Optimizing service value creation with smart, connected products

Meierhofer, Jürg; Heitz, Christoph; Hannich, Frank

Publication type:	Conference paper
Type of review:	Peer review (abstract)
Title:	Optimizing service value creation with smart, connected products
Authors:	Meierhofer, Jürg Heitz, Christoph Hannich, Frank
et. al:	No
Proceedings:	Proceedings of the 2021 Naples Forum on Service
Editors of the parent work:	Gummesson, Evert Mele, Cristina Polese, Francesco
Conference details:	The 2021 Naples Forum on Service, a Service Lens on Changing Business and Society, Capri, Italy, 6-9 September 2021
Issue Date:	Sep-2021
Language:	English
Subjects:	Smart services; Smart connected products; Customer relationship lifecycle; Interaction modelling; Value creation
Subject (DDC):	658.5: Production management
Abstract:	Purpose: This paper describes a novel quantitative model for the design of the service interactions in the life cycle of customers using smart connected products – typically in industrial environments, i.e., in Industry 4.0 context – with the goal of optimizing mutual service value creation for both the customer and the provider. Design/Methodology/approach: The presented novel methodology is based on a quantitative system modelling of the mutual value creation both for the customer and the provider as a function of the provider’s effort to leverage the data of smart connected products, by focusing on the customer’s perceived value, on the one hand, and the provider’s value, on the other hand. The impact on value creation is modelled independently for the customer and the provider, respectively, within their specific value framework. For optimizing value creation, a multi-objective optimization approach is applied. Findings: The quantitative model considering the provider’s and customer’s benefits and efforts reflects that utilizing data resources of smart connected products impacts the mutual value creation in different ways: first, it impacts the customer’s value in context. Second, it impacts the value created for the provider by influencing the customer relationship with effects on, e.g., customer lifetime value, acquisition, retention, or new service development, and by influencing the costs for service provisioning. The model captures both sides of the value creation as a result of the design choices. Based on this, approaches from multi-objective optimization are used for optimizing the value created both for the customer and the provider, leading to a subset of Pareto-optimal designs. The application of the quantitative model to typical actor to actor interactions shows that they are mostly not Pareto-optimal and thus have improvement potential for increasing total value creation. Research limitations/implications: This conceptual model can (and should) be further validated and refined in practical business contexts. Possible extensions are discussed such as, e.g., a market model which relates the created customer value to market demand. Practical implications: The model presented in this paper provides a new framework which can be used by firms for designing optimized services and optimize their offering and adoption by customers across the customer relationship lifecycle. Originality/value: The innovation of this paper is the new approach quantitatively linking customer and product life cycle design choices to value creation.
Further description:	Best Paper : Service Science https://blog.zhaw.ch/digital-futures-lab/2021/11/25/smart-connected-products-jurg-meierhofer-and-team-win-best-paper-award/
URI:	https://naplesforumonservice.com/wp-content/uploads/2021/09/meierhofer-heitz-hannich-optimizing-service-value-creation.pdf https://digitalcollection.zhaw.ch/handle/11475/23091
Fulltext version:	Published version
License (according to publishing contract):	Licence according to publishing contract
Departement:	School of Engineering
Organisational Unit:	Institute of Data Analysis and Process Design (IDP)
Published as part of the ZHAW project:	Gestaltung der Interaktionen von Mensch und Maschine in autonomen digitalen Service Ecosystemen (sozio-technischen Systemen)
Appears in collections:	Publikationen School of Engineering

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Meierhofer, J., Heitz, C., & Hannich, F. (2021). Optimizing service value creation with smart, connected products [Conference paper]. In E. Gummesson, C. Mele, & F. Polese (Eds.), Proceedings of the 2021 Naples Forum on Service. https://naplesforumonservice.com/wp-content/uploads/2021/09/meierhofer-heitz-hannich-optimizing-service-value-creation.pdf

Meierhofer, J., Heitz, C. and Hannich, F. (2021) ‘Optimizing service value creation with smart, connected products’, in E. Gummesson, C. Mele, and F. Polese (eds) Proceedings of the 2021 Naples Forum on Service. Available at: https://naplesforumonservice.com/wp-content/uploads/2021/09/meierhofer-heitz-hannich-optimizing-service-value-creation.pdf.

J. Meierhofer, C. Heitz, and F. Hannich, “Optimizing service value creation with smart, connected products,” in Proceedings of the 2021 Naples Forum on Service, Sep. 2021. [Online]. Available: https://naplesforumonservice.com/wp-content/uploads/2021/09/meierhofer-heitz-hannich-optimizing-service-value-creation.pdf

MEIERHOFER, Jürg, Christoph HEITZ und Frank HANNICH, 2021. Optimizing service value creation with smart, connected products. In: Evert GUMMESSON, Cristina MELE und Francesco POLESE (Hrsg.), Proceedings of the 2021 Naples Forum on Service [online]. Conference paper. September 2021. Verfügbar unter: https://naplesforumonservice.com/wp-content/uploads/2021/09/meierhofer-heitz-hannich-optimizing-service-value-creation.pdf

Meierhofer, Jürg, Christoph Heitz, and Frank Hannich. 2021. “Optimizing Service Value Creation with Smart, Connected Products.” Conference paper. In Proceedings of the 2021 Naples Forum on Service, edited by Evert Gummesson, Cristina Mele, and Francesco Polese. https://naplesforumonservice.com/wp-content/uploads/2021/09/meierhofer-heitz-hannich-optimizing-service-value-creation.pdf.

Meierhofer, Jürg, et al. “Optimizing Service Value Creation with Smart, Connected Products.” Proceedings of the 2021 Naples Forum on Service, edited by Evert Gummesson et al., 2021, https://naplesforumonservice.com/wp-content/uploads/2021/09/meierhofer-heitz-hannich-optimizing-service-value-creation.pdf.