. The service has a web application nad mobile application.

11 persons

1) Two co-founders3) Development team: 4 de-velopers, including the head of development4) Sales team 4) Design: one in-house UX

designer, working part-time

COMPANY C

San Francisco,USA

2011 Stage 3: Series A

Funding is raised from venture capilal funds and private investors, with the total of 5.52M USD

(techcrunch.com).

Health

The service is provided in .

Digital service that helps people prevent type 2 diabetes and change their behaviors to live a healthy lifestyle through 16-week coaching program.

Currently the service is provided through a web application, and the mobile version will be launched soon.

35 persons

1) Four co-founders5) Design: Product designer, visual designer, 2 contractor designers6) Director of Product7) Development team, in-cluding VP of Engineering

Company Founded ProductSize & Organizational structure

Stage of funding Market

59//CASE STUDY RESULTS

4.1. Participant Observation: Company A

The two co-founders behind Company A started the venture in January 2012 in Helsinki, Finland. The current CEO, one of the co-founders, has an extensive professional background in media, and the other co-founder has professional background in branding and industrial design. Their idea started with a new lifestyle movement, that later evolved into a web application. It now serves as a platform for people, communities and companies to share stories – posts about their aspirations with audio-visual material – with the online community.

?PMV�\PM�KWUXIVa�_I[�NW]VLML��\PM�[MZ^QKM�LM^MTWXUMV\�[\IZ\ML�QUUMLQI\MTa��ÅZ[\�_Q\P�JZIVL�UI\MZQIT��NWTTW_ML�Ja�LM[QOV�WN �\PM�[MZ^QKM�ÆW_�IVL�][MZ�QV\MZNIKM��)N\MZ�\PZMM�UWV\P[�WN �QLMI\QWV�IVL�XZMTQUQVIZa�LM[QOV�_WZS��\PM�ÅZ[\�^MZ[QWV�WN �\PM�[MZ^QKM�(alpha version) was launched as soon as in March 2012, followed by beta version later \PM�[IUM�aMIZ��<PM�ÅZ[\�][MZ[�RWQVML�\PM�[MZ^QKM�ITZMILa�QV�[XZQVO��IVL�\PM�ÅZ[\�paying corporate customers joined the online community in spring 2013. The overall concept of the service, however, is still evolving with the beta version and going through big iterations on conceptual level.

4.1.1. Development Practices

The projects at Company A are carried out using the Scrum – an agile software development method that divides implementation into smaller iteration rounds, or sprints, that last from one week to 30 days (Rubin, 2013). At Company A, each project is divided into tasks and implemented in one-week sprints according to their priorities and required implementation time. Normally, designs of the service were sent to the development team in bundles before coding started. At the end of each sprint, the implemented parts of the service are reviewed to identify gaps and bugs.


1V�XZIK\QKM��\PM�IOQTM�UM\PWL�_I[�MٺMK\Q^M�QV�\MZU[�WN �OM\\QVO�\PQVO[�LWVM�QV�IV�organized way. However, according to the development team, sprints often led to gaps QV�][MZ�M`XMZQMVKM��JMKI][M�LQٺMZMV\�XIZ\[�WN �\PM�[MZ^QKM�_MZM�LM[QOVML�IVL�LM^MTWXML�separately.

4.1.2. Decision-Making

During the design and development processes, decision-making played an important role in terms of shaping the service. The way those decisions were made varied depending WV�\PM�[Q\]I\QWV��J]\�[WUM�KWUUWV�XI\\MZV[�_MZM�QLMV\QÅML�NZWU�\PM�WJ[MZÎ\QWV[�

First, technical limitations emerged as one starting point for decisions. For instance, when a certain feature was too complex or time consuming (i.e. costly) to implement, the team had to take shortcuts. During the process, the development team simultaneously provided good insights about technical feasibility, and most design issues were solved with close collaboration.

;MKWVL��\PM�NW]VLQVO�\MIU�IVL�QV^M[\WZ[�XTIaML�I�[QOVQÅKIV\�ZWTM�_PMV�Q\�KIUM�\W�LMÅVQVO�\PM�\IZOM\�UIZSM\�IVL�[MZ^QKM�XTI\NWZU[��LMXMVLQVO�WV�\PM�JIKSOZW]VL[�IVL�expectations of those members. When it came to visual design and usability, the plans had to be presented to the management on a regular basis to get approval, though not MÎT]I\ML�Ja�][MZ[�JMNWZM�QUXTMUMV\I\QWV��<aXQKITTa�I�NM_�LQٺMZMV\�LM[QOV�ÎZQI\QWV[�_MZM�XZWXW[ML��IVL�\PM�KPQMN �WXMZI\QVO�WٻKMZ��+77��WZ�\PM�KW�NW]VLMZ[�KPW[M�\PM�preferred option, based on intuition and past experience. The users, however were not involved in decision-making, although their concerns and comments were taken into consideration when the feedback was received.

,M[XQ\M�\PM�IJQTQ\a�\W�XIZ\QKQXI\M�QV�XTIVVQVO�[M[[QWV[�I[�\PM�ÅZ[\�QV�PW][M�LM[QOVMZ�IVL�XZW^QLQVO�QVX]\[�NZWU�][MZ[¼�XMZ[XMK\Q^M��\PM�QV^WT^MUMV\�WN �\PM�LM[QOVMZ�_I[�UW[\Ta�limited to designing the user interface. To a large extent, decision-making at Company A _I[�NIQ\P�JI[ML�IVL�QVÆ]MVKML�Ja�\PM�UIVIOMUMV\�


4.1.3. Designer’s Work and the Role of Design

*MNWZM�\PM�QUXTMUMV\I\QWV�WN �\PQ[�XIZ\QKQXIV\�WJ[MZ^I\QWV�I[�\PM�ÅZ[\�QV�PW][M�designer, the core team consisted of a COO, a community manager and a team of Å^M�LM^MTWXMZ[��6WJWLa�PIL�I�JIKSOZW]VL�QV�LM[QOV��IVL�UW[\�WN �LM[QOV�IK\Q^Q\QM[�were outsourced to freelance designers, who were used when their services were needed. The designers were mostly working remotely, not participating in planning sessions or working on the overall service concept. In some cases the collaboration with NZMMTIVKM�LM[QOVMZ[�PIL�MVLML�L]M�\W�LQ[[WVIVKM[�JM\_MMV�\PM�LM[QOVMZ¼[�^Q[QWV�IVL�\PM�TMILMZ[PQX¼[�^Q[QWV��<PM�NZMMTIVKMZ[��PW_M^MZ��_MZM�UW[\Ta�][ML�I[�][MZ�QV\MZNIKM�(UI) designers. They have been working separately from the development team, and QUXTMUMV\ML�XZM�LMÅVML�\I[S[�\PI\�_MZM�WN\MV�]ZOMV\�Q[[]M[�WZ�ZMY]M[\[�NZWU�\PM�leadership or management. When the resources were scarce, the COO worked on the designs, including both the interaction and visual design. However, the overall lack of M`XMZQMVKM�_Q\P�LM[QOV�KI][ML�Q\MZI\QWV[�IVL�IKK]U]TI\ML�Q[[]M[�\PI\�VMMLML�Å`M[�

During the participant observation, the role of an in-house designer comprised of making the service more consistent in terms of visual design and interaction. The aim _I[�\W�IXXTa�[MZ^QKM�LM[QOV�XZIK\QKM[�\PZW]OP�KZMI\QWV�WN �\PM�ÅZ[\�5>8�NWZ�\PM�KWUXIVa��Overall, design was seen as an activity related to interface design, although the whole \MIU�IXXZMKQI\ML�\PM�LM[QOVMZ¼[�W\PMZ�KWUXM\MVKQM[��[]KP�I[�[a[\MU[�\PQVSQVO�IVL�IJQTQ\a�to work on concepts.

4.1.4. How the Company is (not) Benefiting from Design

Collaboration

Because Company A operates in a two-sided market, it pays attention to all stakeholders during the development of their service, although the focus is more on the consumer market. In fact, the consumers are the starting point for the service concept, and other [\ISMPWTLMZ[�IZM�JZW]OP\�QV�I\�I�TI\MZ�[\IOM��<P][��UW[\�LM^MTWXUMV\�MٺWZ\�Q[�X]\�QV\W�implementing consumer tools. For example, presenting user-generated content in such a


way that it attracts companies was brought up multiple times during planning sessions. However, partners and their needs do not seem to be one of the starting points for concept development, although each one of them is approached individually. Currently, Company A is testing the beta version with 15 companies, while still searching for a solid business model. The concept is undergoing constant change, which makes aligning K][\WUMZ�VMML[��XIZ\VMZ¼[�VMML[�IVL�J][QVM[[�OWIT[�QV�XIZITTMT�LQٻK]T\��<PM�KWUXIVa�is generally happy with their iterative approach to development. However, early collaboration with other companies could have helped Company A to exit the iteration loop with a solid business model earlier.

Generative learning

;QVKM�+WUXIVa�)¼[�NW]VLQVO��\PM�\MIU�PIL�VW\�KWVL]K\ML�][MZ�\M[\QVO�WZ�XZW\W\aXM[��Prototyping was not used in the company due to tight deadlines, and it was not seen as something that the team needed to validate the insights and assumptions. Feedback came mainly through friends and family who were using the service. According to one of the co-founders, the service concept was tested also through pitches done by the +-7��<PQ[�Q[�_PMV�\PM�NMMLJIKS�IVL�ÅZ[\�ZMIK\QWV[�_MZM�KWTTMK\ML�I\�KWUXIVa�M^MV\[�and meetings with investors. People listening to the pitches and presentations, however, were rarely the users of the service. In other words, instead of doing early prototyping, Company A started implementing the service concept by creating the brand and KWTTMK\QVO�NMMLJIKS�Ja�[PW_QVO�\PM�TWWS�IVL�NMMT�WN �\PM�[MZ^QKM�\W�OM\�\PM�ÅZ[\�ZMIK\QWV[��The assumptions about user problems and needs, however, were not tested in the real-TQNM�KWV\M`\�IVL�\PMZM�PIL�JMMV�LQٺMZMV\�WXQVQWV[�IJW]\�\PMU�_Q\PQV�\PM�\MIU��7^MZITT��the startup has been following the “build it “ mentality, instead of investing time on ZMÅVQVO�\PM�KWVKMX\�_Q\P�[UITTMZ�UWKS]X[��<PQ[�UMV\ITQ\a�[MMU[�\W�JM�[WUM_PI\�controversial because the service has been under development for two years, which is enough of time to make space for early prototypes to help the company learn from mistakes early on and exit the big iteration loops in a shorter period of time.

During the participant observation, the setting of Company A was used for testing service design practices. In order to support the R&D and internal learning, visualization techniques were used to communicate the core ideas of the concept or


certain functionalities. In practice it involved drawing user journeys, alternative use cases, and scenarios. That turned out to be an important step forward, because the [MZ^QKM�ÆW_�IVL�\PM�K][\WUMZ�RW]ZVMa[�_MZM�VW\�^Q[]ITQbML�JMNWZM��_PQKP�IKKWZLQVO�to the development team caused challenges in R&D. The development team used to receive tasks from the management without fully understanding how features are supposed to function in practice.

What enhanced internal learning and mutual understanding of the service especially was the use of paper mockups for the mobile service (see Image 1). Mockups had never been used before in R&D, though their value was recognized as they triggered important discussions about the user experience with the development and management teams. Overall, visualizing ideas as early as possible and doing quick mockups proved to be one of the most important learning tools.

Empathy

,]ZQVO�\PM�[MZ^QKM�LM^MTWXUMV\�I\�\PM�+WUXIVa�)��][MZ[¼�QV^WT^MUMV\�_I[�[KIZKM��As mentioned earlier, the collection of user feedback and reactions happened mostly

Image 1: Paper prototype for the mobile service of Company A


through conversations with friends and acquaintances. The company organized a few workshops with the target audience, but they were mostly marketing events rather than sessions for learning about user behavior. The users were not directly involved in the iteration processes, although the team had expressed their strong interest and appreciation towards the user-centered approach to development. The service was developed on assumptions about how the service would be used, but it was not validated through systematic observations.

The main constraint for involving the users, according to the management, is the lack of \QUM�IVL�ÅVIVKQIT�ZM[W]ZKM[��,M[XQ\M�\PM�MٺWZ\[�][ML�WV�J]QTLQVO�\PM�[MZ^QKM��\PM�[\IZ\]X�still does not know what is the right business model, hence the iterations in the service concept. User-centered design approach would have potential to help the company ensure that it is taking the right approach and answering the right needs early on.

As part of the participant observation, the user-centered approaches in R&D were tested on-site. One method was organizing workshops for corporate partners and users in order to validate some of the entrenched assumptions about the service and gain new insights for the MVP of the mobile service. The challenges turned out to be mostly time-related. While workshops required careful planning and preparation, a lot of micro-level tasks were waiting for implementation. Time-related issues, however, were the matter of prioritizing tasks, but the most challenging part turned out to be having the management accept the plan and allow making user workshops a priority. There _I[�VW�XMZKMQ^ML�VMML�\W�WZOIVQbM�[]KP�_WZS[PWX[�NZWU�\PM�UIVIOMUMV\¼[�XMZ[XMK\Q^M�and, according to the COO, workshops and user participation are “too picture perfect for a startup”. Even when user insights were collected, they have not been used as comprehensively throughout the service development process, although users are carefully listened to. Additionally, new ideas coming in from the leadership often KPIVOML�\PM�LQZMK\QWV��7N\MV�][MZ�QV[QOP\[�_MZM�\ISMV�QV\W�IKKW]V\�WV�I�[]XMZÅKQIT�TM^MT��For example, those insights that implied some incremental changes or improvements were given more attention.


4.1.5. Status in the Customer Development Model

*I[ML�WV�\PM�ÅVLQVO[�NZWU�\PM�XIZ\QKQXIV\�WJ[MZ^I\QWV�I\�+WUXIVa�)��\PM�[\IZ\]X�[MMU[�to be in stage of Customer Discovery and Customer Validation (see Figure 10) – going through pivots. In other words, it is still at the stage of searching for the optimal business model. The startup has a solid test user base, with approximately 2,000 users worldwide. However, a fraction of those users are actively using the service, proactively creating content and making the service dynamic.

The overall state of the Company A could be described as uncertain, as the company Y]M[\QWV[�[WUM�WN �\PM�[\ZI\MOQK�I[XMK\[�IVL�ZM\PQVS[�Q\[�WٺMZQVO��1\�KIV�JM�]VLMZ[\WWL��that the startup has not found the right problem to solve, or it has not found the right market, due to the little activity within their online community. Additionally, the team is still improving the technical side and usability of the service, going through iterations in user interface design. The fact that the CEO rethinks and questions some of the assumptions in the service can be seen as an adequate approach for an early stage startup company. However, those assumptions are neither tested nor validated in real-life context. What potentially hinders Company A from exiting the pivot phase is the lack of user involvement throughout the development process. In addition to tight schedules IVL�TIKS�WN �ZM[W]ZKM[��\PM�NW]VLMZ[¼�QV[QOP\[��QLMI[�IVL�NMMLJIKS�XTIa�IV�M`\ZMUMTa

Figure 9: The state of Company A within the Customer Development model is marked with red. The model is

a re-drawn version of the model presented in article ”Why Lean Start-Up Changes Everything” (Blank, 2013).

1CUSTOMER DISCOVERY

PIVOT

SEARCH EXECUTION

2CUSTOMER VALIDATION

3CUSTOMER CREATION

4COMPANY BUILDING

1CUSTOMER DISCOVERY

PIVOT

SEARCH EXECUTION


3CUSTOMER CREATION

4COMPANY BUILDING


QUXWZ\IV\�ZWTM��<PM�[\I\][�WN �+WUXIVa�)�Q[�KWV[Q[\MV\�_Q\P�\PM�ÅVLQVO[�NZWU�TQ\MZI\]ZM�that suggests that lack of user input prevents the company from discovering successful service opportunities and business models.

4.1.6. Challenges

In general, Company A found the iterative agile development as a positive way of approaching projects, and the leadership was happy with the current state of the service. Also, Company A highlighted that the concept is changing all the time, which suits their UMV\ITQ\a��IVL�\PMa�IZM�KWVÅLMV\�IJW]\�LWQVO�\PI\��)T[W��\PM�[\IZ\]X�NMMT[�KWVÅLMV\�about not having in-house designers, and using freelance designers when needed.

One of the most prominent challenges has been the perceived lack of time - the investment rounds and requests coming from investors often determined the schedules, and priorities were made based on those. Lack of time consequently resulted from [KIZKM��ZM[W]ZKM[��I[�\PMZM�_I[�VW�XW[[QJQTQ\a�\W�PQZM�[]ٻKQMV\�IUW]V\�WN �_WZSMZ[��<PM�KWUXIVa�Q[�VW\�OMVMZI\QVO�I�[]ٻKQMV\�IUW]V\�WN �ZM^MV]M��IVL�UW[\�WN �\PM�ÅVIVKQIT�resources came from business angels. This seems to cause two outcomes: if the company has had the resources to develop a service for two years, it could have had the possibility to dedicate time for prototyping and user testing that were seen as unnecessary and costly. The multiple iterations in the concept and uncertainty turned out to be costly, _PQKP�KWV[MY]MV\Ta�TMIL[�\W�[KIZKQ\a�WN �ÅVIVKQIT�ZM[W]ZKM[��<PM�TMILMZ[PQX�\MVL[�\W�JM�more interested in the tangible and measurable results and less about the processes and tools that can be used to produce a successful service. In practice, it turned out to be challenging to apply service design methods in the daily work, because it was not always XW[[QJTM�\W�QUUMLQI\MTa�[PW_�\PM�JMVMÅ\[�WN �IXXTaQVO�\PMU��?PMV�IQUQVO�\W�UMM\�\PMQZ�expectations and get fast results, the pace of work led to cutting corners in design and technical side, which did not leave room for innovation. Overall, a prominent challenge related to applying service design methods is that the team is not familiar with design processes.


4.2. Company B

<_W�MV\ZMXZMVM]Z[�_Q\P�JIKSOZW]VL[�QV�[ITM[��XZWOZIUUQVO��ÅVIVKM��IVL�UIZSM\QVO�founded Company B in 2012. The business idea started with their passion for sports, after identifying opportunities to develop a service that would help people break their wellness routines by matching their interests with relevant service providers. Moreover, they wanted to create a community-based online platform that would enable users \W�ÅVL�TQSM�UQVLML�PMIT\P�IVL�_MTTVM[[�MV\P][QI[\[�IVL�UISM�[XWZ\[�I�[WKQIT�IK\Q^Q\a��/ZIL]ITTa��LQ[KW^MZQVO�VM_�IVL�QV\MZM[\QVO�IK\Q^Q\QM[�\PZW]OP�XMWXTM�IVL�][MZ¼[�TWKI\QWV�became the core of the service. While the service aims at motivating people to get active IVL�\ISM�KIZM�WN �\PMQZ�_MTTJMQVO�Ja�UI\KPQVO�\PMQZ�XZWÅTM[�\W�ZMTM^IV\�TWKIT�[MZ^QKM�XZW^QLMZ[��\PM�J][QVM[[�XIZ\VMZ[�IZM�IJTM�\W�\IZOM\�\PM�ZQOP\�K][\WUMZ[�QV�I�KW[\�MٺMK\Q^M�way. The service is a new concept in the market and the selected case company is the ÅZ[\�UW^MZ�

<PM�KWUXIVa�[\IZ\ML�Wٺ�Ja�\ITSQVO�\W�XW\MV\QIT�XIZ\VMZ[�JMNWZM�NW]VLQVO�\PM�KWUXIVa�\W�OM\�\PMQZ�ÅZ[\�ZMIK\QWV[��1\�ITT�JMOIV�_Q\P�I�WVM�XIOM�_MJ[Q\M�XQTW\��\PZW]OP�_PQKP�\PM�QVQ\QIT�\MIU�KZMI\ML�\PM�ZMTM^IV\�PMIT\P�IVL�_MTTVM[[�WٺMZ[�NWZ�\PMQZ�][MZ[��<PM�KWUXIVa�\PMV�TI]VKPML�Q\[�ÅZ[\�JM\I�^MZ[QWV�QV�2IV]IZa��_PQKP�_I[�I�5QVQU]U�>QIJTM�Product (MVP) version of the service, and the concept has been under development [QVKM�\PMV��1V�Q\[�ÅZ[\�_MMS��+WUXIVa�*�OW\�Q\[�ÅZ[\�XIaQVO�K][\WUMZ[��\IZOM\QVO�M^MZaWVM�who were interested in trying new activities. While having a good way of attracting VM_�K][\WUMZ[�Ja�WٺMZQVO�\PMU�WX\QWV[�\PI\�UI\KP�\PMQZ�QV\MZM[\[��\PM�KWUXIVa�Q[�[\QTT�ÅO]ZQVO�W]\�PW_�\W�ZM\IQV�\PM�XIaQVO�K][\WUMZ[�IVL�J]QTL�TWaIT\a��<PM�[MZ^QKM�Q[�[\QTT�JMQVO�LM^MTWXML�JI[ML�WV�][MZ[¼��XIZ\VMZ[¼�IVL�W\PMZ�[\ISMPWTLMZ[¼�NMMLJIKS�IVL�VMML[�


Table 2: Interviewees from Case Company B. The interviews were conducted between January 9 and

January 12.

4.2.1. Development Practices

According to the interviews, Company B does not have a formal development process. One of the reasons for that is the high level of uncertainty, as the team works on the most urgent tasks. However, a formal development process was not seen as something

Co-founder Helsinki Finnish Face-to-face Business and Marketing:

Altogether over 6 years of work experience in marketing, business and entrepreneurship.

Interviewee: Responsible for the business development side and is the intiator of the business idea (together with the other co-founder).

UX Designer Helsinki English Facte-to-face Service Design:

Several years of educational and professional experience in service design, design innovation and management, and product development.

Interviewee: Responsible for the overall design and user experience, working closely with e co-founders.

Head of Development

Helsinki English Face-to-face Information Technology:

Many years of educational and professional experience with software development and consulting

Interviewee: Responsible for the R&D and project management

Work location

COMPANY B

Interviewees Background Selection CriteriaLanguage Interview Mode


Co-founder Helsinki Finnish Face-to-face Business and Marketing:

Altogether over 6 years of work experience in marketing, business and entrepreneurship.

Interviewee: Responsible for the business development side and is the intiator of the business idea (together with the other co-founder).

UX Designer Helsinki English Facte-to-face Service Design:

Several years of educational and professional experience in service design, design innovation and management, and product development.

Interviewee: Responsible for the overall design and user experience, working closely with e co-founders.

Head of Development

Helsinki English Face-to-face Information Technology:

Many years of educational and professional experience with software development and consulting

Interviewee: Responsible for the R&D and project management

Work location

COMPANY B


that the team needed, as described by the in-house designer:

¹?M�LWV¼\�PI^M�IVa�NWZUIT�_Ia�WN �_WZSQVO��?M¼^M�JMMV�LQ[K][[QVO�Q\�IVL�NWZ�VW_�_M¼^M�JMMV�[IaQVO�\PI\�we didn’t feel like this is going for us now…that we’re sort of, still very early on. Though I think that WVKM�_M�[\IZ\��NWZ�QV[\IVKM��ZMÅVQVO�\PM�5>8��<PI\¼[�LMÅVQ\MTa�_PMV�_M�_QTT�[\IZ\�[\Z]K\]ZQVO�W]Z�XZWKM[[�more. And now we’re moving from one feature to the next. As sort of the main sections of the MVP. Just \ZaQVO�\W�OM\�\PMU�LWVM�I[�[WWV�I[�XW[[QJTM��;W��NIQZTa�KPIW\QK��TM\¼[�[Iaº�(Designer, Company B)

Although there is no perceived need for a process, the team still structures work using Kanban method (Andersson, 2010), a scheduling system for lean and just-in-time production that is supervised by the Head of Development. One of the most important ways of organizing the tasks is using a backlog wish list, where requests and new ideas are collected. When a backlog and a to-do list are done, the team gets back to the wish lists and selects the most relevant and important tasks to be taken further to implementation. The tasks emerge during planning sessions and concept workshops, where as many employees as possible attend, and also along the way, coming in as requests from the leadership and sometimes investors. The tasks are planned together _Q\P�\PM�\MIU��IVL�\PM�[KPML]TM�Q[�IOZMML�WV�IKKWZLQVO�\W�\PM�VMMLML�\QUM�IVL�MٺWZ\��The designer works together with developers in parallel, designing the service ahead of the development team.


>IZQW][�IXXZWIKPM[�\W�LMKQ[QWV�UISQVO�_MZM�QLMV\QÅML�QV�\PM�QV\MZ^QM_[�NZWU�LQٺMZMV\�respondents. There were some similar opinions that were related to decision-making and the challenges associated with that. Overall, it seemed that the company used technology as the main driver for design related decisions in the company. Partly this happened because the design was outsourced before hiring the in-house designer. At \PM�\QUM�_PMV�\PM�ÅZ[\�QV�PW][M�LM[QOVMZ�OW\�PQZML��\PM�\MKPVQKIT�XIZ\�WN �\PM�[MZ^QKM�_I[�already determining many things.

¹.WZ�M`IUXTM�WV�\PM�WTL�[Q\M�_M�][ML�\W�ÅO]ZM�W]\�ITOWZQ\PU[�\W�JM�][ML�\W�[MM�_PI\�][MZ[�TQSM�IVL�LWV¼\�


like. In order to give them the passes that they want. And it always felt weird and wrong. I could develop it myself but I always felt that it’s not working well as I was hoping and that there was something wrong with it. Not from the technical point of view, but the conceptual point of view. And when [the QV�PW][M�LM[QOVMZE�KIUM�\W�\PM�\MIU��_M�PIL�\PQ[�KWVKMX\�UMM\QVO�IVL�\PMV�_M�ÅO]ZM�\PI\�¹IK\]ITTa��_M�LWV¼\�VMML�\PQ[�I\�ITTº��4QSM�Q\¼[�R][\�ZML]VLIV\��?M�LWV¼\�VMML�\W�ILL�\PQ[�ITOWZQ\PU�\W�UISM�W]Z�customers happy. Because we let the users to choose their own passes. So now it’s not based on algorithm but is based also on interests…In the beginning it was our gut feeling, but later on we validated it based WV�PW_�XMWXTM�QV\MZIK\�_Q\P�W]Z�_MJ[Q\M��?M�NW]VL�W]\�\PI\�\PI\¼[�\PM�_Ia�\W�OW��<PI\¼[�\PM�XZWJTMU�·�_M�were giving the passes to people, but they either did no try the passes, they did not like it at all when they went there. E.g. they give zero points for it. Not because the experience wasn’t good, but because it wasn’t OWWL�NWZ�\PMU�º�(Head of Development, Company B)

Using secondary data sources was also perceived as important support for decision-making, as explained by the CEO:

“Analytics, market place, which in theory derives from analytics, sales, customer service feedback, []Z^Ma[°IVL�QV[QOP\[�IJW]\�_PI\�W\PMZ�\PQVO[�_WZS[�QV�ILRIKMV\�QVL][\Za��;W�Q\�[PW]TLV¼\�KWUM�NZWU�aW]Z[MTN��)VL�\PI\¼[�1�\PQVS�Q[�I�KTI[[QKIT�.QVVQ[P�_Ia�WN �\PQVSQVO�Q[�\PI\�O]a[�_WZS�\PZMM�aMIZ[�QV�I�garage and don’t show it to customers. I can claim that we did exactly in the opposite and we went to the market too early and the product wasn’t ready, had even technical...but it showed us how to learn Y]QKSTa�º (CEO, Company B).

Intuition seemed to be the starting point for most of the decisions made in the company, according to all interviewees. Also, the strategic decisions were mostly made by the founders, and they were based on their past experiences and vision. The designer also QVÆ]MVKML�LMKQ[QWV�UISQVO�Ja�KZMI\QVO�MIZTa�XZW\W\aXM[�IVL�Y]QKSTa�^Q[]ITQbQVO�\PM�QLMI[�in order to show them to the team. With the freedom to manage own design projects, \PM�LM[QOVMZ�UISM[�XZWXW[IT[�NWZ�\PM�UIVIOMUMV\�NWZ�ÅVIT�IXXZW^IT��?PMV�Q\�KIUM�\W�technical and implementation side of the service, the Head of Development acted as the key decision-maker, ensuring that the development progresses smoothly.

As pointed out multiple times by the founder, making decisions is also a matter of


JITIVKQVO�JM\_MMV�\PM�KW[\[��XW\MV\QIT�UI\MZQIT�JMVMÅ\[�IVL�\PM�IUW]V\�WN �MٺWZ\�ZMTI\ML�\W�LM^MTWXQVO�KMZ\IQV�XIZ\[�WN �\PM�[MZ^QKM��1N �\PM�M`XMK\ML�JMVMÅ\�NZWU�QUXTMUMV\QVO�something outweighs the costs, the feature goes to implementation:

“I guess that the most important aspect of prioritization is deciding what’s really important and then take \PM�ZM[\�WN �\PM�\PQVO[�W]\°[W�ÅZ[\�Q\¼[�_PI\�[\ZI\MOQKITTa�UISM[�[MV[M�IVL�°[WZ\�WN°NZWU�\PM�K][\WUMZ¼[�standpoint. Second thing is, how much it’s going to cost in terms of budget, time, whatever else. And the \PQZL�WVM�Q[�_PI\¼[�\PM�XW\MV\QIT�JMVMÅ\�NZWU�Q\°º�(CEO, Company B)

)T[W��IVITa\QK[��M`Q[\QVO�[]Z^Ma[��IVL�UMI[]ZIJTM�LI\I�UILM�I�[QOVQÅKIV\�QVÆ]MVKM�WV�decisions. Overall the challenges were related to prioritizing tasks and requests coming NZWU�LQٺMZMV\�XIZ\VMZ[�IVL�W\PMZ�[\ISMPWTLMZ[��<PM�\MIU�LQL�VW\�TM\�\PM�J][QVM[[�XIZ\VMZ[�QVÆ]MVKM�\PM�KWZM�WN �\PM�[MZ^QKM��PW_M^MZ�[UITT�KPIVOM[�IZM�[WUM\QUM[�LWVM�QV�order to impress an investor, for example. The company also listens carefully to the users through customer service and rating systems, and utilizes their feedback and ratings in the development. In addition to data, the team also makes decisions based on concepts or functionalities that have been proved elsewhere, through extensive benchmarking. Also, the existing validated designs are used for designing the next versions for the service, for example the MVP for mobile.


The in-house designer of Company B had professional and educational background in service design and industrial design. The designer also had extensive work experience from service design consultancy, where service design practices and methods were put QV\W�XZIK\QKM�QV�^IZQW][�XZWRMK\[��<PM�JMVMÅ\[�WN �PI^QVO�IV�QV�PW][M�LM[QOVMZ�IVL�][QVO�design in general, as a means to translate the corporate identity and business goals into [XMKQÅK�LM[QOV�TIVO]IOM�IVL�NMI\]ZM[��_I[�M`XZM[[ML�QV�U]T\QXTM�[Q\]I\QWV[��<PM�KWUXIVa�IT[W�X]\[�[QOVQÅKIV\�MUXPI[Q[�WV�][QVO�LM[QOV�\W�J]QTL�IVL�UIVIOM�\PM�^Q[]IT�[QLM�WN �\PM�[MZ^QKM�IVL�SMMX�Q\�KWV[Q[\MV\�IKZW[[�LQٺMZMV\�XTI\NWZU[�

¹?PI\�C\PM�LM[QOVMZE�QV\ZWL]KML�Q[�[QUXTa�UISQVO�\PM�_PWTM�IXXTQKI\QWV°�VW\�_WZSQVO�WV�JQ\[�IVL�


pieces and messy and not coherent… So that’s what [the designer] introduced in that sense. One smooth ÆW_�NZWU�WVM�XWQV\�\W�IVW\PMZ�WVM��?PQKP�Q[�ZMITTa�QUXWZ\IV\��IK\]ITTa�º (Head of development, Company B)

“I focus on what are the strategic goals that we are trying to do accomplish and what are the principles we are trying to follow, and what we are trying to accomplish with a feature or part of the service, or the service proposition in general. I would be the one that based on all the inputs that we get from LQٺMZMV\�XIZ\[�WN �\PM�J][QVM[[��NZWU�K][\WUMZ[��NZWU�[ITM[�O]a[�IVL�K][\WUMZ�[MZ^QKM��1�X]\�Q\�QV\W�I�JI[QK�framework or concept that is not necessarily fully tangible, and then [the designer] makes it tangible. =VLMZ[\IVL[�\PM�ZMITQ\QM[��]VLMZ[\IVL[�PW_�][MZ�M`XMZQMVKM�IVL�][MZ�QV\MZNIKM[�ÆW_�QV\W�Q\�IVL�UISM[�Q\�IK\]ITTa°IVL�\PMV�ZM�QVX]\[�[WUM�WN �\PM�KPITTMVOM[�IVL�Y]M[\QWV[�\W�UM��_PQKP�KIV�PMTX�º (CEO, Company B)

On a practical and more concrete level, the designer is seen more as a UX designer than a service designer, and works closely with the founding team, with the eligibility to participate in concept-related discussions. The ownership of the concept, however, belongs to the founders, while the designer is intentionally used to turn it to an overall good user experience.

*MNWZM�PQZQVO�\PM�ÅZ[\�QV�PW][M�LM[QOVMZ��ITT�LM[QOV�IK\Q^Q\QM[��I[�_MTT�I[�LM^MTWXUMV\�IK\Q^Q\QM[��_MZM�W]\[W]ZKML�L]M�\W�ÅVIVKQIT�ZMI[WV[��<PM�QUXTMUMV\I\QWV�_I[�LWVM�IKKWZLQVO�\W�\PM�NW]VLMZ¼[�ZMY]M[\[��IVL�\PM�LM^MTWXUMV\�IVL�LM[QOV�_MZM�\_W�[MXIZI\M�processes that were not integrated together. This resulted in challenges when it came to usability issues and making changes based on new requests, which led to multiple Q\MZI\QWV[�_Q\P�\PM�_MJ�[MZ^QKM��<PM�KWUXIVa�_I[�VW\�N]TTa�KIXIJTM�WN �NWTTW_QVO�\PM�ÅVIT�LM[QOVML�KWVKMX\�_Q\PW]\�ILR][\UMV\[��IVL�\PI\�\]ZVML�W]\�\W�JM�I�[QOVQÅKIV\�KPITTMVOM��In turn, the in-house designer not only worked closely with the founding team, but also with the development team, solving design related and technical issues together, and looking for the best mutual compromise. As part of daily activities, the designer created _QZMNZIUM[��[MZ^QKM�ÆW_�UIX[��IVL�Y]QKS�XIXMZ�XZW\W\aXM[��<PQ[�ZM[]T\ML�QV�I�JM\\MZ�usability, as the head of development described:

“ Let me put it this way: the developer sees the problem and the solution, in terms of technical problems IVL�\MKPVQKIT�[WT]\QWV[��WS'�)�LM[QOVMZ�_WZS[�LQٺMZMV\Ta�·�I�LM[QOVMZ�LWM[�VW\�[MM�I�\MKPVQKIT�XZWJTMU°


VMKM[[IZQTa��C<PM�LM[QOVMZE�[MM[°_MTT��WJ^QW][Ta°�I�LM[QOVMZ�_W]TL�[MM�IV�QV\MZIK\QWV�XZWJTMU��I�ÆW_�XZWJTMU°][MZ�QV\MZIK\QWV�_Q\P�\PM�_MJ[Q\M��;W�\PI\¼[�_PMZM�\PM�\_W�UMM\�JI[QKITTa��IVL�Q\¼[�^MZa�JMVMÅKQIT�NWZ�][��*MKI][M�_M�_MZM�VW\�IJTM�\W�UISM�\PM�IXXTQKI\QWV�ÆW_�\PM�_Ia�_M�_IV\ML�Q\�\W�JM�JMNWZM�C\PM�LM[QOVMZE�RWQVML��;W�VW_�_M�IZM�QV�I�XW[Q\QWV�_PMZM�_M�KIV�UISM�IV�IXXTQKI\QWV�IK\]ITTa°I�KWPMZMV\�application from A to B, without any weirdness, unrelated content, any long descriptions of something \PI\�LWM[V¼\�Å\�\PMZM�º (Head of Development, Company B)


Collaboration

;\ISMPWTLMZ[�[MMU�\W�PI^M�I�[QOVQÅKIV\�QUXIK\�WV�\PM�[MZ^QKM�LM^MTWXUMV\�I\�\PM�Company B. The founders went to talk to their potential partners early on, before the LM^MTWXUMV\�XZWKM[[�[\IZ\ML��\W�ZMÅVM�\PM�[MZ^QKM�KWVKMX\��)T[W��QV[\MIL�WN �QUUMLQI\MTa�starting to code the service, the team ran their pilot manually. They still used inputs from the partners throughout the development process, and these inputs were collected through meetings between sales people, founders and partners. The main challenge, PW_M^MZ��_I[�\W�JITIVKM�JM\_MMV�\PM�LQٺMZMV\�ZMY]M[\[��XIZ\VMZ[¼�IVL�][MZ[¼�VMML[�IVL�opinions, as well as business goals.

“Expectations come from our partners, they come from…every single new investor brings on how certain \PQVO[�_QTT�_WZS°IVL�_PI\�\PMa�[PW]TL�ZMUW^M�IVL�[\]ٺ�TQSM�\PI\��)VL�M^MZa�VM_�QV^M[\WZ�JZQVO[�PQ[�WZ�PMZ�¹W_V�JIOOIOMº�QV\W�\PI\��)VL�\PMQZ�QLMI[�KPIVOM�KWV[\IV\Ta��<PMa�IZM�TQSM�SQL[�\PI\�OM\�VM_�QLMI[�ITT�\PM�\QUM��5a�RWJ��I[�I�TMIL�LM^MTWXMZ�Q[�\W�[Ia�VW��UW[\�WN �\PM�\QUM�º (Head of Development, Company B)

7VM�_Ia�\PI\�\PM�KWUXIVa�IXXZWIKPML�\PM�KPITTMVOM�Q[�\PI\�\PM�NW]VLMZ[�ÅT\MZML�\PM�ZMY]M[\[�IVL�WXQVQWV[�KWUQVO�NZWU�\PM�LQٺMZMV\�XIZ\[�WN �\PM�J][QVM[[��NZWU�K][\WUMZ[��sales team, and customer service. The head of development, in contrast, provided with feedback and comments coming from the development team. Then, the designer turned the most relevant requests into tangible solutions by visualizing them as early as possible. 8ZQWZQ\QbQVO�ZMY]M[\[�IVL�ÅT\MZQVO�LW_V�NMMLJIKS�NWTTW_ML�\PM�NIQ\P�JI[ML�LMKQ[QWV�


making pattern, as the team made assumptions about what is relevant and what is not.

Generative learning

Since the in-house designer joined the startup, quick paper prototypes have been used to achieve a mutual understanding of the user problems and solutions. As described by \PM�PMIL�WN �LM^MTWXUMV\��]VLMZ[\IVLQVO�XZWJTMU[�LQٺMZMV\Ta�_Q\PQV�\PM�\MIU�PI[�JMMV�slowing doing the R&D because of developing the wrong solutions.

What came up from both designer and the head of development was that the main challenge from the design point-of-view is convincing the team about solutions. To answer that, the designer visualized solutions as early as possible in order to make them tangible and support decision-making. However, the hardest thing to convince the team about was not the visual design alone, but whether a particular solution would work. While prototyping would have the potentials to aid in that, there was a perceived lack of \QUM�\W�LW�\PI\��_PQKP�_I[�QV�PW][M�LM[QOVMZ¼[�UIQV�KWVKMZV��1V[\MIL��\PM�ZMILa�5>8�for the mobile service was used as a prototype and to collect real-life use cases for future development.

Empathy

Coming into the startup company with a service design background, the designer introduced some simple user-centered design tools, personas and use case scenarios that also became an important part of development activities.

“[The designer] introduced the personas and we were using the user stories with the founders. But those were user stories of them, not the user stories of personas actually. So [the designer] brought that up, the persona from customer’s point of view. So that does help quite a bit…Basically we were then able to see from the customer’s point of view. Moving from what we have been expecting the application was OWQVO�\W�JM��\W�_PI\�\PM�K][\WUMZ�_IV\ML�Q\�\W�JM��ZI\PMZ��?M�NW]VL�I�UMM\QVO�XWQV\�JM\_MMV�\PM[M�\_W�·�_PI\�\PM�NW]VLMZ[�PI^M�MV^Q[QWVML�IVL�_PI\�\PM�IXXTQKI\QWV�[PW]TL�JM�“ (Head of Development, Company B)


The user-centered approach brought in by the in-house designer, was perceived as a positive advantage for the team. Before the introduction of use case scenarios and XMZ[WVI[��\PM�[MZ^QKM�_I[�LM^MTWXML�UIQVTa�JI[ML�WV�\PM�NW]VLMZ[¼�^Q[QWV�IVL�\PMQZ�XMZ[WVIT�M`XMZQMVKM[��6W\�WVTa�LQL�\PM�\MIU�NMMT�UWZM�KWVÅLMV\�IJW]\�\PM�W^MZITT�service concept, but also found that the quality of the service had improved, because the introduced practices allowed the team to think about the whole user journey on a more concrete level. The designer, however, found that the design and development processes could be even more user-centered and was concerned about the lack of direct user involvement:

“…But what we are really missing is that we need to test with users a lot more… once the MVP will be out, we’ll spend a lot more time on…sort of…documenting process better and also doing more user tests, TQSM�\ISQVO�Q\�W]\��OWQVO�W]\�_Q\P�XMWXTM�IVL�NWTTW_QVO�\PMU�QV�\PMQZ�M`XMZQMVKM��?PQKP�_M�LWV¼\�PI^M�\QUM�\W�LW�\PI\�º

The lack of time was perceived to be a big challenge that held the team back from involving the users more directly and applying co-creation or co-design approaches to the service development, for example. While users were not directly involved in the development process, the importance of getting user feedback and their ratings of the service came up in all interviews. The web service serves as a channel for collecting that QVNWZUI\QWV��IVL�W\PMZ�LQOQ\IT�\WWT[�IZM�][ML�\W�\ZIKS�XMWXTM¼[�IK\Q^Q\QM[�QV�WZLMZ�\W�OM\�measurable data.

¹?PMV�aW]�[XMVL�\_W�aMIZ[�_Q\P�\PQ[��aW]�SQVL�WN �SVW_�I�TW\�WN �LI\I�QV\ZQV[QKITTa�IVL�aW]�SVW_�I�TW\�of data through surveys and things like that. And the analytics that we get on the side, we know what _WZS[�IVL�_PI\�LQZMK\QWV�_M�VMML�\W�OW�\W�º�(CEO, Company B)

=[QVO�[MKWVLIZa�[W]ZKM[�WN �LI\I�_I[�[MMV�I[�QUXWZ\IV\�IVL�[]ٻKQMV\�MVW]OP�\W�UISM�decisions based on them. The data, however, did not seem to fully replace the direct involvement of users:

¹1�\PQVS�_M¼^M�TMIZVML�Ja°ÅZ[\�WN �ITT��_PI\�J]QTLQVO�JTWKS[�aW]¼ZM�OWQVO�\W�LW�IVL�_PI\�IZM�\PM�XZWKML]ZM[�WN �PW_�aW]�_WZS��PW_�LW�aW]�]VLMZ[\IVL�IVL�UIVQX]TI\M�IVL�\ISM�LI\I�QV\W�IKKW]V\�º (CEO, Company B)



Company B has more than 6.000 users, out of which 100 users are paying for the service on a regular basis. The main task for the company at that moment was to build strong loyalty and make the users come back, although the users have been generally happy with their experience.

¹?M�PI^M�I�^MZa�OWWL�_Ia�WN �OM\\QVO�XMWXTM�WVJWIZL��*]\�_PI\�_M�VMML�\W�[\QTT�ÅO]ZM�W]\�Q[�PW_�\W�SMMX�them in the service…So we have a couple of things that we believe will now help in this. And we need to \M[\�Q\�QN �\PI\¼[�\PM�KI[M�º (Designer, Company B)

<PM�JQOOM[\�XQ^W\[�IVL�^ITQLI\QWV[�WN �\PM�\MIU¼[�PaXW\PM[M[�_MZM�ITZMILa�LWVM�through the existing web application that had undergone several major iterations. At that moment, the team felt that they were following the right path with the latest service concept, and could focus on growing the community. Looking at the Customer Development model, Company B was in the stage of Customer Creation (see Figure 10).

Figure 10: The state of Company B within the Customer Development model is marked with red. The model

is a re-drawn version of the model presented in article ”Why Lean Start-Up Changes Everything” (Blank,

2013).

<PM�\MIU�_I[�K]ZZMV\Ta�¹KTMIVQVO�]Xº�\PM�W^MZITT�[MZ^QKM�WٺMZQVO�Ja�LM^MTWXQVO�I�5>8�NWZ�I�UWJQTM�^MZ[QWV��)LLQ\QWVITTa��\PMa�ITZMILa�PIL�I�[]ٻKQMV\�IUW]V\�WN �XIZ\VMZ[�QV�

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both countries, which helped them validate the service, and had their marketing and sales activities set up. There was still a high level of uncertainty, which all interviewees acknowledged. But the changes were happening on a smaller scale while the core idea of the service stayed the same.

4.2.6. Challenges

The main challenges in Company B related to the lack of resources and time pressure. The lack of resources in the beginning forced the founders to outsource design to save costs, which resulted in a poor user experience and highly complex outcome that LM^MTWXMZ[�NW]VL�LQٻK]T\�\W�WZOIVQbM�IVL�_WZS�_Q\P��)T[W��XW\MV\QIT�KW[\[�I[[WKQI\ML�_Q\P�[WUM�NMI\]ZM[�QVNWZUML�\PM�ÅVIT�W]\KWU�IVL�LM[QOV��1N �I�NMI\]ZM�_I[�XMZKMQ^ML�I[�\WW�KW[\Ta�\W�QUXTMUMV\��Q\�_I[�TMN\�W]\��]VTM[[�\PMZM�_I[�I�JQO�JMVMÅ\�NZWU�I�J][QVM[[�point-of-view. Limited access to the target users also hindered the possibility to test the service and observe how it is used in real-life context. The designer found it hard to set up design processes in a company, in order to support the team in their work and ensure W^MZITT�KWV[Q[\MVKa�QV�\PM�ÅVIT�W]\KWUM�

Additionally, introducing new practices that were unfamiliar to the team and founders could be a challenge, unless the founders became convinced about their \IVOQJTM�JMVMÅ\[��;QUQTIZTa��+WUXIVa�)�IVL�*�][ML�I�[QOVQÅKIV\�IUW]V\�WN �\QUM�WV�LM^MTWXUMV\"�\_W�aMIZ[��<QUM�XZM[[]ZM�IVL�[KIZKQ\a�WN �ÅVIVKQIT�ZM[W]ZKM[�[MMUML�\W�JM�perceptions, but they also seemed to be avoidable. Lack of user involvement at an early stage could easily lead to more iterations, which could turn out to be more costly and time consuming to implement. The service related decisions, however, so far had been based on intuition and past experiences.


4.3. Company C

.W]VLML�QV��+WUXIVa�+¼[�KW�NW]VLMZ[�ZMXZM[MV\�LQٺMZMV\�ÅMTL[�·�PMIT\PKIZM��engineering, behavioral medicine, and business. At least two founders had extensive XZWNM[[QWVIT�M`XMZQMVKM�NZWU�\PM�LM[QOV�ÅMTL�IVL�_MZM�NIUQTQIZ�_Q\P�\PM�XZQVKQXTM[�WN

Co-founder &

CEO

San Francisco English Skype Neuroscience, Medicine, Business:

Extensive professional background in healthcare and wellness, product development, research and writing.

Interviewee: Responsible for the overall product strategy with a strong interest in healthcare innovation.

Head of Design San Francisco English Skype Service Design

Over 10 years of professional experience in visual design, art direction, and user experience design. Additionally, educational background in Graphic Design and Marketing, Psychology and Anthropology

Interviewee: First designer at the company who is responsible for the overall user experience.

VP Engineering San Francisco English Skype Information Technology

Over 10 years of experience in software engineering and leading development teams, with a focus on high-quality user experience.

Interviewee: Responsible for the development at the case company

Work location

COMPANY C


Table 3: Interviewees from case company C. The interviews were conducted between January 27 and

February 3.


design thinking. Together they created a concept of an online service to help prevent diabetes, basing their ideas on existing studies and conducted user research. The service concept idea was tested already before the company was founded, and involved simple mock-ups that were used to show to users and see their reactions. Only after several rounds of initial concept iterations, the team decided to start building the service.

The company is one of the pioneering startups in the digital healthcare business, where it combines medical science and design. In this case study, the main focus was on a program that helps people lose weight and develop healthy and sustainable habits. By using the program, users get customized coaching based on their personal information, and peer support. The product was developed for all people who attempt to lose weight, have a pre-diabetes diagnosis, or those who are at risk for type 2 diabetes. Alternatively, MUXTWaMZ[�KIV�IT[W�[]XXWZ\�\PMQZ�MUXTWaMM[¼�XIZ\QKQXI\QWV�QV�\PM�XZWOZIU��IVL�\PMa�PI^M�become an important target customer group for company C.

4.3.1. Development Process

The projects at Company C were carried out using Extreme Programming (XP) - an agile development approach that is used when a team is building software with vague or changing service requirements (Paulk, 2001, p.2). The team gets together on weekly planning meetings to review the progress and estimate user stories, in order to guide the team through the development and design. Priorities and time estimates were made by the Director of Product, and based on the needs of the company or stakeholders. The in-house designer, in contrast, described their work as being carried out in two-week sprints, and highlights the importance of adapting the design process to that.

Ideally, the designer is four weeks ahead of the development team with the designs. This allows the development team to know what is coming up for the next sprint two weeks QV�IL^IVKM��)KKWZLQVO�\W�\PM�LM[QOVMZ��\PI\�OI^M�MVW]OP�WN �\QUM�NWZ�\PMU�\W�ÅO]ZM�W]\�solutions and possible issues. The overall impression from the interviews was that there were no perceived challenges related to combining design with agile development.



Due to the size of the company, the decision-making was divided between certain roles within the company. The co-founders and the Director of Product were the main decision-makers, who collect insights and feedback from all stakeholders and supervised the strategy and concept related decision-making. The interaction and visual design related decisions, in turn, were made by the Head of Design.

¹AW]�KIV¼\�LM[QOV�I�OZMI\�XZWL]K\�Ja�KWV[MV[][�º�(CEO, Company C)

<PM�NIK\WZ[�\PI\�QVÆ]MVKM�LMKQ[QWV�UISQVO�IZM��ÅZ[\�WN �ITT��QV\]Q\QWV��XI[\�XZWNM[[QWVIT�experiences and tacit knowledge. That was mentioned by all interviewees and perceived as a powerful approach in R&D. In fact, Company C had done multiple prototypes of its service at a very early stage, which helped validate assumptions and turn them into facts to support decision-making. Based on those facts, the company developed the MVP of the service that now serves as a starting point for all design related decisions. Not only the early stage prototypes helped to make better decisions, but also user feedback and insights were considered as the most important driver for design related decisions. They were kept in the focus throughout the whole service development cycle. Sometimes, the founders even contacted the users directly to talk about their positive or negative experiences. Finally, the team also used data, following trends and patterns related to user behaviors.

The most challenging hurdles for decision-making was making priorities and balancing JM\_MMV�\PM�MٺWZ\[�VMMLML�\W�QUXTMUMV\�KMZ\IQV�NMI\]ZM[�^MZ[][�\PMQZ�XMZNWZUIVKM��)T[W��QV�ILLQ\QWV�\W�XW[[QJTM�\ZILMWٺ[��LMKQLQVO�]XWV�\PQVO[�\PI\�_MZM�PIZL�\W�XZW\W\aXM�_I[�IT[W�[MMV�I[�LQٻK]T\��1V�\PI\�KI[M��\PM�KWUXIVa�NWTTW_ML�\PMQZ�QV\]Q\QWV�IVL�UW^M[�WV�_Q\P�[WUM\PQVO�\PI\�NMT\�ZMI[WVIJTM�NZWU�][MZ¼[�XMZ[XMK\Q^M�


)KKWZLQVO�\W�\PM�+-7��\PMQZ�ÅZ[\�PQZM�QV�\PM�KWUXIVa�_I[�I�LM[QOVMZ��)\�\PM�\QUM�WN �\PM�


interviews, the company had two in-house designers, both of them being professional LM[QOVMZ[�NZWU�NIQZTa�LQٺMZMV\�LM[QOV�ÅMTL[��<PM�QV\MZ^QM_ML�LM[QOVMZ�_I[�\PM�0MIL�WN �Design who was responsible for the overall service concept and brand consistency. The second in-house designer was hired as a visual designer, and supported the Head of Design in various projects.

Not only the designers were driving the design process, but also the founders and the ,QZMK\WZ�WN �8ZWL]K\�PIL�XZWNM[[QWVIT�M`XMZQMVKM�QV�\PM�ÅMTL�WN �LM[QOV��<PQ[�[M\\QVO�UISM[�\PM�LMÅVQ\QWV�WN �LM[QOVMZ¼[�ZWTM[�[WUM_PI\�JT]ZZa��JMKI][M�VWVM�WN �\PM�NW]VLMZ[�or the Director of Product were professional designers per se. However, what they were doing from the beginning, such as mockups and user research, was actually service design. The CEO elaborated:

¹?M�PIL�[WUM�KWV[]T\IV\�LM[QOVMZ[��IVL�_M�PIL�I�LM[QOVMZ�\PI\�_I[�UIaJM�WVM�WN �W]Z�ÅZ[\�PQZM[�IN\MZ�][��but that was more of a visual designer. But we only hire visual designers who have a good eye for product and interactions too. But I think me, [co-founder 1] and [co-founder 2] we have almost an instinct for design, and an instinct for the more important things. Like the service design. That’s very much how we \PW]OP\�NZWU�\PM�JMOQVVQVO��;W�1�_I[�QV�UML�[KPWWT��1�_W]TLV¼\�KITT�Ua[MTN �I�LM[QOVMZ��J]\�\PI\¼[�R][\�PW_�1�\PW]OP\��4QSM��ITT�WN �Ua�JM[\�NZQMVL[�QV�;IV�.ZIVKQ[KW�IZM�LM[QOVMZ[��;W�Q\¼[�Ua�XMWXTM��M^MV�\PW]OP�1�VM^MZ�_MV\�\W�:1;,�º (CEO, Company C)

Even though the designers were involved early on in the beginning, the main focus areas QV�\PMQZ�_WZS�_MZM�^Q[]IT�LM[QOV�IVL�QV\MZIK\QWV�LM[QOV��7^MZITT��LM[QOVMZ[¼�KWUXM\MVKQM[�in user experience design and visual design were highly recognized and appreciated throughout the whole company, and designers were perceived as key personnel who create experiences. For example, the Head of Design recognized that the intentional use of design in his work was to create a unique experience that would make the service stand out from the other digital healthcare services.

¹+ZMI\M�W]Z�W_V�TWWS�IVL�VW\�TWWS�TQSM�IVa�W\PMZ�JWW\[\ZIXXML�IXX�W]\�\PMZM�º (Head of Design, Company C)

)\�[WUM�XWQV\��+WUXIVa�+�][ML�NZMMTIVKM�LM[QOVMZ[��<PM�ÅVLQVO[�NZWU�QV\MZ^QM_[�


indicated challenges related to outsourcing design. The designers were not always there to work on solutions with the development team, and as a result the service became ¹JWW\[\ZIXXMLº�IVL�\PM�][MZ�M`XMZQMVKM�[]ٺMZML��+]ZZMV\Ta��\PM�UIQV�ZM[XWV[QJQTQ\a�of the Head of Design is to improve the whole user experience in the existing service, IVL�MV[]ZM�KWV[Q[\MVKa�IKZW[[�LQٺMZMV\�KPIVVMT[�IVL�\W]KP�XWQV\[��)KKWZLQVO�\W�the experiences of the interviewees, involving designers in core activities of the KWUXIVa�_I[�^MZa�QUXWZ\IV\�\W�I^WQL�XWWZ�KWUUQ\UMV\�\W�\PM�[MZ^QKM�IVL�QV[]ٻKQMV\�communication between designers and developers.

¹1�RWQVML�QV�TI\M�5Ia��IVL�_M�LQL�PI^M�I�LM[QOVMZ��XIZ\�\QUM��LM[QOV�LQZMK\WZ�_PW�_I[�_Q\P�][�until September or October. And then she actually dropped out and went on to do some work with her ÅIVKu��)VL�[W�_M�_MV\�\PZW]OP�\PQ[�LM[QOV�LM[MZ\��_PQKP�_I[�ZMITTa�KPITTMVOQVO��)[�I�KWUXIVa�\PI\�Q[�SQVL�WN �J]QT\�IZW]VL�LM[QOV��.WZ�IJW]\�NZWU�;MX\MUJMZ�QV��]X�]V\QT�C>Q[]IT�LM[QOVMZE�IVL�C\PM�0MIL�WN �,M[QOVE�KIUM�WV�JWIZL��_PQKP�_I[�TQSM�5Ia�WZ�2]VM�WN ��?M�LQLV¼\�PI^M�IV�QV�PW][M�LM[QOVMZ��?M�LQL�PI^M�I�KWV\ZIK\WZ�LM[QOVMZ��_PW�_I[�[WZ\�WN �\PMZM��*]\�PM�_I[V¼\�ZMITTa�W]Z�LM[QOVMZ��0M�_I[�_WZSQVO�WV�TW\[�WN �W\PMZ�XZWRMK\[��;W�_M�OW\�[WUM�LM[QOV�W]\�WN �PQU�J]\�Q\�_I[�ZMITTa�KPITTMVOQVO�\W�VW\�PI^M�I�LM[QOVMZ�º (VP of Engineering, Company C)

The company was still using two contractor designers, one of them supporting in the design of marketing material, and the other one focusing on communication design. Here, responsibilities involved collaboration with the marketing, sales, and business, creating messaging, and writing copy, and all material was ultimately approved by the Head of Design.


Collaboration

*MKI][M�LQٺMZMV\�VMML[�MUMZOML�NZWU�\PM�J][QVM[[�[\IVLXWQV\��NZWU�][MZ[��TMILMZ[PQX�and partners, the Director of Product was one of the key decision makers when it came to making priorities based on the provided information after speaking to all stakeholders internally and externally, including the end users. Based on those inputs, the Director of Product made decisions about priorities and features that needed to be implemented.


“You have to be really decisive, you can’t design a great product by consensus, but I would say XZQWZQ\QbI\QWV�WN �NMI\]ZM[�WN �_PI\�\PMa�[PW]TL�JM�\MVL[�\W�JM�I�TQ\\TM�JQ\�PIZLMZ�º�(CEO, Company C)

<PM�\ZILMWٺ[�WN �MIKP�VMML�WZ�ZMY]M[\�_MZM�KWV[QLMZML�KWV\QV]W][Ta��IVL�\PM�Y]M[\QWV�was mostly about balancing between the service vision and the feedback. Although the partners were considered as a very important stakeholder and their requests and needs _MZM�\ISMV�QV\W�IKKW]V\��\PMa�LQL�VW\�QVÆ]MVKM�\PM�LM[QOV�LMKQ[QWV[��;WUM�XZIK\QKIT�VMML[�_MZM�_WZSML�WV�\W�PMTX�\PMQZ�XZWOZM[[�IVL�XMZNWZUIVKM��J]\�\PM�XIZ\VMZ[¼�QVÆ]MVKM�_I[�QV\MV\QWVITTa�TQUQ\ML�[W�\PI\�\PMa�_W]TL�VW\�IٺMK\�\PM�KWZM�IVL�M`XMZQMVKM�WN �\PM�[MZ^QKM��1V[\MIL��][MZ[¼�QVX]\�_I[�M`\ZMUMTa�QUXWZ\IV\��IVL�\PMQZ�QVX]\�_I[�directly collected through health coaches, who worked closely with users by phone.

¹?M¼ZM�JITIVKQVO�JM\_MMV�_PI\�Q[�VMMLML�IVL�_PI\�XMWXTM�_IV\��IVL�XZQWZQ\QbM�IKKWZLQVO�\W�\PM�VMML[��;W�Q\¼[�^MZa�Q\MZI\Q^M�º (Head of Design, Company C)

Generative Learning

The iterative learning and its importance were brought up by all respondents from Company C. Already before it was founded, the founders spent time talking to people in their natural environment to hear about their experiences. They used time on exploring the opportunities within the domain and soon realized that they would create an online service. In order to test the concept, the founders built simple, but fake paper mock-ups of the service and showed them to people to see their reactions and hear their comments.

;QVKM�\PM�KWUXIVa�_I[�NW]VLML��\PM�\MIU�J]QT\�\PM�ÅZ[\�5>8�WN �\PM�[MZ^QKM�\PI\�_I[�prototyped a few times before it was built with code. In other words, they did not start with code but with a human-centered approach to design. Using the MVP as a proof-of-concept showed that idea might actually worked and provided necessary data. The team \PMV�[\IZ\ML�J]QTLQVO�\PMQZ�ÅZ[\�TIZOM�XQTW\��IVL�MUXTWaML�][MZ[�NZWU�\PM�\IZOM\�OZW]X�to use their service free of charge to see whether the service could work at that scale together with multiple health coaches. Overall, the mentality inside the company was all about building and “learning as you go”, which all interviewees appreciated.


Empathy

The tools and methods used in the company were not mentioned explicitly during interviews. According to the designer, there was no need to use any particular tools, because past experience supports most decisions that had to be made. Past experience, tacit knowledge and intuition were brought up in all interviews. Though particular tools or methods were not mentioned when asked, a few methods were found from the interview material. Health coaches were considered as an important “tool” for the team to collect user insights and feedback. They are often used as a primary source of information, because they work in-person with the users and make their own observations to identify trends. In special cases, for example, when someone drops of or has an especially good experience with the service, the founders call users to talk in person about it.

Storytelling could be also considered as one of the user-centered related methods, because the stories were generated based on user insights. Also the knowledge about users was carried throughout the whole design process. This way, the user stories were intentionally used to support development activities.

¹?M�\MVL�\W�_ZQ\M�[\WZQM[�I�TW\��;W�_M¼TT�\PQVS�IJW]\�I�][MZ��\PQVS�IJW]\�\PM�VIZZI\Q^M�\PI\�\PMa�VMML�\W�M`XMZQMVKM��IVL�R][\�LZI_�Q\��;W�_MMS�WVM�\PQ[�Q[�OWQVO�\W�PIXXMV��_MMS�\_W�\PI\�[PW]TL�PIXXMV��IVL�QN �\PI\�LWM[�PIXXMV�\PMV�\PQ[�XMZ[WV�[PW]TL�KWUM�QV�º�(CEO, Company C)

The stories were based on intuition and tacit knowledge, but also on the past experiences from talking to the target users. The other main sources for collecting feedback and insights were customer support, surveys, and data (such as trends).


+WUXIVa�+�PIL�I�[TQOP\Ta�LQٺMZMV\�[\IZ\QVO�XWQV\�KWUXIZML�\W�\PM�XZM^QW][�\_W�companies, because service design practices were embedded, although implicitly, in \PM�:�,�NZWU�\PM�WV[M\��)�[QOVQÅKIV\�ZMI[WV�NWZ�\PI\�_I[�\PM�NW]VLMZ[¼�M`XMZQMVKM�


in design and their knowledge about design thinking. Involving the users from the JMOQVVQVO�PMTXML�\PM�NW]VLQVO�\MIU�LMÅVM�\PM�[MZ^QKM�KWVKMX\�MIZTa�WV�IVL�I^WQL�KW[\Ta�iterations. The company has grown bigger in size, including 35 full-time employees, and is applying for Series B in funding. It is currently collaborating with big corporate clients and growing the number of paying customers. At this stage, the company has a solid J][QVM[[�UWLMT��Q\[�XZWL]K\�PI^M�NW]VL�I�OWWL�Å\�QV�\PM�UIZSM\��IVL�Q\�PI[�Q\[�UIZSM\QVO�and sales activities set up. Currently, the main aim at the company was to scale the business and grow the customer base. Thus, it seemed that state of the Company is at the Customer Creation phase (see Figure 11).

“So it’s really important to have signups going up now. And even though, the rest of our product is really QUXWZ\IV\��_M¼^M�I�XZM\\a�OWWL�LMOZMM�WN �KWVÅLMVKM�\PI\�\PM�XZWL]K\�Q\[MTN �IK\]ITTa�_WZS[��)VL�I\�\PM�UWUMV\��\PI\¼[�\PM�\PQVO�_M�[PW]TL�NWK][�WVº�(VP of Engineering).

Figure 11: The state of Company C within the Customer Development model is marked with red. The model

is a re-drawn version of the model presented in article ”Why Lean Start-Up Changes Everything” (Blank,

2013).

4.3.6. Challenges

The main challenge that came up from all interviews related to the use of freelance designers. There was a period of time when the team did not have an in-house designer.

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.ZMMTIVKMZ[�_MZM�_WZSQVO�WV�LQٺMZMV\�XIZ\[�WN �\PM�[MZ^QKM��IVL�_MZM�VW\�I[�QV^WT^ML�QV�KWZM�LM[QOV�IK\Q^Q\QM[��)[�I�ZM[]T\��\PM�LM^MTWXUMV\�\MIU�PIL�LQٻK]T\QM[�_Q\P�UISQVO�\PM�[MZ^QKM�KWV[Q[\MV\��IVL�\PM�W^MZITT�Y]ITQ\a�WN �\PM�M`XMZQMVKM�PI[�[WUM_PI\�[]ٺMZML��;WWV�after realizing the issue, the team hired a new in-house designer, who is the current Head of Design. Some design activities were still outsourced to freelancers, but they were more in a supporting role, producing marketing and sales material for the company. Generally, the Head of Design was supervising the whole design process, working together with the Director of Product and development team.

4.4. Summary and Discussion

:MÆMK\QVO�]XWV�\PM�ÅVLQVO[�NZWU�\PM�XIZ\QKQXIV\�WJ[MZ^I\QWV�IVL�\_W�KI[M�[\]LQM[��[WUM�[QUQTIZQ\QM[�IVL�LQٺMZMVKM[�KIV�JM�QLMV\QÅML�IKZW[[�\PM�\PZMM�KI[M[��<PM�KI[M�[\]La�analysis brought up three key issues that seemed to play a key role in the performance of R&D: 1) The role of design in R&D; 2) In-house designers versus outsourced designers; 3) Lack of customer input.

4.4.1. Approaches to Service Development

<PM�UIQV�NWK][�WN �\PM�QV\MZ^QM_[�_I[�\W�KTW[MTa�TWWS�I\�\PZMM�KWUXIVQM[¼�IXXZWIKPM[�\W�service development process and the use of service design practices in R&D. Through KZW[[�KI[M�IVITa[Q[��KMZ\IQV�XI\\MZV[�WN �\PM�[\IZ\]X[¼�IXXZWIKPM[�\W�[MZ^QKM�LM^MTWXUMV\�_MZM�QLMV\QÅML��IVL�NW]VL�\W�PI^M�IV�QUXIK\�WV�\PM�[\IZ\]X¼[�IJQTQ\a�\W�XZWKMML�\W�\PM�company building stage of the Customer Development model.

The development process at Company A could be described in the following way: >Q[]IT�,M[QOV�·�-VOQVMMZQVO�·�*]QTL�5>8� Design was used before the coding started, but it was rather limited to the creation of user interface and brand guidelines. When the development had started, design no longer seemed to be integrated in the development


XZWKM[[��I[�Q\�_I[�][ML�I[�I�[MXIZI\M�W]\[W]ZKML�[MZ^QKM��_PMV�\PMZM�_MZM�[]ٻKQMV\�resources and need. Those outsourced designers were implementing designs according to requests, and their design decisions were mostly restricted by the technical solutions of the service. It was mostly the technology and the vision of the leadership that drove the development process, but not design.

1V�\PM�KI[M�WN �+WUXIVa�*��\PM�QLMV\QÅML�XI\\MZV�_I["�5IZSM\�ZM[MIZKP�·�8ZW\W\aXM�·�-VOQVMMZQVO�·�,M[QOV�·�*]QTL�5>8� The company started by talking to potential partners before the service concept was put into implementation. After getting positive reactions from the target market, the founding team created a one-page website through which MIKP�][MZ�_I[�[MZ^ML�UIV]ITTa��)N\MZ�\PM�ÅZ[\�XQTW\��\PM�[MZ^QKM�JMKIUM�UWZM�KWUXTM`�as new features were taken in, and the designer was hired at the later stage. At that point, many technical solutions imposed certain constraints for the design. However, the designer still had the freedom to design the desired experience with the new MVP for mobile service. The MVP was intended for testing once the implementation was complete.

Company C, in contrast, used empathetic methods as a starting point, and the company was continuously using those gathered inputs throughout the development process. <PM�QLMV\QÅML�IXXZWIKP�\W�[MZ^QKM�LM^MTWXUMV\�KW]TL�JM�LM[KZQJML�I["�Insights/empathy ·1LMI�^ITQLI\QWV�IVL�XZW\W\aXQVO�·�,M[QOV�·�*]QTL�5>8�·�-VOQVMMZQVO. It is noteworthy that the company did not start developing the service using code. Coding was used after the concept was proven through quick and simple prototypes that did not require engineering. As a result, the founding team had such a profound understanding of their users that major iterations were not needed after the MVP. It can be concluded that +WUXIVa�+�PIL�QLMV\QÅML�\PM�ZQOP\�XZWJTMU�\W�[WT^M�IVL�\PM�ZQOP\�UIZSM\�\W�\IZOM\��_PQKP�TML�\W�UQVQUIT�Q\MZI\QWV�QV�\PM�[MZ^QKM�WٺMZQVO�IVL�ZMY]QZML�TM[[�LM^MTWXUMV\�MٺWZ\�

*I[ML�WV�\PM�\PZMM�KI[M[��\PM�ÅVLQVO[�[PW_�\PI\�I�XZWNW]VL�]VLMZ[\IVLQVO�WN �][MZ[�Ja�][QVO�[MZ^QKM�LM[QOV�UM\PWL[�KIV�PI^M�I�XW[Q\Q^M�MٺMK\�WV�\PM�ÅVIT�W]\KWUM��)TT�\PZMM�KWUXIVQM[��PW_M^MZ��PIL�LQٺMZMV\�[\IZ\QVO�XWQV\[�NZWU�_PQKP�\PMa�JMOIV�\W�LM^MTWX�\PMQZ�[MZ^QKM�WٺMZQVO[��?PQTM�+WUXIVa�+�PMI^QTa�NWK][ML�WV�][MZ[��I\�+WUXIVa�)�\PM�


SMa�LZQ^MZ�NWZ�QVVW^I\QWV�_I[�\PM�+-7��_PW[M�PaXW\PM[M[�IJW]\�][MZ[¼�VMML[�_MZM�ZIZMTa�validated with thorough user or market research.

+WUXIVa�*��QV�\]ZV��[\IZ\ML�\PM�J][QVM[[�IN\MZ�\ITSQVO�\W�XIZ\VMZ[��_PW�PI^M�I�[QOVQÅKIV\�QUXIK\�WV�\PM�ÅVIT�W]\KWUM��)TT�KWUXIVQM[�_MZM�NW]VL�\W�MUJZIKM�¹J]QTL�Q\º�I\\Q\]LM��J]\�Q\�PIXXMVML�I\�LQٺMZMV\�[\IOM[�WN �[MZ^QKM�LM^MTWXUMV\��?PQTM�NWZ�+WUXIVQM[�)�IVL�*�\PI\�UMIV\�OM\\QVO�W]\�[WUM\PQVO�NI[\�IVL�ZI\PMZ�]VÅVQ[PML�\W�MV\MZ�\PM�UIZSM\��NWZ�+WUXIVa�+�Q\�_I[�UWZM�IJW]\�XZW\W\aXQVO�_Q\P�\PM�TMI[\�IUW]V\�WN �LM^MTWXUMV\�MٺWZ\�and going out to talk to the users.

4.4.2. The Role of Design in R&D

)[�XZM[MV\ML�MIZTQMZ��\PM�\PZMM�KI[M�KWUXIVQM[�][ML�LM[QOV�QV�LQٺMZMV\�_Ia[��;WUM�of the design practices could be referred to as service design, although doing service design seemed to be rather an unconscious process. In general, the design process was ]V[\Z]K\]ZML�IVL�\PM�[MZ^QKM�WٺMZQVO[�PI^M�JMMV�KWV\QV]W][Ta�]VLMZ�LM^MTWXUMV\��[WUM\QUM[�]VLMZOWQVO�M^MV�[QOVQÅKIV\�Q\MZI\QWV[��<PM�LQٺMZMVKM[�QV�IXXTaQVO�LM[QOV�XZIK\QKM[�IVL�\PM�JMVMÅ\[�WN �LWQVO�[W�KIV�JM�LM[KZQJML�\PZW]OP�\PM�TMV[�WN �\PM�,IVQ[P�Design Ladder (Figure 2). Table 4 shows the correlation between the status of each startup in terms of Customer Development and Danish Design Ladder models, explaining how the way startups use service design practices impacts their ability to proceed to Company Building stage.

1V�\PM�KI[M�WN �+WUXIVa�)��\PM�UIQV�X]ZXW[M�WN �][QVO�LM[QOV�_I[�\W�LQٺMZMV\QI\M�\PM�service with the aid of visual design. Additionally, without testing the service with the end users and stronger collaboration with business partners, exiting the pivot stage with JQO�Q\MZI\QWV[�QV�\PM�[MZ^QKM�KWVKMX\�[MMU[�\W�JM�KPITTMVOQVO��<PQ[�ÅVLQVO�QVLQKI\M[�that the company did not use the strategic capabilities of service design throughout the service development process, especially when the work of outsourced designers comprised mainly of UI design as a separate activity from development.

Company B, in contrast, had an in-house designer with a background in service


Table 4: Summary of case companies’ design practices and their position in the Danish Design Ladder.

Company A Customer Discovery & Customer Validation pivot

• Working together with partners on campaigns• Going out of the building to the users to collect feedback and reactions (through events) • Outsourcing desgin work and using designers’ services when needed

Stage 2: Design as Styling

Design is only relevant in terms of style

Company B Customer Creation • Using personas to drive design related decisions• Creating simple paper mockups to build mutual understanding within the team and communicate ideas• Creating user stories• Collecting feedback from users and business partners• Creting guidelines for the team to reach consistency and mutual understanding• Using an in-house service designer

Stage 3: Design as Process

Design is integral to the development process

Company C Customer Creation • Developing a consistent brand across all service touch points• Creating guidelines for the team to reach consistency and mutual understanding• Prototyping the service concept early on with the users• Collecting user’s insights throughout the development and turning them into design solutions• Creating user stories• Using personas thoughout development• Go out out of the building to talk to the users in their real-life context• Using an in-house designer • Founders are experienced with design process and design thinking

Stage 4: Design as Strategy

Design is a key strategic means of encouraging innovation

Company Stage of Customer Development Model Service Design Approach Stage of Design Ladder


design. The designer approached design taking into consideration the whole service system, having responsibility for the brand development, overall user experience, communication and setting up processes to enable better integration of service design practices. The design work was done through close collaboration with the founders and Head of Development, and it was an integral part of the development processes. This takes the startup to the Customer Creation stage. However, the high level of uncertainty and the number of iterations could be reduced with more direct collaboration and testing with users as early as possible.

Finally, Company C used service design practices to drive innovation, which enabled \PMU�\W�IL^IVKM�\W�\PM�+][\WUMZ�+ZMI\QWV�[\IOM��)T\PW]OP�\PM�LM[QOVMZ¼[�ZWTM�QV�Company C was similar to Companies A and B (focusing on UX), what seemed to UISM�\PQ[�KI[M�LQٺMZMV\�QV�\MZU[�WN �LM[QOV�UI\]ZQ\a�_I[�\PM�LM[QOV�M`XMZQMVKM�WN �KW�founders and the Director of Product who was one of the key decision-makers in the company. They emphasized using service design practices as a driver for innovation and incremental improvement.

Whether or not all the startups used in-house designers or outsourced design, all three of them considered design as an important aspect in terms of overall success of the [MZ^QKM��\PM�_Ia�\PMa�]\QTQbML�Q\�Q[�_PI\�UILM�\PM�LQٺMZMVKM��)LLQ\QWVITTa��ITT�KWUXIVQM[�NW]VL�\PI\�LM[QOV�KW]TL�PMTX�\PMU�LQٺMZMV\QI\M�\PMQZ�WٺMZQVO[�IVL�J]QTL�TWaIT\a��J]\�VWVM�WN �\PMU�][ML�\PMQZ�QV�PW][M�LM[QOVMZ[�I[�[\ZI\MOQ[\[��<PM�QVÆ]MVKM�WN �NW]VLMZ[�_I[�[W�strong in all three cases that they had the control over the service concept. The designers were brought in later in the process, when the technical side of the service informed most of design solutions, which was especially true for Companies A and B.

?PI\�UILM�\PM�LQٺMZMVKM�QV�\PM�TM^MT�WN �QV\MOZI\QWV�WN �LM[QOV�XZIK\QKM[�QV�1<�[\IZ\]X[�seemed to be the culture that shared the design values within the company with all MUXTWaMM[��.QVITTa��\PM�ÅVLQVO[�[PW_�\PI\�\PM�PQOPMZ�I�[\IZ\]X�_I[�WV�\PM�LM[QOV�ladder the faster it could proceed towards the company building stage presented in the Customer Development model. When comparing the time used on development between the three case companies, full integration of service design practices, instead of ][QVO�IOQTM�UM\PWL[�ITWVM��_I[�NW]VL�\W�UISM�I�[\IZ\]X�UWZM�MٺMK\Q^M�


4.4.3. Decisions on Service Features

Decision-making was one of the key focus areas in the study, because the patterns of decision-making can potentially inhibit or enable the use of service design in an IT [\IZ\]X�KWUXIVa�IVL�IٺMK\�MٻKQMVKa��<PM�UW[\�KWUUWV�XZIK\QKM[�ZMTI\ML�\W�LMKQ[QWV�UISQVO�_MZM�QLMV\QÅML�IVL�KWV\ZI[\ML�IUWVO�\PM�\PZMM�KI[M[��1V�ZMOIZL[�\W�UISQVO�choices and decisions, the startup companies struggled with the following most commondilemmas in their R&D: � *ITIVKQVO�JM\_MMV�XMZKMQ^ML�\ZILMWٺ[�IVL�\PM�KW[\�WN �LM[QOVQVO�I�NMI\]ZM� (A, B, C) Balancing between the time required to implement a designed features and resources (A, B, C) Balancing between what features to keep and what to change (A, B) Making priorities (B, C)

)T\PW]OP�\PM�XZM[MV\ML�LQTMUUI[�_MZM�[WT^ML�QV�LQٺMZMV\�_Ia[��[WUM�KWUUWV�XI\\MZV[�_MZM�QLMV\QÅML�NZWU�\PM�ÅVLQVO[��.QO]ZM��[]UUIZQbM[�\PM�SMa�LZQ^MZ[�NWZ�LMKQ[QWV�making found from the interviews. It shows decision-making patterns driven by service design and other common ways of approaching issues. The service design driven approach comprises of dimensions as the following:

Empathy: observing people in their own environment, in the course of everyday routines, analyzing and applying that information in practice. User insights-driven: Using feedback and input from users through their proactive or inactive participation in the development process. Early prototyping: used for validating beliefs and assumptions, as well as eliciting reactions from all stakeholders.

All three case companies used measureable and analytical data to guide their decision-making about major changes or service improvement, although the type of data varied NZWU�TWWSQVO�I\�W^MZITT�[\I\Q[\QK[��XI\\MZV[�IVL�\ZMVL[�QV�][MZ[¼�JMPI^QWZ�\W�[QUXTa�NWTTW_�the number of sign-ups. Decision-making at Company A happened mostly based on


QV\]Q\QWV�IVL�\PM�NW]VLMZ[¼�^Q[QWV��IT\PW]OP�[WUM�LI\I�_I[�][ML��)\�+WUXIVQM[�*�IVL�C, data was examined most closely when decisions had to be made. When existing data was not enough to provide the necessary evidence, all three companies relied on QV[\QVK\�IVL�XI[\�M`XMZQMVKM��)LLQ\QWVITTa��\PM�M`Q[\QVO�LM[QOV[�IٺMK\ML�LMKQ[QWV[��IVL�\PM�technical side of the service together with implementation costs also set the boundaries. Only Company C intentionally prototyped the service and tested it with users in order \W�][M�\PM�ÅVLQVO[�NWZ�N]Z\PMZ�LMKQ[QWV�UISQVO�

<PM�ZM[]T\[�PQOPTQOP\ML�PW_�I�NW]VLMZ¼[�^Q[QWV��JIKSOZW]VL�IVL�^IT]M[�QVÆ]MVKML�LMKQ[QWV�UISQVO��<PQ[�Q[�M[XMKQITTa�M^QLMV\�_PMV�KWUXIZQVO�\PM�NW]VLMZ¼[�JIKSOZW]VL�in Company C with founders in Companies A and B. Lack of experience in design does VW\�VMKM[[IZQTa�UMIV�\PI\�\PM�LMKQ[QWV�UISMZ[�_MZM�VW\�KWUXM\MV\��J]\�Q\�LWM[�IٺMK\�\PM�extent to which a company is making data-driven or service design driven decisions.

Figure 12: Key drivers for decision-making.

SERVICE DESIGN

DRIVEN DECISION-MAKING

GENERAL STARTING POINTS

FOR DECISION-MAKING

Founders’ vision

Using past experience and

executing plans that have proven

to work elsewhere

Cost and time estimates

Data-driven

Empathy

Early prototyping

User-insights -driven


<PM[M�ÅVLQVO[�NZWU�\PM�KI[M�[\]LQM[�[PW_�\PI\�\PM�\_W�\aXM[�WN �LMKQ[QWV�UISQVO�XI\\MZV[�cannot exclude each other. Relying only on data, assumptions and past experience can lead to low customer satisfaction and lack of understanding of the real problems and needs. Similarly, relying on user insights and feedback alone makes it challenging to identify the pain points in the service, forecast the next steps and build a sustainable business. Service design approach can help avoid unnecessary iterations, as well as save time and costs by solving the right problems through the use of customer insights and prototyping in order to validate assumptions and interpretations of the data. Thus, using both types of decision-making and turning user insights into measureable data should JM�IV�Q\MZI\Q^M�IVL�ZMÆMK\Q^M�XZWKM[[��?PMV�\PM[M�\_W�\aXM[�WN �LMKQ[QWV�UISQVO�IZM�QV�balance, startups can get big advantage from both.

4.4.4. Challenges

One of the goals of this study was to uncover real-life challenges that hinder the use of service design in IT startups. During the interviews, the respondents were not highlighting the perceived problems or challenges related to using the practices, partly JMKI][M�\PM�KWVKMX\�WN �[MZ^QKM�LM[QOV�_I[�QV\MZXZM\ML�LQٺMZMV\Ta��7^MZITT��ITT�\PZMM�\MIU[�NZWU�\PM�KI[M�[\]LQM[�IVL�XIZ\QKQXIV\�WJ[MZ^I\QWV�[MMUML�\W�JM�KWVÅLMV\�IJW]\�their agile service development philosophy and talked about their practices in a positive manner. They did not see the lack of formal design processes as a problem, and they LQL�VW\�[MM�\PM�JMVMÅ\[�QV�PI^QVO�WVM�L]M�\W�\PM�PQOP�TM^MT�WN �]VKMZ\IQV\a��)T\PW]OP�\PM�challenges were not mentioned explicitly, a few points, which were brought up multiple times, were found from the collected interview material:

1) Lack of in-house designerThe cross-case analysis showed that using outsourced designers could hinder embedding design culture into a startup and make R&D more design driven, as the case of Company A indicated. The outsourced designers were even more restricted by the technical side of the service than the in-house designers, who still had more eligibility to IٺMK\�[MZ^QKM�ZMTI\ML�LMKQ[QWV[�


As agency workers or freelancers, outsourced designers seemed to be in a weaker position than in-house designers, because they had higher pressure to keep their client [I\Q[ÅML�IVL�UIQV\IQV�I�OWWL�ZMTI\QWV[PQX�NWZ�N]\]ZM�KWTTIJWZI\QWV[��1V�NIK\��QV�ITT�\PZMM�case companies the outsourced designers were used as implementers, receiving pre-LMÅVML�ZMY]QZMUMV\[�IVL�ZMY]M[\[�NZWU�\PM�TMILMZ[PQX��<PQ[�UMIV\�\PI\�\PM�KWVKMX\�related decisions were developed before involving designers in the process, and the full XW\MV\QIT�WN �LM[QOVMZ¼[�KIXIJQTQ\QM[�_I[�VW\�]\QTQbML�

In all three cases, the major challenge with the outsourced designers was that the lack of their direct involvement and weaker engagement led to a broken user experience. In part, this happened due to the lack of mutual understanding of the concept and the lack of close collaboration between the designer and development team. For instance, when ready designs were delivered and some features had to be changed at a later stage, the development team ran into problems with the overall consistency in the service. )KK]U]TI\ML�Q[[]M[�IVL�OIX[�KI][ML�LQٻK]T\QM[�_Q\P�ITT�\PZMM�KI[M[��IVL�\PM�KW[\[�IVL�\QUM�][ML�WV�Å`QVO�\PMU�\]ZVML�W]\�\W�JM�[QOVQÅKIV\��<PM�ZWTM�WN �W]\[W]ZKML�LM[QOVMZ[��JI[ML�WV�\PM�ÅVLQVO[��[MMUML�\W�JM�^MZa�LQٺMZMV\�NZWU�\PM�ZWTM�WN �QV�PW][M�LM[QOVMZ[��_PW�_WZS�KWTTIJWZI\Q^MTa�_Q\P�\PM�TMILMZ[PQX�IVL�MVOQVMMZQVO�\MIU[�\W�ÅVL�WX\QUIT�solutions.

2) Lack of Customer Input<PM�TIKS�WN �LQZMK\�][MZ�QV^WT^MUMV\�Q[�\PM�\PQZL�KZQ\QKIT�Q[[]M�\PI\�_I[�QLMV\QÅML�JI[ML�WV�the cross-case analysis. When comparing two extreme cases - Companies A and C - the ÅVLQVO[�[PW_�M^QLMVKM�\PI\�_Q\PW]\�QV^WT^QVO�\PM�][MZ[�JW\P�QV�\PM�MIZTa�JMOQVVQVO�IVL�throughout the whole R&D, exiting the pivots and big iterations in the service concept seemed to be extremely challenging.

Another critical point is the importance of iterative testing and prototyping with the users to collect their feedback and insights, instead of solely relying on measuring data. In the long run, relying on assumptions and measurable data alone can cause exponentially more costs and use more time resources on developing features that the startup is not certain about. Testing and prototyping with users were often seen as a time consuming activity, but, in fact, did have the potential to save time by helping avoid


unnecessary iterations on conceptual level, as the case of Company C showed.

Additionally, the case provided evidence that the prototypes do not necessarily require I�TW\�WN �ÅVIVKQIT�ZM[W]ZKM[�IVL�I�N]TTa�N]VK\QWVQVO�5>8��;\IZ\]X[�KIV�^ITQLI\M�\PMQZ�assumptions with target customers by using the least amount of design and development MٺWZ\�IVL�XZWL]KQVO�UWKS]X[�I\�I�TW_�KW[\�

��;\ISMPWTLMZ[¼�QVÆ]MVKM)�[QOVQÅKIV\�NIK\WZ�\PI\�KIV�MVIJTM�\PM�QV\MOZI\QWV�WN �[MZ^QKM�LM[QOV�Q[�\PM�XZM^IQTQVO�culture and values of a startup company. This culture often starts with the founders as the main stakeholders and decision-makers. If the founders do not have a design background or understanding of design, the key challenge for service designers is to convince the team and inform the leadership about the competencies of service design XZWKM[[��)T\PW]OP�\PM�JMVMÅ\[�WN �[MZ^QKM�LM[QOV�IZM�[WUM\QUM[�PIZL�\W�UMI[]ZM�QV�\PM�[PWZ\�Z]V��\PQ[�KWUXIZI\Q^M�KI[M�[\]La�[PW_ML�\PI\�\PM�JMVMÅ\�WN �QV\MOZI\QVO�Q\[�UM\PWL[�to R&D exist.

��8MZKMQ^ML�\QUM�XZM[[]ZM�IVL�[KIZKM�ÅVIVKQIT�ZM[W]ZKM[The perceived time pressure came up multiple times during the interviews, especially with Companies A and B. Both startups highlighted that the time related challenges hinder the use of some service design practices and early prototyping or user testing. 1V[\MIL��\PM�ÅZ[\�UWJQTM�5>8�_I[�][ML�QV�JW\P�KI[M[�NWZ�XZW\W\aXQVO��1\�Q[�_WZ\P�pointing out, however, that both startups had developing their services for two years, which indicates that there could have been the possibility to involve users and implement quick prototypes early on to ensure that the right problems are solved. Use of time is KWV[MY]MV\Ta�KWZZMTI\ML�_Q\P�\PM�ÅVIVKQIT�I[XMK\��1\�Q[�_WZ\P�XWQV\QVO�W]\��PW_M^MZ��\PI\�the startups in this study have had some funding since the beginning but they used them QV�LQٺMZMV\�_Ia[�

)[�I�ÅVIT�VW\M��\PM�KPITTMVOM[�XZM[MV\ML�QV�\PQ[�[MK\QWV�KIV�JM�I^WQLML�Ja�QV\MOZI\QVO�service design as part of the processes as early as at the onset of development. When LM[QOV�KWUM[�JMNWZM�MVOQVMMZQVO��LM[QOV�KIV�PI^M�I�JQOOMZ�QUXIK\�WV�\PM�[\IZ\]X¼[�IJQTQ\a�to yield its advantages, as opposed to introducing it at a later stage.

CONCLUSIONS

5

97//CONCLUSIONS

THIS STUDY AIMED TO�[PML�TQOP\�WV�\PM�JMVMÅ\[�WN �[MZ^QKM�LM[QOV�QV�1<�[\IZ\]X[�NWZ�UWZM�MٺMK\Q^M�LM^MTWXUMV\�WN �\PMQZ�[MZ^QKM�WٺMZQVO[��<W�IKPQM^M�\PQ[�IQU��\PQ[�[\]La�comprised of participant observation in one startup company in Finland, and two case studies, one in Finland and the other in the USA, in order to explore the role and potential of service design in a real-life context. The use of service design practices and the ways of handling the development process were discussed through cross-case comparisons, which helped identify which kinds of practices of service design were used, IVL�]VLMZ�_PQKP�KWVLQ\QWV[�\PMa�MVIJTML�\PM�ZM[XMK\Q^M�[\IZ\]X[�\W�JM�UWZM�MٺMK\Q^M�

The results of the conducted case studies provide three key insights that address the main research question. First, based on the cross-case analysis there is a strong correlation between the level of design use in startups and the capability of the KWUXIVa�\W�ILÎVKM�\W_IZL[�\PM�»KWUXIVa�J]QTLQVO�XPI[M¼�LMÅVML�Ja�;\M^M�*TIVS�QV�his Customer Development model. The more a startup utilizes human-centered design practices, observation, and prototyping as an integral part of the service development XZWKM[[�QV�IV�MٻKQMV\�IVL�MٺMK\Q^M�UIVVMZ��\PM�NI[\MZ�Q\�KIV�ZMIKP�\PI\�XPI[M��<PM�IVITa[Q[�WN �KI[M�[\]La�ÅVLQVO[�QVLQKI\M[�\PI\�Q\�Q[�^MZa�QUXWZ\IV\�IVL�ÎT]IJTM�\W�integrate design at the onset of the service development process in order to attain [QOVQÅKIV\�»[\ZI\MOQK¼�IVL�»WXMZI\Q^M¼�ILÎV\IOM[�

*]QTLQVO�WV�\WX�WN �\PM�ÅZ[\�SMa�QV[QOP\��\PM�[MKWVL�QUXWZ\IV\�ÅVLQVO�Q[�\PI\�ZWTM�WN �LM[QOV�QV�I�[\IZ\]X�KWUXIVa�Q[�[\ZWVOTa�JI[ML�WV�NW]VLMZ¼[�XZQWZ�SVW_TMLOM��QV\MZM[\��and understanding. The study shows that the lack of experience, or understanding of \PM�JMVMÅ\�WN �LM[QOV�KIV�TQUQ\�QV\MOZI\QWV�WN �[MZ^QKM�LM[QOV�XZIK\QKM[�IVL�LM[QOVMZ¼[�XZW�active involvement.

)LLQ\QWVITTa��MUJMLLQVO�[MZ^QKM�LM[QOV�QV�:�,�JMKWUM[�UWZM�LQٻK]T\�_PMV�\PM�[MZ^QKM�


designer is brought into the process at the latter phase of development. Furthermore, having an in-house service designer does not necessarily mean that a startup can JMKWUM�UWZM�[MZ^QKM�LM[QOV�LZQ^MV��?PI\�UI\\MZ[�Q[�PW_�LM[QOVMZ¼[�KWUXM\MVKQM[�IVL�capabilities are utilized, as well as how the designer is involved in key activities, including decision-making and decision-taking. Therefore, it is important for companies to ensure that adequate design skills are within, or available to the founding team through very early hires.

Third, the study shows that a strong design culture cannot be embedded into a startup using only part-time or external designers due to their limited involvement in key development activities.

<PM�[\]La�ZM^MIT[�\PI\�\PMZM�IZM�[QOVQÅKIV\�JMVMÅ\[�\W�JM�I\\IQVML�\PZW]OP�\PM�IK\Q^M�IVL�ongoing integration of the service design process and that of the software development process. While service design is especially strong in exploration and creation through its human-centered design and generative learning processes, the strength of agile methods Q[�\PM�QUXTMUMV\I\QWV��;MZ^QKM�LM[QOV��\P][��MVPIVKM[�\PM�MٺMK\Q^MVM[[�WN �1<�[\IZ\]X[�when it is an integral part of R&D. An important prerequisite for that, however, is an early integration of service design processes and practices.

5.1. Recommendations

)VITa[Q[�WN �\PM�ÅVLQVO[�[PW_[�\PM�XW[Q\Q^M�QUXIK\�WN �IXXTaQVO�[MZ^QKM�LM[QOV�XZIK\QKM[�QV�:�,�WV�\PM�MٺMK\Q^MVM[[�WN �I�[\IZ\]X��0W_M^MZ��\PQ[�[\]La�]VKW^MZML�[WUM�SMa�Q[[]M[�\PI\�MVIJTML�WZ�QVPQJQ\ML�[\IZ\]X�KWUXIVQM[�\W�]\QTQbM�\PM�JMVMÅ\[�WN �[MZ^QKM�LM[QOV��<WOM\PMZ�_Q\P�\PM�QLMV\QÅML�VMML[��\PM�ÅVLQVO[�KWV\ZQJ]\M�\W�\PM�LM^MTWXUMV\�WN �I�[M\�of recommendations to help guide R&D in IT startups.

1) Expend time on exploration and creationThe literature review on service design suggests spending time on exploration and KZMI\QWV�XPI[M[��IT\PW]OP�\PM�QUUMLQI\M�JMVMÅ\[�WN �\PW[M�IZM�LQٻK]T\�\W�UMI[]ZM��1V�XZIK\QKM��[\IZ\]X[�ÅVL�Q\�KPITTMVOQVO�\W�M`XTWZM�\PM�XW[[QJQTQ\QM[��WN\MV�ZMTaQVO�WV�QV\]Q\QWV��past experience, and concepts that have worked elsewhere. Additionally, creation of a

99//CONCLUSIONS

consistent service concept may seem unnecessary and costly. However, the study shows that cutting corners in the design process often results in a poor user experience and a XWWZ�]VLMZ[\IVLQVO�WN �_PI\�VMMLML�\W�JM�J]QT\��<PM�ÅVLQVO[�[\ZWVOTa�MVKW]ZIOM�\PM�TMILMZ[PQX�\W�KWV[QLMZ�\PM�UMIVQVO�WN �\PMQZ�ÅZ[\�TI]VKPML�[MZ^QKM��IVL�_PM\PMZ�Q\�Q[�I�OWWL�JI[Q[�NWZ�OM\\QVO�ÅZ[\�][MZ[�KWV^QVKML�IJW]\�\PM�[MZ^QKM�IVL�J]QTLQVO�I�[\ZWVO�relationship with them.

2) Allow time for prototyping and learning<PM�_Ia�\PM�[MZ^QKM�LM^MTWXUMV\�XZWKM[[�Q[�[\Z]K\]ZML�QVÆ]MVKM[�\PM�IJQTQ\a�WN �I�[\IZ\]X�\W�JM�UWZM�MٺMK\Q^M�IVL�\W�][M�[MZ^QKM�LM[QOV�XZIK\QKM[��7VM�WN �\PM�KWUUWV�assumptions that startups have is that testing the service must be based on a coded [MZ^QKM�\W�[I^M�\QUM�IVL�KW[\[��<PM�MUXQZQKIT�[\]La�ÅVLQVO[�[PW_�\PI\�NZMY]MV\�\M[\QVO�and prototyping before coding can ensure that the company is on the right track, or show the pain points in the service concept. Coding the service with a functioning back-end database does not necessarily lead to saving costs and time. The prototype can be implemented as a fake service or paper prototype or even a visualized scenario, which will be enough to elicit reactions, comments and feedback to learn from.

This approach to prototyping can encourage more frequent testing with users at a low cost. If involving user directly in testing on a regular basis is not possible due to the lack of resources, the team can alternatively use the service as part of their daily life. One of the risks can be subjectivity in the service evaluation, but that is better than no testing at all. This approach is a low-cost way to discover the context around the service, as the research by Salla Koski (2008) has shown. By observing the way people use the service QV�\PMQZ�VI\]ZIT�[M\\QVO��\PM�[\IZ\]X�KIV�]VKW^MZ�LQٺMZMV\�[Q\]I\QWV[�IVL�XPI[M[�ZMTI\ML�\W�the use of the service (p. 46).

3) Involve and observe users early on+WV[\IV\�QV^WT^MUMV\�WN �][MZ[�QV�\PM�LM^MTWXUMV\�XZWKM[[�\PZW]OP�LQٺMZMV\�KPIVVMT[�IVL�XTIKQVO�\PMQZ�QV[QOP\[�I\�I�[\IZ\QVO�XWQV\�NWZ�LMKQ[QWV[�[MMU[�\W�JM�IV�MٻKQMV\�_Ia�\W�NWK][�WV�KWZM�[MZ^QKM�WٺMZQVO[�IVL�LM^MTWX�ZMTM^IV\�[WT]\QWV[��?PI\�UI\\MZ[��PW_M^MZ��Q[�the way how users are involved. By simply asking users for feedback or following data, it had critical limitations to get an in-depth understanding of the real problems and


LM^MTWX�I�]VQY]M�[MZ^QKM�WٺMZQVO��<PM�KWUXIVa�][QVO�IV�Q\MZI\Q^M�LM^MTWXUMV\�XZWKM[[�that starts with extensive observation of users in their natural context has a better [\IZ\QVO�XWQV\�NWZ�LM^MTWXQVO�I�[]KKM[[N]T�[MZ^QKM�KWVKMX\��=[QVO�LM[QOVMZ¼[�KWUXM\MVKM[�or a person who is familiar with service design principles and empathetic design is important for interpreting user information and translating it into relevant solutions.

4) Consider how the designer is involved in company’s activitiesAmong the case companies, not all of them see the need or have an opportunity to hire an in-house designer. Founders in this case should consider carefully the purpose of hiring an outsourced designer. When a designer implements requests that are given QV�I�NWZU�WN �I�\W�LW�TQ[\�WZ�XZM�LMÅVML�\I[S[��\PI\�UIa�TQUQ\�\PM�IJQTQ\a�WN �][QVO�\PI\�LM[QOVMZ¼[�[\ZI\MOQK�KWUXM\MVKM[��M[XMKQITTa�_PMV�\PM�LM[QOVMZ�Q[�_WZSQVO�[MXIZI\MTa�from the development team and is part of key decision-making sessions. Changing or adjusting the designs during the development stage, in that case, can turn into a KPITTMVOM��IVL�\PM�LM^MTWXUMV\�\MIU�JMKWUM[�WN\MV�ZM[XWV[QJTM�NWZ�LMÅVQVO�_PI\�Q[�\W�JM�QUXTMUMV\ML�IVL�PW_��<PM�[\]La�ÅVLQVO[�[]OOM[\�\PI\�QN �\PM�NW]VLMZ[�_IV\�\W�PQZM�an outsourced designer, they need to have a solid service concept before involving the designer.

<PM�JM[\�_Ia�\W�][M�\PM�JMVMÅ\[�WN �[MZ^QKM�LM[QOV�Q[�\W�PQZM�IV�QV�PW][M�LM[QOVMZ�with adequately strong design skills. When hiring, it is highly encouraged to involve the designer in the development process as early as possible to fully utilize his or her competencies. This will give the designer an opportunity to set up needed processes that will help make service design practices as a key driver for service development and become part of strategy, before the technical solutions of the service create limitations. As the study shows, it is not enough to just bring in a designer to become more service design oriented, but it is the question of how the designer is involved in the key processes and in decision-making. The culture and environment needs to be such that they enable I�LM[QOVMZ¼[�QV^WT^MUMV\�\PZW]OPW]\�\PM�_PWTM�LM^MTWXUMV\�XZWKM[[�

5) Build a collaborative culture and mutual understanding about the visionAccording to Stickdorn and Schneider (2011), during the service development process, I�\MIU¼[�UW\Q^I\QWV�IVL�MVOIOMUMV\�Q[�SMa�\W�[][\IQVIJTM�[MZ^QKM�QUXTMUMV\I\QWV��<PM�

101//CONCLUSIONS

ÅVLQVO[�NZWU�\_W�KI[M�KWUXIVQM[�[PW_�\PI\�LQ[[WVIVKM�JM\_MMV�\PM�\MIU¼[�^Q[QWV�IVL�TMILMZ[PQX¼[�^Q[QWV�WN\MV�TMIL[�\W�UQ[]VLMZ[\IVLQVO[��<P][��Q\�Q[�QUXWZ\IV\�\W�QV^WT^M�employees from the beginning of a service design process, respecting their inputs.

Also, because it is important to share mutual understanding of the core of the service internally, the company must enable use of tools and methods that enhance internal communication and learning, instead of seeing it as a waste of time. These tools can be, NWZ�M`IUXTM��[\Iٺ�O]QLMTQVM[��^Q[]ITQbML�][M�KI[M�[KMVIZQW[�IVL�[\WZaJWIZL[��*I[ML�WV�\PM�observations in the case companies and the implications above, service design does help [\IZ\]X[�JMKWUM�UWZM�MٺMK\Q^M��XZW^QLML�\PI\�[MZ^QKM�LM[QOV�IXXZWIKP�Q[�MUJMLLML�QV�R&D. This primarily requires support and encouragement from leadership, for example a CEO or a founder.

��,WK]UMV\�\PM�XZWKM[[�NWZ�UWZM�MٺMK\Q^M�TMIZVQVOService design thinking can be reached, when the startup takes the implemented concept to the next exploration round and evaluates the results. Thus, it is important to keep track of the process and improvements, and to make them transparent to the _PWTM�\MIU�NWZ�MٺMK\Q^M�QV\MZVIT�TMIZVQVO��<P][��\PM�SMa�ZWTM�WN �\PM�QV�PW][M�LM[QOVMZ�Q[�\W�OZIL]ITTa�QV\ZWL]KM�[MZ^QKM�LM[QOV�\PQVSQVO�IVL�LWK]UMV\�M^QLMVKM�WN �Q\[�JMVMÅ\[��The documentation of the processes and outcomes will help to measure success and the value of service design approach in the long run. It is also encouraged to demonstrate to the development team and management that the proposed plans are based on real evidence rather than pure gut feeling. It is essential to convince the team about what is being implemented and why. As the study suggests, service design is powerful when it is embedded in the culture, and the thinking is shared within the team.

5.2. Evaluation of the Study

<PM�KWVL]K\ML�[\]La�PI[�[WUM�TQUQ\I\QWV[��.QZ[\��\PM�MUXQZQKIT�ÅVLQVO[�IZM�TQUQ\ML�\W�three IT startup companies. Because every startup has unique needs and resources and I�XIZ\QK]TIZ�KWV\M`\��Q\�Q[�VW\�IXXZWXZQI\M�\W�LZI_�KWVKT][QWV[�WV�\PM�\IVOQJTM�MٺMK\[�\PI\�


the service design approach has on the overall performance of the company. Because the volume of the data is a limitation to this study, the aim of this work is not to pin LW_V�»KWZZMK\¼�_Ia[�WN �][QVO�[MZ^QKM�LM[QOV�IVL�Q\[�O]IZIV\MML�JMVMÅ\[��)T\PW]OP�\PM�conducted participant observation uncovered similar themes that were brought up in six in-depth interviews with two case companies, not all themes included supporting evidence across all three companies. In order to avoid misleading the readers, it was made transparent in the empirical part that due to the limited number of case companies, each company was studied as a unique entity.

)LLQ\QWVITTa��[MZ^QKM�LM[QOV�_I[�XMZKMQ^ML�IVL�QV\MZXZM\ML�LQٺMZMV\Ta�L]ZQVO�\PM�interviews with each case company. Some respondents were fully unfamiliar with the concept of service design, which might have limited the study. Overall, it is somewhat challenging to develop practical implications that can be followed by every company based on three unique cases. Instead, this thesis introduced several recommendations _PQKP�1<�[\IZ\]X[�KIV�\ISM�QV\W�KWV[QLMZI\QWV��ZMÆMK\QVO�WV�\PMQZ�W_V�TWKIT�contingencies.

5.3. Future Research Opportunities

This research was built on the ongoing discussion related to integration of service design and agile software development. It now formed a background for future research XW[[QJQTQ\QM[�\W�UMI[]ZM�\IVOQJTM�MٺMK\[�IVL�JMVMÅ\[�WN �IXXTaQVO�[MZ^QKM�LM[QOV�QV�[\IZ\]X�context. For example, the recommendations provided in this study could be validated through studying a larger number of companies and developed into practical guidelines. This research opportunity would potentially require a long-term participant observation, ZMY]QZQVO�LWK]UMV\I\QWV�WN �XZWKM[[M[��LMKQ[QWV[��ÅVIT�W]\KWUM[��IVL�\M[\�ZM[]T\[�

<PM�UMI[]ZIJQTQ\a�WN �M`XTWZI\QWV�IVL�\PM�JMVMÅ\[�WN �M`XTWZI\WZa�IK\Q^Q\QM[�QV�[MZ^QKM�development process are another issue that came up during research. One way of approaching this could be looking into opportunities of integrating exploration as part WN �LM^MTWXUMV\�XZWKM[[��IVL�OMVMZI\QVO�M^QLMVKM�WN �\PM�KWVKZM\M�JMVMÅ\[�IVL�KW[\[�related to using exploration, versus not taking the service concept to the next exploration

103//CONCLUSIONS

phase. The costs associated with the iterative and exploratory learning could make a [QOVQÅKIV\�KWV\ZQJ]\QWV�\W�\PM�XZIK\QKM�WN �[MZ^QKM�LM[QOV�IVL�M`Q[\QVO�ZM[MIZKP�IZW]VL�the ROI in design.

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6

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APPENDIX A

SEMI-STRUCTURED INTERVIEW GUIDE

5a�QV\ZWL]K\QWV��UQV��

Thank you very much for participating in my study. My name is Avesta and I am from University of Arts, Design and Architecture at Aalto University.

The purpose of the study

The research tries to build a holistic picture of how service design is or is not applied in tech startup companies through case study interviews. The objective is to understand both the role and potentials for service design and how it can be applied to help with decision-making when a company is developing a new service. At the end, this study _W]TL�XZW^QLM�aW]Z�KWUXIVa�_Q\P�QV�LMX\P�IVITa[Q[�WV�\PM�KWUXIVa¼[�IXXZWIKP�\W�design for services, and potentially identify new areas where you as a company might apply service design approach on an operational level. During the interview, I would like to discuss this topic through 1-2 actual project examples and I am especially interested in your personal experiences and perspectives on the things discussed. What I am interested in is how you have been using design, how you have been making design related decisions and why has the product evolved the way it is.______________________________________________________________________

Questions

1) Personal interpretations of service design (5 min.)

What is your personal understanding of service design?

,MÅVM�¹[MZ^QKM�LM[QOVº�QV�aW]Z�W_V�_WZL['��1N �\WW�PIZL��PI^M�\PMU�LZI_�I�XQK\]ZM��][M�IV�IVITWOa��M\K��1N �VW\��/=-;;��*M�XZMXIZML�\W�WٺMZ�aW]Z�W_V�LMÅVQ\QWV�WN �_PI\�¹[MZ^QKM�LM[QOVº�Q[��<PMa�UQOP\�JM�LWQVO�Q\�M^MZa�LIa�J]\�\PMa�R][\�LWV¼\�SVW_�Q\�

2. Applying service design within the company, challenges & opportunities (15 min.)

How would you describe your exposure to service design here at (company)? Probing questions: 0W_�PI^M�][MZ[�JMMV�QV^WT^ML'� 0W_�PI^M�aW]�JMMV�\M[\QVO�XZW\W\aXQVO�\PM�[MZ^QKM'�?Pa'How is (service) design used on a strategic level in practice? Ask WHY they do those things. Probing questions: ?PI\�LW�aW]�[MM�I[�\PM�JMVMÅ\[�WN �[MZ^QKM�LM[QOV'�� ?PI\�_I[�\PM�UW\Q^I\QWV�\W�QVQ\QI\M�I�[MZ^QKM�LM[QOV�XPQTW[WXPa�I\��KWUXIVa�� PQZM�I�LM[QOVMZ'�� ?PMV�LQL�\PM�LM[QOVMZ�OM\�QV^WT^ML�QV�\PM�XZWKM[['� ?Pa�LW�aW]�ITT�I\��KWUXIVa��][M�I�[MZ^QKM�LM[QOV�IXXZWIKP'�)[S�?0A�Q\¼[�[MMV�� I[�I�JMVMÅ\��What challenges have you observed related to service design? Any concrete examples? )[S�?0A�Q\¼[�I�KPITTMVOM��M\K�

3.Service development process (from the product feature point-of-view) (10 min.)

E.g. How do you work as a team? How do you organize the work? Probing question: ?PMV�Q[�\PM�LM[QOVMZ�QV^WT^ML'�?Pa�[W'

4.What are the factors that impact decision-making (20 min.)

What are the service features you started with and how did you get down with those features? Why has your product evolved the way it is now? E.g. what other options did you consider and why were these chosen? Probing questions: ?PW�Q[�\PM�SMa�LMKQ[QWV�UISMZ�ZMOIZLQVO�\PM�LM[QOV�WN �[MZ^QKM'

� ?PMZM�LW�\PM�QLMI[�KWUM�NZWU'�0W_�IZM�][MZ[�QV^WT^ML�QV�\PI\'� 0W_�LQL�aW]�UISM�[]ZM�aW]Z�I[[]UX\QWV[�IZM�ZQOP\'�� 0W_�PI^M�aW]�OI\PMZML�\PM�][MZ�QV[QOP\[�IVL�_PW�_I[�QV�KPIZOM�WN �\PI\'�0W_�LQL�aW]�\ZIV[TI\M�� \PW[M�QV[QOP\[�\PMV'� 0W_�LQL�aW]�SVW_�\PI\�aW]�IZM�WV�I�_ZWVO�\ZIKS�ZQOP\�\ZIKS'�?PI\�PIXXMVML�\PMV'?PI\¼[�\PM�PIZLM[\�\PQVO�NWZ�aW]�\W�LMKQLM�WV�QV�\PM�ZMTMI[M�UIVIOMUMV\�KaKTM'�?Pa' Probing question: ?PI\�UISM[�aW]�]V[]ZM�IJW]\�\PM�NMI\]ZM[�WZ�_PI\�KI][M[�\PM�UW[\�� LMJI\M'��What are the things that take the longest to investigate? What are the things where most of the time is hard to agree on? Why? Probing question: ?PI\�QV[QOP\[�LQL�aW]�VMML�\W�UW^M�NWZ_IZL'�� 0W_�LW�aW]�ÅVL�I�KWUXZWUQ[M�_Q\PQV�\PM�\MIU'How do you decide what features to leave out and what to keep throughout your XZWL]K\�LM^MTWXUMV\��LQٺMZMV\�[\IOM[�WN �LM^MTWXUMV\�' Probing question:�?PI\�IZM�aW]Z�I[[]UX\QWV[�JI[ML�WV'Finally: How do you see your product will evolve in the future? Why?

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