The Future Is in the Engineering of Experience

THE NEW MANAGERIAL AND ORGANIZATIONAL CHALLENGE FOR COMPANIES IS LEARNING TO DESIGN PRODUCTS AND SERVICES AS A SINGLE WHOLE, IN ORDER TO BE ABLE TO SATISFY ACTUAL CUSTOMER NEEDS

by Enzo Baglieri, SDA Bocconi School of Management
Translated by Alex Foti

The macroeconomic data compiled through 2014 by a joint research team composed of  of SDA Bocconi and UCLA Anderson management schools on the topic “The Future of Services” showed a high prevalence of informational services in US wealth creation (over 56% of the aggregate product), confirmed by a similar dynamic in the composition of Italian GDP (over 40%). The most recent data however indicate that there is a recovery in the ability to generate value out of the services performed by tangible assets, i.e. from product-service combinations in which the latter uses the former as a veritable distribution channel. For example, books or software as service associated with physical devices branded by software vendors themselves. Translated into managerial implications, this means that while in the recent past we saw the servitization of products, today we are witnessing the productization of services. More generally, it can be argued that in the short term, the classic distinction between an economy of goods and an economy of services will disappear, to the benefit of business models where the distinction between product and service, especially in the eyes of the customer, will be completely superfluous.
 
For the purposes of innovation management, in a scenario like the one described for companies the crucial issue then becomes what to design and plan for. If the customer no longer buys the car for the benefit the product provides, but because part of a much broader product and service system (think of what is taking place with the spread of automatic and driverless cars) what does a car company need to design? The car or the service that the former enables, without which the car itself has no reason to exist? The question is not specious, because so far the two components have been treated separately, since the economic actors that produce the good and those who provide the service are two different kinds of companies. However, if the two components become indispensable one for the other, this organizational and design separation can be very harmful, because companies risk underestimating what the customer really needs while overestimating what they already know to achieve. The customer is actually asking for a pleasant, memorable experience, which is not only the result of the ability to meet his/her needs, but also to anticipate them, to amaze the consumer and deliver more than was expected. The engineering of the product and the engineering of the service should be replaced by integrated experience engineering, which should be able to encode and streamline performances that are high in emotional content.
 
Experience design is a rapidly evolving discipline and is based on the principle that experience is a dynamic concept, influenced by the cultural and symbolic context where the experiential event takes place, and the result of processes that have become etched in memory of the customer. In particular, according to the studies currently under way in the Bocconi-UCLA team, experience starts developing even before the moment of service delivery and continues even beyond the use of the service in question. Conversely, companies tend to focus on the period of purchase or use, and adopt a transactional rather than relational perspective with their consumers. In addition, the service and experience generated depend on the combination of four factors (the ability of contact personnel, the tangible components of service, the intangible and informational components of the service, and, finally, the role of the customer himself/herself), which if properly modulated can help produce a lasting effect on the customer's memory and on his/her propensity to repeat the experience with the company in question.