Customers_and_service_innovation

How to take costumers into consideration in service innovation projects Marianne Abramovici Laurence BancelCharensol

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How to Take Customers into Consideration in Service Innovation Projects MARIANNE ABRAMOVICI and LAURENCE BANCEL-CHARENSOL In industrialised services activities designed for customers, the success of the innovation depends on, besides the traditional factors used, the way the customer deals with the innovation, all the more so when the innovation introduced has modified the tasks conferred upon him in the service production process. In these conditions, how can the validation of innovation by the customer from concept definition to the implementation of the evaluation methods be integrated? This article first discusses theoretical works in project management to answer this question for service innovation projects. The basis for the analysis is a series of three case studies of French services firms. It underlines the diversity of solutions used by firms. This preliminary research makes two methodological points. First, it presents different ways of identifying the stages in which these problems can be solved. Second, it clarifies what should be validated at each stage, and which factors determine the methods and the necessary resources to carry them through.

INTRODUCTION

Service and industrial innovations can have an impact on the entire management systems of the organisation (information system, human resources management, marketing, etc.). In this regard, several authors have studied various aspects of innovation which can impact on service production systems (technological innovation, organisational, innovation in service delivery, product/process innovation, etc.), as well as their characteristics and their impact on the firm and the customers [Flipo, 2001; Barcet, Bonamy, 1999; Gallouj and Weinstein, 1997].

Marianne Abramovici and Laurence Bancel-Charensol, Business Management, GREGESE/PRISM/OEP, Marne-La-Vallée University, Marne-La-Vallée, France.

The Service Industries Journal, Vol.24, No.1 (January 2004), pp.56 78 PUBLISHED BY FRANK CASS, LONDON

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However, service innovation also raises the issue of its methods of development and implementation. The latter stems from two particularities of service activity in relation to the customer [Eiglier and Langeard, 1987].

Service consumption by one customer implies the existence, at a particular moment, of a production process workflow, a direct contact between the firm and the person providing the service and the customer. At the same time as this contact takes place, other customers are usually present in the production system.

Furthermore, the customer participates in the production process, either because he is himself subject to transformations stemming from the production system (customer as target), or because he participates in the execution of certain tasks (customer used as production system resource).

His willingness is thus necessary to provide an efficient and cost-effective service but also creates uncertainty [Bancel-Charensol and Jougleux, 1997].

Particularities in service production, as opposed to industrial production, are even more obvious when we consider services designed for a large number of customers, in a continuous and recurrent manner, in production systems which derive their added value mainly from the front office.

As soon as an innovation transforms the front office production process, it is likely to modify how the customer is involved. In this case, the success of innovation depends on, besides the traditional factors, the way the customer deals with the innovation.

The conditions for implementing an innovation project appear to be particularly fragile in cases where the customer is used as a resource in the production system [Bancel-Charensol, 1999]. Indeed, when the customer is approached as such, the firm must be capable of training and guiding the customers participation. When the customer is used as a resource, he can be considered as a partial employee of the firm [Mills and Morris, 1986; Bowen, 1986]. However, the customer is not subject to the employee subordination rules.

Therefore, the risks involved in co-production of service innovation do not depend solely on the impact of the innovation or on the quality of service delivery to the customer.1 Indeed, by being a participant, the customer also evaluates the quality of the interaction with the front office elements. R. Normann [1994] refers to the moment of truth to designate the moment when the customer and the service provider are face to face.

Hence, the success of the innovation depends on, among other things, the impact of the transformation process on the customer, all the more so when the innovation introduced has modified the tasks conferred upon him. The question is not only whether or not the customer is capable of freeing himself from these new tasks (does the customer have sufficient knowledge and competence to know, understand and assume the role assigned to him

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by the firm?), but whether he can follow directions, whether he wants to participate and how can he can be taught to accomplish new tasks.

This phenomenon has repercussions on the way the customer views the different stages of the innovation project. It is necessary to evaluate his expectations or to verify the ergonomics of the product during the various phases of the test. Besides, it is important to think about the design of the production system in the front office from the customerÂ’s perspective and to anticipate the firmÂ’s external communications and the customersÂ’ training methods, which can help them to accept the innovation.

The risk is high because entire sectors of the service economy (whether they are connected to services only or to services related to goods) are faced with tough competition. Whether the financial profitability of the activities is based on cost price management and/or differentiating various qualities of service, the success of an innovation project as planned is what matters the most. This phenomenon is even more obvious with the accelerated development of automation and the rationalisation of production processes in the front office which are now available thanks to progress made in data transportation, processing and compilation.

In these conditions, how can the resource-customer be integrated at the various stages of an innovation project? How can the validation of innovation by the customer from concept definition to the implementation of the evaluation methods be integrated? How, when necessary, can the customer be taught to accomplish new tasks? How can one strike a balance between customer adaptation to an innovation and innovation modification while taking the difficulty of customer learning into consideration? It seems important to address these issues upstream and to integrate them in the organisation of the innovation project.

Here, we are interested in service activities on stabilised, finished and normalised products, which the customer chooses (or not) to purchase as such. Service options exist, but in a closed range of solutions, and they are defined in ex ante describable forms. As mentioned above, the problem of taking the customer into consideration in the innovation process appears to be specific to industrialised services designed for final customers. It is indeed in this case that the service requirements are usually characterised by the massive, permanent and recurrent presence of customers. Thus, it is in this situation that service providers are more particularly faced with the problem of how to reproduce the service result throughout time. This is especially true with highly intangible services.

Keeping the service results homogeneous from one customer to another with a similar result for a given segment is another issue. It is also under these circumstances that firms have most difficulty directing service delivery toward customers who are simultaneously present in the

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production system, while mastering the impact of the interaction among these customers on the quality of service. It is for that reason that this empirical research is focused on production innovations as defined by Barcet, Bonamy and Mayère [1987], who mostly focus on mass industrialised services. As Everaere [1997] indicates, innovation in these types of services is thus identifiable as ex ante. It represents the breaking of a rigid mode of service. Its development can become a structured form of project2 which can be compared to the processes of innovation in the industry.

Explaining the way the resource-customer must be taken into consideration in services provided to final customers, in service innovation projects, leads us first to examine the benefits and limits of work referenced to date in management research on service innovation projects. At this stage, the risks of an experimentation phase centred on the customer and the difficulties of its implementation will be examined. Second, we will continue with an exploratory study based on three examples of service innovation projects (Formule 1, Navigo, Cab X). The method for taking the customers into consideration during these projects helps to underline the diversity of solutions used by firms in the three cases studied. This preliminary research leads us to present different ways of identifying the stages in which these problems can be solved. It clarifies what should be validated at each stage, and which factors determine the conditions for expending the necessary resources to carry them through.

N O R M AT I V E P R O J E C T M A N A G E M E N T M O D E L G U I D E L I N E S

Many models attempt to describe the progress of an innovation project as a succession of clearly identified stages, the end point of which represents a milestone for the project. The number of stages can vary a great deal according to whether the model tends to be normative or descriptive. In this study, we rely on a four-step model3 resulting from research on industrial innovation projects. Its advantage is that it helps to locate the majority of other models under study while being extremely generic. The process begins with a needs identification phase (including a customer needs analysis), a needs interpretation phase (including the research of concepts or ideas), a development phase or product definition and a product validation phase which helps to decide whether the new product should be industrialised or commercialised. As mentioned by Lovelock and Lapert [1999: 216], if we compare the chronology of this model with the one proposed by Booz Allen Hamilton, and later adapted by Jallat4 [1992, 1994] in his works on services innovation, most phases (generation of ideas, development test) are common to goods and services.5

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As a first approach, we can assume that the customers will be taken into consideration mostly during the needs identification phase and the product validation phase.

Taking the Customer into Consideration in a Project Upstream: A Crucial but Fragile Behaviour Pattern Taking customers into consideration in the development of innovation projects is essential for the evolution of project management. It is the basis for distinguishing between the project customer, future owner of the project result, and the project manager, the entrepreneur who is responsible for developing the project for the customer. The task book is a document which specifies the information necessary for the project manager to accomplish the project according to his customer s expectations. It is a key document, the basis for the formal agreement between those two key players. Indeed, it plays a doubly protective role: it is a guarantee for the project customer that the project will correspond to his request and for the project manager that this initial request has remain unchanged [Charue-Duboc, 1997].

The customer at the heart of this relationship is clearly identified, whether he is a private or a public entity. The customer/provider relationship, as described in this model, corresponds essentially to a B-to-B relationship. The model cannot be applied directly by analysing the relationship between a firm developing a product (goods or a new service) to satisfy final customers and those customers. When a product is developed for a large number of heterogeneous customers, this model does not work.6 In particular, it is based on the dogma of the customer s need [Chanchevrier, 1997]. This dogma assumes that it is possible to clearly identify which customer needs will be able to be satisfied by the innovation being proposed. The idea that it is possible to identify and explain the needs of future customers creates a virtual relationship between the representative customer, the future beneficiary of the innovation being developed and the firm responsible for developing the innovation.

Thus, the theoretical development of an innovation project begins with the definition or identification of the needs. It uses the results of the customers expectations marketing research, sometimes by placing a hierarchy on these expectations through value analyses.

However, as underlined by Chanchevrier [1997], among others, the identification of customer needs raises several difficulties. Expectations under study are not only a reflection of purchasing decisions but also of how the user values a particular product during his life cycle (which includes indirect uses). Two main questions arise.

First, with regard to an innovative product, this step should not only take into consideration the customer s expectations of a particular result

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but also the expectations of the conditions for developing the benefit provided by this service. Langeard and Eiglier [1994] show that service performance is equally based on the final performance of the service (result) and on the experience of the customer (service delivery). This implies that the customer s experience derived from the service must comply with his expectations [Langeard and Eiglier, 1994]. To solve this problem, the firm would need to be able to evaluate, at this stage, the skills the customers are willing to mobilise in the production of service. This is independent of the conditions in which they will be asked to mobilise them (service characteristics as a whole7 are not yet defined at that stage of the project).

Furthermore, when we take a look at the expected results for the product, the way the customer perceives its value depends on the timeframe under consideration. Customer expectations are thus determined differently whether the service is short term or long term, i.e. immediate service or service result [Gadrey, 1991].

Thus, in order to be valid, the task book is based on the assumption that it is possible to reduce customer diversity in order to associate a targeted segment with clearly identified expectations. Grönross [1984] stresses that this operation is often difficult, especially when it concerns services aimed at mass consumption. Besides, it is based on the idea that customer needs pre-exist the innovation, which will help to satisfy them, and that the firm will be able to clarify them. Finally, these needs are supposed to be stable at least for the duration of the development and commercialisation of the new service.

It is only when all these conditions are met that the identification of the customer s needs can help compile a task book. However, we will note that a number of tools used to analyse quality of service can be mobilised usefully at this stage of the project to help specify the new service characteristics and to design the service delivery system. For example, it concerns quality of service evaluation criteria as developed by Zeithaml, Parasuraman and Berry [1990], or process representation techniques such as logigrams and blueprints [Shostack, 1992].

If the need identification stage is considered as crucial in project management, it appears as a fragile structure in service innovation. So much so that, in considering innovation projects, some authors [Callon, 1999; Gallouj and Gallouj, 1996] favour a direct integration of the customer in all stages of the project development process rather than intermediation made possible by the task book. This recommendation is well adapted to a one-toone relationship and is particularly relevant in the case of B-to-B service innovations. What shape can such integration in the process take when we consider innovations in massive industrialised services?

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T H E VA L I D AT I O N S TA G E : B R O A D E R O B J E C T I V E S

In the classic development of an innovation project, the validation stage is one that follows the conception of goods. Its goal is to validate the chosen technical options through the construction of a prototype.8 Its goal is to respond to the latent needs of the customers by presenting it to future users.

This stage is crucial in project development because it will result in the decision to stop the project, re-develop it or produce the product.

However, the number, type and timing of customer validation tests can vary from one project to another. During the development of new food products, we can ask a customer panel to test a very complete prototype (including a package and a specific message). The test represents the last development stage by placing future consumers in conditions extremely close to future commercialisation conditions. By contrast, more and more software developments integrate future users in the early stages of product development, increasing the number of tests on specific functions of the program [McConnell, 1996]. Therefore, the final user takes part in the entire development of the product.

As underlined by Thomke and Bell [2001], the use of tests during the project depends on the degree of uncertainty surrounding the project, the cost of the test (model, testing conditions, etc.), and the cost of a late redevelopment. More precisely, the project manager must strike a balance between the additional costs of earlier testing and the value of information that early testing can provide.

However, the cost of the test depends largely on the model chosen to reproduce the characteristics of the future product. Considering goods, the model can be, among other possibilities, one of a kind (prototype), a test model or a virtual simulation. Each one of these solutions implies specific costs and results. Indeed, in general, one considers that the more closely a test reproduces the characteristics and conditions of use of the future product, the more lessons can be drawn from the test. Thomke and Bell underline that the reliability of a test with customers is based on the characteristics of the model shown to customers during testing, as well as on the conditions of reproduction of the real use environment of these goods. These parameters will come into play during testing, at a more or less early stage, involving the customer s participation in project development.

Test conception is thus a complex activity, which requires definition of the characteristics of the model, the test environment, the conditions for experimentation, their timing, and which are most likely, in one or several ways, to respond to one or more facets of validation of the product by the customer.

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The validation stage with the customers, while it is not so systematic in the conception of new services [Jallat, 1992], is equally considered as a crucial step. But the intangibility, the inseparability of production/consumption and the co-production of services necessarily modify the outcome of the experimentation.

The intangible nature of services raises the issue of the type of models which can be used during experimentation. There appear to be extremely diverse situations. In a number of cases, the innovation of a service is based on development or use of a technology (automatic tellers, web sites, etc.), the characteristics of which will have to be necessarily reproduced. The notion of model is thus no different from that of the development of goods.

In other cases where innovation concerns a highly intangible service (new training offer, new placement offer), the model must describe the main characteristics of the future service so that the customer can have an accurate representation (scenario, training kit). In this case, we may assume that the cost of developing the model is significantly reduced.

Simultaneous production/consumption requires testing the service as a result and as a service delivery. It differentiates between the characteristics of the model and the characteristics of the test environment. More precisely, the model used in the validation phase of a service may include the characteristics of the service delivery system. Thus, it can duplicate part of the production process, especially the provider customer interface. This can create a preference for a prototype, which reproduces the life-size characteristics of the service being developed. This is the option that Accor chose in the development of Formule 1. The implementation of the service validation stage being developed led to the opening of the first Accor budget hotel in France [Bourgeois and Jallat, 1994]. The test, which must be placed near the end of any development process, has thus the characteristics of a killer test [Reinersten, 1997]. Regardless of the option used, the simulation of the test environment will condition the nature of the risks taken by the firm: dropping the project in its final stage (killer test) or damaging the corporate image in the case of premature experimentation.

Furthermore, with the presence of the customer while the service is being provided, front office personnel play a prominent role in the success or failure of the innovation. Indeed, contact personnel often serve as an intermediary between the customer and the innovation. It is also the front office personnel who will eventually train the customer with the new service script [Solomon et al., 1985] which requires first that the innovation process be accepted by the contact personnel [Jallat, 1992] and second that personnel be trained in the innovation process before testing.

Co-production also requires being in a position to test the conditions for customer participation, which include his ability to become aware of his

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participation and his support. Reproducing real conditions during the customer validation tests is insufficient. It is also necessary to have the test customers play their role, which should include a clear explanation of any modification in the process, and if need be, customer training.

Thus, the customer s validation of the service innovation appears to be more complex than the validation of goods innovation because it requires responses on four distinct elements:

the customers recognition of an added value produced by the service innovation; the customers participation in the consequences of the innovation for their participation in the service and for the conditions of their interaction with other customers who are simultaneously present in the production system; the customers ability to participate in the desired conditions; the customers communication and training conditions.

In order to include all of these elements, Scheuing and Johnson proposed a model for developing new products in services which integrates six distinct testing phases, in the following order: concept test; service test (which requires users and front office personnel); process and system test (requiring front office personnel exclusively); marketing programme test; mock trial and marketing test. The last three tests systematically require user participation [Gallouj and Gallouj, 1996]. The choice to increase the number of tests helps to take into consideration, in a successive and independent manner, all of the issues raised by a service innovation:

the customers recognition of an added value produced by the innovation (concept testing); the customers ability to participate in a controlled environment and to accept the consequences of the innovation for their participation ( service test ) integrating customer participation in the production process; marketing tests; the customers ability, in life-like conditions, to participate in and to accept the consequences of the innovation (mock trial).

If this model takes into consideration the customer as a resource for the project, which must be integrated in the conception phase of the new product, one can wonder whether it is realistic and whether it can be extended. Furthermore, it does not bring any answers concerning the characteristics of the models shown to test customers, the conditions and

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their recruiting mode. Finally, it does not address the precautions which should be adopted while conducting these tests.

The industrial development models help to clarify the distribution of roles among the various actors, the theoretical development of a project, and the role and the risks of testing. Yet they do not integrate the specific elements of production innovation in services. The service model study helped us to pinpoint uncertainties specific to services by linking them to their own characteristics. These works show that the production process must be tested from the customer s viewpoint. They recommend that front office personnel and customers be trained. However, the practical way of taking the customers into consideration during the production of service innovation projects remains.

T E A C H I N G S D R AW N F R O M C O R P O R AT E P R A C T I C E S

The difficulties underlined above bring us to the issue of the way some service providers conduct their service innovation projects. In this article, we examine three main projets: The creation of the product Hôtels Formule 1 by the French group Accor, and two projects developed by the RATP, the public urban transportation authority in Paris (Cab X and Navigo).9 Cab X is an automation project designed to clean subway stations. It was developed in 1982 1983 but was never carried through. Navigo is a development project of a magnetic card for public transportation in the Paris area. Introduced at the end of the 1980s, its development started in 1998 as part of a formal project structure and the installation of tollbooths began in 2002.

Both firms offer individual services: urban public transportation and inexpensive lodging. Those services are industrialised services for a large public, produced by a Flow Shop type of production system. The system is characterised by short-term cycles, a standard product and a high production volume [Fitzimmons and Sullivan, 1982]. In these systems, cost management is very important. Production activities are thus standardised.

Although the employees providing the service have minimal contact with personnel, customer participation is high due to his indispensable presence within the infrastructures (transportation or hotel infrastructure). Part of the value of service to the customer is dependent upon the interaction with the service equipment and with the other customers who are simultaneously present in the delivery system. We can then identify these organisations as mass service as meant by Dumoulin and Vignon [1991].

The three cases presented above are production innovations. They are part of cost management and productivity gains plans and of the industrialisation10 of services. However, the contexts which led to the

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implementation of these projects varied. The Formule 1 case deals with reducing the infrastructure and production costs of hotel services to respond to the demand identified in the budget hotel market (a room for less than 100 francs in 1985). By contrast, with the two RATP projects, what prompted the innovations was not the market but technical requirements: they were linked to the necessity of rapidly renewing the magnetic tolls which give network access, in the case of Navigo, and to the desire of conducting research for the purpose of automating the cleaning process in subway stations, in the case of Cab X. Thus, the Formule 1 project is mainly a marketing management project, whereas Navigo is managed by the RATP Project Department, and Cab X is an R&D project.

In the three cases, the innovation modified the customer s participation in the production process. The innovation characteristics and their context led managers to make distinct choices in conducting the projects. After examining approaches used to take the customers needs into consideration in the task book, we will analyse the test methods used.

Incomplete Customer Needs Assessment in the Project Task Book One of our hypotheses is that the context which leads to the implementation of an innovation project serves to structure the identification of needs.

Indeed, in the Formule 1 case, what prompted the innovation was the existence of a potential market. Accor s marketing department was in charge of evaluating customer expectations. In a standard way, a qualitative study was conducted first to identify customer expectations in terms of price, and second, in terms of service content for a previously determined reference price. What distinguishes this project from a traditional industrial project is the necessity to take into consideration in the task book all of the repercussions of customers expectations on front office design, under production cost restrictions derived from the reference price. The needs, in terms of use, must then be satisfied according to methods compatible with restrictions imposed by the use of the customer as a resource, the simultaneous presence of several customers in the production system and expectations concerning the quality of the interaction with the front office. Thus, the wish to have a very clean, sound-proof room with a comfortable bed could be offered along with common baths (which would help to reduce production cost). However, customer participation required taking into consideration the attitudes of other customers sharing the facilities and, for instance, their impact on the cleanliness of the bathroom.

Therefore, obtaining the customer s validation of this solution on the basis of the concept alone is generally not sufficient.

As for the two RATP projects, the need for innovation did not stem from the pre-existing demand of customers but from the search for productivity gains. However, both task books integrated the customers needs.

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In the Navigo case, since the innovation modified the functions of ticket payment and network access, the problem of customer as resource arose.

During the project, a collective document was used as a task book. In particular, this document integrated the role of the customer through a number of restrictions, taking into consideration the resource customer as an individual, with his own of knowledge and behaviour. In particular, it included:

functional restrictions: the ability to read and write without direct contact, fast information transmission corresponding to a pedestrian toll booth; ergonomic restrictions: the ability to perform a transaction with the help of user-friendly ergonomic equipment; technical restrictions (weight, card autonomy, etc.).

The customer who is taken into consideration is not an isolated individual. He is a pedestrian immersed in a crowded environment. This characteristic of urban transportation is integrated in the task book under the form of a double restriction: a maximum rapidity of passage (with the shortest possible contact) and safety (the transaction must be reliable and only accept one commuter at a time).

The final validation of this reference document from the customer s viewpoint was conducted by a committee of users and by the project customer.

The Cab X case presents a paradoxical situation for our research problem. In fact, the cleaning robot was to function in commuter zones during opening hours and thus in the presence of passengers. However, for project members, the presence of the robot was not supposed to modify the customer s perception11 of their participation in service delivery. This case is interesting in the sense that it constitutes one a contrario example of the manner in which the customer must be taken into consideration during the project (so that the innovation may not compel his participation in service delivery). The impact of this innovation on the clientele has thus been anticipated through highly restrictive safety constraints, which were integrated in the task book and which were supposed to prevent the robot, whether moving or not, from colliding with commuters. However, the impact the presence of a cleaning robot could have on a moving crowd, whose behaviour could not be reacted to, was not anticipated in the task book. This lack weighed heavily on the timing and on the profitability of the project.

The example of the two RATP projects shows that even in the absence of initial demand from clientele as a factor for innovation, taking into

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consideration customers needs and the constraints induced by their participation in the production process can facilitate customer approval of the innovation. It also brings us to consider the conditions under which customers will perceive innovation as an improvement. Hence, it helps the firm to increase the perceived quality of the future service. In the case of mass services, the firm has, at this step, to take into consideration the needs of all the various customers for the service.

Hence, whether the innovation belongs to demand pull or science push types , the needs and expectations of future customers were integrated in the first stages of these three projects in a form close to that of a task book. However, the latter did not necessarily incorporate a clear description of the innovation for customer s participation in the production process.

Therefore, it was an incomplete description of customer demand.

Considering the difficulty of taking into account all the uncertainties generated by the presence of the customer in the production process, the needs identification phase does not seem to be able to fully play its role in the development of new services. Thus, in the Formule 1 case, the consequences for the perceived quality of service of new concomitant relationships among hotel guests [Eiglier, Langeard, 1987] of the front office changes were not taken into consideration. In the Cab X project, consideration of robot customer interaction was reduced to safety restrictions (stability, visibility, etc.), which did not help to define pertinent strategies as to how to make the robot avoid commuters (avoidance strategies). As for Navigo, elements relating to external communication on service innovation and customer training methods were not introduced during need analysis.

We should also note that no customer participation in the concept test was planned in these three projects. Hypothetically, in services, the realisation of a concept test requires overcoming the difficulty of providing, at this stage, an accurate representation of the service which reflects that provided by a functional description of goods.

We can then suppose that the product validation phase will serve to compensate for all these difficulties.

Diversity of the Testing Phase Methods The three projects adopted customer-test methods, which are relatively different.

Upon launching Formule 1, a real life size test was developed. In fact, it was a meta-test, which covered several simultaneous experiment on the appearance of various products. This strategy, which can be termed a big killer test [Reinersten, 1997], is justified both in terms of cost and duration: This prototype development option obliged us to conceptualise our project.

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As a result, we are one year ahead. Otherwise, we would have had to conduct studies and then try to interpret them [Bourgeois and Jallat, 1994].

This model, which was adopted, is a prototype because the test consisted of building two hotels in areas which corresponded to the targeted segments under consideration (business and budget tourism) and in opening them.

Real customers corresponding to the two targets which were initially under consideration tested the prototypes. No distinction was then possible between the recognition by the customers of the added value brought by the innovation, their ability and their willingness to adapt to changes in the production process and the communication and customers training methods. The testing phase lasted one year and helped to analyse reactions from both types of clientele. Following several adaptations , it helped to extend the formula.

Only one customer test was conducted during the development of the Cab X cleaning robot, but for very different reasons. In particular, this innovation raised the problems of the impact a moving robot could have on a moving crowd which could not have been anticipated in the task book.

Several prototypes of cleaning robot were thus developed and tested under real conditions for almost ten years. This long testing period can be explained by the radical nature of the innovation and the high number of uncertainties it raised; in particular, strategies to avoid the robot, its external aspect and customers approval in the principle of automation of cleaning tasks. However, strategies of avoidance and external appearance of the robot were not validated until after several attempts. First, they were supposed to be adapted to a public with high expectations and second, to commuters belonging to all segments of the population with heterogeneous needs, in particular, children (who as soon as they realise the robot is automated test its reactions playfully, for example by having the robot carry their school bags along the platform) and disabled people who are not sensitive to the same alert signals.

This test is original in that it did not use a selection of test groups. Only the test sites and time slots were monitored. The robots were then placed in the presence of non specific commuters who were unaware of the project.

This choice is coherent with the goal of making this innovation invisible to the customers for the duration of the development phase. However, this device raised several problems concerning the analysis of passengers behaviour because it was impossible to question them after the fact about their reaction. At first, the project members filmed commuters reactions to the robot with a shoulder camera but they realised that this disposition affected the test by making it visible to the customers. Therefore, they chose to install the camera on the robot. It is that particular device, which itself represents another innovation,12 which was finally adopted.

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By contrast, during the development process of the Navigo Pass, customer tests increased. These methods present two major characteristics: strong personnel involvement during the first phases of the test (the personnel are placed in customer conditions and validate the first characteristics of the pass) and an important number of customer trials throughout service development:

1992:13 Technical feasibility test in laboratory. 100 RATP maintenance employees participate in this test to verify that the pass corresponded to the functional specifications required in a controlled environment.

1993: Test in a real context with RATP operations agents. The experiment took place in a real context (subway line 11) with 900 operations agents. It involved using station access gate openers (which were only equipped with the new system) and at checkpoints (some of which were equipped with the new system). The operations agents were thus obliged to use the pass to open the gates whereas they had the choice of using it or not at checkpoints. This test aimed, among other things at validating the concept of a pass with no commuter contact.

1994: Two customer tests took place. The first one served to verify the reliability of the pass in a crowded environment. In order to do this, 200 checkpoints were installed at the entrance of the RATP administrative building and 2,000 agents participated in this experiment in a controlled environment. The second test, done in a controlled environment, served to take into consideration the various modes of urban public transportation in Paris area as well as the payment function. 4,000 RATP administrative agents who played the role of commuters conducted the test using fictitious money and booths. Thus, it was the use of the pass as well as the fare payment method which were tested. The commuters were systematically debriefed upon their return.

1997: 40,000 operations agents used Navigo (the system is thus extended internally). 1,000 real customers tested Navigo in a life-like situation. An independent survey institute (IFOP) recruited a representative sample of regular commuters.14 The customers had to travel within a given area because they could only access two network gates. The booth agents involved in the experiment were trained for two days (where the project was being developed). In fact, testing, which was initially supposed to take six months, took a year and a half to complete.

During this experiment, an original testing device was put in place to analyse the behaviour of booth agents in relation to customers. Professional actors were hired to play the role of Navigo customers and artificially produce

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challenging situations so as to observe the behaviour of booth agents in a large panel of life-like situations [Mémeteau and Soulard, 2000].

1999: Two life-size experiments were simultaneously put in place in order to test two distinct payment scenarios. They were conducted by two key players in public transportation in the Paris region (SNCF, RATP) and monitored by the Syndicat des Transport Publics Franciliens (STIF). They were involved more than 2,000 commuters and 50 subway stations for over a six-month period and were monitored by the independent survey institute responsible for interviewing and observing commuters. This experiment was to intended to help to choose a payment scenario to extend the magnetic pass to non-subscribing commuters. Its aim was also to help transferring commuters use the magnetic pass. In the end, although the experiment results helped to show the commuters preferred scenario, the project members picked the other test scenario in order to minimise cost, delays and fraud.

Finally, more precise local experiments were conducted during that period. Such was the case, for example, with experiments done with disabled commuters between 1997 and 1999. Another focused exclusively on the behaviour of commuters who obtained their magnetic passes on buses. Due to problems of technical reliability and fluidity constraints, the introduction of the pass made it necessary for customers to validate their ticket on entering and exiting a bus, which was a constraint for them. The issue of extended entry validation has not been resolved because bus conductors decline any responsibility for inspecting the validation process.

Although this goal does not seem to have been consciously studied by the project members, it appears that the mobilisation of personnel during testing played an internal marketing role [Berry, 1983]. This helped to validate the internal customers approval of the innovation, while preparing them to train external customers.

The increasing number of tests involving various users (internal/external, subscribers/non-subscribers) seems to have helped validate the main characteristics of the magnetic pass (by the customer and the operations agents). However, the generalisation of the magnetic pass to annual fare subscribers, which started in 2001, revealed the difficulty in training future users of the booths. According to one of the members of the project team, it is the mode of acquisition of the pass and its result which explain this difference. Indeed, during the experiment, individuals had to go get their magnetic pass. It was a good opportunity to present the booths to them, show how to use them and answer any questions they had. During the generalisation phase, the pass was sent to customers.

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In these three service innovation projects, the customer-test phase plays an essential role. But the way it turns out and the objectives it helps to achieve vary tremendously from one project to another.

Thus, we can observe the models used to challenge the customers of future services. When they essentially come as prototypes, their level of development differs. This is especially true with the types of service they reproduce: with respect to Formule 1, a prototype which corresponds to a real environment; with respect to Cab X, prototypes which are modified throughout the learning process but evolve in a real environment; with respect to Navigo, prototypes which slowly integrate all of the functions of the pass but are first tested in an artificially created environment before they are progressively tested in a real environment.

Also, the number of tests and their timing differed from one project to another. As mentioned above, Formule 1 conducted only one test which was to help to validate the project as a whole at the end of the conception phase.

The duration of this phase can be estimated at one year. The test ended with the decision to extend the service. Although it is difficult to differentiate the phases of the tests with respect to Cab X, the test, which lasted over ten years, fully contributed to the development phase. The prototype, which was tested, was modified almost constantly in order to integrate what had been learned in terms of avoidance strategies, safety devices aimed at the public and the final design of the robot. On the other hand, the Navigo project was characterised by a large number of different tests which were integrated in the project upstream and continued throughout its development.

Finally, there appear to be two opposing types of reasoning governing the choice of user tests in these different cases: representative reasoning and experimental reasoning. •

•

Representative reasoning consists of placing the prototype in front of users who are representative of the future targeted customers. This strategy is particularly clear in the Formule 1 case where the location of the hotel prototype was chosen based on the types of targeted segments: business clientele and budget tourists.

By contrast, experimental reasoning consists of researching guinea pig users, who are more easily observable and controllable, to validate the basic functions of the product being developed. Thus, in the Navigo project, experiments were first conducted with internal users (operations agents) and with a controlled proportion of real customers before being extended to a loyal and captive clientele (the users of the annual Carte intĂŠgrale).

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These two opposing strategies help to achieve different objectives.

Indeed, the representative strategy appears to be coherent with the decision to test a particular prototype which is very complete in a real use environment. It is about maximising test accuracy, regardless of cost. In fact, the presence of real customers helps to achieve direct interpretation of test results. It is the killer test reasoning. In other words, the costs and risks of the test are accepted and help provide the project managers in a short period with a definite answer on the profitability of the solution being developed. However, this solution presents risks. In order to develop a service, the risks in terms of image are important, since in the case of failure, customers can report their negative experience not only with other product models created by the firm but more generally with the production process of the firm. Furthermore, whereas the test helps to verify customer recognition of added value, approval for the consequences of the innovation on their participation and their ability to realise these tasks and finally the performance of the communication and training methods, it does not help to differentiate the lessons learned on these different problems. Thus, it is not helpful in detecting possible obstacles to the development or the generalisation of this new service. The financial risk remains low for a group like Accor. Especially within the context of integrated hotel chains, the Formule 1 example should not hide the ability to recycle the hotels and other hotel formulas in that category in case the project is not validated during the meta-test.

By contrast, the experimental strategy seeks to limit the risks of a test for the firm, even if it means increasing development delays and costs. Hence, the first devices used to test Navigo are invisible to the customers despite their being the first target of this innovation. One of the strong points of this strategy is to ensure support from front office personnel and to train them through experience. One day, those front office personnel will be in a position to train customers. The decision to choose employees as a test population implies that personnel (whether for personal use or external customer contact) are representative of the customers expectations. Besides the internal customers recognition of the benefits of this device, this strategy is consistent with limiting risks pertaining to image and keeping the project confidential. However, we can have reservations on the representative nature of these customers and on the reliability of the tests.

Indeed, as long as they neither have the same knowledge15 nor the same competence as external customers, and the fact that the consequences of the innovation on their professional role can influence their judgement, front office personnel probably do not react the same as external customers with regard to the innovation. Finally, it is not representative of the diversity of real customers.

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Moreover, as opposed to the representative strategy, the experimental strategy helps to differentiate validation feasibility (testing the customers ability), the support, communications and training methods of the customers.16 However, in the end, it is not clear whether the external customers recognition of the innovation s added value has been tested. This issue became crucial throughout the integration of new functions of the Navigo Pass, especially in regard to the firm s ability to use the gathered data to propose special offers to its customers.17 Thus, we can wonder whether increasing the number of test stages has not also contributed to a failure to address the issue of the customer s overall support for this innovation.

More generally, we can wonder whether the issues surrounding service production and innovation do not modify the role of tests in the development process. This exploratory study has shown that as long as the device chosen is slightly visible to the customers the customer tests could contribute to the development phase of the project, thus helping to overcome uncertainties generated by the presence of customers in the development process. Moreover, testing devices involving employees play a role in training customers, whether in their future role once the innovation is put into place (cf. the maintenance agents in Cab X) or their role as customer trainers at the time of generalisation (cf. the case of front office personnel in Navigo). Therefore, tests also play an internal role within the firm, especially by making the project visible to the internal role players as soon as the experiment goes beyond the walls within which the project team works and by pushing for its support or its rejection.

CONCLUSION AND DISCUSSION

Starting from the particular role of the customer in services, we wished to understand how monitoring the production process management of customers in mass industrialised services could be integrated in the development of an innovation project.

We have shown that this issue can be divided in four distinct elements (recognition of an added value by the customers, desire and ability to participate, training methods and external communication). These are necessary for the customer s adoption of the innovation.

Examination of the literature raised the difficulty of resolving these issues during the single identification of needs phase. We then proposed that these issues are better resolved during the customer experimentation phases.

It was therefore important to explore the notion of test in order to understand the specific risks of this stage in service innovation projects.

The second part helped to underline the importance of the problem concerning the types of models used during testing, the methods of

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reproduction of the environment of service delivery, the timing of these tests and the identity of the customers being tested. The interdependency of these problems makes the conception of the experimental phase particularly sensitive.

The analysis of three projects helped to confirm the preponderance of the customerÂ’s experimental phase in making the project a success, taking into consideration the problems encountered upstream. It also underlined the diversity of experimental approaches which are adopted by project managers.

However, the strategies that were kept appear to be consistent with the restrictions imposed by the conditions of service production and the context for implementing the project. In regard to the Formule 1 project, the priority given to a short development period and the financial stability of the Accor group justified the decision to develop a complete prototype for implementing a killer test of a hotel structure.

By contrast, the decision to drop the cleaning automation project is linked to the absence of a strategy which is clearly based on priorities: the wish to develop a ‘Swiss army knife’ robot seemed, during the project, to be clearly incompatible with goals of costs management of the development. The maintenance of the project within a research and development unit, which was disconnected from the strategic priorities of the firm, partly explains this situation.

The development of the Navigo Pass responded to a technical need, the necessity to renew magnetic tollbooths by 2007. It pushed the firm to adopt a new technology which has to be adopted by all of the service users, or several million customers having various relationships with the firm (subscribers, regulars and occasional users). This restriction justified the increased number of tests and partly explains extending the duration of the project.

In the end, it is unlikely that experimental methods in the implementation of service innovation projects could become a normative model. However, this study shows the importance of a test strategy which is consistent with the conditions of project development. The diversity of the models could then result from a risk/fidelity/cost balance which is consistent with the organisation of the project.

More generally, this preliminary work serves the hypothesis that taking into consideration four elements contributing to adoption by customers is a success factor in innovation services. The latter must be taken into consideration as much as those that were already identified. It also helps to underline the interest of the role played by the tests for personnel, especially front office personnel.

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T H E S E RV I C E I N D U S T R I E S J O U R N A L ACKNOWLEDGEMENTS

A preliminary version of this article was presented in September 2002 at the Twelfth International Conference of the RESER (Manchester, UK). The authors wish to thank the RESER members and the participants of the PRISM/OEP seminar, especially Amina Becheur and Faiz Gallouj, for their comments and suggestions which have helped to clarify their ideas and to make corrections to their text.

NOTES 1. The definition of service that we use here is that of Jean-Claude Delaunay and Jean Gadrey [1987]. However, we make a distinction, without neglecting the ambiguities surrounding the notion of product in services [Gadrey, 1991], to distinguish service, as a product offered on the market and result of the interaction of the different elements of the system of production and service as a process which includes all of the production operations necessary to obtain the service. Keeping this in mind, by service delivery we mean part of the production process which takes place in the presence of the customer.

2. Meaning an officially recognised specific approach in the firm which helps to methodically and progressively structure a future reality [Giard, 1991: 7].

3. This model, proposed by Aoussat [1990], among others, is today used as a reference in most research works.

4. In this model, the innovation process goes through five phases before it is commercialised: generation of ideas, filtering of ideas, commercial analysis, development, tests and commercialisation [Jallat, 1992].

5. It is important to underline the model proposed by Aoussat which corresponds to a demand pull approach, since the starting point of the project is the existence of a commercial opportunity [Gallouj, 1994].

6. Here we find the distinction between a project with a controlled cost and a project with a controlled profitability [Giard and Midler, 1993].

7. Here, by characteristics of the service, we mean the four categories defined by Gallouj and Gallouj [1996] in their integrative typology of the innovation to describe any production activity: characteristics of the product, technical characteristics of the process, competence of the service provider and competence of the customer.

8. The notion of prototype is usually used to designate one of the first specimens of a product used for experimenting, under service-like conditions, the qualities of this product for mass production [Woodward, 1965]. We observe in recent works [Thomke and Bell, 2001] an extension of the acceptation of this term to designate any intermediate representations of a future product , thus including virtual simulations and models. In this article, we keep the usual definition of the prototype. We use the notion of model to designate all the means used to represent a future reality [Garel, 2002].

9. The data relating to these three cases come from bibliographies and/or semi-direct interviews with the members of the project teams.

10. Here, the industrialisation concept is meant as a process helping to make the service production autonomous in relation to the customer and the service provider [Barcet, Bonamy and Mayère., 1987; Gallouj, 1994].

11. Here, it is indeed a perception because the users instinctively move when the robot gets close to them.

12. This research was, in many respects, a pioneering experience in automation in a public environment. In particular, it has helped to make the development of surveillance robots equipped with a camera operational today.

13. In fact, this device was first tested in 1988 as a card with a microchip, serving as an electronic pass for ski lifts at the La Plagne station in France.

14. Only the occasional travellers are not represented.

15. Paradoxically, the 1994 test raised difficulties linked to the administrative agents lack of

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knowledge about the price scale. These difficulties did not surface while testing external customers.

16. In this instance, by default since the team members did not realise the importance of the training methods for the customers and did not integrate them to the elements which we sought to validate for testing. This probably lead to a setback with regard to tollbooth ergonomics.

17. The RATP has been nominated for the Big Brother Award in 2001 in the firm category. The development of the Navigo Pass is one of the elements that were pointed out. It has been recognised for its use in tracing passengers without their knowledge and accessing highly sensitive information without the user s prior knowledge (<http://bigbrotherawards. eu.org>).

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