May Starbucks Be Your Next Bank? - PRO INNO Europe

May Starbucks be your next bank? 

Unleashing intangible sources of value 

through developing customer experience 

Peder Inge Furseth, Norwegian Business School, Oslo 

EPISIS, Helsinki, June 5th 2012 

06.06.2012 1 

Peder Inge Furseth for EPISIS June 5th 2012. Final 

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Megatrends; what should companies do; propose a model for working with Service Innovation 

06.06.2012 2 Peder Inge Furseth for EPISIS June 5th 2012. Final 

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Two megatrends 

• Technology / digitisation 

• Transformation of product to service-economy 

• Consequence: speed; customer decides value 

• The competence of scaling great customer service may be 

the most important 

• Sectors will be collapsed; think of Amazon.com 

• Shop vacancy rates in some UK towns are above 30% 

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• This is part of work in the project named 

• Value Driven Service Innovation, VDSI, 

• Main sponsor: Research Council of Norway 

• Main collaborators 

• Dr. Richard Cuthbertson, University of Oxford 

• Steven De Mello, CITRIS, UC Berkeley 

• Stephen Ezell, ITIF 

• Workshop in Oxford October 11-12, 2012 

• Seminar in San Francisco, CA March 16-20, 2013 

• Thanks go to Mirja Kaarlela, TEKES for the invitation to the 

EPISIS conference. 

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Pace of Innovation Accelerating 

Source: IBM’s Global Innovation Outlook, Joseph Jacobsen, Organizational and 

Individual Innovation Diffusion, 2004 


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Source: The New York Times, 2008 


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Encyclopaedia Britannica vs Wikipedia 

• Encyclopaedia Britannica – started in 1768. 

• Price for a printed edition in year 2010: $1,400. 

• In 2005 Encyclopaedia Britannica had about 810.000 articles 

• Wikipedia had 3 million articles in 2005 

• In 2010 Wikipedia had over 17 million articles 

• 

• From March 2012: 

• Just a digital version: $70/year = 5% 

of the price of a printed version in year 2010 

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Blockbuster vs 

streaming of fim and rental via the web 

• 2003 thousands of 1 mill subscribers 

stores 

• 2010 shut down 24 mill subscribers fall 2011 

app PhoneFlix launched fall 2008 

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High 

Low 

Typically, innovation is seen as product 

improvement 

Volume of innovation efforts 

Last 10 years 

Ten Types framework copyright of Doblin/Monitor 

Source: Doblin analysis, 2005 


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However, the majority of value is created 

elsewhere 

High 

Low 

Cumulative value creation— 

Last 10 years 

Source: Doblin analysis, 2005 

Ten Types framework copyright of Doblin/Monitor

From commodity to specialty item 

$0.79 

$4.29 

Peder 06.06.2012 Inge Furseth for EPISIS June 

12 

5th 2012. Final version

Anatomy of an innovation intent: 

Starbucks 

• Strategists would say: 

Leverage a distinctive brand plus coffee buying production and 

marketing systems to achieve premium pricing and global 

dominance… 

• Instead, their innovation intent says: 

Sell back to a busy customer the twenty minutes each day she 

will look forward to most… 


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• “Customer service experience is always an asset regardless 

of the industry or role you are in – just because you aren’t 

serving someone over the counter doesn’t mean you don’t 

have customers or clients”. 

Michelle Blom, National Recruitment Coordinator, Starbucks Coffee Canada 

• http://bit.ly/yA19p5 

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A clearly defined innovation intent 

guides innovation... 


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A case of mobile marketing: Starbucks at your fingertips and 

Starbucks fastest way to pay 

http://www.youtube.com/watch?v=or6U0GeZ4j0&feature=related 

Now your iPhone can bring you closer to your 

next Starbucks moment 

Also Illy launched 

the Illy Locator 

mobile apps 

Not sure where your closest Starbucks is, or 

which beverage you want to drink? 

•an easy-to-navigate store locator lets you 

search by amenities and get directions 

•there is also a drink builder feature so you can 

build your drink exactly how you like it and 

send it to a friend 

•a food menu with nutritional information, as 

well as stories and facts about the whole bean 

coffees 

Everything is easier with Starbucks Card Mobile 

And Nespresso launched 

both locator and 

transaction mobile apps 

With Starbucks Card Mobile, you can 

• check your balance 

• reload your card with any major credit 

• view your transactions 

• conveniently track your Stars in the My 

Starbucks Rewards program 

• make scan and go payments with 2D 

barcode

Change Management is Crucial to Innovation Success 

“It is not the strongest nor the most 

intelligent that survive, but those most 

adaptive to change.” 

- Charles Darwin 


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“Innovate, You Will” 


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A question of innovation 

“When a service company innovates, it won’t be long before others copy.” 

- So, the only protection for a service company is to keep on moving, to embed innovation as an 

integral part of the management process. 

- While some business models do exist, these tend to be: 

- incoherent 

- incomplete or 

- inconsistent. 

- There is no single integrated tool that covers all of the key aspects of service innovation 

- A paper that aims to identify the components of service innovation and their interrelationships, to 

be presented at ISPIM in Barcelona June 19 th . 


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Levels of innovation 

“Any sustainable innovation should create value for all these parties over the long term.” 

-Value is only realized if the firm has the ability to deliver the required service in the appropriate 

way at an acceptable price for all the parties concerned: firm, customers, and suppliers 

- This ability is only relevant if the firm has a sufficient capacity of resources to succeed 

- Thus, any service innovation comprises of three simple levels, driven by the value created: 

-Innovation capacity: the potential for innovation 

-Innovation ability: the practice of innovation 

-Innovation outcomes: the result of innovation 


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Definitions of innovation 

-Definitions of a business model are: 

- varied 

- generic 

... leaving the manager with little idea as to how to embed innovation within this context 


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Service Innovation Triangle 

Tangible 

assets 

Service 

operations 

Technology 

Value 

Business 

model 

Financial 

assets 

Service firm 

Customer 

experience 

People 

Intangible 

assets 

Value: 

innovation outcomes 

Management: 

innovation ability 

Resources: 

innovation capacity 

06.06.2012 22 Peder Inge Source: Furseth Cuthbertson, for EPISIS Furseth, June 5th Reynolds, 2012. 2011 Final 

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Layers of Innovation: Resources, management, value

Service Innovation Triangle 

The challenge 

Tangible 

assets 

Service 

operations 

Technology 

Value 

Business 

model 

Financial 

assets 

Service firm 

Customer 

experience 

People 

Intangible 

assets 

Value: 

innovation outcomes 

Management: 

innovation ability 

Resources: 

innovation capacity 

06.06.2012 23 Peder Inge Source: Furseth Cuthbertson, for EPISIS Furseth, June 5th Reynolds, 2012. 2011 Final 

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Layers of Innovation: Resources, management, value

The Service 

Innovation 

Triangle 

Questions for innovation 

- What are the plausible futures for your market sector? 

- Who are your future customers? 

- What do they want of their customer experience tomorrow? 

- How will you provide the necessary service operations? 

- How will you make the new business model create value for all? 

- How will you innovate to achieve success? 

- Do you have the required innovation capacity? 

- Do you have the required innovation ability? 

- Do you have an innovation process for creating new value? 


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•Thank you! 

• Oxford 11-12 October 2012 

• San Francisco 16-20 March 2013 

• Innovote.org 

@PIFurseth 

06.06.2012 25 


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May Starbucks Be Your Next Bank? - PRO INNO Europe

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