OPERATIONS STRATEGY FOR GLOBAL COMPETITIVE
CASE STUDY
IDEO : SERVICE DESIGN
MAGISTER MANAJEMEN
FAKULTAS EKONOMI DAN BISNIS
UNIVERSITAS INDONESIA
GROUP 1
Burat Rahadyan (2406462554)
Jayadi Fitrah (2306323221)
Kurnia Ilahi (2406462825)
Mohammad Firdaus Widjanarko (2406462876)
Rista Kurniawan (2406463033)
Sandro Dananjaya Pitoyo (2406463071)
IDEO : SERVICE DESIGN
1.1 Introduction
In the modern era, design has evolved beyond physical products to encompass user
experiences in service delivery. The service sector, which forms the backbone of the global
economy, increasingly recognizes the importance of service design in creating meaningful
interactions between providers and users. However, many industries, including healthcare still
treat design as a secondary consideration, often resulting in suboptimal service experiences.
This gap highlights the need for innovative approaches to transform services, particularly in
resource-constrained environments like hospitals.
IDEO, one of the world's leading design firms, has demonstrated its ability to apply
design principles across diverse industries, from transportation and banking to technology.
Using its human-centered design methodology, IDEO helps organizations deeply understand
customer needs and develop solutions that are not only functional but also emotionally
resonant. Past projects, such as redesigning Amtrak's passenger experience and AT&T's
mMode mobile service interface, showcase how IDEO's approach can transform complex
services into intuitive and delightful experiences.
Now, IDEO faces a new challenge: assisting Portland General Health Center in
improving its healthcare services on a limited budget. The hospital grapples with common
issues like long wait times, inefficient communication, and unsatisfactory patient experiences.
This case study explores how IDEO's methodology, from observational research to rapid
prototyping can be applied to create innovative solutions in healthcare. It also serves as proof
that service design is not a luxury but a fundamental necessity for enhancing quality of life.
1.2 Problem Identification
1) Core Challenge
Portland General Health Center faces difficulties in enhancing healthcare service quality
and patient experience within tight budget constraints. Suboptimal service design has
resulted in patient dissatisfaction and operational inefficiencies.
2) Specific Problem Areas
a.
Patient Experience Aspects
●
Long Queues and Wait Times: Lengthy registration and examination
processes cause patient frustration
●
Ineffective Communication: Lack of clear information about medical
procedures or doctor schedules
●
Physical Discomfort: Poorly designed waiting areas (harsh lighting,
uncomfortable seating, lack of privacy)
●
Negative Emotions: Sterile, impersonal hospital environment increases
patient anxiety
b.
Operational Aspects
●
Staff Coordination Issues: Unclear task distribution among nurses, doctors,
and administrative personnel
●
Inefficient Workflows: Cumbersome administrative procedures (e.g., manual
form filling)
●
Outdated Technology: Obsolete patient information systems hindering data
access
c.
External Constraints
●
Budget Limitations: Minimal funds available for physical renovations or
advanced technology
●
Stakeholder Expectations: Management pressure to balance cost containment
with service quality
d.
Root Causes
●
Traditional Approach: Hospital focuses solely on medical aspects while
neglecting patient experience design
●
Lack of Empathy: Services designed from institutional perspective rather
than user (patient/staff) needs
●
Absence of Prototyping: Solutions implemented without iterative testing,
risking failure to address real needs
e.
Impact Analysis
●
Patients: Decreased satisfaction, potential medical errors due to poor
communication
●
Hospital: Damaged reputation, high operational costs from inefficiencies
●
f.
Staff: Burnout from poorly distributed workloads
IDEO Solution Opportunities
●
Direct Observation: Mapping the complete patient "customer journey" from
admission to discharge
●
Co-creation: Engaging medical staff and patients in brainstorming sessions
●
Low-cost Prototyping: Rapid testing of ideas (e.g., temporary waiting area
layouts)
1.3 Analysis
1) What is the relationship between innovation, design and creativity?
The relationship between creativity, design, and innovation is deeply interconnected,
forming a continuous chain in the development of products and services. Creativity
represents the initial stage, where new and original ideas are generated. It allows individuals
or teams to imagine possibilities beyond current limitations. However, creative ideas alone
are not sufficient; design plays a crucial role in translating creativity into structured,
tangible concepts. Through design, ideas are shaped into understandable forms — whether
they are physical products, services, user experiences, or operational systems. Once the
design has been developed, the process moves to innovation, where these ideas are
implemented in the real world to create tangible value for users and organizations.
In the case of IDEO, the connection between creativity, design, and innovation is clearly
demonstrated in their project approach. IDEO begins its innovation process by encouraging
creativity through brainstorming sessions, where wild ideas are welcomed without
judgment. This initial creative energy is then channeled through structured design
processes, such as creating customer journey maps for Amtrak or experience architectures
for Juniper Financial. The design stage allows IDEO to formalize ideas into actionable
blueprints for services and products. Finally, IDEO brings these designs to life through
rapid prototyping and user testing, ensuring that the final solutions are not only innovative
but also practical and aligned with user needs, as seen in their redesign of the mMode
mobile interface for AT&T.
This understanding aligns closely with the theory discussed in Chapter 8 of the course
material. The chapter highlights that creativity, design, and innovation are critical
components of successful product and service development. Creativity provides a pool of
new ideas, design transforms those ideas into structured outputs, and innovation realizes
them into market-ready solutions. IDEO’s approach also reflects the S-shaped curve of
innovation, recognizing that successful innovation requires time, iteration, and a structured
development journey before achieving wide market adoption.
In conclusion, creativity, design, and innovation are inseparable elements in the process of
delivering value to the market. At IDEO, creativity fuels inspiration, design shapes and
sharpens that inspiration into feasible solutions, and innovation ensures those solutions are
successfully implemented and deliver real-world impact. This dynamic relationship is at
the core of IDEO’s ability to continually generate revolutionary solutions across industries.
2) What are the degrees of development? Do you see them in the products and services
developed by Ideo?
The degrees of development refer to the different levels of change or advancement that
occur during the development of products and services. Based on the material from
Chapter 8, degrees of development can range from minor modifications to major
pioneering innovations. Specifically, the stages often include:
●
Modification of existing products or services (small adjustments or improvements),
●
Extension of current products or services (expanding their capabilities or features),
●
Development of entirely new products or services (creating something substantially
new), and
●
Pioneering of new products or processes (introducing radical innovations that
fundamentally change user experience or operations).
Each degree represents a higher level of complexity, resource commitment, and potential
market impact. Small modifications typically require fewer resources but bring
incremental improvements, while pioneering innovations involve higher risk, greater
investment, and the possibility of disrupting entire industries.
In IDEO’s case, we can clearly observe all degrees of development across the projects they
have handled. For example, in the Amtrak Acela project, IDEO initially focused on
modifying the comfort of train seating — a small but significant improvement to an
existing service. However, as the project evolved, IDEO realized that the entire customer
journey needed to be redesigned, not just the seat. This led them to extend the scope of the
service by redesigning processes like boarding, ticketing, and station navigation.
Ultimately, their work became closer to a development of a new kind of train travel
experience, far beyond traditional train service expectations.
Similarly, in the Juniper Financial project, IDEO worked to develop a new online banking
experience by building emotional segmentation models ("draw your money" exercise) and
tailoring the digital interface to different types of customer relationships with money. This
was not just an extension of an online bank but rather a more pioneering approach to
redefining what online banking could feel like, especially for "onlookers" who previously
felt disconnected from financial management.
In the AT&T mMode project, IDEO applied a combination of modification and extension.
They modified the existing mobile interface to make it more intuitive, but they also
extended the functionality of the service by introducing social connectivity (social
principle), fast task management (TimeSlice principle), and personal relevance (Relevance
principle) — thereby reshaping the mobile internet experience for mainstream users, not
just early adopters.
In conclusion, IDEO’s projects exemplify all degrees of development, from minor
improvements to full pioneering innovations. Their success lies in the ability to flexibly
adapt the degree of development required depending on the project goals, user needs, and
market opportunities. This flexibility reflects the strategic understanding emphasized in
Chapter 8: that product and service development must be responsive to both operational
capabilities and evolving market demands.
3) What are the stages of development according to the book? Did Ideo follow them
based on the case study?
According to the book, the stages of development in innovation typically follow a
structured process that includes idea generation, concept development, prototyping, testing
and refinement, and finally, implementation and launch. These stages are designed to guide
organizations from identifying an initial opportunity through to delivering a tangible
solution. In the case study, IDEO clearly followed these stages, although they used their
own terminology and unique practices grounded in design thinking and user-centered
methodologies.
IDEO began with observation, a phase equivalent to idea generation, where their teams
conducted ethnographic research, shadowed users, and captured insights from real-world
behavior. They then moved to synthesis, in which they translated these insights into design
principles and service concepts similar to the concept development phase. Following this,
IDEO entered the idea generation stage through structured brainstorming sessions, where
quantity and creativity were emphasized. This was followed by rapid prototyping, in which
mock-ups were quickly created and tested, allowing for iterative refinement based on user
feedback. Lastly, IDEO proceeded to implement, working with clients to turn refined
prototypes into final deliverables. Across different projects Amtrak, Juniper Financial, and
AT&T mMode IDEO demonstrated consistent adherence to these development stages,
proving the adaptability and effectiveness of their process.
•
Idea Generation → Observation
IDEO began by empathizing with users through shadowing, interviews, and
ethnographic studies.
•
Concept Development → Synthesis
They synthesized research findings into key design insights and service frameworks
(e.g., customer journey maps).
•
Prototyping → Rapid Prototyping
IDEO built quick, low-fidelity prototypes (e.g., foam train cars, paper UI mockups) to
visualize and test solutions.
•
Testing and Refinement → Iterative Design
Prototypes were refined based on user and stakeholder feedback through multiple
testing loops.
•
Implementation → Final Delivery
The refined designs were implemented with clients across various industries, ensuring
practical application.
4) How is developing a product different from developing a service?
1. Nature of Output
●
Product: Tangible (e.g., physical items like smartphones, Amtrak seats). Can be
touched, seen, and tested before launch.
●
Service: Intangible (e.g., experiences like Amtrak train journeys, Juniper’s
banking). Only "felt" during interactions.
2. Design Process
●
Product: Focus on function, materials, and ergonomics. Physical prototypes (e.g.,
3D train seat models) can be tested repeatedly.
●
Service: Focus on user flows (customer journey) and interactions. Example:
IDEO mapped 10 stages of Amtrak’s passenger journey, not just seat design.
3. User Involvement
●
Product: Users interact with the final product (e.g., using a Palm V).
●
Service: Users actively participate in the process (e.g., hospital patients
interacting with staff, registration systems).
4. Flexibility for Changes
●
Product: Revisions are costly (must alter designs, production tools). Example:
Modifying train seats takes time.
●
Service: Easier to adapt. Example: IDEO could quickly tweak AT&T’s mMode
interface based on user feedback.
5. Success Metrics
●
Product: Objective metrics (durability, speed, sales).
●
Service: Subjective metrics (patient satisfaction, Juniper’s ease of use).
6. Stakeholders Involved
●
Product: Dominated by engineering and industrial design teams.
●
Service: Requires collaboration with frontline staff (nurses, train conductors) and
support systems (IT, HR).
Examples from IDEO’s Case :
● Product: Palm V (focused on form, materials, UI).
● Service: Amtrak (focused on end-to-end travel experience) and Juniper (digital
transaction flows).
5) How would you judge a successful development, based on the products/services
developed by Ideo? By the profit generated? User satisfaction?
A successful development, particularly in the context of IDEO’s approach, should be
judged primarily by user satisfaction and the value delivered to the end user, rather than
purely by the profit generated. While profitability is important for any organization,
IDEO’s case studies demonstrate that long-term success and competitive advantage often
stem from creating meaningful, user-centered experiences, not just from immediate
financial returns.
IDEO’s innovation process places a strong emphasis on understanding users through
observation and empathy, which enables them to uncover latent needs and emotional
drivers. For instance:
●
In the Amtrak project, success was measured by the enhancement of the passenger
experience across all ten stages of the customer journey — from planning to arriving
— not just the redesign of train seats.
●
In the Juniper Financial case, the success lay in the emotional connection and trust
built with users through personalized banking interfaces tailored to different
financial behaviors.
●
In AT&T’s mMode, improvements in page views, m-commerce activity, and thirdparty developer engagement showed how user satisfaction led to better usage metrics
and ecosystem alignment.
Therefore, success should be evaluated using multi-dimensional criteria, such as:
1.
User Satisfaction – Are the users' needs met? Are they emotionally and functionally
engaged?
2.
Functionality and Usability – Is the product/service intuitive and easy to use?
3.
Adoption and Loyalty – Are users adopting the solution and continuing to use it over
time?
4.
Business Impact – Has the innovation enhanced brand value, customer retention, or
operational efficiency?
5.
Scalability and Sustainability – Can the solution be adapted or scaled across contexts
or over time?
1.4 Conclusion
The IDEO case study underscores the strategic importance of integrating human-centered
design principles into the development of products and services, particularly within complex
and resource-constrained environments such as healthcare. Through its structured yet flexible
innovation process, comprising observation, synthesis, ideation, prototyping, and
implementation, IDEO has demonstrated its ability to transform abstract user needs into
tangible, effective solutions. The firm's emphasis on user empathy, interdisciplinary
collaboration, and iterative refinement has enabled the successful delivery of innovations that
go beyond functional utility to address emotional and experiential dimensions of service
delivery.
Rather than measuring success solely by financial performance, IDEO evaluates the
impact of its developments through user satisfaction, adoption, and the long-term value created
for stakeholders. This case reinforces the theoretical insights presented in Chapter 8 of the
Operations Strategy framework, highlighting that innovation, design, and creativity must be
harmonized to achieve sustainable service excellence. Ultimately, IDEO’s work illustrates that
service design is not merely an operational enhancement but a critical strategic capability in
delivering high-quality, user-centered outcomes.
1.5 Recommendation
There are several strategic recommendations can be proposed to enhance the
effectiveness of service design, particularly when applied to sectors such as healthcare:
1.
Institutionalize Human-Centered Design Practices
Organizations, especially in traditionally non-design-driven sectors like healthcare,
should embed user-centered design methodologies into their standard operating
procedures. This includes adopting tools such as customer journey mapping, persona
development, and empathic research to ensure services align with user expectations and
emotional needs.
2.
Foster Cross-Functional Collaboration
Service development teams should comprise diverse expertise including designers,
engineers, social scientists, frontline staff, and IT professionals. The interdisciplinary
model exemplified by IDEO ensures a holistic understanding of service systems and
enables more innovative, practical solutions.
3.
Implement Iterative Prototyping in Service Design
Services should be prototyped and tested incrementally, even in low-fidelity formats, to
validate ideas early and reduce the risks associated with full-scale implementation. This
rapid experimentation approach allows organizations to adapt quickly based on real-time
feedback from both users and staff.
4.
Prioritize Experience over Infrastructure
Particularly in budget-constrained environments, emphasis should be placed on
improving the overall patient or user experience through better communication, flow
redesign, and service touchpoints rather than costly structural changes.
5.
Promote Design Capability Building
Institutions should invest in training programs that build internal capacity for service
design thinking. By equipping staff with the skills and mindset to identify and solve
problems from a design perspective, organizations can foster continuous innovation from
within.
REFERENCES
Slack, N. & M. Lewis (2020). Operations Strategy. 6th Edition. Prentice Hall: Harlow England
(SL).