Serviceology For Service

Takeshi Takenaka
Spring Han
Chieko Minami (Eds.)
Communications in Computer and Information Science 1189
Serviceology
for Services
7th International Conference, ICServ 2020
Osaka, Japan, March 13–15, 2020
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Takeshi Takenaka Spring Han
• •
Chieko Minami (Eds.)
Serviceology
for Services
7th International Conference, ICServ 2020
Osaka, Japan, March 13–15, 2020
Proceedings
123
Editors
Takeshi Takenaka Spring Han
National Institute of AIST Kyoto University
Tokyo, Japan Kyoto, Japan
Chieko Minami
Graduate School of Business Administration
Kobe University
Kobe, Japan
ISSN 1865-0929 ISSN 1865-0937 (electronic)

Communications in Computer and Information Science
ISBN 978-981-15-3117-0 ISBN 978-981-15-3118-7 (eBook)
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Preface
The new technologies represented by AI, ICT, IoT, and XR have significantly changed
our everyday lives and business practices. Such digital technologies could promote
many industries to develop the advanced practices such as co-creation values,
eco-system, servitization, or platform businesses. The concepts generated from these
practices are a major focus in recent service studies.
The Society for Serviceology explores the scientific systematization of services and
promotes technological developments for solutions of industrial issues. It also aims at
providing collaborative opportunities among the experts in business and in various
research fields on services.
The 7th International Conference on Serviceology (ICServ 2020) was the latest in
the ongoing conference series, building on the success of six events held in Taichung,
Taiwan (ICServ 2018), Vienna, Austria (ICServ 2017), Tokyo, Japan (ICServ 2016),
San Jose, CA, USA (ICserv 2015), Yokohama, Japan (ICServ 2014), and Tokyo, Japan
(ICServ 2013). Initiated by Society for Serviceology, in Japan, it aims to build a
community of researchers, academics, and industry leaders following a common goal:
co-creation of services in a sustainable society. ICServ 2020 was held during March
13–15, 2020, in Osaka, Japan, hosted by Osaka Seikei University, and the theme was
“Service and Hospitality Management - Moving forward with seamless technology.”
ICserv 2020 received 58 submissions from 13 countries. The Program Committee
contributed 116 reviews. As a result, 19 full papers were selected to be included in
these proceedings. The accepted papers were classified into the following areas:
Hospitality Management, Service Innovation and Employee Engagement, Service
Marketing and Consumer Behavior, Customer Experience and Service Design, and
Service Engineering and Implementation.
The ICServ 2020 program also included a keynote, panel discussions, special ses-
sions, a paper development workshop, a writing seminar, as well as concurrent
sessions.
We sincerely appreciate the valuable amount of time and knowledge that the Pro-
gram Committee members, members of special sessions, and additional reviewers
invested in carefully reviewing the papers and sessions. Furthermore, we would like to
express our gratitude to the industry sponsors, keynote speakers, moderators, and
panelists for making this conference successful.
January 2020 Takeshi Takenaka

Spring Han
Chieko Minami
Organization
General Chair
Chieko Minami Kobe University, Japan
Steering Committee Chair

Yoshinori Hara Kyoto University, Japan
Program Committee Chair

Spring Han Kyoto University, Japan
Publication Committee Chair

Takeshi Takenaka AIST, Japan
Program Committee
Tamio Arai IRID, Japan
Kyungmin Baek Soongsil University, South Korea
Clara Bassano Parthenope University of Naples, Italy
Wojciech Cellary Uniwerstet Ekonomiczny w Poznaniu, Poland
Houn-Gee Chen National Taiwan University, Taiwan
Xiucheng Fan Fudan University, China
Nobutada Fujii Kobe University, Japan
Walter Ganz Fraunhofer IAO, Germany
Tatsunori Hara University of Tokyo, Japan
Kazuyoshi Hidaka Tokyo Institute of Technology, Japan
Back Ho University of Tokyo, Japan
Lee Jungwoo Yonsei University, South Korea
Toshiya Kaihara Kobe University, Japan
Dimitris Karagiannis University of Vienna, Austria
Koji Kimita Tokyo Metropolitan University, Japan
Youji Kohda Japan Advanced Institute of Science and Technology,
Japan
Michitaka Kosaka Japan Advanced Institute of Science and Technology,
Japan
Stephen Kwan San Jose State University, USA
Moon Kun Lee Chonbuk National University, South Korea
Hisashi Masuda Kyoto University, Japan
Michael McCall Michigan State University, USA
viii Organization
Kyrill Meyer Institute for Applied Informatics, Germany

Hiroyasu Miwa AIST, Japan
Masaaki Mochimaru AIST, Japan
Satoshi Nishimura AIST, Japan
Taiki Ogata Tokyo Institute of Technology, Japan
Takeshi Okuma AIST, Japan
Martin Petry Hilti Corporation, Liechtenstein
Nao Sato Kyoto University, Japan
Yuriko Sawatani NUCB Business School, Japan
Satoshi Shimada Kyoto University, Japan
Kunio Shirahada Japan Advanced Institute of Science and Technology,
Japan
Tom Tan SMU Cox School of Business, USA
Takashi Tanizaki Kindai University, Japan
Keiko Toya Meiji University, Japan
Naoshi Uchihira Japan Advanced Institute of Science and Technology,
Japan
Kentaro Watanabe AIST, Japan
Yutaka Yamauchi Kyoto University, Japan
Sponsor
Contents
Hospitality Management
Cognitive Competencies of Front-Line Employees in the Hospitality

Industry: The Concept of “Serving not to Serve” . . . . . . . . . . . . . . . . . . . . 3
Ryo Fukushima, Bach Quang Ho, Tatsunori Hara, Jun Ota,
Rena Kawada, and Narito Arimitsu
Exploring the Impact of Managerial Responses to Online Reviews

in the Sharing Economy: A Case of Accommodation Sharing Service . . . . . . 20
Wenlong Liu and Xiucheng Fan
“Omotenashi” Must Comprise Hospitality and Service: The Importance

of a Clinical Approach to Practice and Science in the Service Industry . . . . . 34
Tetsuo Kuboyama
Analysis of Service Staff’s Observation on a Customer:

A Case Study of Hotel Service in Japan. . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Satoshi Shimada and Eiko Hoshiyama
Service Innovation and Employee Engagement
Models for Designing Excellent Service Through

Co-creation Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Tatsunori Hara, Satoko Tsuru, and Seiichi Yasui
A Proposal for the Work Engagement Development Canvas

Contributing to the Development of Work Engagement . . . . . . . . . . . . . . . . 84
Ami Hamamoto, Nobuyuki Kobayashi, Hirotaka Fujino,
and Seiko Shirasaka
R&D Staff Perception Leading to Product Innovation: Case Study on

Carbohydrate-Free Saké . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Kengo Matsumura, Satoshi Shimada, and Yoshinori Hara
Problem Structure for Employee Well-Being in the Workplace:

Personal and Organizational Well-Being . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Kei Shibuya, Makiko Yoshida, and Bach Q. Ho
x Contents
Service Marketing and Consumer Behavior
Differences in Customer Delight Rating Linked to Customer Actions

in Japanese and Foreign Residents Using Restaurant Services in Japan . . . . . 143
Hisashi Masuda
Clarification of the Process of Value Co-creation

Marketing - Case of Manufacturing Industry. . . . . . . . . . . . . . . . . . . . . . . . 157
Satoshi Seino
Customer Experience and Service Design
Conceptualization of a Smart Service Platform for Last Mile Logistics . . . . . 175

Michael Glöckner, Luise Pufahl, Bogdan Franczyk, Mathias Weske,
and André Ludwig
Enriching Design Thinking with Data Science: Using the Taiwan Moving
Industry as a Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
Kai-Lun Yang, Shih-Chieh Hsu, and Hui-Mei Hsu
Holistic Measurement Approach of Customer Experiences – Findings

from a Japanese New Car Buyer Study . . . . . . . . . . . . . . . . . . . . . . . . . . . 203
David Marutschke and Ted Gournelos
Service Ecosystem Design Using Social Modeling to Incorporate

Customers’ Behavioral Logic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217
Masafumi Hamano, Bach Q. Ho, Tatsunori Hara, and Jun Ota
The Application of the Cultural-Historical Activity Theory to the

Value Co-creation Process in Higher Education . . . . . . . . . . . . . . . . . . . . . 235
Takashi Tsutsumi and Masaru Unno
Service Engineering and Implementation
Toward Service Process Improvement in Nursing-Care Services:

Application of Behavior Measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253
Hiroyasu Miwa and Kentaro Watanabe
Socially-Conscious Service System Design in the Digital Era:

Research Agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266
Kentaro Watanabe, Yusuke Kishita, Kaito Tsunetomo,
and Takeshi Takenaka
Maintenance IoT Project Framework for Extending Effects to All

Stakeholders’ Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275
Toshiaki Kono, Yui Sugita, and Tomoaki Hiruta
Contents xi
Ecosystem Strategies for IoT Service Platform Ecosystems:

A Case Study of RFID Linen Tags and the Japanese
Linen Supply Market. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287
Yuki Inoue, Takami Kasasaku, Ryohei Arai, and Takeshi Takenaka
Author Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309

Hospitality Management
Cognitive Competencies of Front-Line
Employees in the Hospitality Industry:
The Concept of “Serving not to Serve”
Ryo Fukushima1(&), Bach Quang Ho1, Tatsunori Hara1, Jun Ota1,

Rena Kawada2, and Narito Arimitsu2
1
Graduate School of Engineering, The University of Tokyo,
Tokyo 113-8656, Japan
[email protected]
2
ANA Strategic Research Institute Co., Ltd., Tokyo 105-7140, Japan
Abstract. This paper focuses on the cognitive competencies enabling front-line

employees to grasp context, which previous has not taken into account. To this
end, we developed two studies. Study 1 identifies the key factors and models the
cognition during service based on interview data from flight attendants. Inter-
view data was analyzed by Grounded Theory Approach. In study 2, the cog-
nition of 155 flight attendants was obtained and features representing cognitive
competency were quantitatively identified. Our findings propose the hospitality
concept of “serving not to serve” from a cognitive perspective, for which risk
perception and thoughtfulness are important cognitive competencies.
Keywords: Hospitality Competency Front-Line employee Grounded

theory approach Service engineering
1 Introduction
Services are typically provided by front-line employees, meaning the ability of

employees to perform these services correctly is important for service providers to
maintain high service quality [1]. The capability required in the workplace is generally
called competency. Boyatzis defined competencies as the personal characteristics that
lead to successful performance in a job role [2].
Research on the competencies of front-line employees has hitherto focused on two
specific competencies. The first is technical competency [3–5], which refers to having
the knowledge to accomplish the job. The second is emotional competency [4–7],
which means the capability to act in a manner that displays an understanding of
people’s feelings. These competencies represent the knowledge and behavioral ten-
dencies of front-line employees.
Value in customer service is generated when an appropriate interaction is carried
out in various contexts involving customers and external environments, such as cus-
tomers’ emotions or priority of the service in the workplace. An appropriate interaction
is based on cognition, meaning the employee properly understands the context of the
service and considers his/her behavior. Value co-creation is achieved by using different

T. Takenaka et al. (Eds.): ICServ 2020, CCIS 1189, pp. 3–19, 2020.
https://doi.org/10.1007/978-981-15-3118-7_1
4 R. Fukushima et al.
resources and integrating them according to context [8]. Therefore, the conventional
way of viewing competencies, in which knowledge and service behavior are treated
without context, cannot explain the reason behind resource integration. Consequently,
it is necessary to understand competency from the aspect of cognition by enabling
appropriate resource integration.
In this study, we define “cognitive competency” as the personal characteristics of
cognitive processes that enable appropriate resource integration. Understanding cog-
nitive competency can help clarify employees’ capabilities required to take appropriate
actions to perform a certain job. Therefore, the purpose of this study is to identify
features that represent cognitive competencies utilized by front-line employees in the
hospitality industry.
We created a questionnaire survey to quantitatively identify the characteristics of
cognitive competency. Specifically, the survey collects the cognition of front-line
employees during service. First, we proposed a cognitive process model to be used
during service that can serve as a framework for creating questionnaire survey ques-
tions. The qualitative grounded theory approach (GTA) was used to create the model.
The proposed method is shown in Fig. 1 as follows. First, in study 1, retrospective
interviews were conducted to create a model that represents the cognitive process of
front-line employees during service. This interview was conducted referring to footage
of their customer service during an experimental environment. We then analyzed the
interview data based on GTA. Next, study 2 identified the features representing cog-
nitive competencies. A descriptive questionnaire survey to obtain cognition during
service was created in accordance with the cognitive framework in study 1 and was
answered by 155 front-line employees. The survey data were assigned semantic codes
and the number of codes was counted, enabling the use of the quantitative principal
component analysis.
Study1: Model cognition during service Study2: Identify features representing

based on structured semantic codes cognitive competencies from questionnaire data
Analyze features
Extract cognition by Model cognition process Extract variables
representing cognitive
retrospective interview during service representing cognition
competencies
Principal
component Composite variable
Structured Cognition data
Interview semantic represented by
analysis that represents the
variation of
data GTA codes Attach variables respondents
semantic Cluster analysis/ refer
Count code frequency
codes
and cooccurrence to years of experience
Features
Grasp relationships Questionnaire representing
between categories data cognitive
competency
155 people
surveyed
Cognition Descriptive
model during questionnaire
service survey
Set questions according

to the cognitive structure
during service
Fig. 1. Overview of the proposed methodology.

Cognitive Competencies of Front-Line Employees in the Hospitality Industry 5
This analysis contributes to hospitality research by extending the understanding of

existing competency concepts from the viewpoint of the cognitive competency that
causes service behaviors. Furthermore, by focusing on cognition, we have derived a
new concept of service behavior— serving not to serve— that cannot be expressed
using behavioral characteristics.
2 Literature Review
2.1 Service Interaction
In recent years, the idea of value co-creation has become widespread, where experience
gained as a result of the interactions between service providers and customers is a
source of value [9]. Companies that provide services aim to maintain and improve
market competitiveness by providing customers with better experiences [10]. Since
service behaviors have a significant impact on customer sentiment and decision-making
[11, 12], value is co-created when employees and customers interact and influence each
other [13–15]. Additionally, differences in employees’ capabilities can create hetero-
geneity of the provided service and its quality [16]. For this reason, knowledge that
contributes to maintaining a sufficient level of competencies for front-line employees is
necessary to enhance customer value experience.
Several studies have tried to determine how to enable front-line employees to
provide better service. For example, in recent years, there has been a movement
towards more effective service provision using technology [17–19]. Researchers have
indicated that it is necessary to understand the behaviors and characteristics of
employees. For example, Victorino et al. [20] pointed out the importance of studying
the service provision process by understanding customers and employees from psy-
chological and emotional perspectives. In addition, Subramony et al. [12] indicated that
research should explore the temporal and dynamic aspects of emotional labor. Such
research is crucial to explain how employees learn and adapt to emotional display
regulations. The dynamic aspect means that employees control their emotion sequen-
tially during customer service. This is due to the real-time interactions between
employees and customers in addition to employees’ personalities.
Therefore, the competency of front-line employees is important to ensure a highly
satisfactory customer experience. In light of this, it is increasingly important to
understand cognitive competencies to deal with the dynamic aspects of service
interactions.
2.2 Competency of Front-Line Staff

The competencies necessary for front-line hospitality industry employees can be
divided into technical competencies [4, 5] and emotional competencies [3–7]. Tech-
nical competency refers to the knowledge required in each industry, while emotional
competency refers to the capability to act with an understanding of emotions, including
others’ and their own [3].
Competency depends highly on individuals, thus research on emotional compe-

tency is becoming increasingly important. Researchers have been studying emotional
competency in the context of customer satisfaction [3, 6] and service recovery [5, 7].
Employees with high emotional competency have the ability to increase customer
satisfaction and loyalty [3, 6]. Previous studies have shown that emotional compe-
tencies are important in improving customer satisfaction.
The previously mentioned studies examined competencies regarding knowledge
and behavioral characteristics based on understanding human emotion. However, since
customer service is provided under various contexts, such as customers’ situation and
external environment, the extant understanding of competency cannot fully describe the
competencies that front-line employees utilize to create value in their working place.
Therefore, this study focuses on the cognitive competencies that front-line employees
use to understand context, which includes customers and the external environments.
3 Study 1
3.1 Data Collection and Sample
In order to create a model that represents the cognition of front-line employees during
service, retrospective interviews were conducted with front-line employees in a mock-
up experiment in study 1. The interview data were analyzed based on GTA. We chose
flight attendants because they have to provide customer service to passengers by
considering passenger safety, hence cognitive competence is crucial in their service.
To record the cognition of flight attendants, we conducted recording experiments in
a cabin mock-up that imitates the actual cabin environment. The experiment partici-
pants included three junior employees who had experience of less than three years and
senior employees with more than 10 years of experience. The recorded customer
service time was approximately 25 min and the customer service actions included
serving drinks, cup collection and those provided during passenger boarding phase.
The entire in-flight environment during the service and interactions between the flight
attendants and passengers were recorded to capture the customer service process.
In this experiment, the persona and scenario were prepared for each passenger role
in order to make the experimental environment realistic. These settings enabled the
flight attendants to carry out in-flight service as usual.
After recording the cabin mock-up service, the retrospective interviews were car-
ried out. The flight attendants were asked to recall what they were thinking when
performing the service, while referring to the footage recorded during the experiment.
A semi-structured interview was used, which is an interview method where the
interviewer decides beforehand what to broadly ask, but he/she is often guided by the
answers of the respondents.
3.2 Analysis
GTA was used to analyze the interviews. GTA is a qualitative research method
developed in the field of sociology, which reveals the abstract theory concerning the
process of interaction and phenomena between characters, based on the researchers

ground the analysis on the data [21, 22].
Data analysis was completed in three steps. First, semantic codes are attached to the
interview data based on a deep understanding of these data. Second, these semantic
codes are grouped into similar semantic categories. Third, researchers identify the
relationships between categories by which the theory was generated.
We consider that in-flight services, including safety services and interactions
between flight attendants and passengers, depend on the cognitive competencies of the
flight attendants. Therefore, our aim was to model the theory embedded in the cog-
nition during the in-flight service by using GTA to analyze interview data.
3.3 Results
The created categories and codes are detailed in Table 1, along with their hierarchical
relationship. Based on Table 1, we created flight attendants’ cognition model during
service in Fig. 2. We used the business process model notation (BPMN) to illustrate the
flight attendants’ cognitive process generated in the GTA. In particular, the process was
formalized using BPMN for the large category “Cognition of decision making for
customer service behavior” shown in the bottom of Table 1.
The cognitive process model shown in Fig. 2 can be divided into two parts, the
upper and lower halves. The lower half of Fig. 2 corresponds to “Cognition of cus-
tomer service environment” in Table 1. The hierarchical relationship of the large cat-
egories, categories, codes, and sub-codes are described in the diagrams of the lower
half of Fig. 2. The upper half of Fig. 2, corresponds to “Cognition of decision making
of customer service behavior.” During decision making, codes and sub-codes
belonging to the large category “Cognition regarding customer service environment”
represented as dotted arrows in Fig. 2.
Here, we explain flight attendants’ decision-making process in detail. After iden-
tifying customers’ behaviors, flight attendants make decisions about their service
behaviors. This decision making is represented by the two ramifications in Fig. 2,
namely “should observe a passenger more or not” and “whether they should interact
with a passenger or not.” If they decide not to observe the passenger, they proceed to
the next ramification, otherwise the decision is taken once more at the subsequent
evaluation. If they choose to interact with a passenger, they will decide to provide
“service behavior,” and otherwise they “Do not serve.” As mentioned above, in each
ramification, “Cognition about customer service environment” in the lower half of
Fig. 2 is referred to, but at the same time, “Examine service behavior,” positioning at
the lowest in the upper half of Fig. 2, is also referred to. Though the “Examine service
behavior” belongs to the large category “Cognition regarding decision making of
customer service behavior,” it is freely referred to in actual decision making.”
Therefore, employees made decisions about whether or not they should interact
with a customer. Interestingly, the employee has a choice of behavior even when
service behaviors are not performed from the customer’s viewpoint but only in
employees’ cognition. We call this phenomenon “serving not to serve.”
Table 1. Created categories, codes, and sub-code.

Large category Category Code Sub-code Detailed sub-
code
Cognition of Consideration Review of past
customer service other than customer service
environment passengers Consideration about
safety or efficient
operation
Consideration about Consideration
the environment of about other
cabin flight attendant
Consideration
about other
passengers
Consideration
about facility
Consideration
about timing
Referring to
knowledge/experience
Consideration Estimation of
about background
passengers Prediction of future
behavior
Estimation of Interpretation of
situation behavior
Estimation of
physical
condition
Estimation of Estimation of
psychology needs
Estimation of Estimation of
emotion past/current
emotion
Estimation of
future
emotion
Cognition of Consideration Hesitate to decide
decision making of whether to Should not serve
service behavior serve or not Should serve
Consideration Decide service
about service behavior
behavior Examine service
behavior
Passenger
Behavior
Do not
should observe serve
the passenger should serve the
more or not No passenger or not
Flight aƩendant
ObservaƟon No Decide service service

Yes behavior behavior
Yes
Examine service
behavior
Cognition of customer service environment

Consideration about passengers Consideration other than passengers
Estimation of Estimation of Review of past Referring to

psychology situation customer knowledge/
Estimation of Needs Interpretation of behavior service experience
Estimation of Emotion Estimation of
physical condition Consideration about the
environment of cabin
Consideration Other flight attendant

Estimation of Prediction of about safety or
future efficient Other passengers
background
behavior operation Facility
Timing
Fig. 2. Cognition model during service.
4 Study 2
4.1 Questionnaire Survey
Development of Questionnaire Survey. In order to identify the cognition of flight

attendants during service, a descriptive questionnaire survey was developed based on
the structure of the cognitive model during service. Respondents first watched videos
about passengers’ behaviors. Two different videos showing passengers on board were
viewed. The scenarios in the two videos were as follows:
• Scenario 1: a passenger who is sweating because he has boarded in a hurry.
• Scenario 2: a frustrated lady who is on board with her children.
Second, respondents choose whether they should serve the passenger or not. Finally,
respondents explained in writing why they chose that option. As such, respondents’
cognition leading to a decision could be identified.
The decision “not to serve the passenger” was rarely chosen in the three pilot surveys.
Therefore, we divided the questionnaire into two parts: (1) cognition when respondents
decide to serve after watching the video and (2) the cognition about “serve not to serve”
by asking about their past experience when the respondent decided not to serve.
Collect Questionnaire Survey Data. The questionnaire was given to flight attendants,
and it took respondents 20–30 min to complete. The number of valid responses was
155. In addition, respondents noted their years of experience at the beginning of the
questionnaire. The information on the years of experience is required to identify
cognitive competency. Table 2 shows the number of respondents by year. The cog-
nitive data derived from scenarios 1 and 2 are integrated and analyzed.
Table 2. Number of respondents by years of experience.

Years (service experience) 1 2–3 4–6 7–9 10–12 13–19 20+ Total
Number of respondents 4 23 56 13 17 19 23 155
Extract Variables of Cognition. Structured semantic codes enable qualitative data to

be analyzed quantitatively [23]. In the analysis of structured semantic codes, code
frequency is used as a variable [23]. Code frequency means how many times a specific
code appears in one answer and makes it possible to understand which semantic
concepts are frequent or rare. In this study, each code frequency is used as a variable to
understand how frequently each respondent considers a semantic concept. These
variables quantitively represent the characteristics of cognition extracted from ques-
tionnaire survey.
4.2 Analysis
Extraction of Composite Variables Representing Cognitive Competencies. When

capturing the cognitive competencies of 155 flight attendants, it is difficult to extract
features of cognition by using each variable of code frequency because the number of
variables is too large. Therefore, we reduced the dimensions of the variables using
principal component analysis to understand which frequency of semantic codes can
effectively explain respondents’ heterogeneity. The newly created composite variables
could explain cognitive competency.
The questionnaire survey included two parts. The first part referred to cognition
leading to decision making and the second part to cognition leading to “serving not to
serve.” We analyzed the two parts separately.
Verification of Variables Representing Cognitive Competencies. The feature of
cognitive competency cannot be judged only by the score of the composite variable
obtained by principal component analysis. Therefore, k-means clustering was per-
formed using composite variables whose cumulative contribution rates were above
0.70. The tendency of the years of experience in each cluster was used as a criterion to
judge cognitive competency. The number of clusters was determined by referring to
gap statistics.
4.3 Results
Part 1 of Questionnaire. Part 1 of the questionnaire extracts cognition referred to

when respondents decided to serve. In this section, we show the results of the analysis
from the viewpoint of the number of semantic codes, namely code frequency.
Table 3. Result of principal component analysis for part 1.

Composite Contribution Variables Coefficient Interpretation of
variable rate composite variable
FR1_PC1 0.37 Consideration about 0.53 Represent the
safety or efficient amount of cognition
operation about passenger
Estimation of 0.48 safety and physical
physical condition condition
Interpretation of 0.4
behavior
Examine service 0.37
behavior
FR1_PC2 0.13 Examine service 0.64 If positive:
behavior Examine service
Interpretation of −0.67 behavior a lot
behavior If negative:
Estimation of −0.30 Interpret behavior a
past/current emotion lot
FR1_PC3 0.11 Consideration about 0.34 If positive:
safety or efficient Consider passenger
operation safety or efficient
Estimation of 0.34 operation a lot
physical condition If negative:
Consideration about −0.58 Consider other
other passengers passengers a lot
Consideration about −0.36
timing
Estimation of needs −0.34
FR1_PC4 0.10 Estimation of 0.61 If positive:
past/current emotion Estimate past/current
Interpretation of 0.47 emotion a lot
behavior If negative:
Consideration about 0.36 Estimate needs a lot
safety or efficient
operation
Estimation of needs −0.37
Results of Principal Component Analysis. Table 3 summarizes the information up to

the fourth principal component with a cumulative contribution rate exceeding 0.70. The
right-hand column shows the interpretation of each composite variable.
For example, FR1_PC1, which is the first principal component, is the variable that
can best represent the data with a contribution rate of 0.37. For example, when the
value of FR1_PC1 is large, it there is a large amount of cognition regarding safety and
the physical condition of passengers.
The composite variables can effectively represent the cognitive competencies of
flight attendants. By cluster analysis with information on the years of experience,
researchers examined if the composite variables are effective as a feature of cognitive
competency.
Results of Cluster Analysis. Clustering was performed by the k-means method using
the four composite variables in Table 1. From the calculation of the gap statistic, the
appropriate number of clusters is k = 2 and the data are divided appropriately. Table 4
shows the position of centroid of each cluster. The data are divided into two by
composite variable FR1_PC1, which indicates the amount of consideration regarding
the safety and the physical condition of passengers. The properties of the cluster can be
interpreted as follows:
• Cluster 1 has a sufficient but relatively less consideration of safety and the physical
condition of passengers.
• Cluster 2 has a high consideration level of safety and the physical condition of
passengers.
Table 5 shows the number of respondents allocated to each cluster by years of
experience. Cluster 1 consists of 80 respondents and cluster 2 of 75 respondents. From
Table 5, the relationship between cluster allocation and years of experience can be
• Most respondents with up to 9 years of experience belong to cluster 1.
• Most respondents with experience of 10 years and above belong to cluster 2.
Table 4. Value of centroid (part 1).

FR1_PC1 FR1_PC2 FR1_PC3 FR1_PC4
Cluster 1 −1.95 −0.03 −0.17 −0.06
Cluster 2 2.08 0.03 0.18 0.07
Table 5. Number of respondents allocated to each cluster by years of experience (part 1).
Cluster/Experience 1 2–3 4–6 7–9 10–12 13–19 20+ Total
Cluster 1 3 16 48 9 1 1 2 80
(75%) (70%) (86%) (69%) (6%) (5%) (5%)
Cluster 2 1 7 8 4 16 18 21 75
(25%) (30%) (14%) (31%) (96%) (95%) (95%)
Total 4 25 56 13 17 19 23 155
(100%) (100%) (100%) (100%) (100%) (100%) (100%)
Fig. 3. Plot of respondents for first and second composite variable (part 1).
That is, the clusters created by the composite variable have a strong reliance on the
years of experience.
Further, senior employees with more than 10 years of experience consider safety
and the physical condition of passengers more than juniors do. Therefore, the cognitive
competency represented by composite variable FR1_PC1 refers to estimating passen-
ger safety and physical condition, that is, risk perception. As a result, cognitive
competency in part 1 is the amount of cognition about the safety and physical condition
of passengers.
Figure 3 shows the respondents for the first and second composite variables and the
clusters to which they belong are shown. Again, the clusters are separated by risk
perception, namely composite variable FR1_PC1.
Part 2 of Questionnaire. In the second part of the questionnaire, we identified the
cognition when respondents decided not to serve passengers, namely “serving not to
serve.” This second part of the questionnaire was developed because it was not possible
to extract the cognition about the decision not to serve customers from the first part.
Results of Principal Component Analysis. Table 6 summarizes the information up to
the fourth principal component with a cumulative contribution rate exceeding 0.70. The
right-hand column shows the interpretation of each composite variable.
For example, FR2_PC1, which is the first principal component, is a variable that
can represent the data collectively with a contribution rate of 0.50. For example, when
the value of FR2_PC1 is large, a high consideration of the passenger’s emotions and
interpretation of their behaviors exists when making the decision not to serve
passengers.
The proposed composite variables are effective to represent the cognitive compe-
tencies of flight attendants. By cluster analysis using information on the years of
experience, researchers examined if the composite variables are effective as cognitive
competency features.
Result of Cluster Analysis. Clustering was performed by the k-means method using
the four composite variables shown in Table 6. From the calculation of the gap statistic,
k = 4 is the most suitable partition for the data. Table 7 shows the position of the
centroid of each cluster. The data are divided into four clusters by composite variable
FR2_PC1, which represents the amount of consideration regarding passenger’s emo-
tions and behaviors.
The properties of the cluster can be interpreted as follows:
• When cluster 1 decides not to serve, it has the least amount of consideration
regarding passenger’s emotions and behaviors.
• Cluster 2 has the second lowest amount of consideration regarding passenger’s
emotions and behaviors when deciding not to serve.
• When cluster 3 decides not to serve, it has the second largest amount of consid-
eration regarding passenger’s emotions and behaviors.
• Cluster 4 has the largest amount of consideration regarding passenger’s emotions
and behaviors when deciding not to serve.
Table 8 shows the number of respondents allocated to each cluster by years of
experience. From Table 8, the tendency of cluster regarding years of experience can be
• Most respondents with up to 9 years of experience belong to clusters 1 and 2.
• Most respondents with 10 or more years of experience belong to clusters 3 and 4.
In this way, the cluster membership by the composite variables has a strong rela-
tionship with the years of experience. A summary of the cluster’s properties is as
follows:
• Cluster 1 consists of flight attendants with up to 9 years of experience that have the
least amount of consideration regarding passenger’s emotions and behaviors.
• Cluster 2 mostly consists of flight attendants with up to 9 years of experience and
some with more than 10 years of experience. They have the second least amount of
consideration regarding passenger’s emotions and behaviors.
• Cluster 3 mostly consists of flight attendants with more than 10 years of experience
and some with up to 9 years of experience. They have a relatively large amount of
• Cluster 4 mostly consists of flight attendants with more than 10 years of experience
and some with up to 9 years of experience. They have the largest amount of
From the above, seniors understand more than juniors do about the emotions and
behavior of passengers when they decide not to serve. Therefore, the cognitive com-
petence represented by composite variable FR2_PC1 is thoughtfulness for passengers
when deciding not to serve.
Table 6. The result of principal component analysis for part 1.

Composite Contribution Variables Coefficient Interpretation of
variable rate composite variable
FR2_PC1 0.50 Estimation of past/current −0.64 Represent the amount
emotion of estimation of
Interpretation of behavior −0.57 past/current emotion
Examine service behavior −0.37 and interpretation of
behavior
FR2_PC2 0.10 Examine service behavior 0.46 If positive:
Estimation of future 0.35 Examine service
emotion behavior a lot
Interpretation of behavior −0.67 If negative:
Interpret behavior a lot
FR2_PC3 0.09 Estimation of background 0.89 If positive:
Interpretation of behavior −0.25 Estimate background a
Consideration about timing −0.24 lot
If negative:
Interpret behavior and
consider timing a lot
FR2_PC4 0.08 Estimation of past/current 0.57 If positive:
emotion Estimate past/current
Examine service behavior −0.46 emotion a lot
Consideration about timing −0.40 If negative:
Examine service
behavior and consider
timing a lot
Table 7. Value of centroid (part 2).

FR2_PC1 FR2_PC2 FR2_PC3 FR2_PC4
Cluster 1 2.64 0.57 0.07 0.10
Cluster 2 −3.63 0.54 −0.11 −0.13
Cluster 3 1.05 −0.49 −0.08 −0.10
Cluster 4 −1.37 −0.30 0.11 0.12
Table 8. Number of respondents allocated to each cluster by years of experience (part 2).
-1 2–3
4–6 7–9 10–12 13–19 20- Sum
Cluster 1 2 10
41 3 0 0 0 38
(50%) (43%)
(86%) (23%)
Cluster 2 2 13
39 5 2 2 4 50
(50%) (57%)
(14%) (38%) (12%) (11%) (17%)
Cluster 3 0 07 1 9 10 13 40
(13%) (8%) (53%) (53%) (57%)
Cluster 4 0 0 4 4 6 7 6 27
(7%) (31%) (35%) (37%) (26%)
Sum 4 25 56 13 17 19 23 155
(100%) (100%) (100%) (100%) (100%) (100%) (100%)
Figure 4 shows the respondents for the first and second composite variables and the
clusters to which they belong. Clusters are separated by combined variable FR2_PC1
which represents the thoughtfulness for passengers when deciding not to serve.
Fig. 4. Plot of respondents for first and second composite variables (part 2).
5 Discussion
The theoretical and practical contributions of this research are as follows.
5.1 Extending the Concept of Competency in Hospitality Research

This study extended the concept of competency by clarifying the meaning of cognitive
competency. The competencies of hospitality industry employees in previous studies
have been divided into technical [4, 5] and emotional competencies [3–5]. These two
competencies together represent the degree of achieving goals.
Unlike this previous understanding of competency, the cognitive competency
proposed in this study uses the features of the process to achieve a result, namely
cognition, thus making it possible to describe the competencies that enable front-line
employees to adapt to dynamically changing environments in the actual working place.
We created a cognitive model that comprehensively describes the cognitive process

of front-line employees by conducting retrospective interviews using videos. By con-
structing the model, it was possible to perform quantitative analysis on employees’
cognition. As a result, the cognitive features could be expressed quantitatively by the
frequency of the semantic codes. In the proposed model, we clarified the structure of
cognition during service, where the environment is taken into account in service
behavior decision-making. Furthermore, we also identified the components constituting
cognition by detailed categories, codes, and sub-codes.
Based on the above, we constructed a cognitive model during service that covers
the cognitive components and processes during in-flight service, by which the cognitive
competencies in the hospitality industry can be identified.
5.2 A New Competency of Hospitality from the Cognitive Perspective

In this study, we clarified the concept of “serving not to serve,” meaning that front-line
employees do not serve based on their considerations about customers. This concept is
novel to service research, as it has not focused on cognition but on actual behavior. In
previous research on service operations, the focus was on the behavior of employees
and customers, highlighting the importance of adopting an interdisciplinary approach,
such as utilizing knowledge from psychology and emotions [20].
This study clarifies the cognitive competencies of front-line employees by identi-
fying the cognitive processes during service and analyzing their features. In this way,
the concept of “serving not to serve” was demonstrated by the data. As previously
mentioned, this concept cannot be identified in studies that analyze employee behavior,
such as technical and emotional competencies. Further, there exists a significant dif-
ference in the perceptions of employees and customers during service. Even when
customers think a service is not being provided, employees intendedly decide not to
serve customers based on contextual awareness. This research contributes to the
understanding of the concept of hospitality by clarifying the concept of “serving not to
serve” using cognition.
5.3 Indicating Differences in Cognitive Competencies

From the quantitative analysis, it there are different cognitive competencies required to
serve and not to serve. Subramony et al. [12] indicated that the dynamic aspect of
service should be reviewed to understand how employees in industries requiring
emotional labor are adapting their feelings and thoughts and how they are developing
these skills. The dynamic aspect means that employees change their emotional control
method sequentially during customer service. This is due to real-time interaction
between employees and customers and employee personality.
This study clarified the disparity of cognitive competency based on their years of
experience. During service, the cognitive competency of “risk perception” is important,
and is front-line employees decide not to serve, the competency of “thoughtfulness for
passengers” is important. These cognitive competencies have strong correlations with
the years of experience. Therefore, the more experienced the employees are, the higher
their competencies. Promoting employee training with a focus on these cognitive
competencies can improve the quality of front-line employees’ hospitality to create

competitive advantage.
Although our study only used two scenarios in the questionnaire, the results will
likely not change in another scenario. The results from watching the videos indicated
risk perception that relate less to the actual scenarios. Therefore, our findings are not
affected by the considered scenarios.
5.4 Improving Employees’ Hospitality

As a practical contribution, this study pointed out the importance of training for
increasing the cognitive competency in the hospitality industry. The cognitive com-
petency is a core competency for the hospitality service quality by determining
employees’ performance according to the change of context.
Applying technologies for employee education will be of benefit to managers to
improve employees’ cognitive competency. For example, recording what employees
see is needed to understand their cognition. Therefore, the recording devices such as
smart glasses must be useful for understanding the cognitive competence. Furthermore,
e-learning using smart devices can be used for employee training. The cognitive
competency is a difficult factor for learners (employees) to monitor by themselves.
Therefore, service managers should introduce e-learning systems indicating the real-
time competency level of learners.
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Exploring the Impact of Managerial Responses
to Online Reviews in the Sharing Economy:
A Case of Accommodation Sharing Service
Wenlong Liu1,2(&) and Xiucheng Fan1

1
Fudan University, Shanghai 200433, China
[email protected]
2
Nanjing University of Aeronautics and Astronautics, Nanjing 211106, China
Abstract. Strategies to respond to online reviews have been discussed in many

previous studies. However, researchers rarely pay attention to the managerial
response in the sharing economy context. With sampling from the accommo-
dation sharing service, two studies are conducted to investigate the impact of
responses to online reviews. The results show that B&B’s responses to online
reviews positively affect its popularity ranking, volumes of online reviews and
helpfulness votes. When addressing consumer complaints, response quality,
which refers to response length and empathy, is significantly related to the
helpfulness votes of a review. This research also explores the interaction between
response and review qualities. Results indicate that response length synergisti-
cally contributes to the consumer’s perceived helpfulness with review length and
consumer-provided photos whereas response empathy has no interactive effects
with review length but works well with review photos. Several theoretical and
practical implications are generated on the basis of the research findings.
Keywords: Sharing economy Managerial response Response length

Response empathy
1 Introduction
With the development of Internet technology and the growth of third-party platform-
based business, sharing economy has rapidly emerged as a large and expanding force in
recent years. Sharing economy aims to discover untapped resources as a substitute for
buying products or services themselves [1]. It creates possibilities for people to enjoy
the bonuses of their possessions without significant extra investments [2, 3]. Con-
sumers today are exposed to various types of sharing economy, such as shared cars,
rooms, and other resources. As one of the most well-known sharing economies, Bed &
Breakfast (B&B) has drawn increasing attention from a huge number of young trav-
elers owing to the relative cheap price and the experience of authentic local culture it
offers. However, as a form of informal accommodation [4], B&Bs are not subject to
uniform standards or regulations with regard to their facilities, furnishing, and services.
Accordingly, consumers must evaluate the service by utilizing host reputation clues,
which are typically in the form of online reviews.

Exploring the Impact of Managerial Responses to Online Reviews 21
As the most influential form of electronic word-of-mouth (eWOM), online reviews

play a non-negligible role in shaping online users’ attitudes and facilitating their pur-
chase decisions [5–7]. This role has also been confirmed in the sharing economy,
specifically in the B&B industry [8]. Given the influence of online reviews, managers
as well as scholars have long been concerned about them. Many previous studies have
investigated the indicators to evaluate or estimate the usefulness of online reviews
[9–13], whereas others have proved the significant impact of online reviews on firms’
sales and revenues from online transactions [14, 15]. As with the capability of positive
reviews to help firms enhance their reputation and popularity, the negative reviews can
attract extra attention and bring ruinous influences on firms’ images and performance.
Considering online reviews’ double-sided effect, firms have no choice but to adopt the
“response” strategy confidently.
Responses from businesses are generally regarded as “customer care” and “elec-
tronic reputation management” [16]. By responding to positive reviews, businesses can
strengthen their relationship with satisfied consumers and impress prospective con-
sumers with a smooth interactive atmosphere. By contrast, responding to negative
reviews is not only an opportunity for service recovery by delivering explanations or
solving problems due to service failure; it is also a necessary act to avoid follow-up
discussions or even attacks from other consumers online [17]. Moreover, a business
can convert a previously dissatisfied customer into a loyal patron when complaints are
promptly and adequately resolved [18]. Thus, response strategy to online reviews is
believed to have a significant relationship with competitive performance [19].
The presence (versus absence) of a hotel’s response will result in prospective
consumers drawing further positive inferences regarding the hotel’s level of trust-
worthiness as well as concern for its consumers [20]. By adopting the response option,
different voices of response (conversational, professional, or other voices) lead to
different outcomes [16, 20, 21]. In particular, expressing a high level of empathy to
negative reviews will not only convert the dissatisfied consumer’s attitude but also
encourage prospective consumers to make a favorable evaluation of the hotel’s
responses [22].
Compared with hotels that generally have a relatively well-developed reputation
management system and well-trained online customer service personnel, most B&Bs
are operated by house owners who are probably not well-equipped with professional
knowledge and skills. Some hosts may have recognized the importance of managing
eWOM and started paying attention to guests’ comments, whereas others may not.
Given this situation, this study first aims to address the following research questions:
– RQ1. Do B&Bs’ responses provide them with any benefit?
– RQ2. What makes for a helpful response to consumers’ complaints?
– RQ3. How do B&Bs’ response and consumer review synergistically facilitate
consumers’ understanding of the service?
The rest of this paper is organized as follows: First, existing literature concerning
the sharing economy and studies about online reviews’ response strategy will be briefly
reviewed. Second, this study will determine if the provision of B&Bs’ responses can
bring them any benefits, which will focus on the popularity ranking, volume of
reviews, and volume of helpfulness votes. Third, this study will analyze the impact of
22 W. Liu and X. Fan
quantitative and qualitative aspects of B&B’s response content on the helpfulness

perception of prospective consumers and then determine the effective response strategy
to manage consumer complaints. This study will also explore the interactive effect of
B&B’s response and consumer review on handling online complaints. Finally, theo-
retical and managerial implications as well as limitations will be discussed.
2 Literature Review
2.1 Sharing Economy
The development of information and communications technologies (ICTs) has cat-
alyzed the emergence of collaborative consumption [3]. Being a part of this over-
whelming trend, the sharing economy, as an economic-technological phenomenon, is
fueled by an increasing consumer awareness, proliferation of collaborative web com-
munities, and social commerce [2, 23, 24]. The sharing economy is an umbrella term
with a range of meanings often used to describe economic and social activities
involving online transactions; it originally stemmed from the open-source community
and thus refers to peer-to-peer sharing of access to goods and services [3]. Sharing
economy services are growing into an indispensable part of the information-intensive
services sector by using ICTs to match consumers with service providers, such as short-
term accommodation rentals, car rides, and housekeeping [25, 26].
The rapid growth of sharing economy businesses has threatened the traditional
value chain [27]. Zervas et al. analyzed Airbnb’s entry into the state of Texas and
quantified its impact on the Texas hotel industry over the subsequent decade. They
estimated that in Austin, where Airbnb supply is the highest, the causal impact on hotel
revenue is in the 8%–10% range; moreover, the impact is non-uniform, with lower-
priced hotels and hotels not catering to business travelers being the most affected [28].
The impact manifests itself primarily through less aggressive hotel room pricing, an
impact that benefits all consumers and not only the participants in the sharing economy.
Wang and Juan investigated both B&B innkeepers and consumers to explore the
underlying mechanisms between the service provider’s entrepreneurial orientation and
consumer response [29]. The B&B innkeeper’s level of risk-taking and proactiveness
significantly affect their service innovation performance, which in turn influence
consumers’ perceived service value and satisfaction; thus, the latter determines their
repurchase intention [29]. Although B&Bs have previously evolved into a non-
negligible stream in the hospitality industry, studies about either customer service or
performance management of B&B still require further exploration.
2.2 Response Strategy to Online Reviews

Hospitality businesses are adopting various approaches to online review response.
Some hotels respond to every single review, whereas others may rarely or never
respond to consumer comments [30]. Some hotels respond to negative reviews,
whereas others respond to both positive and negative reviews. Responses to positive
reviews generally show that hotel managers are listening and expressing appreciation to
their consumers. It also reflects their willingness to develop a positive relationship with
consumers. Responses to negative reviews address consumer complaints and promise a
corrective action plan for service failure recovery, aiming to increase consumer satis-
faction [31]. Compared with a no-response baseline, the presence of a response from
the hotel yields significantly more favorable trust and customer concern inferences, as
prospective consumers who have viewed responses to online complaints evaluate the
hotel more positively than those that do not provide responses [17, 20, 32].
Communication style is regarded as an important characteristic of online com-
munication [16, 20]. Conversational human voice is considered an effective commu-
nication style, as it refers to “an engaging and natural style of communication as
perceived by publics” [33]. By contrast, professional voice refers to a relatively stan-
dard style, which is respectful, formal, and task-oriented; however, it lacks affective
expression [16]. When responding to negative reviews, the empathy contained in the
response content is a crucial factor [20, 22]. An accommodating response strategy, such
as sincerely apologizing for unexpected experience and/or promising corrective action,
has a more positive effect on prospective consumers’ evaluation of the hotel than a
denial/defensive or excuse strategy [19, 32].
Individuals also infer the attitude and concern of hotels toward consumers from
several quantitative aspects of management responses. The consumers’ perceived speed
with which an organization responds to consumer complaints has been verified as an
important factor in service recovery as well [33]. A timely response to online reviews
can result in prospective consumers drawing extra positive inferences about the level of
the hotel’s trustworthiness and concern for its consumers [20, 22] and in turn enhance
their perceived helpfulness of an online review [34]. The cumulative frequency of
hotels’ responses to online reviews is also positively related to competitive perfor-
mance [19, 34].
Previous studies indicate that both qualitative and quantitative aspects of man-
agerial responses are influential in shaping consumers’ perception of a hotel’s repu-
tation and performance. However, few studies have discussed this topic in the context
of sharing economy.
3 Research Design, Methodology, and Results
3.1 Study 1: Investigating the Effect of B&B’s Responses
Hypothesis Development. Consumers consider managerial responses an indicator of

customer care [35]. Thus, the provision of managerial responses conveys an important
signal of a firm’s customer-oriented strategy and results in improved satisfaction of
consumers and improved sales [36]. Active listening theory demonstrates that effective
listening contains three dimensions of information processing, namely, sensing, pro-
cessing, and responding [37]. Among the three dimensions, only responding can be
perceived by consumers. Without response, consumers will not know the occurrence of
the other two dimensions [22]. The presence of managerial responses reflects the
consideration and emphasis of a business on communication and interaction with
consumers and its responsiveness to consumer comments, which may result in better
popularity among its competitors [34]. Moreover, frequent responses enhance the
information reciprocity between businesses and consumers and thus can encourage
consumers to write other online reviews [38]. According to exchange theory of
interpersonal communication, an individual who provides information to another
person obligates the recipient, who therefore must furnish benefits in return [39].
Prospective consumers, as the information seekers, acquire information from the
hotel’s responses and thus feel obligated to reciprocate, such as voting for the help-
fulness of the reply [34]. Thus, the current study proposes the following hypotheses:
Hypothesis 1a (H1a). The cumulative number of responses to online reviews is
positively related to B&B’s popularity ranking.
Hypothesis 1b (H1b). The cumulative number of responses to online reviews is
positively related to B&B’s volume of online reviews.
Hypothesis 1c (H1c). The cumulative number of responses to online reviews is
positively related to the total volume of helpfulness votes.
Methods and Results. A crawler was developed on the basis of Python 3.6 to collect
data in this study. A total of 27,626 online reviews of the top 100 B&Bs in Shanghai
from Ctrip.com (one of the leading online travel agencies) were collected by 7th March
2019. The data contain each B&B’s information (e.g., name, popularity ranking,
number of reviews, average valence, average room price, promotion, recommendation
rate, and opening year), review information (i.e., posting date, star rating, content,
number of pictures, and helpfulness votes), reviewer information (total reviews and
total earned helpfulness votes), and B&B’s response. Excluding two B&Bs which have
no reviews, 98 B&Bs remained as the sample of this study. Table 1 shows the char-
acteristics of sampled B&Bs. Given that B&B is a relatively new form of accommo-
dation, B&Bs available on Ctrip.com are less than five years old.
For further analysis, the popularity ranking into -ln(popularity ranking), the volume
of online reviews into ln(volume of online reviews), and the cumulative number of
responses are transformed into ln(Cumulative number of responses). When testing the
hypothesis, several control variables are included, such as average valence, room price,
promotional marketing, recommendation rate, and age of B&Bs, as they may, to a
different extent, influence B&B’s ranking, volume of reviews, as well as volume of
helpfulness votes. Similarly, room price is transformed into ln(room price) and rec-
ommendation rate is transformed into ln(recommendation rate * 100). The value of 1
represents B&B’s promotional activity, whereas 0 represents no promotional market-
ing. Table 2 presents the results of the hypothesis test by using a hierarchical regression
analysis.
As shown in Table 2, the cumulative number of responses can contribute to B&B’s
popularity ranking (0.469***, p < 0.001, H1a supported) and entices consumers to
create other reviews (0.467***, p < 0.001, H1b supported). Frequent responses facil-
itate prospective consumers to understand services provided and issues mentioned in
the reviews better, thus leading to further helpfulness votes (0.446***, p < 0.001, H1c
supported).
Table 1. The characteristics of sampled B&Bs.

Min. Max. Mean Standard deviation
Average valence 4.1 5 4.74 0.19
Room price (RMB) 80 669 325.46 115.46
Promotional marketing 0 1 0.47 0.50
Recommendation rate 0 100% 75.36% 0.42
Age of B&B (years) 0 5 1.51 0.94
Popularity ranking 1 100 50.11 29.18
Volume of online reviews 7 2105 284.10 355.80
Volume of helpfulness votes 0 540 44.83 91.72
Cumulative number of responses 0 1739 186.73 285.82
Table 2. Hypotheses test of study 1.

Dependent variables
B&B’s popularity Volume of Volume of
ranking online reviews helpfulness votes
Independent Cumulative number 0.469*** 0.467*** 0.446***
variables of responses
Control Average valence −0.084 −0.107 0.268**
variables Room price 0.289** −0.063 0.007
Promotion 0.095 −0.052 0.151*
Recommendation 0.074 0.341*** 0.235*
rate
Age of B&B −0.147 0.308*** 0.157
R2 0.281 0.753 0.524
F value 5.927*** 46.150*** 16.729***
Notes: *p < 0.05, **p < 0.01, ***p < 0.001
3.2 Study 2: Investigating the Relationship Between Response Quality

and Helpfulness Votes
Hypothesis Development. As a form of communication initiated by businesses to

engage consumers, managerial responses play an increasingly vital role in eliminating
the negative effects caused by consumer complaints as well as information asymmetry.
However, it does not consistently work, unless it is delivered appropriately. A few
studies have investigated the effectiveness of managerial response from specific levels,
including both quantitative and qualitative aspects of managerial response. Sparks et al.
pointed out that a fast response versus a moderate or slow one will result in prospective
consumers drawing further positive inferences regarding the hotel’s level of trust-
worthiness and concern for its consumers [20]. Li et al. confirmed this statement by
analyzing 212 hotel responses to consumer reviews. Speedy responses were found
effective in enhancing the volume of helpfulness votes [34]. As the main quantitative
measure of the response content, response length still awaits investigation regarding
any relationship with either business performance or consumer helpfulness perception
of online reviews [21]. However, a rising information conveyed by a communication
medium also increases its capacity to reduce uncertainty [40]. Consumer complaints are
explained or resolved sufficiently. As the importance of a speedy response has
repeatedly been confirmed, this study will focus on the quantitative feature of the
response content itself and propose the following hypothesis:
Hypothesis 2a (H2a). The length of response to negative review is positively
related to prospective consumers’ helpfulness votes.
When responding to online reviews, conversational human voice versus profes-
sional voice will result in prospective consumers drawing more additional inferences
about a hotel’s concern for its consumers [16, 20]. Specifically, when responding to
negative reviews, an accommodating response is more effective to improve consumer
satisfaction and enhance prospective consumers’ purchase intention than a defensive
voice [19, 21]. Drawing on the theoretical model proposed by Baccarani and Bonfanti
for oral communication, consumers are believed to expect more warm/empathic
responses than cold/apathetic replies [41]. Responses containing empathy statements to
negative reviews will encourage prospective consumers to make a favorable evaluation
of such response [22]. Thus, the current study proposes the following hypotheses:
Hypothesis 2b (H2b). The empathy of response to negative review is positively
related to prospective consumers’ helpfulness votes.
Business’s response to negative reviews provides potential consumers the oppor-
tunity to learn more about the service in a dual channel rather than a single channel
(consumer review). Previous studies regarding managerial response to online reviews
mostly focus on the stand-alone impact of response, scarcely shedding light on the
interaction between the consumer and the manager. Encouragingly, Xie et al. verified
that the response to online review could moderate the influence of review valence on
future hotel performance [31].
Prospective consumers can learn about the service quality and trustfulness of a
hotel from how the hotel reacts to a long review with complaints. They can also gain
insights as to why the situations in the consumer-provided photos could have occurred
[42, 43]. As mentioned above, negative reviews are not only viewed more but also
perceived as more useful than positive reviews [44]. Thus, a response with sufficient
explanation to a long negative review, especially with photos embedded, will help the
reviewer and potential consumers understand the provided service better. Thus, this
study proposes the following hypotheses:
Hypothesis 2c (H2c). An interactive effect exists between the response length and
the negative review’s length on the prospective consumers’ perception of
helpfulness.
Hypothesis 2d (H2d). An interactive effect exists between the response length and
the number of photos in a negative review on the prospective consumers’ perception
of helpfulness.
A personalized response to an altruistic positive review can make prospective

consumers perceive high helpfulness of the response and expect a satisfactory expe-
rience in the review [19]. Similarly, when consumer complaints are related to certain
controllable factors, confessional and empathic responses lead to high trust toward the
firm. If the B&B innkeeper responds to the complaints that a reviewer posted in a long
review or provide explanations about the situation in the photos in a deeply thoughtful
and apologetic voice, then, prospective consumers will deduce that the B&B is very
concerned about their consumers and their experience. Thus, this current study pro-
poses the following hypotheses:
Hypothesis 2e (H2e). An interactive effect exists between the empathy of response
and the negative review’s length on the prospective consumers’ perception of
helpfulness.
Hypothesis 2f (H2f). An interactive effect exists between the empathy of response
and the number of photos in a negative review on the prospective consumers’
perception of helpfulness.
Methods and Results. In the 27,626 reviews collected for this study, 14,453 (52%)
have a star rating score of 5, indicating a relatively high level of satisfaction. By
contrast, the reviews which are rated less than 5, to some extent, reflect consumers’
disappointment or complaint on certain aspects of the B&B’s service. After removing
the incomplete data, 2,107 reviews containing negative statements remain on the basis
of the mean of all reviews (M = 4.764, SD = 0.626) for the hypothesis test of Study 2.
The number of words in a response is used to measure response length. To evaluate the
empathy level of a response, this study conducted an improved sentiment analysis
based on Python 3.6 with Jieba, SnowNLP, and a self-defined keyword dictionary with
words generally used to express empathy. Jieba is considered the most high-quality
Chinese word segmentation tool [45–47] as it can make a smooth and precise overall
calculation and structure [48]. SnowNLP is a sentiment classifier based on Bayesian
training and is extensively used for sentiment analysis of Chinese texts. The output is a
value between 0 to 1. Furthermore, the expertise of reviewers (total reviews and
helpfulness votes) and review-related information (star rating, review length, and
number of pictures) are included as control variables. Table 3 presents the character-
istics of sampled reviews.
For the hypothesis test, all values of variables are transformed into ln value, except
empathy and star rating. According to Model 1 in Table 4, the relationship between the
length of a response and helpfulness votes is significant (0.034*, p < 0.05, H2a sup-
ported); in addition, the empathy level of a response is positively related to the help-
fulness votes (0.045**, p < 0.01, H2b supported). According to Model 2, the
interactive effects of response and review lengths (0.194*, p < 0.05), response length
and the number of review pictures (0.296***, p < 0.001), and response empathy and
the number of review pictures (0.121***, p < 0.001) are verified (H2c, H2d, and H2f
supported); whereas the interaction between empathy of response and review length is
insignificant (−0.100, p > 0.05, H2e supported). The results largely indicate the
existence of the interaction between consumer review and B&B response.
Table 3. The characteristics of sampled reviews.

Min. Max. Mean Standard deviation
Star rating of a review 1 4.5 3.680 0.930
Review length 0 819 48.107 53.711
Number of photos in a review 0 9 0.388 1.279
Total reviews of a reviewer 0 2025 22.522 115.111
Total helpfulness votes a reviewer earned 0 230 3.305 14.457
Age of a review 2 1097 346.104 258.743
Length of response 2 541 74.719 51.922
Empathy of response 0 1 0.672 0.385
Helpfulness votes of a review 0 47 0.154 1.289
Table 4. Hypothesis test of study 2.

Dependent variables: helpfulness votes
Model 1 Model 2 Model3
Independent Length of response 0.034* −0.086
variables Empathy of response 0.045** 0.111*
Length of response * review length 0.194*
Length of response * number of photos in a review 0.296***
Empathy of response * review length −0.100
Empathy of response * number of photos in a review 0.121***
Control Star rating of a review −0.038* −0.049** −0.050**
variables Review length 0.036* 0.034* −0.076
Number of photos in a review 0.620*** 0.622*** 0.234**
Total reviews of a reviewer −0.165*** −0.167*** −0.163***
Total helpfulness votes of a 0.245*** 0.246*** 0.243***
reviewer earned
Age of a review 0.028 0.035* 0.034*
R2 0.493 0.496 0.502
F value 340.207*** 257.796*** 178.148***
F change 5.848** 10.002***
Notes: *p < 0.05, **p < 0.01, ***p < 0.001
4 Discussion and Conclusion
Although response to online reviews is increasingly being adopted by businesses, its

effectiveness still requires investigation. Particularly, little research has focused on the
managerial response to consumers’ complaints in the sharing economy. Compared with
the hotel industry with mature customer service management systems, B&Bs are pri-
vately operated by non-professional property owners. Therefore, understanding the
importance of reputation management and customer response system is necessary for
them. Thus a series of studies were conducted to evaluate the effectiveness of B&Bs’
responses to online reviews.
According to the results of Study 1, the provision of B&Bs’ responses is positively

related to their popularity ranking, volume of reviews, and volume of helpfulness votes.
This finding indicates that B&B’s responses play a very important role in the process of
prospective consumers’ evaluation about the service. This form of interaction and
communication can also encourage consumers to write other reviews. These findings
are, to some extent, consistent with the results of the study conducted by Li et al. in
which they sampled hotels that responded to consumer reviews [34]. They found that
frequent response enhances information reciprocity, thus encouraging consumers to
leave additional reviews, which in turn, can also improve a hotel’s popularity ranking.
Although the relationship between response frequency and helpfulness votes was
insignificant in their study, the positive effect of the cumulative number of responses on
prospective consumers’ perceived helpfulness is revealed in B&Bs in this research. As
B&Bs provide relatively non-standard services, hosts’ responses can eliminate the
information asymmetry caused by a consumer’s complaints and help prospective
consumers understand the service better. This kind of effort may contribute to
improving consumers’ perceived trustworthiness of service providers as well as their
purchase intention and ultimately influence competitive performance [19, 20].
According to the results of Study 2, response length and response empathy have
positive relationships with helpfulness votes. Previous studies have pointed out that the
length of an online review is influential on its helpfulness as it determines the amount
of information it conveys [9–11]. Similarly, longer responses can convey more
information than shorter ones, reducing prospective consumers’ perceived uncertainty
[40]. Furthermore, the interaction between response and review lengths with photos
indicates that using sufficient words to restate, paraphrase, and resolve the problems
raised by the consumers in long reviews and/or photos are necessary [37]. When
responding to consumers’ reviews, especially to negative reviews, the use of empathic
expression not only improves consumer satisfaction but also causes prospective con-
sumers to evaluate the response favorably, which will result in additional positive
inference about the service [22]. By simultaneously considering the non-significant
interaction between empathy and review length, regardless of the length of a con-
sumer’s review, empathic communication is consistently effective when responding to
consumer complaints. However, empathy plays a relatively greater role when
responding to consumer complaints with more photos than those with fewer to without
photos. As photos provide rich and persuasive information that may influence potential
consumers’ purchase intention [42], the more photos embedded in a negative review,
the more effective empathic response will be on showing the B&B’s concern for its
consumers.
4.1 Theoretical Implications

As the main form of eWOM, online reviews have been extensively discussed in e-
commerce related studies. Researchers in the field of hospitality and tourism also
displayed significant concern toward online reviews in the service sector. However,
few studies have investigated the effects of online reviews in the sharing economy,
such as B&Bs. Given that B&B is a relatively informal business form that provides
non-standard service, online reviews are considered the most important cues for
potential consumers to evaluate the service. In contrast to previous studies which

largely focused on the online review itself, this study takes a unique perspective by
focusing on the B&B host’s response to online reviews as a more comprehensive
approach to studying online reviews. The significant relationship between B&Bs’
responses and their popularity ranking, the volume of reviews, as well as volume of
helpfulness votes enrich the framework to understand the usefulness and impact of
online reviews, and to some extent, provide theoretical support to predict a B&B’s
performance based on its effort to interact with consumers.
Managerial response has been increasingly drawing attention from researchers.
Existing studies have verified the impact of the presence of managerial response and
response frequency but rarely put interests on the response quality. This study intro-
duces two indicators, namely, response length and empathy, to measure the content
quality of a response. By using a consumer self-report method, Min et al. have
determined that a response with an empathetic statement is favourable [22]. The current
study employs a sentiment analysis method to analyze the level of empathy. The
measurements developed by this study provide a reference for others to study man-
agerial response.
4.2 Practical Implications

Currently, most hotels interact with consumers and resolve the online complaints by
responding to online reviews. It not only shows business’s concern for its consumers
but also decreases the negative effect of information asymmetry on potential con-
sumers’ purchase intention. Similarly, our research findings show that interacting with
consumers can contribute to B&B’s popularity ranking, promote additional online
reviews, and improve information receivers’ perceived helpfulness of online reviews.
Thus, B&B hosts should maximize the reputation management system of online
platforms and actively respond to online reviews.
However, as private property owners, most B&B hosts are non-professional indi-
viduals who lack the skills of eWOM management. The findings of this study suggest
that response length and empathy convey signals about a B&B host’s attitude toward
consumer complaints. Specifically, when responding to complaints in a long review or
a review with photos, the B&B host should provide a detailed explanation and/or a
specific corrective action. Conversely, empathic statements should frequently be used
to show how B&B understands and cares about its consumers.
4.3 Limitations
As one of the first works on investigating online reviews in the sharing economy, this
research provides a comprehensive perspective to study eWOM in the sharing economy
context. However, in the sharing economy, several other factors may also influence the
effectiveness of response. To illustrate, compared with the hotel’s staff, B&B hosts
have rarely been educated or trained to communicate with consumers. Consequently, a
notable relationship exists between the host’s personality and his/her communication
style. Moreover, do hosts’ demographic characteristics, such as educational back-

ground, gender, age, and so on, affect their response strategy decision? Does the
business scale (e.g., number of rooms) influence the B&B owner’s response efficiency
to online reviews? Other studies are eager to explore the above questions in the future.
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“Omotenashi” Must Comprise Hospitality
and Service
The Importance of a Clinical Approach to Practice
and Science in the Service Industry
Tetsuo Kuboyama(&)
Graduate School of Management, Kyoto University, Kyoto 606-8317, Japan

[email protected]
Abstract. The divergence of “scientific knowledge” and “practical knowledge”

is suppressing productivity in the service industry. This is because science is
lacking in the perspective viability that is demanded by practice. A concept of
service must be created through a “clinical” approach done as fieldwork, with
both science and practice using common terminology. By clinically redefining
the three keywords of the service industry, “omotenashi,” “hospitality,” and
“service,” this paper elucidates the correlation between productivity and these
concepts in order to bring science and practice closer together. The redefinition
is, specifically, that “Hospitality” refers to the development characteristics that
arise to meet the complex needs of customers, while “Service” refers to the
accumulation of “hospitality” knowledge, as filtered and standardized by busi-
nesses. Additionally, “Omotenashi” refers to the added value of the experience
that is expected by customers, and is a “story” that is created from a combination
of “Hospitality” and “Service.” What contribution can a redefinition of these
three concepts make to productivity? The contribution to be made is toward an
enhancement of productivity, made possible by a research approach that is both
scientific and practical, and that incorporates diverse hypotheses in a manner
that has been hitherto difficult to accomplish; this is to be achieved by clarifying
the interrelation between the concepts.
Keywords: Omotenashi Hospitality Service Clinical knowledge
1 Introduction
Today’s service industry accounts for 70% of Japan’s GDP (Fig. 1), and expectations
for the pursuit of a viable science for improving service industry productivity have
never been higher. Because of these expectations, practice and science must become
closer to share their knowledge and become integrated.

“Omotenashi” Must Comprise Hospitality and Service 35
Fig. 1. Japanese industrial structure 1955-2014, National Accounts, Cabinet Office [1]
The decline in the share of the manufacturing industry and the growth of the non-
manufacturing industry are global trends. The manufacturing industry share in the US,
UK, and France has dropped to around 10%, and the service industry share in the
emerging countries accounts for 50% to 70% [2] (Fig. 2). In Japan as well, it is
considered that the service industry will be further developed in the future.
Fig. 2. Changes in the share of manufacturing and service industries in other countries,
EUKLEMS data base [2]
It has been a long time since the low productivity of the Japanese service industry
was pointed out (Fig. 3). However, in actuality, there are evident differences between
practice and science as to the interpretation of “knowledge.” Much “knowledge”
accumulated in practice is tacit, and floats in the absence of interplay between scientific
and practical knowledge, each of which allow the heterogeneous, independent exis-
tence of the other. However, practice must be explained scientifically. The sharing of
“knowledge” requires a clear definition of terms. The three terms important to the
36 T. Kuboyama
service industry, “omotenashi,” “hospitality,” and “service,” are not clearly defined by
prior researchers so as to allow them to be understood by practitioners. Definitions of
terms by scientists are difficult to understand for practitioners, and often given no sense
of the clinical. At the same time, these three practitioners’ terms are, for scientists,
“individual” and “tacit,” and feel very distant from the natural sciences. Based on prior
studies, this paper provides practical a pragmatic examination of these three terms,
redefining them scientifically in order to bring “scientific knowledge” and “practical
knowledge” closer together.
Fig. 3. Comparison of labor productivity in the non-manufacturing industry with the United
States (2009), EUKLEMS data base 2008, 2009, 2012, GGDC data base, JIP data base 2012,
Bureau of Economic Analysis [3]
The essence of the problem is the divergence between “scientific knowledge” and
“practical knowledge,” with science lacking in the perspective of the viability
demanded by practice. Correcting this divergence requires a “clinical knowledge”
approach through fieldwork. Noting the source of the divergence between practice and
science, Kobayashi [4] touched on the need for fieldwork, saying, “Practical research
has individual, symbolic, and active characteristics. Its validity may be called into
question in the universal, ethical, and objective perspective that is the standard for
empirical science” [4]. Further, Kobayashi pointed out the problems of practitioners
with an example from the world of civil engineering practice, with the thinking of
Schön [5] as a foundation. “(1) Reflection in action as professionals is not enough.
(2) There are few opportunities to acknowledge oneself as a technical master and
reflect. (3) Reflecting practitioners cannot turn reflections into explicit knowledge.”
Schön explained the need for systematization of “field knowledge”. In addition,
Sawabe [6] focused on the mutually beneficial usefulness of research and practice
through the clinical studies of Kaplan [7] and Nakamura [8], who emphasized field-
work in managerial accounting research as a key concept. He noted, “Clinical
knowledge is created using both practical knowledge (that which practitioners are
aware of) and scientific knowledge (that which observers accept), and is a framework
that appropriately categorizes individual phenomena.” Thus, this paper explains the
three major terms of the service industry, “omotenashi,” “hospitality,” and “service,”
scientifically, and redefines them, presenting a practical background based on clinical
processes. The following are expected from the analysis of these terms: (1) creation of a
common understanding between practice and science; (2) formation of systematic,
comprehensive management thinking at the frontlines of practice; and (3) responsive-
ness to rapid changes in the times and diverse customer preferences. In other words, by
using common terms, “knowledge” will increasingly become explicit. With the cre-
ation of a service management methodology through linguistic characteristics, we can
expect to achieve a co-existence of science and practice in our thinking.
There are no unified definitions for these three terms. Accordingly, this paper gives
examples of this lack of unity and the diversity of interpretations in practice, in order to
accurately present the status quo. Next, by comparing the research perspectives of two
researchers, the author wishes to present a blended perspective with the author’s
practical experiences. At the same time, the paper will deepen the discussion by
pointing out internal inconsistencies of prior researchers. For example, prior studies
state that, while “omotenashi” has something to do with the definitions of “hospitality”
and “service,” those studies do not touch on the practical importance of “omotenashi”.
However, the importance of the word “omotenashi” in service design as the overall
assessment of customer experiences (stories) must also be shown.
2 Expressions of the Concepts Inherent

in the Three Major Terms
With a blended perspective with the author’s practical experiences, the concept of
“Omotenashi” is the overall assessment of customer experiences (contexts) made up of
continuous touch points. In other words, omotenashi can be seen as service design into
which individual experiential stories are woven. However, “Omotenashi” as a dairy
term is generally translated as “hospitality” in English, and the two words are essen-
tially synonymous, while “service” is understood as being superior, with greater sub-
stance and sincerity. However, in regard to “hospitality,” prior researcher Yutaka
Yamauchi focused on “hostility,” as was pointed out by Derrida [9], in writing about
service as a “struggle” [10]. Yamauchi did not make a linguistic distinction between
“hospitality” and “service.” On the other hand, sociologist Tetsuji Yamamoto asserted
that “service” and “hospitality” are completely different. Yamamoto’s definition relied
on a theory of the state, viewing “service” as a tool for social structure, with a uniform
existence in which the ethics of “society” rules and standards are at work. Yamamoto
developed a theory of dualism, in which “hospitality” is juxtaposed with “service” as a
world of subjective non-separation. This paper critiques prior studies, while striving to
combine science and practice by redefining the aforementioned three terms, and clin-
ically validating those terms from a new perspective. By showing the correlation
between these three terms, the paper extracts the inherent concepts existing therein.
38 T. Kuboyama
3 Prior Studies
The perspectives of prior researchers Yutaka Yamauchi (Professor, Kyoto University

Graduate School of Business Administration) and Tetsuji Yamamoto (Former Visiting
Professor, Tokyo University of the Arts), and from the service industry Malcolm
Thompson (General Manager of The Peninsula Tokyo), regarding the three terms are
presented below. (Thompson’s opinions were selected by the author) [11].
3.1 The Two Perspectives of Yutaka Yamauchi: Issues

with and Developments in “Hospitality”
“Hospitality Is a Struggle”. Yamauchi [12] cited Derrida [9] in defining “hospitality”

as a struggle. The Latin root of the word is hospes, which denotes a confrontation
between two things. In other words, “hospes” is a combination of “hostis” and “pets” to
form “hostilis” (the intent of hostile, unrecognized thing). In addition, Yamauchi notes,
“What does the thesis mean that says service is a struggle? Service is the fusing of the
beautiful, harmonious facade and the abyss of struggle.” Service has two meanings,
namely (1) a beautiful, harmonious facade and (2) the abyss of battle. In other words,
he decidedly says that a genial response to a customer is a facade (a false front) [13],
with the essence being a “battle.” He continues, saying, “The essence of service is the
abyss of struggle. A facade is configured so that one can withstand the abyss. Service
has a portion that is a facade, with the essential aspect at a contrasting orientation. The
beauty, solicitude, and satisfaction of the facade are important, and at the same time the
deficiencies, contradictions and struggles are important. The harmonious facade is, in a
sense, a story of something being done too well” (Yamauchi [12]).
However, there is another way to view Derrida’s explanation of a “struggle.” Tetsuji
Yamamoto noted that “Hospitality should not be regarded as ‘an enemy’ or ‘struggle,’
but interpreted as a manifestation of reciprocity” [13]. This reciprocity can be placed
into three categories, namely (1) the point of contact between advanced skills and
historical, traditional cultural skills (skills); (2) the point of contact between environ-
mental places and cultural history (concepts); and (3) the point of contact between
private feelings and parallel beauty (subjects). These transform each other and are
interrelated. Yamamoto proposes using this concept as a hospitality skill. There are
some misgivings about Yamauchi’s perspective; first is the obsession with the ety-
mology of the word “struggle.” This can be understood to a certain extent, though
stating that the practice of service is a “story of something done too well and a
harmonious facade” diverges from the essence of practice. The second misgiving is
treating “service” and “hospitality” as synonyms. The title of Yamauchi’s work is
“‘Tousou toshite no Service” (Service as a Struggle), though it starts with the root of
the word “hospitality.” If “service” and “hospitality” are synonymous, the interpreta-
tion of the single word “service” should be sufficient to show the context of all service
industry phenomena. However, it is impossible to show every possible context with
“service” alone. This is because contexts of practical service are thought to be inter-
woven with diversity and mutual subjectivity, interpretations of complex, subtle psy-
chologies, and creative responses. Being careless with the explanations of words makes
one scientifically defenseless, and there is a fear of mistakenly recognizing the per-
sonal, unreplicable treatment symbolized by a Japanese inn proprietress as high-quality
omotenashi, along with individual emotional episodes, and having these expanded and
disseminated as examples of “omotenashi.”
The Service Design of Sushi Restaurants Is One of Fear. Yamauchi [12] declared,
“If service is understood as a struggle, the service design of sushi restaurants is strange.
They are designed to be difficult to understand. The master of the restaurant has the
option to make a menu, and can politely explain the menu, but does not do so. Such a
design heightens nervousness in customers, and seems to be quite distant from user-
centric or human-centric thinking to date. According to Donald Norman, a proponent
of human-centric design, the discussion on emotional design has intensified this point.
For example, roller coasters provide fear to customers, the value being that ‘they can
brag to others that they could deal with the fear’ [15]. ” However, given the practical
experiences of the author, there are some doubts about this “world of the struggle.”
According to Ken’ichiro Nishi, the owner of the venerable Tokyo restaurant Kyoaji,
“The reason menus in sushi restaurants don’t have prices is that prices change
according to market value, and the lack of menus (with prices) shows that everything is
fresh, with nothing frozen. It’s the mark of a good, well-regarded shop. Also, when
market values fluctuate, we try to ascertain customer budgets and make sure what
customers order fits within their usual budget. It’s a sign that the customer can have
peace of mind with the Japanese way of doing business.” Thus, this is not a tool for
arousing fear in customers, nor is it a design for showing one’s self-control in con-
quering fear, as with riding on a roller coaster. This sort of approach from the world of
science causes confusion among many practitioners. Certainly, the perspective of a
“struggle” might apply to a limited number of customers, but there can be no escape
from the business viability aspect. The deep “hostility” derived from Derrida is nothing
more than the reciprocity of Yamamoto [14]. In other words, just as the term “market
value” implies, value fluctuates as it is impacted by changes in the natural environment
and demand and supply balances in the marketplace. However, the Japanese way of
doing business, with the customer at the center of business, assumes that commerce
occurs only when there are customers. Thus, knowing how much each customer will
spend and as much as possible making a bill fit that budget is also “market value,” and
is part and parcel of commerce. Before spending or making money, the development
and maintenance of “customers” takes priority. This is not a design for fear. Yamau-
chi’s perspective does not display an understanding of the cultural capital peculiar to
Japan in its method of commerce.
Hara [16] noted that the relationship between service providers and customers is one
that co-creates value. “Those involved in a service jointly work to dialectically improve
service literacy and co-create value, creating a foundation for value creation based on
long-term relationships of trust”. The fact that the root of Japan’s way of commerce is
in “developing and maintaining customers” (Baigan Ishida) cannot be overlooked:
“Even if one supposes that selfishness is good for business, one can never allow harm
to others (customers) no matter how much profit may result” [17].
40 T. Kuboyama
3.2 The Assertions of Tetsuji Yamamoto
Tetsuji Yamamoto’s Perspectives on “Hospitality” and “Service”. Yamamoto

explained the significance of “hospitality” through a theory of the state: “The essence
of social design is a space homogeneous and uniform with the national state space. In
other words, this is a design of homogeneous space, with service being a norm and rule
in the structure of ‘society [18]’,” Yamamoto thought of “hospitality” as an ever-
changing response to all types of parties, synonymous with the “hospitality” and
“service” of the aforementioned Yamauchi, though Yamamoto understood these two
things as two completely different poles.
Tetsuji Yamamoto’s Perspective in Relation to the Definitions of “Service” and
“Hospitality”. Yamamoto [19] declared, “Service and hospitality are mixed up, not
just in Japan, but globally.” “Service is doing the same thing for everyone. By contrast,
hospitality is doing things differently depending on the other party. Hospitality has no
norms or rules.” “The 20th century was a century of service. The 21st century is an era
of hospitality.” He polarized the two, asserting that “service” was something of the
past, while “hospitality” was of the future.
In addition, Yamamoto [20] asserted that “hospitality” is erased in a “service” society,
and pointed out five problems.
(1) There is no differentiation between single relationships and co-relationships.
(2) “Hospitality” does not function in society.
(3) Product objectification makes “hospitality” unrecognizable.
(4) The theoretical thinking of subjective separation makes “hospitality” unrecog-
nizable.
(5) Human agency makes individual logic unrecognizable.
A careful reading of these practical viewpoints means that the problem of (1) is the
confusion of personal response and fixed services packaged for group treatment;
(2) can be interpreted to mean self-existent “hospitality” cannot thrive in a world (or
society) bound by structured rules and regulations; (3) shows the state of products and
services subjectively provided as ready-made goods (objects), with no room to insert
the customer’s volition. This is understood in Goods Dominant Logic. (4) can be
understood to mean that, in logical thinking where “agents” and “objects” are separate,
the mutual subjectivity of service providers (co-creation logic) is not put to use.
(5) means that “hospitality” is not service providers responding with their will, but
using customer will or the will (or capital) of place [21]. However, this viewpoint is not
a practical one in terms of viability. There is no viable strategy for “hospitality.” In this
logic, the provision of “hospitality” vanishes through the characteristics of “service”
(IHIP characteristics). In actuality, is it not “hospitality” (with development charac-
teristics), rather than the provision of high cost services for reduction, that shifts one-off
special treatments to “services” (with standardized characteristics), and strategizing the
accumulation of services to support viability? Here is seen the divergence between
practice and science.
3.3 “Hospitality” in Practice that Matches the Times

In the world of practice, what must be avoided above all else is continuing to provide
fixed, unchanging services to customers. This is a starting point for service philosophy.
Customer preferences and experience values change with trends and advances in the
world. The reality is that there is no such thing as a customer with unchanging pref-
erences. Preferences change not only due to changes in the external environment, but
also due to visitation patterns. Customers visit businesses individually, as families, as
unmarried couples, as married couples, as organizations, and so forth, and responses
must be changed for each of these cases. The same expressions of service must not be
used. Individuals must be provided service focusing on individual preferences and
experience, while services to families will change based on age, gender, occasion and
season. For unmarried couples, services will change by occasion and season, with
considerations for age, age gaps between women and men, and women’s preferences.
Services for married couples must consider age and the preferences of the wife, with
discernment of the occasion, season, and health. Organizations require responses that
reference organization standpoints, composition, purpose, season, age makeup, visit
frequency, and past issues. People not involved in services may think that these types
of varying services are ideal but unrealistic. However, reality is the constant pursuit of
the ideal. No one thought that convenience stores would ever sell oden hotpot or coffee,
or would steal market share from specialty shops. Steady progress over time is the
reality of the world. Responding to changes in the external environment is not limited
to advances in AI; these are environmental responses exemplified by the responses to
VUCA (Volatility, Uncertainty, Complexity, and Ambiguity), and to the LGBT and
other constituencies. Accordingly, Yamamoto’s response to changes in “hospitality” is
an effective theory even in practice, though a shift from “hospitality” to “service” is a
condition for realizing viability.
3.4 Differences Between Prior Research and Practice

Yamamoto does not recognize the significance of “service” as a structuralistic, uniform
norm, and defines “hospitality” as more evolved, placing it in opposition to “service.”
The “hospitality” that Yamamoto noted as a concept has importance in the world of
practice as well, and enables strategic service design. However, Yamamoto’s definition
of “hospitality” is difficult to use in practice. The problem is that at times only its
logical nature is prioritized, with viability being left behind. With the hurdle of via-
bility, we must attempt to establish a logic to augment practice. I wish to reinforce the
fact that “service” has not been redefined.
3.5 Interpreting Malcolm Thompson

As a practitioner working in the management of a foreign-financed hotel chain rather
than as a researcher, how does Malcolm Thompson view the difference between
“service” and “hospitality”? Thompson integrates the two. He states, “‘Service’ is the
grease that turns the gears of “hospitality, and allows for smooth operations. ‘Hospi-
tality’ cannot be discussed as something merely intuitive and intangible. ‘Service’ is
42 T. Kuboyama
almost tangible. Thus, skills and techniques are required. From the perspective of the
customer, ‘hospitality’ refers to the overall experience of a customer. It is the sense and
impressions one feels. ‘Service’ is the grease required to keep those experiences turning
without hesitating” [22]. “Hospitality is the sense that customers feel through an overall
experience, and “omotenashi” refers to individual services to customers that create
“hospitality.” In other words, it is service with a “personal touch.” Although this can be
understood as a definition of the implementation of hospitality, it is lacking as a
strategic discourse or service design. As a definition, it is something intuitive, tending
to the practical. “Hospitality” is a blanket term for individual experiences, and cannot
be visualized. However, “service” can be visualized. It exists as a phenomenon that can
appeal to customers; but what is lacking in the world of practice is analytical thinking
in business to make knowledge explicit. Creating explicit knowledge and systemati-
zation after reflections is important.
3.6 Interpreting in the World of Service Practitioners

The lack of analytical thinking in business to make knowledge explicit can be pointed
out by analyzing the results of questionnaire conducted by the author on executives of
other foreign-affiliated hotels, Japanese hotels and some service companies. The fol-
lowing is an excerpt of the answers [23].
“Omotenashi is a heart that carefully considers the other person. Japan’s unique mind and
provided at the discretion of the individual. Hospitality is providing added value in every aspect.
Service is offering added value by humans, limited to software. One element of hospitality.”
Hirohide Abe, vice president-revenue, Asia Pacific of the Hyatt Hotels & Resorts
“Omotenashi is the same as Hospitality. Hospitality is beyond “service”, employees read

customer requests, take the customer’s standpoint, proceed proactively and respond to customer
requests. Service means customer service according to the manual.”
Hirohisa Fujimoto, seniror director of development, Japan & Micronesia at HILTON
WORLDWIDE
“Omotenashi is proactively responding to customer requests and needs. Hospitality is, for
example, talking to entertain customers. Not necessarily provided in return for consideration.
Service is obtained at a price”
Daisuke Yoshihara, director of corporate planning office of the Place Hotel Tokyo
“Omotenashi and hospitality are the mental things that people treat, and service refers to the
specific acts of omotenashi and hospitality.”
Dadao Kikuchi, chairman of the Royal Holdings Co., Ltd.
“Omotenashi is a concept based on a Japanese cultural background and hospitality and service
are concept based on a western cultural background. Omotenashi is the same as hospitality.
Hospitality is an act to improve the quality of service. Proactively providing what is expected.
The word “service” includes the meaning that the service recipient is in a higher position and
the service provider is in a lower position.
Koji Takabayashi managing director of Horwath HTL (Consulting Firm)
“In the medical field, “service” is a medical practice, and “hospitality” means promptly per-
forming necessary treatment for a patient after obtaining consent from the patient. “Hospitality”
refers to the patient’s mental support and giving priority to saving the patient’s life over the
patient’s “satisfaction”. There is no word “omotenashi” in the medical field. A similar term is
“patient response”. It refers to using “sama” when calling the patient’s name (calling the
patient’s name with a title), and striving to reduce pain during treatment as much as possible.”
Ryoichi Nagata, Representative Chairman, President & CEO of Shin Nippon Biomedical
Laboratories, LTD.
The above comments can be summarized as follows (Table 1). The charts plotted
according to the characteristics are shown below (Fig. 4).
Table 1. Interpretation of three keywords by Japanese service providers

Omotenashi It is a translation of “hospitality” and “omotenashi” and “hospitality” are
essentially synonymous
Hospitality It is a sincere response with a more fulfilling “service”, and it is a matter of
considering customer comfort regardless of the price
Service It is a tool that realizes comfort, and is a standardized response provided by
consideration
Fig. 4. Characteristics of the three keywords interpreted by Japanese service providers
The interpretation of the three keywords in the Japanese service industry is that
“omotenashi” and “hospitality” are synonyms, and “hospitality” is a treatment that does
44 T. Kuboyama
not require a return, whereas “service” is a customer service according to consideration.

As for the relationship between “hospitality” and “service”, it can be said that “hos-
pitality” is what enhanced “service”. However, the recognition that “omotenashi” and
“hospitality” do not require consideration may lead to denial of business as a company.
Then, it becomes impossible to solve the low productivity problem facing the current
Japanese service industry.
If the quality of “service” is enhanced by “omotenashi” and “hospitality”,
“omotenashi” and “hospitality” should rather be regarded as a source of added value.
And it is essential to have a scientific approach to how these three elements relate to
each other and provide new value to customers.
Cornell University School of Hotel Administration also conducted a survey of the
service industry about the meaning of “hospitality” and “service”. The following
responses were obtained (excerpt) [24]:
“Hospitality is welcoming a person into your environment, such as your hotel or restaurant, our
home, or even your office, and making them fell warm and secure and that they will be cared for.
Service is placing yourself at the disposition of others, anticipating their reasonable needs and
freely offering the meeting of these needs, with integrity and caring, to the best of your ability.”
John Sharpe, former president and CEO of the Four Seasons Hotels and Resorts
“Hospitality: The ability to make people feel comfortable in their surroundings and to connect
with them in a genuine and personable manner. Being courteous and smiling are among the
hallmarks of hospitality, as is being genuinely concerned for your guest’s experience and
thinking one step ahead of them at all times.
Service: The ability to engage with guests in a discreet, professional, and warm manner, to take
advantage of each moment one has with a guest, to interact with them as individuals, and to put
the guest before all else.”
Shane O’Flaherty, president and CEO, Forbes Travel Guide
“Hospitality: We strive to consistently deliver a Bloomingdale’s experience that is both per-

sonal and engaging. We want our customers to feel a sense of community, where fashion and
style are always made easy to navigate. Service: Relationships are the cornerstone of our model.
Customers are looking for great merchandise but many times will return because of great
service. Our associates are expected to build their business through loyal clients who will
reward personalized care.”
Tony Spring, president and chief operating officer, Bloomingdale’s
“When I think of hospitality, I think of providing warm, caring, genuine service. I think we
need to take care of our guests in a thoughtful, caring way as if we were welcoming them into
our homes. If ever we come across as aloof, I think we have failed as a hotel. When I think of
Service, I think of going above and beyond the expectations of our guests.”
Maria Razumich-Zec, general manager, regional vice president, USA East Coast, The Peninsula
(Chicago)
“My view is that service comes from thinking of the head. Hospitality comes from that plus
intuition of the gut and emotions from the heart.”
Ted Teng, president and CEO, Leading Hotels of the World
“Hospitality: Graciousness. Service: Respect”

Randy Morton, president and CEO, Bellagio Resorts/Las Vegas
“Understanding the distinction between service and hospitality has been at the foundation of our
success. Service is the technical delivery of product—or how well you do your job. Hospitality
is how the delivery of that product makes its recipient feel—or who you are while you do your
job. Service is a monologue—we decide how we want to do things and set our own standards
for service. Hospitality, on the other hand, is a dialogue. To be on a guest’s side requires
listening to that person with every sense, and following up with a thoughtful, gracious,
appropriate response. It takes both great service and great hospitality to rise to the top.”
Danny Meyer, owner, Union Square Hospitality Group
“Hospitality is showing others you are on their side. It builds relationship, has a warm feeling,
offers flexibility, understanding and comes from the heart. Service is the technical procedure of
doing our work. It is the transaction; has trained/industry knowledge; is systematized, com-
petent, and comes from the intellect. Service defines what we do and hospitality personalizes
how we do it. Success results from the integration of Service and Hospitality. Here is the
Success Formula: Integrity = Service ^ (Hospitality)
I = S (to be H degree)
H is exponential thus very powerful!”
Chick Evans, owner, Maxie’s Supper Club and Oyster Bar (Ithaca, NY)
Michael D. Johnson, former Dean, Cornell University School of Hotel Adminis-

tration quotes on “hospitality” and “service” as follows:
“Hospitality is foremost the application of the golden rule or treating others as you would
expect to be treated yourself. While largely universal, every country and culture has its own
unique expectations as to how to provide a friendly, welcoming and generous treatment of
visitors, which is the essence of hospitality.”
“Ultimately, service is the ability to deliver a great customer experience either as a solutions are
new to the world, just new to the company providing them; otherwise, customers would provide
the service them-selves. An outstanding service provider allows customers to trade off money
for time or time for money” [24].
These interpretations represent the actual situation in the field of services, and there
are some common points in the interpretation of each person, but the definitions are
rather vague and not scientific.
This fits with Kobayashi [4] assertion that “Reflective practitioners in the action
cannot make their reflections explicit knowledge.” This is where the problem of
divergence between scientific knowledge and practical knowledge becomes clear.
4 Redefining and Filtering “Omotenatshi,” “Hospitality,”

and “Service”
As we have discussed to this point, there are no clear definitions of these three words,
either in the world of service practice, or in academia. In practice, theoretical arguments
are looked down on and avoided, while scientific knowledge for its part diverges from
the real world. Thus, the author adds his practical experiences as “clinical knowledge”
connecting practical and scientific knowledge, to define these three words as follows:
46 T. Kuboyama
Omotenashi (the overall assessment of customer experience) = Hospitality (de-

velopment characteristics) + service (standardization characteristics).
In other words, “omotenashi” is an amalgamation of the “hospitality” that is nor-
mally researched and developed, and the standardized, generalized “service” generated
from portions of hospitality. “Hospitality” is conceptual and fluid, with a liquidity that
conforms to the desires of the other party. It seeks out new needs based on the age,
orientation, physical condition, lifestyle, and experience value of the customer, and
experimentally provides product services. If we liken it to an automobile, “hospitality”
is a prototype that strives for various potentials. It gains solidity as standardized ser-
vices only by recognizing as effective the filters of the three aspects of viability, namely
(1) cost-effectiveness, (2) marketing, and (3) competition. Again likening it to an
automobile, “service” is a platform. Not only the aforementioned Yamamoto, but any
recipient of services has a negative impression of the cold, uniform responses of “by-
the-book” services, though in actuality doing things by the book, or standardizing and
generalizing is important for viability. The problem is that the book is never revised
afterward. The example Yamamoto notes of a menu of a restaurant in a storied hotel
going unchanged over decades is “service” that compromises customer attractions.
However, always accepting customer needs and continually standardizing those ele-
ments that are operable simply as standard “services” inevitably increases the volume
of services. By doing so, firms can pursue customer satisfaction with an increased value
of customer experience, and in addition can realize differentiation and added value
versus competitors through always improving service levels (Fig. 5). Maintaining
customers and developing new customers through the development of attractive
“hospitality” enables an expansion of both customer quality (via complex consumption
behavior by improving lifestyle through increased experience value) and quantity (via
the application of customer engagement theory).
Fig. 5. Chart of redefining three keywords

Adopting Yamauchi’s [25] perspective that the products and systems that service
design targets are entirely different from service per se, and accepting the viewpoint of
that adapting, on an as-is basis, the discussion on service design to services is difficult, I
have attempted to form “clinical knowledge” through a careful reading of prior studies
and considering my practical experiences. In other words, as was noted by Yamamoto
[19], though “service” and “hospitality” are different, “service” is not therefore repu-
diated. Cornell University accepts that the two are interrelated, and the validity of the
view that these two differing concepts co-exist should be noted.
“Hospitality and Service are both distinct and interrelated. Hospitality is like
strategy, whereas service is its tactics. I believe that they both are integral to every
business, and they are fundamental to our industry” [26].
4.1 The Merits of Redefinition

“Hospitality” is the R&D-driven, experimental area of responding to customer needs,
while “Service” extracts and formalizes the discovered practices into a commercially
feasible form. The biggest merit of redefining these two areas as parts of “Omotenashi”
is that it enables businesses to ensure commercial viability while addressing the
problem of low labor productivity. Because it becomes feasible to realize a rise in
customer numbers and expenditures by responding to customers’ needs carefully and
proposing a new sense of value that meets the rise in customer satisfaction continu-
ously. When the individual definitions of the three concepts “Hospitality”, “Service”
and “Omotenashi” are clarified, their respective characteristics and relationships
become clear and their interconnectedness can be seen. As an example, let us assume
that a customer requests the provision of a service that is not provided in the existing
service program. The service provider has two options in these cases: either refuse to
provide the service as it is not in the program, or to try to satisfy the customer’s wishes
even though the request is out-of-scope. The latter case involves the experimental
provision of a new customer service and falls under the heading of “Hospitality.” This
is equivalent to R&D in manufacturing. If the customer is satisfied, and the new service
passes through the filter of being verified for commercial feasibility, the company
standardizes the response as a “Service.” It is then added to the business’ service
manual. The service value is improved for customers whose wishes are fulfilled, and a
contextual “story” is born from successive customer contacts (interactions between
customers and service providers). In this way, clarifying the interrelation between the
three concepts makes it possible to gain a scientific understanding of practice, from the
perspective of key concepts such as strategy setting, customer creation and customer
lifetime value. Furthermore, this makes it possible to secure competitive advantage by
promoting the development of new services.
As can be seen from the concept of “simultaneity” (or indivisibility), one of the so-
called characteristics of service, the provision and utilization of services occur simul-
taneously as part of the relationship between customer and service provider. This is
where improvisation becomes the key to service. However, in common practice until
now, improvisation has only been possible in special cases and can only be provided by
a very limited number of skilled staff. There are also many cases where the response is
limited to a specific customer and does not make business sense.
48 T. Kuboyama
However, by redefining, service providers can educate their staff to systematically

give them a better understanding of the importance of “Hospitality” brought by the
improvisation. Additionally, achieving excellence in improvisation adds new value to
existing services and enhances competitiveness, while “Omotenashi” helps to create a
comprehensive customer experience (or “story”) and leave the customer with a positive
final impression. Furthermore, it can be shown scientifically that continuous customer
contact can bring about added value (“context”) in customer service.
If, as Tetsuji Yamamoto argues, manual-driven “service” is unnecessary and only
“hospitality” that is tailored to each customer is needed, then it becomes essential to
completely adapt to the different needs of individual customers when providing cus-
tomer service. It is both unreasonable and physically impossible to provide 100 dif-
ferent responses to 100 individual customers. In addition, in cases when the customer’s
needs are outside the scope of what can be met by the provider, the provider must
accept this and provide a response to the customer.
In this case, basing the response on the redefinition of O = H + S would provide
satisfaction to both the customers and the business. In other words, when responding to
the needs of 100 different customers, it is important to first identify the needs that are
common across all 100 individuals and standardize these needs as “services.” Stan-
dardization means that the service provided is not unique and will be available to all as
a completely standard product. This is efficient because it enables the creation of a
system that can deal with thousands of customers by readying things such as personnel
allocation and mechanization in advance. Once this is in place, some elements of
“Hospitality” that are not included in the base “Service” can be provided to individual
customers. Redefining “O = H + S” in this way enables the provision of considerate
“Omotenashi” in a stable and sustainable system.
“Service” in this redefinition grows in scope as time passes and customer satis-
faction increases. For example, if a hotel’s room rate includes board, cleaning and a
laundry charge of sheets but most of the customers also request shoe-shining, the hotel
can incorporate this into its standard Services. Having “Services” that can increase in
scope in this way reflects well on the quality of the hotel, and is a good demonstration
of brand power. By adding shoe-shining to the range of available services, the hotel is
able to add value to the room price, which will ensure profitability and offer a com-
petitive advantage. It is also an effective marketing strategy: rethinking the policy on
shoe-shine services reinforces the hotel’s authenticity and will appeal to lifestyle- and
fashion-conscious markets. It can be argued that widening the provision of “Services”
benefits all stakeholders. Given the relationship between “Service” and “Hospitality,”
any opportunity to keep updating “Services” should be taken. Services that do not
change with the times and adapt to customer needs will soon become commoditized
and lose competitiveness.
The argument against applying the three concepts in the business world is that the
actual content of customer service is personal and not strategic. When interpreting the
expression “Omotenashi = Hospitality = Care rather than service,” Omotenashi can
become an ad-lib by the service provider, or becomes a situation in which the customer
gets exactly what they want, as they had many times in the past, which in turn leads to
repeated responses and the customer getting bored. Furthermore, the idea that “hospi-
tality = an action which does not demand a return” can make business viability difficult.
As an example, consider a hotel lounge in which drinks are provided free-of-

charge. What kind of approach is appropriate when a customer wants an item that
cannot be provided for free, unlike the coffee, tea and soft drinks on offer? If a business
decides that “Omotenashi = heartfelt service,” it should provide the customer with
what they want. Regardless of the cost, it should provide even beer or wine in line with
the customer’s wishes. On the other hand, if the business takes a manual-based
approach and refuses to provide anything other than those which can be provided at
low cost, this will naturally lead to customer dissatisfaction.
The best response for both customers and the hotel is for the hotel to identify the
items for which there is a high customer need and include them on the free item menu.
The added cost of widening the scope of the service can be written off as a cost of
marketing or incorporated systematically into the room rate. In this way, “O = H + S”
meets the needs of various customers and creates Services from those elements that are
viable in terms of cost-effectiveness, that provide marketing benefits, or that help to
differentiate a business from its competitors. This gives rise to a chain of operational
flows and creates the ability to balance providing a fine-tuned response to every cus-
tomer, reflecting the added-value in compensation, and improvement of the corporate
brand.
5 Application of These Terms at a Luxury Resort Hotel
Given the redefinition of the three terms in Sect. 4, let us introduce an implemented
example of customer service. The hotel in this example is a luxury hotel that is sur-
rounded by nature amidst the mountains near Lake Toya, in Hokkaido’s central
southeast region, with the closest airport, the New Chitose Airport, located 130 km
away. It can accommodate approximately four hundred guests, and the hotel’s thirteen
restaurants make it a world-class resort. After opening as a large-scale hotel during
Japan’s bubble economy era, it went bankrupt in 1997 and was brought back to life
again in 2000. In 2008 it became famous as the main location for the Hokkaido Toyako
Summit, and it was allowed entry into the international luxury hotel consortium Leading
Hotels of the World (“LHW”). In addition, the 2012 Michelin Guide Special Hokkaido
Edition gave the hotel the highest rating of 5 pavilions in its accommodations division,
and three restaurants within the hotel received three, two and one stars, respectively, for
a total of six stars. It was thus recognized as an internationally first-class resort hotel.
The hotel did not enjoy such circumstances from the outset. In its first iteration it
opened in 1993, later going bankrupt in 1997, and in that period it was a members-only
hotel. It reopened with rebranding by new management as a normal hotel in 2002. This
reopening was accompanied by a complete change in concept. At the time of this
reopening, the economy was in the middle of an unprecedented recession, and the hotel
worked hard to gain customers in a nonexistent high-end market.
The greatest effort made by the hotel was to reflect the marketing strategy to create
and maintain customers in the service of the hotel. In doing so, it focused on the con-
ceptual characteristic of liquidity, or conforming to customer demands, just like a liquid
[27]. Based on customer age, orientation, health, lifestyle experience values, etc., the
hotel explored new needs, and experimentally provided products and services for them.
50 T. Kuboyama
5.1 Implementation of “from Birth to 100” Marketing

Specifically, it made lists of the new facilities, services, and human resources that
would be required as it imagined the needs of customers of all ages, from birth to 100,
or based on information obtained through customer interactions. For example, the
needs of a baby are inextricably tied to the needs of a pregnant woman, or the needs of
a newborn child. What type of menu of should be provided to a pregnant woman, and
how should those meals be provided? What should be done about milk for newborns or
those that are being weaned from milk? The list goes on. Hotels generally tend to focus
their products on services around the primary customer demographic of those in their
30s to 50s and 60s. However, responding to the needs of all possible customers is
important for marketing strategy, and is where a linguistic understanding of “hospi-
tality” augments ideas. For example, in this hotel, children are called “child cus-
tomers,” and viewed as a reserve army of future primary customers. The hotel thus
experimented with providing to all sorts of needs, validating viability through
responses, effectiveness for other customers, marketing impact, and cost effectiveness.
Products and services that passed that process became standard “services” of the hotel,
and were provided to all customers.
Let us look at a specific case at an example hotel. One winter day, a family with a
92-year-old father visited the hotel. The father’s daughter said that this would probably
be her last trip with her father, so she was determined to make arrangements to take him
to restaurants where he could eat his favorite foods and to take care of his physical
health. The hotel also focused its efforts on supporting the daughter.
They provided hot water bottles so that he would not get cold at night, and laid
warm rugs to make sure that he didn’t catch a cold when he moved on a wheelchair in
the lobby during the day. These provisions were listed in their “0–100 Marketing” list
as items to be arranged for 90-year-old customers. Then, on the second day of their
stay, the elderly customer asked to go out on the ski slopes outside the hotel.
The family tried to discourage him as they were worried that he might get injured or
catch a cold. However, the customer insisted to experience the beautiful snow-bound
vistas of Hokkaido for himself. In response, the hotel suggested that they use the
“igloo” that had been built on the slopes to enable him to enjoy the refreshing air and
scenery while staying warm and safe. In addition, they installed a charcoal brazier in
the hut, so that he could enjoy locally-caught grilled shishamo [a type of fish] with hot
rice wine. This could help the family enjoy the trip by all the family members and
create memorable moments at Hokkaido. The elder customer said he would very much
like to visit us again on the day of check out. It was no longer his last trip.
As a result of this family’s case, the hotel has updated its “0–100 Marketing List” to
offer a winter outdoor menu for older customers. They did so because they determined
that being over-protective towards the elderly and restricting their behavior did not
necessarily lead to customer satisfaction. By embracing the customer’s needs and
rejecting preconceptions, they determined that there is a high possibility that these
provisions would be applicable to other elderly customers, turning “Hospitality” into a
“Service.” In other words, this hotel’s unique level of service for the elderly improved.
5.2 Creating a Small-Course Menu at a French Restaurant

Let us look at another specific case at an example hotel. One customer in the late 70s
could not enjoy all the courses of a meal due to the excess of food provided by a
Michelin 3-star restaurant in the hotel. Hearing that, the hotel made a special course
with small portions per plate, and allowed customers to choose that when making
reservations. The hotel has been able to realize a structure that responds to customer
needs without placing a burden on the provision of services. Thus, R&D-like “hos-
pitality” is standardized into “services” through the three filters of viability. “Hospi-
tality” that began as a prototype ended up as a “service” throughout the hotel.
In most hotels and restaurants, if a customer requests less food, the natural response
is to provide a smaller portion size (Hospitality). Adding a new course to the menu
(thereby making it a Service), as the hotel in this example did, is much rarer. If a
customer who has orders small portions in advance when they make their reservation,
the restaurant will prepare a small-portion course menu just for that customer.
A thorough response that treats each customer as an individual is standard.
The reason for making the small-portion menu at the hotel into a “Service” instead
of offering it on a case-by-case basis was not just to provide an option for the elderly
but also for those who, despite being careful about their health as they get older, still
want to enjoy delicious food, and because there were many female customers who
wanted to avoid the heaviness of traditional French food.
Turning the menu into a “Service” enabled the restaurant to efficiently cater to more
needs and, at the same time had operational merit, in that it eliminated the conflict
between the cooks and the waiters that sometimes arises as a result of differing goals
and opinions. As an example, waiters will try to respond quickly and considerately to
customer needs and, if there are customers with small appetites, will offer them a
smaller portion size. However, cooks have less direct contact with the customer and
may feel put out by having to fulfil irregular orders. Furthermore, if a customer leaves
food uneaten because the portion size is too large, the worry such that there might be a
problem with the quality of dishes can be a source of stress and concern.
By making the specially adapted menu, which was initially irregular, into a Service,
customers can order it in advance when they make a reservation and the chef knows
how many customers will order it when they prepare the small portion menu on the
previous day. This resolves unnecessary conflict and helps to reduce food wastage.
6 Conclusion
“Hospitality” is undoubtedly effective as a starting point for “services” that will

increase and maintain customers. The measures known as “hospitality” that are used for
improving customer satisfaction are similar to the research and development done in
the manufacturing industry. I have defined as “services” those elements that have been
standardized and accumulated due to their validity in the three filters of viability,
namely cost-effectiveness, marketing, and competition. The significance of clearly
defining terms is in the systematizing of the communication of wills, including those of
scientists. For example, instead of using the general phrase “sincere service,” when
52 T. Kuboyama
service providers speak of “hospitality,” they can turn to a “vector of awareness”

throughout an entire company in regard to the evolution of skills for our time, or the
orientations, cultures, and diversity of customers, through a common understanding of
the “efforts and attempts to develop new skills.” The redefinition of terms can generate
innovation in thinking. On the frontlines of service practice, the techniques of practice
are given priority, and “knowledge” lags. Accordingly, defining terms enables the
sharing of “knowledge” as well as productivity around that “knowledge.” Nonaka [28]
pointed out that “quality of work, such as autonomy and creativity, are important, as is
the productivity of knowledge with value.” By putting the practice of service into set
terms, we become more acquainted with scientific knowledge; and by proactively
associating, marketing education and other fields, the discussion on service which has
been clarified by prior research can make tacit knowledge explicit. Sawabe [3] noted
that, “The recursive structure of theory and practice as a basis for an intelligent per-
spective on combining scientific knowledge and technical knowledge must be made
part of academic practice.”
The benefit to taking a clinical approach is that it provides a common language
between practice and science. This allows practice to incorporate science and use it to
improve management quality. However, there is currently very little collaboration
between industry and academia in Japan. Why, when the need for industrial-academic
cooperation is so apparent, is it difficult to express in concrete actions? It can be argued
that this is due to the absence of linguistic tools that enable mutual understanding and
allow us to meet each other halfway. While individualized management practices are
unsustainable and make raising productivity difficult, scientific knowledge that cannot
be applied in practice misses the opportunity to contribute to society.
As long as techniques in the practice of service are not made explicit, we cannot
expect AI or other technologies to be beneficial for us. A redefinition and imple-
mentation of terms is critical for combining AI and practice, and for improving pro-
ductivity thereby.
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Analysis of Service Staff’s Observation
on a Customer
A Case Study of Hotel Service in Japan
Satoshi Shimada1(&) and Eiko Hoshiyama2

1
Kyoto University, Yoshida-honmachi, Sakyo-ku, Kyoto 606-8501, Japan
[email protected]
2
Super Hotel Co., Ltd., CE Nishi-honmachi Building, 1-7-7, Nishi-honmachi,
Nishi-ku, Osaka 550-0005, Japan
Abstract. Personalized services are required for high customer satisfaction and
depends on front-line employees. Superior service staff sometimes notice what
general staff can’t, have a better understanding of how to observe customers and
provide excellent service according to the situation. In this study, we investigate
how staffs observe customers, and in turn, use this information for human
resource development. Through this investigation, we gather data on the staff’s
gaze point, and then understand their thinking process in response to what they
saw. The gaze points are categorized into 8 items. What the staff thought varied
even with the same gaze points. From the results of the analysis, we propose a
model of the staff’s observation levels. Using this model, service staff can be
trained to provide better customer service.
Keywords: Customer encounter Observation Hotel staff Visual Thinking

Strategies
1 Introduction
Human resources are one of the most important assets of hotel industry [1]. It is said
that customers want personalized service [2] and the responsibility for customizing
services is often on front-line employees [3]. Hotel staff need an intuitive understanding
of a customer and their needs in order to provide suitable services [3]. Compared to
general staff, superior service staff are better at observing customer behaviors and
providing services that are suitable to the situation. Providing specialized services is
desirable to make an impression on a customer’s mind. However, sometimes the
focusing on the needs of a customer may lead to fatigue and fluster in the staff. This can
have a negative effect on their performance and their ability to provide fundamental
services. While superior staff are able to maintain composure and adapt to the service
requirements of customers and fellow workers, general staff have some difficulty
achieving both, although they are capable of providing standard services to customers,
especially during crowded conditions.
In this paper, we study how the staff observe customers. Through the analysis
of staff’s observation, this study aims to obtain knowledge for human resource

Analysis of Service Staff’s Observation on a Customer 55
development, including staff training. For this purpose, we propose developing a model
of staff’s observation levels that will enable service staff and their managers to have a
better understanding of how staff members should be trained.
2 Service Providers’ Behavior and Characteristics
2.1 Human Resources for Hotel Staff

To retain superior staff who can provide excellent service, the initial recruitment and
selection of staff is also an important issue. Ineson et al. used biodata in the selection
process for hotel employees [4], and the idea of “ideal employees” and “non-ideal
employees” was proposed after analyzing the biodata. This strategy for selecting hotel
staff for employment was also studied by [5]. The selection criteria of recruitment were
observed in line with hotel classification, which was according to aspects such as the
scale of the company. Studies showed that there were differences in the strategies
adopted by smaller hotels in comparison to those of the larger hotels, and it is sug-
gested that there are basically two alternative strategies i.e. a successful holistic strategy
and a more conventional bureaucratic strategy. These strategies are discussed from the
viewpoint of human resource management and in a social context.
In contrast, from a viewpoint of innovation management in the hospitality industry,
staff training is described as a key factor that should be given a high priority [6].
Kennedy et al. studied the training programs of five-star hotels [7], and the differences
in the perceptions of the quality of customer service received by customers was
measured and linked to the training programs of the staff.
2.2 Behavior Measurement and Investigation of Services, for Training

Purposes
The work process performed by cabin crews was observed and analyzed by Fukushima
et al. [8]. The crews’ activities were converted into data and linked to information
shared by attendants at briefings. The crews’ cognitive processes were modelled from
the data and the differences between inexperienced attendants and experienced staff
was used for staff training. Luiselli et al. proposed a training program based on
competencies for direct-care service providers, and their training program consisted of
three items, namely measurement, behavior support, and skills acquisition [9].
The studies show that in terms of practical work improvement and the development
of training methods, behavior is measured and shared with trainees as knowledge.
2.3 Visual Thinking Strategies (VTS) and Observations of Customer

Service
VTS is a technique originally developed for art appreciation [10]. Through observation
and discussion about a painting, VTS improves one’s ability to observe an object, express
one’s impressions of it linguistically, and collaborate with others. VTS has been used in
school education [11], and training nursing students in the service industry [12, 13].
56 S. Shimada and E. Hoshiyama
The investigation of the staff’s observations was based on a VTS format. The aim
of this paper is to develop an observational model that can be used to divide staff
members into several categories, which would help the staff know what they should
train for. The staff have to observe the customers in order to provide them a customized
service. To do this, they need to be able to interpret the actions taking placing during a
service encounter. VTS can be used to train people in specific aspects of observation.
Therefore, VTS is recommended for the investigation of staff’s observations.
2.4 Target of This Study

In our previous study, the interaction between service staff and customers was observed
during the check-in process [14]. The study focused on hotel check-in operations as this
is the first point of contact between the staff and the customers, and this first interaction
can determine a customer’s overall satisfaction with a hotel. Based on the results of the
experiment, it was identified that experienced staff generally review a customer’s
information prior to the customer’s arrival and they gather further information on the
status of the customer during their interaction with the customer during check-in. The
information the staff obtain allows them to tailor their service according to the cus-
tomer’s need. Based on the above study, we categorized staff features into 3 types;
“observation (input)”, “processing” and “action (output)” as Fig. 1 [14].
• Customers’ conditions • Customer satisfaction/delight

• Environment • Environment(change/ continue)
e.g. a repeater coming

Situation into the hotel Outcome
Staff
• Observation
Processing • Action
• Gaining information
Output
Input
(What) e.g. noticing that a customer is a
repeater based on his/her name e.g. thanking the customer
e.g. checking the for their previous stay and
customer’s name (How) e.g. noticing it in one second
for coming again
Fig. 1. Typification of staff features based on the flow of staff behavior [14].
The knowledge obtained from the results of the analysis was assumed to arise from
the acquisition of customer information before and during customer service, and this
information is classified as the “input.” Therefore, in this paper, “input” has been set as
the target feature.
From a research point of view, it is important to identify what service providers

look out for when they collect information on customers and what are they thinking or
feeling as they collect this information. Knowledge of how experienced staff make
observations can be used for staff education.
3 Overview of the Investigation

3.1 Case Study: Super Hotel Co., Ltd.
We chose Super Hotel Co., Ltd., a hotel company headquartered in Osaka, Japan for
our case study. It operates 136 hotels in Japan and 3 hotels in other countries. These
hotels specialize in providing accommodations. The check-in process is an important
part of customer service at these hotels. Because customer encounters at Super Hotel
are limited to check-in services, a specific and definite situation can be set up for the
research.
3.2 Staff Targeted for the Survey

In selecting the staff to be surveyed, we first had to consider who are the best staff.
Standard staff also had to be selected in order to retain the possibility of a comparison
of the results of analysis between staff with different levels of skill. The distinction
between superior and standard staff was based on the results of an in-house contest and
evaluation by the manager of Super Hotel. Finally, 3 superior staff members and 4
standard staff were selected. The investigation into staff observation took place between
11 June and 27 June 2018.
3.3 Preparations of the Investigation

The purpose of the investigation was to collate the views and perceptions of service
staff with regards to the check-in process. Two main questions were the subject of the
investigation. One was “What do staff see (during a customer service event)?”. The
other is “What do staff think [and feel] (from what they see during such an event)?”.
Experimental collaborators participated in the investigation and were asked to watch
videos as part of step (A) of the investigation “What do staff see?” and then to write
what they thought, which was step (B) of the investigation.
In step (A), experimental collaborators watched a video depicting a scene where a
customer enters the hotel. High-tech equipment was used to track their gaze, and the
staff’s observation of the video was investigated and analyzed, as if it was an obser-
vation of a real customer.
In step (B), experimental collaborators wrote down on a recording sheet what they
thought and felt from what they saw in the video. The instructions, referencing VTS
techniques, were: “When you are watching the video, feel free to describe and tell us
(i) how you thought or felt, (ii) from what point did you think or feel this way?” How
service staff think given what they see, is basically a process that takes place in the
mind of the staff. This thinking is classified as “processing,” as shown in Fig. 1.
In order to organize the knowledge derived from the investigation and apply it to
human resource development, it is necessary to structure the results of the investigation
into the concepts of “input,” “processing,” and “output,” so that it is easier to discuss
the behavior of the staff based on the information gained from the observations.
The investigation was conducted in Japanese and the settings, explanation,
responses and results were translated into English by the authors.
4 Investigation into Observation
4.1 Prior Explanation of the Investigation to Participants

First, the purpose of the experiment, the general functions of the devices, and the type
of data that would be acquired were explained to the participants.
Next, the participants were shown a video recording of a hotel. The participants
were employed in a hotel that is different from one shown in the video. By watching the
video, staff were able to familiarize themselves with how customers come to the front
desk and where they stand (Fig. 2).
Fig. 2. A scene of introduction of the hotel, used for preparation of the videos.
Staff were then shown an image that explained how to use the recording sheet that
they were being given. The images were not related to the hotel industry but only
provided instructions on using the recording sheet. The participants were advised to
provide their interpretations of the video without worrying about them being right or
wrong.
4.2 Staff’s Observations of the Videos

For step (A), we prepared 20 videos depicting a scene of a customer entering the hotel.
Each video was about 15 s long and showed a person, acting as a customer, entering
the hotel and approaching the front desk. Customers of different age groups, gender,
and fashion were portrayed in the videos, to avoid bias for or against specific customer
attributes. Some common situations, such as a customer holding a smartphone, that can
be seen in a service setting were set up. The people acting as customers were Japanese
employees from the quality management department of Super Hotel. The video had no
sound as it was intended for acquiring information visually. Figure 3 is an example of
one such scene in the video. The video was displayed on a monitor connected to a
laptop. An eye tracking device, Tobii Pro X2-60, that can observe and track the
movement of a person’s gaze point, essentially “knowing” what a person is looking at,
was positioned on the lower side of the monitor (Fig. 4). The layout for the observation
investigation is shown in Fig. 5. With the eye tracking device, a staff’s point of sight
can be observed without any stress and impact on the participants.
Fig. 3. A scene of a customer entering the hotel.
Eye-tracking device
Fig. 4. The position of the eye tracking device.

Fig. 5. The layout used for the observation investigation.
4.3 Recording What Staff Thought and Felt

For step (B), as per the questions described earlier in Sect. 3, we asked the staff to write
as much information as they could while they observed the video. There were no
restrictions on time or the content they were to describe. They were instructed to
describe the things that they noticed in the video, such as “a man wears a black suit,” as
well as anything else they might be feeling about them, such as “he travels for busi-
ness.” If the staff noticed multiple thing regarding a person based on only one specific
observation (or gaze point), then several sentences about what they thought or felt were
allowed. At this point, we did not investigate how confident the staff were in their
descriptions; however, we did enquire the staff during additional interviews.
4.4 Additional Interviews About Staff’s Observations During Usual

Customer Service
To interpret the meanings of “what staff saw” and “what staff thought and felt” in the
context of usual customer services, additional interviews to participants were carried
out. Before the additional interviews, the results of the analysis on the observation
investigation, as described in Sect. 5 of this paper, were summarized. Based on the
result that came out in the data analysis, staff were asked what they looked at and what
they thought during customer service.
4.5 Analyzing the Point of Sight Data

An analysis software designed for the eye-tracking device was used for the observation
investigation. The eye tracking device and its analysis software enabled us to record the
exact point on the monitor where a service provider was watching the movie (Fig. 6).
The point that a staff member gazes at is shown as a circle. When he/she changes the
gaze point, the shift is expressed with a line between two circles. What the staff sees
can be known with these symbols. With the analysis software, an AOI (Area of
Interest) can be defined in the movie (Fig. 7). Using these AOIs with the point-of-sight
data, along with other data such as the length of time spent on an AOI, a staff’s
observation is digitalized as data related to an AOI.
Fig. 6. A visualized point of sight and flow of sight.

Fig. 7. Areas of Interest defined on some objects.
5 Results of Analysis
5.1 What Do Staff See?

From the descriptions in the recording sheets of step (B), items of observation were
categorized based on the types of words or descriptions which appeared frequently. The
described content was classified as follows:
• What (direction) a customer sees,
• How a customer walks,
• A customer’s facial expressions,
• A customer’s gestures,
• A customer’s clothing (including a watch and accessories),
• A customer’s belongings (luggage),
• Physical characteristics (including body shape, hair style and makeup),
• Other.
The time spent by a participant watching a particular point was not considered to be
of significance. The data gained with the eye tracking system showed that the point
where staff payed the most amount of attention timewise was the customer’s face. The
least amount of time spent looking at a customer’s face was 30% of the total time,
whereas, the longest amount of time was 70%. However, the percentage of descriptive
observational sentences in the recording sheets that related to the face was less than
20% in total, including “What (direction) a customer sees” and “a customer’s facial
expression.”
What was seen exactly, in what order, was different for each staff member. Some
staff members displayed their own unique observation patterns. For example, one staff
member looked at a customer from head to toe, then the luggage, and then the clothes
in a specific order.
5.2 What Do Staff Think?

In this section, the contents of the recording sheets, what the staff saw and what they
thought, are organized. A detailed explanation of each of the above-mentioned items
and the perceptions of the staff are given below:
What (Direction) a Customer Sees. Regarding “What a customer sees,” there were
comments such as “a customer’s line of sight is sweeping from side to side” and “a
customer looks at the paper (/map) in their hand.” When staff saw a customer looking
around confused or nervous, they wrote that they assumed that the customer was new
to the hotel.
How a Customer Walks. This category was in relation to the speed of a customer’s
gait and was classified as either “early-” or “late-walking”. In “early-walking” cases, it
was assumed that the customer was either in a hurry or was impatient. In this instance,
the staff members were generally aware of the customer’s need for a timely check-in
and response. In “late-walking” cases, the staff members often considered advising the
customer to sit down and have a rest, assuming that the customer was tired.
A Customer’s Facial Expression. The facial expressions of customers were classified
into three categories i.e. a stern expression, a pleasant expression, and no expression. In
the case of a stern expression, it was assumed that the customer might have some
problem. For this reason, there was an opinion that, after completing procedures such
as a quick check-in, the staff considered it a sign that the customer required additional
support. For the customer with pleasant facial expressions however, it was assumed
that the purpose of the trip was enjoyable. Therefore, in their attempt to make the
customer’s stay at the hotel even better, the staff intended to guess the purpose of the
customer’s visit and talk about it with them. The expressionless customer was assumed
to not be in a normal state, and in some cases, staff considered asking if the customer
was well. There has been a study done to evaluate service from the viewpoint of the
customer based on criteria related to facial expressions [15].
A Customer’s Gesture. The responses on gestures of the customer at the front-desk
were variable and highly unique. For example, there were items such as “holding
back,” “wiping sweat,” and “taking out a wallet immediately.” The staff assumed that a
customer held back and wiped his sweat if he was not feeling good. The staff com-
mented that they would not respond to such a situation. It was assumed that if a
customer took out their wallet immediately, they were in a hurry or accustomed to the
Super Hotel check-in process. Nonverbal behavior (NVB) is seen as important as
communicative behavior for interactions between a staff and a customer [16]. The
gesture is very meaningful as “each gesture is like a single word and one word may
have several different meanings. … NVB can also help establish a relationship between
staff and customer and help establish staff credibility” [16].
A Customer’s Clothes (Including a Watch and Accessories). There are two types of
interests that staff had on a customer’s clothes. One type was to notice the character-
istics of a customer’s clothes and accessories, and to talk about it during the customer
service. The other was speculating from their clothes that a customer was still at work
during their check-in. When a customer checks in at the hotel during work, it is
necessary for a provider to make changes to service processes such as storing a cus-
tomer’s luggage or proceeding with the check-in procedure quickly.
A Customer’s Belongings (Luggage). The size of the luggage was also mentioned as
a feature and was used to infer the ease of use of the guest room and length of stay.
From the viewpoint of customer’s expectations, helping a customer with his or her
luggage is one important factor that makes them feel most welcome [17].
Physical Characteristics (Including Body Shape, Hair Style and Makeup). The
size or height of a customer was used to determine the size of the sleepwear that should
be provided regardless of the body size, and many staff members checked these
physical attributes. The Height of a customer would also be used to determine if they
could access high shelves in a room and if not additional work was required after
check-in.
About the relationship between what staff saw and what they thought from their
observations, some combinations were recognized as being common patterns of
behavior, displayed by many staff members. Some examples are as follows:
• If staff see a customer’s line of sight swaying from side to side, then staff infer that
he/she is a new customer
• If staff see a customer walk straight up to the front desk, then staff feel that he/she
might be a regular
• If staff see a customer walking fast, then staff guess that the customer is in a hurry
and are mindful of proceeding with the service process quickly
What was common to the three superior staff members was that multiple possi-
bilities were often assumed based on one point of observation. They interpreted one
fact in several ways, and prepared for many different changes that might be required in
their response. On the other hand, they didn’t think too much about things and instead
focused on one or two specific observations. The number of sentences or words written
in their recording papers was less than the amount written by standard staff. Most
interestingly, the staff member whose job experience was the shortest in duration out of
all research collaborators, wrote the largest number of sentences. What this staff
member described about what she saw were comments mainly centered on the cus-
tomers’ appearances, and what she thought and felt from these observations were
mostly anticipations about the customers’ personalities. Even though a customer’s
personality affects the impact of customer service and is important feature for the
service, it is something which the staff can’t change or influence directly. In cases
where staff are anticipating a customer’s personality, they should think about adapting
their service according to this information.
6 Discussions
6.1 A Model of Service Staff’s Observation Level

From the results of the analysis, we propose a model of ideal service regarding staff’s
levels of observation (Fig. 8). The descriptions on the recording sheets were about
certain features of a customer and about staff forming assumptions about a customer’s
condition based on these features and about deciding what to do, or what not to do,
depending on the customer’s condition. What staff thought seemed to get even more
complex the deeper their consideration on a customer’s features or his/her condition.
The ideal consideration process for staff was therefore divided into 5 steps so that
information could be processed in stages.
In the following, while explaining how the model is structured, the characteristics
of each stage and the issues that can arise at each stage, are organized as a flowchart.
An example of training and/or help to the provision of service at each stage is also
described.
The model starts from the moment when the provider notices a customer. When
staff see a customer, they sometimes find something that should be paid attention to. In
the first step, the fact that they find something or not is the branch condition. If staff
members find nothing in spite of a customer being in trouble, they need to pay more
attention to the customers.
In the second step, the branch condition is set to whether staff can interpret what
they find and relate it back to customer service. If they cannot connect the finding with
customer service, then they cannot provide any service for the finding and can only pay
attention to it. For the staff members at this level, they should know more about the
relationship between a customer’s condition and their service. A kind of case study on
their business might be the help needed for it.
In the third branch condition, whether or not the finding can be interpreted in
multiple ways is the key question. In this case, if a customer has trouble and staff can
help him/her easily, then their help is enough as a provision of service. However, things
are not always simple and need to be considered from multiple angles. For this level,
segmentation of customers is one of the solutions for staff to change their view. They
should train to know a customer and empathize with them, and try to imagine how
he/she feels in a specific situation.
If the finding can be interpreted in several ways, the process goes to the fourth
step. The branch condition at this level is whether staff can clearly find the highest
priority interpretation or not. In this case, if the priority is clear, then the situation is
similar to the previous level. Staff should provide customer service with more room
than usual so as to find out more about the customer and adapt their interpretation.
From this level, staff need to not only think and feel more about a customer’s condition,
but also to judge which choice is the most prudent amongst many possible choices.
A staff notices
a customer
No Does the staff

Find find something
Level 0
nothing to do that should be
paid attention to ?
Yes
No Can the staff

Just pay
interpret the finding(s)
Level 1 attention to
in connection with
the finding(s)
customer service
Yes
No Can the staff

Provide uniform
Level 2 interpret the finding(s)
customer service
in multiple ways
Yes
Can the staff

Provide customer Yes
clearly find
Level 3 service with room
the highest priority
for adaptation
interpretation
No
Does the staff

Adapt customer No
need additional
Level 4 service according
information to prioritize
to the situation
interpretation
Yes
Try to obtain additional

information
Fig. 8. A proposed model of staff’s observation model.

When staff find something that multiple interpretations are possible for, and those
interpretations are not clearly prioritized, then staff need to prioritize them by them-
selves. The fifth and final branch condition is about whether staff have enough infor-
mation for prioritization or not. In the cases where they have much knowledge and
information and can prioritize several interpretations, they should provide service
according to those. But when the priority is not clear, the adaptation is more important,
and has more necessity, than level 3. If the information is not enough and staff cannot
judge what is important among several interpretations, they need to obtain additional
information related to the findings.
This model expresses the difficulties of a staff’s observation of a customer as
“level”. However, it does not mean that they always need to think deeply. For example,
at Level 0, if there is actually nothing special to make note of, then they don’t have to
do anything. To provide an excellent customer service, service providers need to judge
at what level they should deal with a particular finding or observation.
6.2 The Relationship Between Staff’s Observations and Their Behavior

The proposed model includes several activities, and the process ends for each one of
them at each level. These activities are related to the customer service that staff provide
and they themselves are not part of the “observation.”
The results of the analysis suggested that thinking too much, especially about what
one cannot change or influence directly, often hinders one from taking action. In the
additional interviews, some staff even said that they had difficulties in making a
decision in many situations. They thought hard about a customer’s condition in order to
try and provide them a better experience at the hotel, but their failure to take a decision
may have resulted in customer discomfort, and consequently they feel nervous about it.
One important point related to staff’s behavior is they sometimes choose to watch
over a customer and do nothing. The reason they act this way varies; it is mainly due to
the fact that the staff don’t have any idea what to do for the customer, because they are
unable to choose one of multiple ideas or because even if they can do something with the
current situation, they chose not to because they think that the customer might feel bad
about it. Even considering good points of observation, service staff “need to explore
what guests mean when they say they feel comfortable—particularly as this or other
emotions probably vary by customer segmentation, length of stay, or other factors” [18].
Watching over a customer should be a general service requirement of all staff’s behavior.
From the viewpoint of obtaining customers’ information, staff are told that they can
get information from the customer database or through interaction with customers.
These are very similar suggestions to the result of our previous study [14]. However,
one clear difference appears between superior staff and general staff. Superior staff use
the database before a customer comes to the hotel. After the customer comes, they also
observe the customer and obtain customer information through interaction. In contrast,
general staff use the information in the database after a customer comes to the hotel for
checking whether they are a regular or a new customer. Some standard staff said that
they didn’t want to assume whether a customer was a regular or not because the
information was in the database and they couldn’t check it. The manager of Super
Hotel commented on this point that this difference in customer treatment, between
superior staff and general staff during the first interaction between a staff and a cus-
tomer at the hotel, may considerably change the impression of the hotel for the cus-
tomer. A customer database is a great help to customer service, and thus, service staff
need to utilize the database effectively.
This study aims to obtain knowledge for human resource development including
staff training. With our model, service providers are expected to be able to know which
step is difficult for them regarding observations of customers, and this is one cause of
difficulty with the provision of services. Several staff reported that by attending and
participating in this investigation that it helped them to realize what they saw and what
they actually thought and felt. It suggests that the methods of our investigation perhaps
induce metacognition. That is an important function for staff training.
7 Conclusion
Superior service staff can always find something that should be paid attention to, and
superior staff know how to interpret their findings and provide excellent customer
service according to the situation. This study focusses on a staff’s observation of
customers. Through the analysis of the staff’s observations, this study aimed to obtain
knowledge for human resource development including staff training. With this aim, a
model of staff’s observation levels is proposed.
The observation investigation was conducted on the case of Super Hotel. Videos in
accordance with the depicted scene of a customer entering the hotel were prepared.
While experimental collaborators watched those videos, an eye tracking device with its
analysis software was used to gather the point-of-sight data for staff without any extra
stress and impact on the staff. While watching each video, the collaborators were asked
to write as much information as they could about their observations and feelings.
From the results of the analysis, we obtained a list of items that the staff saw during
their observations. Their thoughts about what they saw vary. However, some rela-
tionship between what the staff saw and what they felt from it were common for many
staff members. All 3 of the superior staff often assumed multiple possibilities with one
observed fact. One important fact related to staff’s behavior is that they sometimes
choose to just watch over a customer and do nothing directly. Watching over a cus-
tomer should be a general requirement of service staff’s behavior.
The limitation of this study is that the data used for analysis was taken from seven
staff members who were all from the same hotel. More data from across the hotel
industry is required to prove the model’s efficiency. However, the proposed model is
valuable as a draft model to express the difficulties related to a staff’s observation.
Future works related to the modelling of staff’s observations include the investigation
of the actual provision of service, by analyzing the relationship between an observation
and a staff’s behavior more deeply. The development of training methods for staff
observation is another proposal for future work. The authors proceeded in the devel-
opment of a training method including VTS style discussion. For a review by staff after
training, the review sheet is also discussed based on the findings through this research.
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Service Innovation and Employee
Engagement
Models for Designing Excellent Service
Through Co-creation Environment
Tatsunori Hara1(&), Satoko Tsuru1, and Seiichi Yasui2

1
[email protected]
2
Graduate School of Science and Technology, Tokyo University of Science,
Tokyo, Japan
Abstract. Design approaches and methods that are currently widely used in
practice target better customer satisfaction, without focusing on customer
delight. Customer delight is essential to creating differentiated or better customer
experiences. While “service excellence” as an organization’s capability to
achieve customer delight has standards, such as CEN/TS 16880, a standard
method for designing “excellent service” has not yet been developed. This paper
attempts to provide a foundation for what excellent service is toward a new
standardization of designing excellent service. The co-creation aspect in
excellent service is emphasized in this paper to achieve continuous customer
delight. A structured model of excellent service and the concept of a co-creation
environment are described. “Engaged customers and employees” and an
“ecosystem of data collection and utilization” are sub elements to enhance the
effectiveness of a co-creation environment, which is modeled and elaborated as
a leverage mechanism to differentiate excellent service from basic service.
Keywords: Service excellence Customer delight Service design Service

modeling Co-creation
1 Introduction
Customer expectations in today’s competitive world have changed and are constantly
evolving. An organization’s ability to create differentiated or better customer experi-
ences increases their business competitiveness. For this reason, it is essential for
organizations to understand customer expectations, needs, wishes, problems, and
experiences. These understandings of the customer are used as input into design services
and products. To achieve this, organizations began adopting several design approaches,
as follows:
• Human-Centered Design (HCD), described in ISO 9241-210 [1] and ISO 9241-220
[2],
• Design thinking promoted by IDEO and the Stanford d-school [3], and
• Service design thinking [4, 5], which builds on the work of HCD and the design
thinking.

74 T. Hara et al.
The purposes of these approaches are not limited to offering guidance on delivering
better customer satisfaction. However, these standards and methods do not cover how
to create outstanding customer experience, despite many organizations noticing the
need to move beyond “mere” customer satisfaction. Customer delight [6, 7] is regarded
as a key concept to serve this need. Customer delight is defined as “emotions of
pleasure and surprise experienced by the customer derived from either an intense
feeling of being valued or by expectation” [8].
To achieve customer delight, the technical specification of CEN/TS 16880—
“Service excellence: Creating outstanding customer experiences through service
excellence” [8]—describes capabilities of an organization that enable “individual ser-
vice” (Level 3) and “surprising service” (Level 4) toward customer delight, as shown in
the left part of Fig. 1.
Compared to “service excellence” as an organization’s capability, this paper deals
with “excellent service” as an offering with individual and surprising service performed
between the organization and the customer, facilitating the organization’s creation of
outstanding customer experiences to achieve customer delight. The delivery of
excellent service also requires foundations comprised of “core value proposition”
(Level 1) and “complaint management” (Level 2) to assure customer satisfaction, as
shown in the middle part of the figure. A specific design method for such excellent
service is necessary for improved success. In addition, to generate continual delight, the
co-creation and development of preferred relationships with customers is required.
Level 4 Surprising
Service service Outstanding
customer Customer
excellence Excellent delight
experience
Level 3 Individual service
service
Complaint
Level 2
management
Basic Customer Customer
service experience satisfaction
Level 1 Core value proposition
Organization’s capability
Service Customer perspective
and activities
Fig. 1. The service excellence pyramid and excellent service.
To serve this need, this paper proposes models for designing excellent service with
a co-creation mechanism to achieve customer delight. In Japan, JSA-S1 1002, “Guide
1
JSA standards and specifications (JSA-S), which were established by Japanese Standards Association
(JSA) in June 2017, are private sector standards in a wide range of fields, including the service sector
that can be developed in an agile and efficient manner with good quality, proposed by private and
public organizations including companies, associations, government agencies, and academic
societies.
Models for Designing Excellent Service Through Co-creation Environment 75
for the development of service standards aiming excellent service” [9], was published
in June 2019. This specification provides service standard developers with general
guidelines for developing interpersonal service standards for the realization of excellent
services. The proposed models in this paper extend the co-creation environment con-
cept described in the JSA-S 1002.
2 Structured Model of Excellent Service
Figure 2 shows a structured model of excellent service, depicted from a customer’s

standpoint, and a good co-creation environment. The inner circular arrow in the right
part of the figure shows a customer journey, while the outer circular arrow depicts the
service delivery process and the service provider’s activities that support it. Interactions
(touch points) occur between the two, and various consumer experiences take place
during these interactions. Customer delight can be achieved when an outstanding
customer experience is created through individual and surprising service provision by
exploiting opportunities found during the interactions. Apart from touch points, any
points that contribute to customer delight can be identified as points-of-data (data
points) to be monitored and exploited. Touch points can be used as a data point since
they provide an opportunity to create customer delight. Furthermore, a customer’s
journey continues as they return for repeat business. Repeated service use by customers
can affect a level of customer knowledge and participation, as well as employee
engagement.
Success factors Excellent service through co-creation
Co-creation environment
• Organization capability
• High level of employee engagement
Interactions
(touch points)
• Effective use of touch points
Outstanding
customer
Customer
experience(s)
delight
• Sufficient customer information

• High level of customer engagement Customer
experience(s)
• Various information collected using data points

• Follow-up of repeated customer experiences
• Repeat business Point-of-data (i.e., data points)

• Next design and management
Fig. 2. Structured model of excellent service through co-creation.

76 T. Hara et al.
Based on the structured model, the following can be described as success factors for
achieving excellent service:
• Design and manage a co-creation environment that facilitates effective and con-
tinued implementation of excellent services through active participation of service
employees and customers in co-creation. A good co-creation environment includes
organizational capability, high level of employee engagement, effective use of touch
points, sufficient customer information, and high level of customer engagement.
• Use various information collected using data points for improving future designs
and management activities once the service has ended.
• Follow up repeated customer experiences to create delight by considering the
accumulation of knowledge and changes in customer engagement.
3 Design Elements of Excellent Service
In the book, this is service design doing [5], in 2018, six principles of service design are
described: human-centered, collaborative, iterative, sequential, real, and holistic. These
principles base the original five principles of service design proposed in the book, this
is service design thinking [4], in 2011. The originals are user-centered, co-creative,
sequencing, evidencing, and holistic, which have been widely quoted ever since. The
authors of the books revised the originals according to people’s usage and under-
standing of them in practice. Among revisions, it should be noted that the original
principle of “co-creative” was divided into “collaborative” and “iterative” in new
principles. This was completed because, in most cases, people tend to focus on the
collaborative and interdisciplinary nature of service design, rather than the fact that a
service only exists with the participation of a customer. The new six principles can be
applied to the design of excellent service, as well. Regarding design processes, design
thinking [3] and human-centered design [1, 2] give such typical collaborative and
iterative processes. Among them, the five processes (empathize, define, ideate, proto-
type, and test) are widely used.
However, as explained in the abovementioned revision, the original meaning of co-
creative nature of service with customer became limited in the service design
approaches. Without co-creation with the customer, it is difficult to ensure and sustain
customer delight in excellent service. Therefore, this paper emphasizes the co-creation
aspect of excellent service by setting design elements consisting of “3E” and “AT-
ONE,” as shown in Fig. 3. A basic structure for excellent service and creating customer
delight are developed by identifying projected actors, touch points, offerings, needs,
and experiences—the five key areas identified in the AT-ONE method [10]. In addi-
tion, an environment for co-creation should be designed as a leverage mechanism to
enhance the delivery of better and sustained customer delight. Sub elements to evolve
the co-creation environment are “engaged customers and employees” and “ecosystem
of data collection and utilization.” These are detailed in the next section.
Environment for co-creation Actors

Touch points
Engaged customers and employees
Offerings
Ecosystem of data collection and utilization Needs
Experiences
Fig. 3. Design elements for excellent service: 3E and AT-ONE.
The 3E and AT-ONE design elements require organizations to have a clear

understanding of what excellent service quality entails, especially when designing
excellent services, and include elements that bring surprises and delight to customers.
Kano’s model [11] is useful to understand customer requirements and their impact on
customer perceptions. Kano’s model refers customer delight, as well as customer
satisfaction, which are both integral components of service excellence. Figure 4 is a
revised diagram of the Kano model by replacing the degree of satisfaction (vertical
axis) with the degree of customer experience. Excellent service quality can be regarded
as an attractive quality that delights customer or a one-dimensional quality with high
performance that exceeds customer expectation.
Better customer
experience
One-dimensional
Attractive quality quality (satisfier)
(delighter)
Requirement
Requirement
not fulfilled
Fulfilled
Must-be quality
(dissatisfier)
Worse customer
experience
Fig. 4. Revised diagram of Kano model in terms of customer experience.

78 T. Hara et al.
3.1 Overview of Co-creation Environment

For improved excellent service, in addition to collaboration with stakeholders in design
processes, it is important to design and manage an environment that facilitates co-
creation with stakeholders through interactions that occur during the service delivery
process.
Customers are an especially important partner in value co-creation. For this reason,
organization should thrive to increase customer engagement and participation, as well
as employee engagement. Co-creation between service organizations and customers
can increase the likelihood of creating customer delight and customer loyalty. A co-
creation environment is established by cultivating elements (opportunity, information,
knowledge, attitude, etc.) that encourage interactions between the organization and
customers across the service delivery, mainly at the key points of contact that are
clearly identified through the customer journey mapping. The established co-creation
environment works as a leverage mechanism to enhance the delivery of better and
sustained customer delight. Two sub elements in creating a co-creation environment are
“empowered engagement of customers and employees” and “ecosystem of data col-
lection and utilization.”
Engaged Customers and Employees. One of the sub elements of the co-creation
environment is the engaged customers and employees. Organizations should imple-
ment measures to enhance an overall level of engagement with both customers and
employees and consolidate efforts as appropriate. Figure 5 illustrates this concept as
vector addition and the area of a parallelogram. The higher an overall level of
engagement is, the more likely the organization can produce outstanding customer
experiences through co-creation.
First, organizations should determine the current level of engagement demonstrated
by employees in customer service settings and launch initiatives to improve employee
engagement. Similarly, organizations should determine the current level of engagement
demonstrated by customers at points of contact across the service delivery and launch
initiatives to improve customer engagement. Tables 1 and 2 exemplify different levels
of customer and employee engagement for co-creation.
Table 1. Example of levels of customer engagement and its key activities for co-creation.
Level Key activities
1 Accept
2 Clearly express needs
3 Use efficiently and effectively
4 Give feedback
5 Recommend to others
6 Feel psychological ownership
Table 2. Example of levels of employee engagement and its key logics for co-creation.
Level Behavior logics
1 Rewards and punishment
2 Regulations
3 Requests from customers
4 Observation from customer’s perspective
5 Empathy for customers
6 Psychological ownership
Area for co-creation that generates

outstanding customer experience
ent
n
tio
gem
rea
-c
co
nga
r
fo
t
en
’s e
em
ag
er
ng
tom
e
all
er
Cus
Ov
Appropriateness
of collaboration
Employee’s engagement
Fig. 5. Customer and employee engagement for co-creation environment.
Ecosystem of Data Collection and Utilization. Feedback from customers and front-
line employees is essential for improving service quality. For this reason, a mechanism
should be incorporated into their service delivery framework that allows them to
monitor interactions at different points of contact, across the entire customer journey,
and in the service delivery process. These can be used as data points, and they enable
feedback provision, service personalization, adoption, improvement, and learning.
Therefore, technological support should be embedded into the mechanism to effi-
ciently collect and provide sufficient data.
3.2 Effect Model of Co-creation Environment as Leverage Mechanism

The leverage mechanism based on “engaged customer and employee” and “ecosystem
of data collection and utilization” in this section, it enhances the potential for co-
creation and enables organizations to create customer delight by achieving “better”
80 T. Hara et al.
outstanding customer experiences. See Tables 1 and 2 for examples of different levels
of customer and employee engagement for co-creation. Implementing this mechanism
into delivery of excellent service requires organizations’ agility. Therefore, designing
excellent service should be planned while referring to this mechanism.
Figure 6 illustrates the mechanism structure as a lever system to catapult a ball onto
the bar into the air. Figures 7 and 8 show how the structure works in the case of basic
service and excellent service, respectively. This paper explains basic logics to calculate
the effect of co-creation environment on customer delight. Mathematical model is
expected, based on the logics.
Structure of the Leverage Mechanism. In Fig. 6, a leverage system is placed on the
slope, consisting of a pole brace, a rotatable bar attached with the pole, a ball to be
catapulted in the left part, and weights to be put and released in the right part. Vertical
coordinates of the ball represent how well a service delivers good customer experience,
which can result in either customer satisfaction or customer delight. Customer satis-
faction switches to customer delight when the ball is catapulted to a height above the
horizontal state of the bar.
The effort force by weights that presses the bar down represents employee
engagement, the current level of which corresponds to numbers of weight. The effort
arm, the distance between the fulcrum and the effort force, represents customer
engagement. The current level of customer engagement determines the position where
weights should be placed and released.
The greater the effort force and effort arm are, the greater the moment of force
causing the bar to rotate clockwise becomes. This force moment corresponds to areas
for co-creation that may bring outstanding customer experience, shown in Fig. 5. The
resistance arm, the distance between the fulcrum and the ball, represents necessary cost
of data collection and analysis through data points. The smaller the resistance arm is,
the smaller the moment of a force by the ball weight causing the bar to rotate coun-
terclockwise becomes.
Basic Service for Customer Satisfaction. Using this structure, Fig. 7 represents a
case of basic service aimed at customer satisfaction. With lower engagements and/or
higher cost of data collection and utilization, the bar rotates slowly and stops at the
horizontal state (State B-2) due to the slope. At this time, the ball stays on the bar and
does not go upwards at State B-2, because the ball’s momentum is too small to
jump. This means that high customer satisfaction can be obtained, but no customer
delight would be expected.
Excellent Service for Customer Delight. Figure 8 represents a case of excellent
service through co-creation aiming at customer delight. With higher engagements and
lower cost of data collection and utilization, once the bar comes into a horizontal
position (i.e., from State E-1 to State E-2), the bar launches the ball upwards. The ball’s
max vertical distance from the bar in the horizontal position represents outstanding
customer experience (State E-3). The greater the distance is, the more customer delight
is. Furthermore, the lightness of the ball itself, as the organization’s agility, reduces the
opposite moment and affects how high the ball will go.
Customer delight
Force moment
6
t) (areas for co-creation)
en
t arm gem 5
r
fo ga
Ef r en 4
to me
s 3
(cu
rm ion 2
e a ct Effort force
tanc colle ) 1
n (employee engagement)
sis ata tio
Re of d tiliza
st d u
(co an
satisfaction
Customer
Load Fulcrum Effort
Ecosystem of data collection and utilization Engaged customer and employee
Fig. 6. Structure of leverage mechanism through co-creation environment.

Customer delight
• The ball stays on the bar and does not go upwards

because the ball’s momentum is too small to jump. 6
• High customer satisfaction but no customer delight 5
State B-2 1 2 3 4 5 6
satisfaction
Customer
State B-1
Load Fulcrum Effort
No ecosystem of Less engaged customer

data collection and utilization and employee
Fig. 7. A case of basic service aimed at customer satisfaction.

82 T. Hara et al.
Max vertical distance of ball

State E-3
Customer delight
(outstanding customer experience)
State E-2 1 2 3 4 5 6
satisfaction
Customer
State E-1
Load Fulcrum Effort
Ecosystem of data collection and utilization Engaged customer and employee
Fig. 8. A case of excellent service through co-creation aimed at customer delight.
4 Conclusion
This paper proposed models for designing excellent services through a co-creation
environment. The co-creation aspect in excellent service was emphasized to achieve
continuous customer delight. A combination of customer engagement and employee
engagement was a sub element of the co-creation environment. The ecosystem of data
collection and utilization was another sub element and is enabled by data points
embedded in the delivery of excellent service.
The effectiveness of a co-creation environment was modeled and elaborated as a
leverage mechanism, so that excellent service for customer delight is differentiated with
basic service for customer satisfaction. This provides a foundation for what excellent
service is toward future standardization of designing excellent service.
Future work includes to develop a calculation model based on the leverage
mechanism and conduct case studies in several fields.
Acknowledgements. The authors would like to express their sincere thanks to Dr. Naohisa
Yahagi (Keio University), Dr. Shun Matsuura (Keio University), and Japanese Standards
Association (JSA) for the enlightening discussions.
References
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Soc. Qual. Control 14(2), 39–48 (1984)
A Proposal for the Work Engagement
Development Canvas Contributing
to the Development of Work Engagement
Ami Hamamoto1(&), Nobuyuki Kobayashi2, Hirotaka Fujino1,

and Seiko Shirasaka1
1
Graduate School of System Design and Management, Keio University, 4-1-1,
Hiyoshi, Yokohama-Shi, Kohoku-Ku, Kanagawa 223-8526, Japan
{ami925,hirotaka.fujino}@keio.jp,
[email protected]
2
The System Design and Management Research Institute
of Graduate School of System Design and Management,
Keio University, Yokohama, Kanagawa, Japan
[email protected]
Abstract. Employee engagement is positively and significantly related to their

productivity, creativity, innovativeness, customer service as well as in-role and
extra-role behaviors. The purpose of this study is to propose the Work
Engagement Develop Canvas (WEDC), which aims to enhance employee work
engagement. The evaluation method of this study is to check outputs where
participants described the WEDC as well as to collect two types of question-
naires: A Pre-implementation questionnaire and a post-implementation ques-
tionnaire. Additionally, the evaluation is carried out by (1) Checking the output
(2) Paired t-test, and (3) Open Coding. The novelty of this study is to focus on
enhancing work engagement through the visualization of employees’ own
thoughts.
Keywords: Work engagement Work Engagement Development Canvas

WEDC Burnout
1 Introduction
Employee engagement is positively and significantly related to employees’ produc-

tivity, creativity, innovativeness, customer service and in-role and extra-role behaviors
[1]. However, employees are not motivated with the work they engage in and do not
contemplate the purpose of the work [2]. Therefore, the purpose of this study is to
propose the Work Engagement Develop Canvas (WEDC), which aims to enhance
employee work engagement. The WEDC helps to increase employee work engage-
ment. The evaluation method of this study is to check outputs where participants
described the WEDC as well as to collect two types of questionnaires: a pre-
Implementation questionnaire and a post-Implementation questionnaire. In addition,
the evaluation is carried out by (1) Checking the output, (2) Paired t-test, and (3) Open
Coding.

A Proposal for the Work Engagement Development Canvas 85
Then, the novelty of this study is described. Hamamoto et al. proposed educational
programs to enhance work engagement [3], but this is not a study focusing on
increasing work engagement through the visualization of employees’ own thoughts.
In other aspects of work engagement studies, Shimazu described that “job crafting”
is an effective method for work engagement [4]. “Job crafting” is the cognitive and
behavioral technique for increasing motivation to work and improving productivity.
Although there are studies on the development and effectiveness of education and
training programs aimed at improving job crafting [5], these studies are not focused on
increasing work engagement through the visualization of employees’ own thoughts.
Therefore, the novelty of this study is to focus on enhancing work engagement through
the visualization of employees’ own thoughts. Section 2 describes the proposed
method. Section 3 describes how to evaluate the proposed method. Section 4 describes
the evaluation results based on the information obtained from the evaluation method.
Section 5 describes the discussion using the evaluation results. Lastly, Sect. 6 shows
conclusions and future prospects.
2 Proposal
We propose the Work Engagement Development Canvas (WEDC) that helps to

increase work engagement through the visualization of employees’ own thoughts
(Fig. 1).
[My values] [My strength] [Social vision and life vision]
D
A B [Vision of the organization] [Vision of your own work]
E F
[My role] [Social role]
C G
[A source of motivation for your work]
H
[Current concrete objectives] [Current concrete goals in line with objectives]
I J
[Your growth] [Your future growth]
K L
Fig. 1. Work Engagement Development Canvas (WEDC).
2.1 Overview of the WEDC

Engagement is characterized by vigor, dedication, and absorption which are considered
as the direct opposites of the three burnout dimensions exhaustion, cynicism, and a lack
of professional efficacy, respectively [6]. Previous empirical studies have identified job
86 A. Hamamoto et al.
resources and personal resources as the essential factors that influence work engage-
ment [6–8]. According to Xanthopoulou et al. job and personal resources lead to
engaged workforces [9]. The WEDC A to L frame proposed in this study corresponds
to personal resources. Personal resources are positive self-evaluations that are linked to
resiliency and refer to individuals’ sense of their ability to control and impact upon
their environment successfully [9, 10], As such, personal resources (1) are functional in
achieving goals, (2) protect from threats and the associated physiological and psy-
chological costs, and (3) stimulate personal growth and development [9, 11].
We describe Fig. 2 related to personal resources. Hamamoto et al. used several
questions related to personal resources for evaluating educational proposals that
enhance work engagement. Figure 2 shows the relationship between the questions.
Hamamoto et al. used Japanese translated the definition of personal resources translated
by Shimazu and proposed by Hobfoll et al. [3, 7, 10]. Furthermore, according to
Xanthopoulou et al. the definition of personal resources proposed by Hobfoll et al. is as
follows. “Positive self-evaluations that are linked to resiliency and refer to individuals’
sense of their ability to control and impact upon their environment successfully”.
Therefore, this study utilizes the definition of Xanthopoulou et al. The reason for
adopting the definition of Xanthopoulou et al. is that we place importance on “positive
self-evaluations” when we design the WEDC. We designed the WEDC for business
persons in the developmental stage. We consider that business persons in the devel-
opmental stage may not be caught positively for themselves. Due to their short working
experience, there are many opportunities to suffer at work. More and more they suffer
at work, they would lose confidence and be less willing to challenge, and as a result,
they may not be able to work with vigor. We tried to give to the participants the
positive self-evaluations that regained their confidence. Moreover, we motivated to
challenge and helped them work with vigor. Based on the above, we were hoping to
use the definition of Xanthopoulou et al. which uses the phrase “positive self-
evaluations”. We describe the details below.
The relationship between questions related with Fig. 2 and “positive self-
evaluations that are linked to resiliency and refer to individuals’ sense of their abil-
ity to control and impact upon their environment successfully [9, 10]” are as follows:
“1. Deepening self-awareness”, leads to “2. Increased feelings of self-esteem” and “3.
Motivation to try new things improves”. In addition, when the participants obtained “5.
Ability to organize my own thoughts and feelings”, the participants proceed to “6.
Discovered hints to solve problems (tasks)”. Through proceeding “6. Discovered hints
to solve problems (tasks)”, the participants would be a state of “7. Able to be relieved
from stress”. Then, the state of “7. Able to be relieved from stress” concludes “3.
Improved motivation to try new things”. In addition, the “4. Improvement of point of
view and the mindset on various matters” is related to “2. Increased feelings of self-
esteem” and “6. Discovered hints to solve problems (tasks)” [3]. Based on the argu-
ment described above, we describe the overview of the WEDC (the relationship of the
WEDC frame) below. First, the connection of frames “A/B/C/G/H” is described as
reference to Fig. 2.
Then, the relationships between the frames of the WEDC are described. First, the
connections among the frames A/B/C/G/H are described in the following arguments by
using Fig. 2. Understanding “A: My values” and “B: My strength” can lead to work
4. Improvement of
1. Deepening self- 5. Ability to organize
point of view and the
understanding. my own thoughts and
way to think on
feelings.
various matters.
2. Increased feeling 6. Discovered hints to

of self-affirmation. solve problems (tasks)
3. Motivation to try 7. Able to be relieved

new things improves from stress.
Fig. 2. Relationship between questions on “positive self-evaluation related to the ability to

control the surrounding environment and to resilience” [3].
engagement. That understanding “A: My values” and “B: My strength” is considered to

be “Deepening self-awareness (self-understanding)”. As it is one’s own consideration
about what values one has, and what strengths one has is one’s own characteristic.
Therefore, understanding one’s own values and strengths will lead to self-
understanding. According to Hamamoto et al., the more the opportunity of “Deepen-
ing self-awareness” happens, the more improvement of the “Increased feelings of self-
esteem” happened (Fig. 2) [3]. Organizational self-esteem is one of the “personal
resources” of work engagement [12]. Therefore, understanding “A: My values” and “B:
My strength” will lead to “personal resources” of work engagement. Hamamoto et al.
indicate that “Increased feelings of self-esteem” leads to “Motivation to try new things
improves” (Fig. 2) [3]. “Motivation to try new things improves” is close to the meaning
of the frame of “H: A source of motivation for your work”. Therefore, it can be said
that the contents described in each frame of “A: My values” and “B: My strength” leads
to frame “H: A source of motivation for your work”. We consider that the “Ability to
organize my own thoughts and feelings” relates to the understanding of “A: My val-
ues”. In other words, Hamamoto et al. described that the “Ability to organize my own
thoughts and feelings” leads to be “Able to be relieved from stress” and further leads to
“Motivation to try new things improves” (Fig. 2) [3]. From this argument, we can
describe that “A: My values” lead to “Motivation to try new things improves”. If
“Motivation to try new things improves” can be regarded as close to the meaning of the
WEDC’s “H: A source of motivation for your work”, “A: My values” can be con-
sidered as “H: A source of motivation for your work”. The content of the “H: A source
of motivation for your work” depends on the conflicts between the content of the two
frames “C: My role” and “G: Social role”. The reason is described below. According to
Kitaoka, the apparent cause of “burnout” which is the opposite in meaning to work
engagement, is the imbalance between work demand and resources, as well as the
conflict between values (Conflict between personal and organizational values) [13].
Therefore, in order to confirm the conflict between individual and organizational val-
ues, the framework of “C: My role” and “G: Social role” were established for avoiding
the conflict between C and G increase work engagement. Increased work engagement
can lead to “H: A source of motivation for your work”. That is because, according to
Shimazu, personal resources, which is the component of work engagement, have been
reported to be positively associated with motivation [7]. From the above, we argue that
“C: My role” and “H: A source of motivation for your work” are connected and “C: My
role” and “G: Social role” are necessary in order to consider “H: A source of motivation
for your work”.
The connection of the frames D/E/F/G will be described. “D: Social vision and life
vision” is the social vision for one’s future. This vision is influenced by “A: My values”
and “B: My strength” because their own values are easily reflected in their vision. In
addition, there are many cases where people would like to utilize and reflect their own
strengths in their vision.
“E: Vision of the organization” is a frame describing the vision of the organization
to which you belong to. Also, it is necessary to confirm the conflict between “D: Social
Vision/Life Vision” and “E: Organizational Vision”. The reason for this confirmation is
to avoid the conflict (burnout) [13] between D and E.
“F: Vision of your own work” is the vision of the work they are responsible for. In
addition to the organization’s vision, this is the framework for reconsidering the sig-
nificance of the work they are responsible for.
“G: Social role” is a necessary frame for discovering one’s own role in the bigger
picture: “D: Social vision and life vision”, “E: Vision of the organization”, and “F:
Vision of your own work”.
It is necessary to visualize “E: Vision of the organization”, “F: Vision of your own
work” and “G: Social role” and to confirm their connections. That is because if the
contents described in the three frames of “E: Vision of the organization”, “F: Vision of
your own work” and “G: Social role” are related with each other, it is understood that
the participant’s vision of their own work leads to the organization’s vision. According
to Frese et al. [14, 15], consistency with the organization’s vision as well as holding a
long-term focus is a characteristic that enables individuals to voluntarily contribute to
their organization.
According to Kobayashi et al. [16], if employees can recognize the three connec-
tions, employee motivation will increase, and employee behavior will change to be in
line with management strategies. The three connections are management vision (“E:
Vision of the organization”), task (“F: Vision of your own work”), and role of
employees’ own task (“G: Social role”). Furthermore, regarding the framework of “D:
Social vision and life vision”, we considered that it affects “E: Vision of the organi-
zation” and “F: Vision of your own work”.
That is because selecting the organization to which the participants belong and the
work in charge may determine the way of life such as their own living environment. As
a result, it is considered that their own “D: Social vision and life vision” affects “E:
Vision of the organization” and “F: Vision of your own work”. In other words, “D:
Social vision and life vision” is considered to encompass “E: Vision of the
organization” and “F: Vision of your own work”. From the above, we considered that
the connection to the contents of the frame D/E/F/G is related to the participant’s
motivation. It suggests that it leads to “H: A source of motivation for your work”.
Then, the frames I/J/K/L will be described. Participants set their own goals, such as
“J: Current concrete goals in line with objectives” and “L: Your future growth”. That is
because according to Conger et al. voluntary targeting leads to high motivation [17].
“I: Current concrete objectives” is a necessary frame to clarify “J: Current concrete
goals in line with objectives”.
The “K: Your growth” is a necessary frame to clarify the “L: Your future growth”.
Furthermore, “K: Your growth” can lead to positive self-evaluation by visualizing
one’s own growth. The personal resources of work engagement are “positive self-
evaluations that are linked to resiliency and refer to individuals’ sense of their ability to
control and impact upon their environment successfully” [9, 10], which may lead to
increase work engagement.
2.2 Description Method

We have provided descriptions of each frame (A to L) within the WEDC and coop-
erated participants with writing the WEDC. The details are as follows (Table 1).
We show how to describe frames (A to L), and the premise of describing the
WEDC. We had the participants choose one of the jobs they were responsible for.
Then, assuming the work they chose, they asked themselves to describe frames (A to L)
on the WEDC. That is because we considered that when they described the WEDC, it
would be easier for them to describe by specifying the scope of work.
– In “A: My values”, participants describe what they cherish and their beliefs.
– In “B: My strength”, participants describe what their recognitions are their
strengths, or their strength is recognized by the others around them. Furthermore,
when sharing the awareness of the WEDC as shown in Table 2, it is better to
discuss frame B with each other in pairs. That is because there is the discovery
provoked by others indicating their strengths, which may lead to the self-esteem of
participants. As their self-esteem increases, their work engagement increases. That
is because organizational self-esteem is one of the “personal resources” of work
engagement [12].
– In “C: My role”, the participants describe their own role. Specifically, in order to
realize the contents of participant’s “A: My values”, they use the content of “B: My
strength” and describe the contents that the participants would like to address to.
– In “D: Social vision and life vision”, participants describe the vision that further
develops “C: My role”. Specifically, they describe the future vision of their “C: My
role”, which expands their contribution.
– In “E: Vision of the organization”, the participants describe the vision of the
organization to which the participants belong. In other words, it is the purpose of
their organization and the philosophy of the organization.
– In “F: Vision of your own work”, the content is the purpose of the work they are
currently engaged in. Considering participants’ work that they are responsible for,
contributes to their customers and society, and reconsider the purpose of their work.
– In “G: Social role”, the participants describe the own role expected by the society
which satisfies three visions of “D: Social vision and life vision”, “E: Vision of the
organization,” and “F: Vision of your own work”.
– In “H: A source of motivation for your work”, the participants describe the source
of participant’s own motivation that includes both “C: My role” and “G: Social
role”. In other words, it is the content that includes both what the participants would
like to be and what they are required by society.
– In “I: Current concrete objectives”, participants describe that considering the
specific purpose of the work that the participants are responsible for, based on “H:
A source of motivation for your work”.
– In “J: Current concrete goals in line with objectives”, participants describe that
considering specific goals leads to achieving the purpose of “I: Current concrete
objectives”.
– In “K: Your growth”, participants describe the considerations about the most
growing part of their work.
– In “L: Your future growth”, participants describe the contents that participants
would try to improve for their future, based on the contents described in “J: Current
concrete goals in line with objectives” and Frame “K: Your growth”.
We try to encourage participants to increase their own work engagement voluntarily
by regularly updating the WEDC descriptions. We consider that participants will
reaffirm that the organization’s values meet their values and that they will remind
the organization’s vision and their work visions and reconsider their daily work as
rewarding. In addition, participants can create their own spiral of growth by visu-
alizing their own growth and updating their goals.
We show the key points for participants using the WEDC.
– Participants check that the contents of “D: Social vision and life vision” and “C: My
role” described by the participants are connected. This argument is to understand
their current role linking to their future vision.
– Participants confirm that “E: Vision of the organization” is on the extension of “F:
Vision of your own work”. In other words, this is to reaffirm that the purpose of the
work they are in charge of, is included in the purpose of the organization. Thereby,
we aim that they would find the meaning of the work.
– Participants check that “D: Social vision and life vision” includes “E: Vision of the
organization” and “F: Vision of your own work”. By recognizing the relation
between the participant’s desire of “D: Social vision and life vision” and the par-
ticipant’s requirement of “E: Vision of the organization” and “F: Vision of your
own work”, we aim to their recognition of the meaning of their work which they are
in charge of.
– Participants confirm whether the desired role is described in “C: My role” and
whether the role allocated by the organization or society described in “G: Social
role”.
In addition, they need to make sure that there is no conflict between “C: My role”
and “G: Social role”. In addition, they check whether the personal values are reflected
in “D: Social vision and life vision” and check whether the organizational values are
described in “E: Vision of the organization”. Then, it is necessary to confirm whether
there is a conflict between “D: Social vision and life vision” and “E: Vision of the
organization”. That is because the conflict between individual values (frame C and D)
and organizational values (frame G and E) can lead to burnout that represents the
opposite meaning of work engagement [13].
For example, referring to the participant in Table 6, we show the following case.
A participant describes “I work with internal team members to provide services that
impress customers” in “C: My role”.
We considered that the contents of “C: My role” were closer to the meaning of
social roles (organizational values) than to that of personal roles (values).
In that case, we cannot confirm whether their description of “C: My role” is the
conflict with their content of “I make everyone I am with happy” in “G: Social role”.
When we cannot confirm the conflict between frame C and frame G, we consider that
the contents of frame H may also be biased. In fact, this participant described in frame
H “What customers are pleased with/to be able to tell the customer that it was good to
leave it up to you.” We considered that it was biased to social roles (organizational
values). Through those arguments, it is necessary for the participant to confirm whether
or not the participant’s own personal values are clearly described in the frames “C: My
role” and “D: Social vision and life vision”.
2.3 WEDC Implementation

The WEDC for participants was implemented according to the procedure described in
Table 2. We conducted an educational program on the WEDC for participants
according to the following procedure.
First, the first author explained on how to describe the WEDC. Second, participants
performed the WEDC. Third, the participants conducted a pair of works between
participants. Finally, the participants shared their awareness among all members about
the following two items; notice of having described the WEDC; notice about dis-
cussing the impressions of the WEDC in pairs.
We believe that the WEDC is also suitable as a communication tool with others.
For example, when bosses talk to their subordinates, they can use the WEDC to
understand their subordinates’ values and work engagement. That is because we
consider that there is the possibility that superiors may improve the way of commu-
nication with subordinates.
Table 1. WEDC frame questions.

Frame Questions
A [My values]
What are the most important values and beliefs in your work? Please describe them specifically
B [My strength]
What is one of your strengths and personalities that will lead to results in the work you set up?
C [My role]
Based on “A: My values” and “B: My strength”, describe about your role in the work
D [Social vision and life vision]
What would you like to contribute to society? What is your vision in life?
Please describe one of the most important things to you
E [Vision of the organization]
What is the vision of your organization?
F [Vision of your own work]
What is your vision for the work?
Describe one of your most important things
G [Social role]
Based on the “D: Social vision and life vision”, “E: Vision of the organization” and “F: Vision of
your own work” mentioned earlier, what do you think is your Social role in the work you have set
up?
H [A source of motivation for your work]
Based on “C: My role” and the “G: Social role Content” that you have considered so far, what do
you think is the most important thing that will enable you to have “a positive, fulfilled state of mind,
vigor, dedication, and absorption with your work”?
I [Current concrete objectives]
What is the purpose of your work?
J [Current concrete goals in line with objectives]
What are your specific goals for your current work based on your description of “I: Current
concrete objectives”?
Please specify the goals that are appropriate for you to be in a state of feeling “vigor, dedication,
and absorption” in this work
K [Your growth]
What do you think is the most growing part of your work?
L [Your future growth]
How would you like to develop yourself in your work by reviewing the overall contents described
in frames A to K of the WEDC?
Table 2. Implementation details of WEDC.

No. Implementation content Time required
1 Explanation on how to describe the WEDC 5 min
2 Participants perform the WEDC 15 min
3 Conduct pair of work between participants Another person
5 min
4 Share awareness among all members about the Presentation of about 1 min
following two items per person
- Notice of having described the WEDC
- Notice about discussing the impressions of the
WEDC in a pair
3 Evaluation Method and the Cooperating Company
This study describes the company cooperating with this study, the specification of the
participants in the cooperating company and the evaluation method.
3.1 The Explanation of the Company Cooperated with This Study

The company cooperating with this study pursues enhancing work engagement. That is
because the company needs to sustain the effort of human resource development. The
company’s business is consulting service whose quality of service toward customers
depends on human resources. Therefore, the company invests over the long term for
employees to obtain the skill-set and mind-set for working. From the above, we con-
sidered that the company pursues sustaining the effort of human resource development,
in other words enhancing work engagement.
3.2 The Specification of the Participants in the Cooperating Company

Participants of this study were leaders who had been with the company for five to eight
years. The reason why we selected these participants, is that they influence other
employees. According to Gutermann et al., leaders’ work engagement affects their
subordinates [18]. There were eleven participants (two males: nine females). There are
two hundred thirty employees in this company including about twenty managers with a
lot of management experience and also about twenty leaders with a little management
experience. Managers have been working in the company for many years. Through
their long time career, they have obtained high loyalty and work engagement with this
company. Moreover, they can increase the work engagement of other employees and
improve their quality of working.
On the other hand, leaders need to increase their own work engagement as the
leaders would try to develop to managers with a matured skill-set and mind-set for
working. In another perspective, they need to have a certain skill-set for influencing
other employees in their improvement of work engagement. For these contexts, we
chose them as participants for this study. Then, we could obtain eleven participants.
The eleven participants are eight leaders out of twenty except mid-career employees
and three candidate leaders. Table 3 shows the attributes of the participants. For leader
candidates, we considered it necessary to implement the WEDC in order to acquire
leadership skills in the future.
Table 3. The attributes of paticipants.

Year Leaders Candidate leaders Total
Male Female Male Female
5 1 1
6 1 2 3
7 1 2 3
8 1 3 4
Total 2 6 0 3 11
3.3 The Overview of the Evaluation Method

We assessed whether participants were able to describe the WEDC and whether it was
effective in increasing their work engagement. The evaluation method was carried out
according to the procedure of Fig. 3.
We evaluated (1) whether the WEDC could be described and (2) how the measure
of work engagement has changed. The evaluation result was analyzed through
(1) Checking the output, (2) Paired t-test, and (3) Open Coding (Fig. 3). We describe
these three evaluation methods below.
3.3.1 Checking Output

The way we checked outputs was to make sure that they are described in the WEDC. In
this study, we determined that all participants were able to describe in all frames of the
WEDC.
3.3.2 Paired t-test

The corresponding sample, the t-test, is performed by using a pre-questionnaire and a
post-questionnaire in which participants perform the WEDC. As for the content of the
questionnaire, we adopted the work and well-being survey “Utrecht Work Engagement
Scale” (UWES). According to Schaufeli et al. and Zecca et al. work engagement and its
subdimensions can be assessed with UWES [19, 20]. It measures three factors (vigor,
dedication, and absorption) of the work engagement [19] advocated by Schaufeli et al.
in seventeen items. (Table 4) The previous study [19] explains how to use UWES as
follows:
“The following 17 statements are about how you feel at work. Please read each
statement carefully and decide if you ever feel this way about your job. If you have
never had this feeling, cross the “0” (zero) in the space after the statement. If you have
had this feeling, indicate how often you felt it by crossing the number (from 1 to 6) that
best describes how frequently you feel that way.”
This study adopted the questions and evaluation criteria in Tables 4 and 5 by
Schaufeli et al.
[Evaluation procedure] [Analytical method] [Evaluation point]
Pre-Implementation
Questionnaire
Participants describe Whether participants can

Checking output
on the WEDC describe the WEDC
Paired t-test Effectiveness in enhancing

Post-Implementation
Questionnaire the participant’s
Open Coding work engagement
Fig. 3. Steps to evaluate WEDC.

Table 4. Utrecht work engagement scale questions (Schaufeli et al. [6, 19]).
No. Question Type of scale
1 At my work, I feel bursting with energy VI1
2 I find the work that I do full of meaning and purpose DE1
3 Time flies when I am working AB1
4 At my job, I feel strong and vigorous VI2
5 I am enthusiastic about my job DE2
6 When I am working, I forget everything else around me AB2
7 My job inspires me DE3
8 When I get up in the morning, I feel like going to work VI3
9 I feel happy when I am working intensely AB3
10 I am proud of the work that I do DE4
11 I am immersed in my work AB4
12 I can continue working for very long periods at a time VI4
13 To me, my job is challenging DE5
14 I get carried away when I am working AB5
15 At my job, I am very resilient, mentally VI5
16 It is difficult to detach myself from my job AB6
17 At my work, I always persevere, even when things do not go well VI6
Note: VI = Vigor scale; DE = Dedication scale; AB = Absorption scale.
3.3.3 Open Coding

With regard to the qualitative data analysis, we used free descriptive answers as data
and had one expert of qualitative research methods by using qualitative coding
methods. This study used procedures 1 to 3 of Kobayashi et al. [21] as a method of
open coding. The procedure was as follows: [22]
Step 1: View free answers, and pick those that are related to the participant’s thought
stream. Set the viewpoint for Affinity Diagram grouping (Step 2). It was set in this
study as “the participant’s thought stages”, in order to show how work engagement is
increasing.
Step 2: Look for, from the aforementioned viewpoint, the descriptions related to how
work engagement is increasing, and sort them into groups.
Step 3: Write titles for each group that summarizes the essence of the group, at a
slightly higher level of abstraction (called “Open coding results” in this study).
The reason described above is that using the WEDC, participants’ thoughts lead to
stages of thoughts increasing work engagement. Additionally, this study ensured the
validity of analysis through the one qualitative researcher’s review on the Open coding
results [23].
Table 5. Evaluation Criteria (Schaufeli et al. [6, 19]).

0 Never
1 Almost Never
A few times a year or less
2 Rarely
Once a month or less
3 Sometimes
A few times a month
4 Often
Once a week
5 Very Often
A few times a week
6 Always
Every day
4 Evaluation Results
We present the results of the evaluation according to three patterns of analysis.
4.1 Checking the Output

4.1.1 Whether the Subject Could Be Described in the WEDC
As for the WEDC, all participants were fully covered.
4.1.2 WEDC Example

We present sample WEDC description for one participant. (Table 6, Fig. 4).
Table 6. Implementation details of WEDC.

Frame Participant description
A I would like to make customers happy through the service of our company
B I would like to do a customer perspective service
I would like to facilitate communication with internal team members
C I work with internal team members to provide services that impress customers
D To facilitate communication among people through my involvement
E Make people who work happy
F I work to make all those involved happy
G I make everyone I am with happy
H What customers are pleased with/to be able to tell the customer that it was good to
leave it up to you
(continued)
Table 6. (continued)
Frame Participant description
I The purpose of work is to feel the value of existence
J I will do my best to be able to receive words of thanks from customers and team
members five times a day
K To feel that I am growing is that I can do my best for people around me
L I would like to convey my passion and feelings to my juniors
[My values] [My strength] [Social vision and life vision]

I want to make I want a customer To facilitate communication among people through
customers happy perspective service. my involvement.
through the service I want to facilitate [Vision of the organization] [Vision of your own work]
communication with Make people who I work to make all those
of our company.
internal team members. work happy. involved happy.
[My role] I work with internal team members to [Social role]
I make everyone I am with happy.
provide services that impress customers.
[A source of motivation for your work] What customers are pleased with. /
To be able to tell the customer that it was good to leave it up to you.
[Current concrete objectives] [Current concrete goals in line with objectives]

The purpose of work is to feel the value of existence. I will do my best to be able to receive words of thanks
from customers and team members five times a day.
[Your growth] [Your future growth]

To feel that I am growing is that I can do
I want to convey my passion and feelings to my juniors.
my best for people around me.
Fig. 4. A result of WEDC description for one participant.
4.2 Paired t-test

It was evaluated whether or not the WEDC was effective for increasing work
engagement through the use of a t-test of the results that corresponded to a pre-
implementation Questionnaire and a post-implementation Questionnaire. The results
are shown in Tables 7 and 8. The significance of question 13 “To me, my job is
challenging” is 0.000, which is significant. Question 7 “My job inspires me” is also
significant at 0.016. Furthermore, although the average value of this time is 6 grades,
the average, in that case, is 3.5, which is positive as it exceeds the whole (Table 8).
4.3 Open Coding

We show a diagram that visualizes the thought process that increases work engagement
based on comments extracted by Open Coding (Fig. 5).
The contents of the extracted comments and the number of comments are shown in
the following table (Table 9).
1. I can visualize my thoughts.
3. I was able to clarify my life vision, organizational 2. I understand through realizing my strengths
vision, and vision of your own work. and my values.
4. I can check the overlap range between the vision of

the organization and my vision.
5. I recognize my role.
6. I can recognize what to do next.
7. I realize that my actions correspond to the vision, and

I feel that I am approaching the vision.
8. I can feel the meaning and value of my work.
9. I can affirm myself.
11. I am proud of myself. 10. I can be confident in myself.
12. I feel increased dedication for my work.
13. I feel that my work engagement is increasing.
Fig. 5. Stages of thought that enhances work engagement.
5 Consideration
We consider it across three patterns of analysis methods.
5.1 Discussions for Paired t-test

Question 13 is effective because the significant probability is 0.000. Therefore, “To me,
my job is challenging” is valid with regard to enthusiasm for work. Question 7 “My job
inspires me” is also significant at 0.016. The results of the other questions were not
significant probability. The reason is conceivable that the number of samples is small,
so no result is obtained in the t-test. Therefore we need to increase the number of
participants in the future.
Table 7. Paired t-test results.

Standard deviation t value Significance (both sides)
PreQ1 – PostQ1 0.647 −1.399 0.192
PreQ2 – PostQ2 0.467 −1.936 0.082
PreQ4 – PostQ4 0.701 0.430 0.676
PreQ5 – PostQ5 0.701 −0.430 0.676
PreQ6 – PostQ6 0.447 0.000 1.000
PreQ7 – PostQ7 0.522 −2.887 0.016
PreQ8 – PostQ8 0.786 1.150 0.277
PreQ9 – PostQ9 0.674 −1.789 0.104
PreQ10 – PostQ10 0.674 −1.789 0.104
PreQ11 – PostQ11 0.467 −1.936 0.082
PreQ12 – PostQ12 0.751 −0.803 0.441
PreQ13 – PostQ13 0.467 −5.164 0.000
PreQ14 – PostQ14 0.674 −1.789 0.104
PreQ15 – PostQ15 0.874 −0.690 0.506
PreQ16 – PostQ16 0.786 −1.150 0.277
PreQ17 – PostQ17 0.647 −1.399 0.192
5.2 Discussions About the Result of Open Coding

We present discussion of the consequences of Open Coding. We considered that
participants may gain “2. I understand through realizing my strength and my values.”
by realizing “1. I can visualize my thoughts.”. Since we considered that by visualizing
participants’ thoughts, they can understand their own strengths and values. We con-
sidered that if participants realized that “1. I can visualize my thoughts.”, they would
proceed on the stage of “3. I was able to clarify my life vision, organizational vision,
and vision of your own work.”. The reason for our inference is, when participants
perform the process of visualizing their own thoughts, participants have the opportunity
to consider their life vision, their organization vision, and their vision of your own
work. We considered that if participants realized that “3. I was able to clarify my life
vision, organizational vision, and vision of your own work.”, they would proceed on
the stage of “4. I can check the overlap range between the vision of the organization
and my vision.”. As we considered that by clarifying the participants’ organizational
vision and their own vision, they would be able to recognize the common points
between the two different visions. We considered that if participants realized that “4.
I can check the overlap range between the vision of the organization and my vision.”,
they would proceed on the stage of “5. I recognize my role.”. Since we considered that
participants recognized their own roles by understanding two arguments: First, the role
is required by the external environment of participants, such as the organization’s
vision: Second, the role is that participants themselves would like to play intrinsically,
such as their own vision. We also considered that “5. I recognize my role.” was related
to the WEDC “I: Current concrete objectives” section. The reason for this relation is,
we considered, that participants considered of “5. I recognize my role.” is based on the

contents “C: My role” and “G: Social role” described by the participants themselves.
The participant’s “C: My role” and “G: society role” are two elements that are
necessary for the participants to consider “H: A source of motivation for your work”.
By visualizing participants’ “H: A source of motivation for your work”, we thought
participants could have the opportunity to consider “I: Current concrete objectives”.
We considered that if participants realized that “5. I recognize my role.”, they
would proceed on the stage of “6. I can recognize what to do next.”. We thought that by
recognizing their roles, participants would be clear as to what they should do.
We considered that “6. I can recognize what to do next.” is related to the WEDC “J:
Current concrete goals in line with objectives” because participants could set specific
goals by recognizing what they should do next.
We considered that if participants realized that “6. I can recognize what to do
next.”, they would proceed on the stage of “7. I realize that my actions correspond to
the vision, and I feel that I am approaching the vision.”. That is because we consider
that by clarifying their actions participants should take next and they would be able to
feel closer to their vision.
We considered that “7. I realize that my actions correspond to the vision, and I feel
that I am approaching the vision.” is related to the WEDC “K: Your growth”. This is
because we thought that the change in participants’ approach to their vision was a sign
that they were growing.
We considered that “7. I realize that my actions correspond to the vision, and I feel
that I am approaching the vision.” is related to the WEDC “L: Your future growth” as
we thought that by making the actions clearer toward the vision, participants could
figure out what skills they would develop in order to get closer to the vision.
We considered that if participants realized that “7. I realize that my actions cor-
respond to the vision, and I feel that I am approaching the vision.”, they would proceed
on the stage of “8. I can feel the meaning and value of my work.”. That is because
when participants realized that their actions were approaching their vision, they would
find their work meaningful and valuable.
We considered that if participants realized “8. I can feel the meaning and value of
my work.”, they would proceed on the stage of “9. I can affirm myself.”. That is
because we considered that participants would be able to affirm themselves as engaged
in meaningful and valuable work.
We considered that if the participants realized “9. I can affirm myself.”, they would
proceed on the stage of “10. I can be confident in myself.”. That is because we
considered that if participants were positive about themselves, they would be more
confident.
We also considered that if participants realized “9. I can affirm myself.”, they would
proceed on the stage of “11. I am proud of myself.”. That is because we considered that
the participants’ affirmation of themselves would increase their self-pride.
We considered that if the participants achieved “11. I am proud of myself.”, they
would proceed on the stage of “12. I feel increased dedication for my work.”. That is
because the participants’ dedication to the work increases as they become more proud
of themselves and their work.
Table 8. Results of average values.

Pre Post
Q1 AVE 4.09 4.36
STD 1.044 0.924
Q2 AVE 5 5.27
STD 0.632 0.647
Q3 AVE 6 6
STD 0 0
Q4 AVE 4.36 4.27
STD 1.027 1.272
Q5 AVE 4.82 4.91
STD 1.25 1.136
Q6 AVE 4.73 4.73
STD 1.272 1.104
Q7 AVE 4.09 4.55
STD 1.446 1.128
Q8 AVE 3.64 3.36
STD 1.567 1.748
Q9 AVE 3.55 3.91
STD 1.44 1.578
Q10 AVE 4.73 5.09
STD 0.905 1.044
Q11 AVE 4.64 4.91
STD 1.12 1.044
Q12 AVE 3.64 3.82
STD 1.963 1.779
Q13 AVE 3.82 4.55
STD 1.079 1.128
Q14 AVE 4.73 5.09
STD 1.104 0.831
Q15 AVE 4 4.18
STD 1.095 1.25
Q16 AVE 4.55 4.82
STD 1.572 1.079
Q17 AVE 4.45 4.73
STD 1.368 1.104
We considered that if participants realized “12. I feel increased dedication for my

work.”, they would proceed on the stage of “13. I feel that my work engagement is
increasing.”. That is because according to Schaufeli et al., increased dedication is a
component of work engagement [19].
In conclusion, we considered that the 1–13 stages of thoughts using the WEDC
have contributed to an increase in work engagement. In addition, if employees in the
Table 9. List of comments.

No. Comment content Number of
comments
1 I can visualize my thoughts 34
2 I understand through realizing my strength and my values 4
3 I was able to clarify my life vision, organizational vision, and 6
vision of your own work
4 I can check the overlap range between the vision of the 5
organization and my vision
5 I recognize my role 2
6 I can recognize what to do next 3
7 I realize that my actions correspond to the vision, and I feel that I 1
am approaching the vision
8 I can feel the meaning and value of my work 1
9 I can affirm myself 7
10 I can be confident in myself 3
11 I am proud of myself 4
12 I feel increased dedication for my work 13
13 I feel that my work engagement is increasing 17
service industry can enhance their work engagement by visualizing their own thoughts,
we believe that there could be a change in the quality of service to customers. Because,
according to Piyali, employee engagement is positively and significantly related to
employees’ productivity, innovativeness, customer service, and in-role and extra-role
behaviors [1]. For example, the service staff who provided the minimum service
requested by the customer will become more willing to try to exceed their customer’s
expectations.
We suggested that participants select one of their daily tasks so that the participants
could easily answer the questions in each frame of the WEDC. Certain tasks partici-
pants selected are hard to describe in the WEDC, so we considered they may have
difficulties in describe the WEDC. We suggested that participants select one of their
daily tasks so that the participants could easily answer the questions in each frame of
the WEDC. Certain tasks participants selected are hard to describe in the WEDC, so we
considered they may have difficulties in describe the WEDC.
We considered that the tasks participants selected do not always assume a leader in
this study. In particular, we perceived the values of “A: My values” and “D: Social
vision and life vision” were usually more influenced by the values of organizational
operations. As a result, when participants describe “A: My values”, their own vision is
limited to the organizational work. Therefore, the participants describe the “C: My
role” in the WECD, which is limited to the organizational work. Thus, This study
suggests that this influence leads to an imbalance (burnout) [13] between “C: My role”
and “G: Social role”. In order to avoid this imbalance, we believe it is necessary to
demonstrate our work as a leader. That is because a leader has the mindset of con-
sidering their work as a part of the whole picture of their business compared with their
subordinate’s consideration, so they are more likely to recall their values and vision.
Therefore we consider in future works, the leader’s mindset would encourage descri-
bers to a more balanced description of “A: My values” and “D: Social vision and life
vision”. The potential of future works based on WECD would propose. This study
based on CANVAS [24] demonstrates the work of the participants as a leader through
expressing the identity of the leader. Expressing the identity of the leader in the frame
of “C: My role” enables participants to describe their whole pictures of their working as
a leader. Those future studies would, therefore, solve the limitations of this study: an
imbalance between “C: My role” and “G: Social role” (burnout) [13].
6 Conclusion
The purpose of this study was to propose the Work Engagement Develop Canvas,
which aims to enhance employee work engagement. The evaluation method of this
study was to check outputs where participants described the WEDC as well as to
collect two types of questionnaires: a pre-Implementation questionnaire and a post-
Implementation questionnaire. In addition, the evaluation was carried out by
(1) Checking the output, (2) Paired t-test, and (3) Open Coding. The visualization of
employees’ own thoughts using the WEDC helped to increase employee work
engagement. As a result of the evaluation, this study was found that when following 1–
13 stages of thoughts using the WEDC, this study contributed to increasing work
engagement. The following arguments are potential future research topics.
– We consider that the reason for the lack of results in the t-test is due to the small
number of samples. Therefore, we need to make efforts to increase the number of
participants in the future.
– In this study, we verified the service industry, but we need to experiment to see if
the WEDC is effective in other industries.
– It is unclear how long the effect of the WEDC will last once the WEDC is
implemented.
– Participants may not be able to describe the best content during a one-time
implementation of the WEDC.
– To increase work engagement, CANVAS [24] related to leader identity may be
combined with the WEDC of this study. We would confirm whether the method of
combining the WEDC and CANVAS [24] can increase work engagement.
– We need to check what percentages of the leaders continue to implement the
WEDC in order to see if they can continue to use the WEDC.
– We need to observe the work engagement of employees other than leaders influ-
enced by leaders’ work engagement in order to evaluate the efficacy toward
employees other than leaders.
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(2019)
R&D Staff Perception Leading
to Product Innovation: Case Study
on Carbohydrate-Free Saké
Kengo Matsumura(&), Satoshi Shimada, and Yoshinori Hara
Graduate School of Management, Kyoto University, Yoshida-honmachi,

Sakyo-ku, Kyoto 606-8501, Japan
[email protected]
Abstract. This paper examines the development process of carbohydrate-free

saké, namely, Gekkeikan zero carbohydrate saké, as a case study in order to help
enhance the success rate of innovation by enabling readers to understand the
pattern of innovation for its efficient management in the development process.
The concept of effectuation was applied to this case and explained using activity
theory. Here we report that, to inspire innovation in product development,
organizations should develop prototypes of products containing technology
seeds based on the intrinsic motivation of R&D staff and should further begin
small test marketing without hesitation from fear of failure.
Keywords: Research & development Intelligence Sensemaking

Effectuation Activity theory
1 Introduction
We examine the development process of carbohydrate-free saké—an innovation—

using Gekkeikan zero carbohydrate saké as our case study. According to Schumpeter,
“innovation” is that a new effort (e.g., implementation of new methods, provision of
new products and services that did not exist in the market before, or development of
new businesses) on the production side (supply) first, is beneficial to production, and
second, creates new customers. Finally, this process leads to the creation of new added
value to society [1].
Traditional concepts of service management and design emphasize person to person
interactions and this approach focuses on the touch points or encounters where the
service is delivered to the customer. However, it deemphasizes activities or processes
that are invisible to the customer. In order to understand the service management
system, Teboul divided “service” into two stages. One is the frontstage which repre-
sents the interaction the customer has with the service, and the other is the back-
stage which is the part of the service value chain that the customer can’t see [2]. In this
study, as well as the service, the approach which focuses on backstage where activities
or processes are invisible to the customer is applied to production and manufacturing.

R&D Staff Perception Leading to Product Innovation 107
It is commonly held that successful innovation is merely a result because it is

difficult to lead it through intended implementation. However, through our case study,
we help to enhance the success rate of innovation by enabling readers to understand the
pattern of innovation for its efficient management by examining the backstage phe-
nomenon in the development process based on a business administration approach.
2 The Management of Innovation Process in Product

Development
2.1 Interpretation from the Ansoff Matrix
In order to grasp the patterns of innovation in the product development process, the
Ansoff Matrix is considered to be a good model for this case. The Ansoff Matrix was
developed by Ansoff [3] and summarized in Fig. 1.
Fig. 1. The Ansoff Matrix adapted from Ansoff [3]. It suggests that there were effectively only
two approaches to developing a growth strategy; through varying what is sold (product growth)
and who it is sold to (market growth).
As shown in Fig. 1, first, selling its existing products into existing markets is the
lowest risk strategy for a company, termed Market Penetration. Second, developing
new products for existing markets (customers) termed Product Development is a higher
risk strategy than Market Penetration. The success of this strategy is dependent on
whether the organization effectively conducts research and insight into their customer
and market needs in addition to their own internal capabilities and competencies for
driving innovation. Third, taking existing products into new markets termed Market
Development is also considered to be riskier than Market Penetration, because it can be
difficult to realize new markets or new target segments beyond conventional rationale.
Finally, Diversification, developing new products for new markets is considered the
108 K. Matsumura et al.
riskiest strategy in the Ansoff Matrix. However, this risk can be mitigated by under-
taking ‘related’ diversification, and it could have the potential to gain the highest
returns.
While, it is true that the Ansoff Matrix is a strategic planning tool that provides a
framework to help managers and marketers decide strategies for future growth, it is
insufficient to account for the management of innovations when we aim to help
enhance the success rate of innovation in product development. When a marketer
and/or R&D staff intend to move into new markets and/or create new products, various
factors such as the challenges and risks for changes of business-as-usual activities, and
furthermore whether they possess transferable skills, flexible organizations, and
agreeable stakeholders must be taken into account.
Therefore, the management of technology (MOT) perspective is considered to be
more useful for enhancing the success rate of innovation in product development. It is
often said that there are three main barriers that must be overcome to successfully
develop a viable new business through technology-based innovation, commonly
referred to as the “Devil’s River,” the “Valley of Death,” and the “Darwinian Sea” [4–7].
Some competencies are required for overcoming these barriers. Therefore, we sought to
interpret the innovation process in product development based on the intelligence frame.
2.2 Interpretation from the Intelligence Frame
Intelligence Cross. Chesbrough (2007) states that “technology itself has no inherent
value, but only when combined with a business model, it creates value” [8]. The
following equation can express this statement:
Technology þ Business model ! Value ð1Þ
Because the business model is realized by “Market needs” and “Product devel-
opment process involving organizations” it is assigned to (1):
Technologies ðwith the feasibility to achieve significant valueÞ þ Market needs ðwith a
new value prospect; even customers have not yet recognizedÞ þ Product development
process involving organizationsðby using communication skills with members
of other departmentsÞ ! Value
ð2Þ
(2) is redefined in terms of the ability (intelligence) dimension that generates each
situation:
TI þ MI þ BI ! Innovation ð3Þ
TI, MI, and BI from formula (3) are shown in Fig. 2 below using the framework by
Misawa and Hattori [9]. In addition to concrete measures to create differentiated
products for innovation as the competency [10], like an underwater iceberg that does
not appear on the surface, it is important to generate each “intelligence cross”
(TI MI BI).
Fig. 2. TI MI BI cross based on Misawa and Hattori [9]. R&D staff should fulfill the
TI MI BI cross to create differentiated products for innovation. TI, MI and BI show the
ability (intelligence) dimension that generates each situation concerning Technologies, Market
needs and Product development process involving organizations, respectively. TI, MI and BI
represent Creativity, Insight and Sensemaking, respectively.
Uncertainties in the Management of R&D and Commercialization. As Chesbrough

(2007) has noted, technology development has a long span, whereas marketing
information has a short span. Hence, the technology and the market are characterized
by uncertainty (Fig. 3). To that end, engineers need to communicate the “technical
information” of the technology developments that they have independently interpreted,
as the engineers are appropriately managed. It is also important for “knowledge
management” that engineers do not focus excessively on technology development for
product realization, but at the same time, conduct exploratory research to improve TI.
Two Methods of Evaluating Technologies in the Commercialization Process. As
shown in Fig. 4, there are two evaluation systems that minimize the false-positive error
toward the existing market and that minimizes the false negative error toward the new
market. Conventional product development in existing markets can be compared to
“chess thinking,” where experience is effective, and once it becomes stronger, failure to
develop new products is not an option. On the other hand, innovation in a new market
can be compared to “poker thinking,” which may result in unintended value creation
due to licensing and spin-off among technologies that cannot be realized by businesses
and products.
Fig. 3. Uncertainties in the management of R&D and commercialization adapted from

Chesbrough 2007. Businesses related to the technology and the market differ in span,
orientation, and mission.
In conventional product development, the manner of conducting R&D using an

evaluation system that minimizes false-positive errors has been permeating toward
existing markets. That is, acquired market research information is applied directly to
product development. As shown in Fig. 3 above, the mission of marketers and
developers is product development. As a procedure, they first discover and conceive
their needs, and then ask researchers and engineers whether there are corresponding
technology seeds. The technology is evaluated by minimizing the false-positive error
(Fig. 4). Therefore, in many cases, marketers and developers continue to focus on
minimizing false-positive errors even toward new markets and are unaware of the
importance of the evaluation system that minimizes false-negative errors toward new
markets. Whether innovation in a new market succeeds or fails depends on their
“unique interpretation” that leads to “intuition” and their insight. MI toward a new
market is defined as the recognition of potential needs prior to customers. Therefore,
MI needs not only to analyze the current market (customer), but also continue to ask
what the future market (customer) should be.
On the other hand, the mission of researchers and engineers is technology devel-
opment. They are required to assume potential market needs from independent inter-
pretation based on existing market information. They must then proceed with
technological development while determining where technology seeds can be used.
Thereafter, the technology is evaluated by minimizing the false negative error (Fig. 4).
Whether innovation succeeds or fails depends on “the sense of the potential of tech-
nology expansion where the acquired seeds through independent interpretation and
insight can be used generally for technology development when it applies to a prod-
uct.” TI toward new market is defined as the identification of technology seeds
combined with new product. Therefore, TI needs not only to create new technologies,
but also to continue to search for “how the technologies can be used in the future.”
Fig. 4. Two methods of evaluating technologies in the commercialization process toward the
existing market and the new market adapted from Chesbrough (2007). The technologies in the
commercialization process toward the existing market and the new market were evaluated by
causal logic and effectual logic, respectively
The Ability to Convey the Vision and Concept of the Future. In addition to MI and
TI, to make it easy to create differentiated products for innovation, R&D staff gains
trust in the organization, has multiple patterns of communicating with the surroundings,
and has an accurate presentation method (catchphrase, catch copy, etc.). BI is the
ability to convey the vision and concept of the future which has been obtained
implicitly (not yet acquired) to the surroundings through the cross between TI and MI
in a concise and clear manner, and the ability to lead the organization to put it into
practice with other people’s help.
Here, sensemaking is required for engineers and marketers who are located
upstream from the commercialization decision and have the role of providing judgment
materials. The sensemaking theory was advocated by Weick et al. [11], and, until now,
there has been a tendency to grasp it as “the power of the humanities” that is a different
dimension from business and management, similar to human-dependent ability and
spirit theory. However, it is now being recognized as a management theory supported
by management scholars [12]. R&D is future-oriented and characterized by risk.
Hence, both engineers and managers need entrepreneurship and “conscientious” skills.
By using BI to communicate and trust, engineers and managers are connected by
empathy. In this way, a relationship is established that surpasses myopic short-term
profits and shares value, allowing investment and commercialization decisions.
3 Case Study
3.1 Sales of Gekkeikan Zero Carbohydrate Saké
The Japanese domestic saké market is fiercely competitive. Observers have noted that
the war of attrition within this market has been shrinking. Within this environment,
Gekkeikan Sake Company, Ltd. (hereon, Gekkeikan) released Gekkeikan zero carbo-
hydrate saké in September 2008. At the time, it was the first carbohydrate-free saké in
the industry. In the market, annual sales of over ¥100 mn is considered a success—the
Gekkeikan zero carbohydrate saké sales volume increased to ¥500 mn in the first sales
year alone. Since then, this product has continued to sell well and become established
as a product in a new category of saké (Fig. 5). Its share in the category carton of sake
targeted for health-conscious customers grew, allowing it to occupy 55.4% of the
market in 2013 compared with 11.4% in 2008 when it was first released. As of 2018,
the saké category targeting health-conscious customers is worth more than ¥4 bn,
where Gekkeikan zero carbohydrate saké has a 65% share.
In this case, Gekkeikan zero carbohydrate saké is innovative because it overcame
the technical challenge of developing a carbohydrate-free saké. It was the first to be
released in the market and has consistently recorded stable profits. Though the product
was developed by a team of experts, for the purpose of our study, we focus on two
individuals—Researcher I and Marketer S—as the sources of intelligence.
Fig. 5. Annual change in shipment amount of Gekkeikan zero carbohydrate saké for 5 years
from 2008 when it was released to 2012.
3.2 Two Challenges for Product Development

Carbohydrate-free mixed beverages are developed by substituting saccharides (i.e., the
organic compound forming carbohydrates). In this process, there is little to no technical
challenge. Similarly, eliminating saccharides from alcoholic beverages such as low-malt
beer and liqueurs is also easy allowing for efficient product realization. However, saké is
made from rice, which is predominantly a carbohydrate, and have a high alcohol con-
tent. The challenge was to develop carbohydrate-free saké while still using the original
raw material and also adhering to the manufacturing method defined by the Japanese
Liquor Tax Act1. Therefore, there was still great concern about the influence of high
carbohydrate and alcohol contents on yeast in the alcoholic fermentation process for
carbohydrate-free saké. These technical challenges made it difficult to realize such a
product in an ordinary saké brewery.
Because saké is a nonessential grocery product, its quality is evaluated based on its
taste. However, without the source of umami and sweetness from the carbohydrate, this
type of saké is light-tasting. In fact, a common Google search shows that searching for
“Gekkeikan carbohydrate-free” also leads to suggestions for “Gekkeikan carbohydrate-
free bad taste.” Thus, a substantial number of consumers have evaluated this product as
bad-tasting. To develop technology that can help commercialize carbohydrate-free
saké, Gekkeikan had to solve numerous problems, such as how to interpret and judge
the quality of saké.
3.3 Researcher I: Developing the Brewing Technology for Carbohydrate-

Free Saké
Researcher I, a member of the research department, led the development team of low-
carbohydrate saké. Before releasing the final product, he discussed its development with
junior researchers during the trial production and tasting stage. Researcher I states that:
“The ultra-light taste of low-carbohydrate saké is good to consume with meals. I believe many
people will also agree it tastes good. As I get used to drinking it, I have realized that reducing
carbohydrate is refreshing.”
To informally test the product, Researcher I brought a low-carbohydrate prototype

to the year-end party—the peak season for saké brewing—of the product development
department in December 2006, approximately one year and nine months before the
official release of Gekkeikan zero carbohydrate saké. Upon tasting the prototype, one
member of the department stated that “The low-carbohydrate saké certainly goes well
with the hot pot dish.” Note that, at this point, developing carbohydrate-free saké was
not decided by the parent company, but the commercialization of carbohydrate-free
saké was a goal set by Researcher I. Thus, no reliable method had yet existed to
develop such a product. Based on the feedback from the informal testing, Researcher I
set out to develop a fully carbohydrate-free saké.
In addition to small-scale brewing tests (up to 10 kg of white rice) at the laboratory,
Researcher I routinely visited the site of the brewery to work with frontline workers
engaged in commercial brewery (up to 80 ton. of white rice). Despite being part of R&D
and experimentation, he often worked at the site of the brewery, eventually becoming
the “hub specialist between the brewer and the researcher.” As a result, the process of
product development involved serious collaboration between the brewery site and the
laboratory for solving technical challenges and determining the scope of implementing
theoretical ideas. Researcher I states that “You cannot do something impossible, but you
can do it with accumulation of a little effort.” Assessing the feasibility of the brewery
1
Saké is characterized by the specific ingredients that are used to make it. First, it must only be made
using rice and a “rubbing” process is necessary as stipulated in Article 3-7 of the Japanese Liquor
Tax Law.
section allowed him to gain progress in new product development through technology
development and field testing. Researcher I’s skills in, for instance, repairing and
constructing experimental equipment also exemplified his overarching role in product
development and research, giving him the moniker of “building firm” by colleagues.
Efficient communication with other researchers during repairs allowed the proper
monitoring of the project. Any experimental ideas were also researched as “underground
research,” though not included in the official reports. Despite inter-organizational bar-
riers between the research site and the brewing site, Researcher I was able to overcome
these challenges. In addition to having a unique career and high skill as a craftsman, he
was highly regarded in the manufacturing headquarters.
3.4 Marketer S: Insights on Releasing Carbohydrate-Free Saké

as a Successful Product
At the forefront of sales, the appearance of more differentiated products incorporating
Gekkeikan original technology was eagerly awaited. At this point, Marketer S conducted
market research on the highly differentiated product of carbohydrate-free saké from its
preceding counterpart, low-carbohydrate products. In addition to the part of the product
planning and advertising department, Marketer S, a business graduate, became the central
figure conducting the market research survey for Gekkeikan. This market research
yielded positive responses, confirming the existence of customers who would positively
evaluate the super-light taste of carbohydrate-free saké, though some respondents did
reject the taste. These findings convinced him that carbohydrate-free saké could become
a successful selling product if it were released. He noted that the quality of “sense” in
qualitative research interviews was important in market research. That is,
“Qualitative survey helps us understand whether our sense and touch of the customer is ‘just a
false belief’ or ‘what the customer actually feels.’ It makes a hypothesis from the marketer’s
point of view, that is, it makes it possible to see the value customers have and to predict
customer’s taste preferences. Through the information input process, we can understand the key
points of customer value, and we can move on to the test marketing stage, figuring out how
many customers have such value through subsequent quantitative surveys.”
Marketer S further states that:

“Other large manufacturers in other industries are gathering data from interview surveys of
customers for so-called ‘higher-ups in the company.’ They then make ‘in-place decision-making
by inputting customer information.’ I would like to create a system to increase the number of
employees who have a customer perspective, besides customer perspective management.”
Marketer S, with new product planning achievements, gained the trust of the sales
department. He brought a different perspective of the commercialization of carbohydrate-
free saké, which complemented Researcher I’s research-based approaches.
3.5 Decision to Commercialize Carbohydrate-Free Saké
Gap Between Sales Side and Manufacturing Side. In April 2007, a routine meeting
was held between the technical development and product planning sides. Researcher I
and Marketer S aimed to overlap their work from their respective standpoints to
develop carbohydrate-free saké. However, the company feedback was highly varied. At
the forefront of the business, a salesperson desired carbohydrate-free saké because
carbohydrate-free beer-based beverages were already existing in the market: “We want
a new product that will become a weapon for our sales.”
Though carbohydrate-free saké is markedly different from the products of other
companies, it is a product that negates the “common sense” of the saké industry in
terms of taste. Therefore, it would be difficult to secure the expected quality, especially
for the manufacturing side, which is responsible for ensuring higher quality and taste,
as well as the executive side. The in-house evaluations of the prototypes brought up
issues such as “whether such a too light and poor taste is acceptable to customers” or if
there is a “risk of damaging the Gekkeikan brand when this product is released.”
However, the development of the product did not halt because the management
attitude embraced the challenge of creating a carbohydrate-free saké; that is, the firm
exhibited a strong spirit of “creativity.”
Gekkeikan’s Basic Philosophy. Haruhiko Okura, the current president of Gekkeikan
company and the fourteenth head, established Gekkeikan’s basic philosophy of “Quality,
Creativity, Humanity” when he became president in 1997. The firm has always pursued
the basic quality of the manufacturer (“Quality First”) and focused on “providing the
world’s highest quality products at competitive prices that can always satisfy con-
sumers.” For the firm, Creativity is “to constantly pursue creativity, promote innovation
in management and technology, and continue to take on new challenges.” Humanity is
“to endeavor to improve employee knowledge and abilities, and to help each employee
lead a fulfilling life according to their individuality.” The management attitude holds that
“challenging creates tradition” and “the total human power of each employee leads to the
power of the company and leads to a company that can satisfy customers.”
Moreover, the development continued because there was no sufficient practical
reason to object against the taste of a nonessential grocery product with a strong
subjective factor. The commercialization of Gekkeikan zero carbohydrate saké was
promoted mainly because both Researcher I and Marketer S were trusted by their
respective headquarters based on their past achievements. The trust in individual
promoters and their supporters also being crucial.
3.6 Conflicts Between Researcher I and Marketer S
Difference Between Technology Development and Product Realization. When

technology development for product realization began, Marketer S routinely visited the
laboratory and brewery site to collaborate with Researcher I, who developed the
technology. Although few salespeople could be seen in the brewery site, it was rare for
sales staff such as Marketer S to visit so frequently.
Although Researcher I and Marketer S had the same vision of product realization and
commercialization of Gekkeikan zero carbohydrate saké, the timelines of technology
development and product realization differed significantly. Technology development is
time-consuming, whereas product realization requires the introduction of differentiated
products to the market as soon as possible. From the viewpoint of customers and
distribution, Marketer S set deadlines for achieving goals on the manufacturing side,
whereas Researcher I had to meet technical requirements to realize manufacturing in a

limited time. This led to conflicts.
The Insufficient Scale-Up Verification. Saké is different from other Japanese crafts in
that it is not made by human hands, but by the action of microorganisms. Hence, the
brewer’s job is likened to creating a better environment within which microorganisms
can function in the making of saké. To reduce the carbohydrate content in saké, it is
necessary to prepare an environment where saké yeast can sufficiently eat the carbo-
hydrate. Although small-scale technology development in the laboratory was realized
and technical elements had already been prepared, the scale-up verification at the
commercial level at the brewery site was insufficient.
Although the commercialization schedule was preplanned, the scale of actual
production did not always match the small-scale production, and then it was still
uncertain whether the carbohydrate content was reduced to zero as the fermentation
progressed. In fact, even after its release, it remained difficult to control its production.
On the other hand, the new Gekkeikan zero carbohydrate saké, where fermentation is
difficult to manage, showed higher sales than expected, leading to tight supply of
stocks.
Risks Behind Successful Release. Marketer S recalls:
“It is impressive that there was a crisis of shortage of stock at the time of release. Sales have
been stronger than expected since it was released, so we urgently needed to increase production.
However, the factory was about to enter the maintenance period, and the employees working
there were also scheduled to be absent. We could not run out of new products by any means.
I repeatedly negotiated with related departments to operationalize the brewery site and factory.
Thanks to the cooperation of many people, it was possible to increase production on a tight
schedule. As a result, Gekkeikan zero carbohydrate saké has been steadily sold without any
shortage and continues to perform well. I felt once again strongly that our company had a
corporate culture that enabled the entire company to work together even during difficult
challenges. I still have a strong impression of this time.”
The production of Gekkeikan zero carbohydrate saké faced a crisis for a while,
despite its successful release, because it was already adopted by major convenience
store chains. If it ran out of stock, the distribution side would then impose a penalty,
such as suspension of trade.
3.7 The Customer’s Needs and the New Technology Seeds

Technology seeds are not a complete form of technological development. Innovative
product development was not realized even after all technical elements were com-
pleted. In fact, Gekkeikan zero carbohydrate saké was created by what Researcher
I called the “accumulation of a little bit of effort.”
Regarding customer needs, Marketer S described the elation from being accepted in
the market. It was motivating that the hypothesis derived from objective data analysis
applied successfully to the market. This was a challenging process:
“We conducted qualitative surveys to understand customer awareness and behavior, but col-
lecting and organizing the data after the surveys requires an enormous amount of time and
labor. I found it worthwhile to use this data to identify customer needs. With the product that I
oversaw, it was rewarding to see even the product development become a hot topic in the
market. The sales are now going well, so I feel satisfied.”
For his future goal, Marketer S states:

“I would like to translate the advanced technology (seeds), which is the strong point of Gek-
keikan, into products and to create products that customers can enjoy for a long time.”
As a marketer, he is also exploring ways to utilize technology seeds.
4 Case Analysis
4.1 Case Analysis by Using Intelligence Frame
Key to Success for Good Sales. The survey results in 2013 showed why Gekkeikan
zero carbohydrate saké, which was first evaluated as having “bad taste,” continued to
have good sales [13]. The poor evaluation of carbohydrate-free saké came from existing
customers who preferred traditional saké, whereas a new customer cluster was formed
that was health-conscious, which purchased the product. In other words, because saké is
a nonessential grocery product, the taste continued to be recognized as the basic measure
of quality because of the provider’s cognitive bias. However, the new customer segment
which did not belong to the same segment as the provider, formed a large part of the
potential market the provider had not yet discovered. On the other hand, this provider’s
cognitive bias led to the competitors delaying the discovery of this new customer
segment. Thus, similar products took longer to develop, and, as a result, Gekkeikan zero
carbohydrate saké dominated sales, with the company taking up the top market share in
the saké category targeting health-conscious customers. Gekkeikan zero carbohydrate
saké was expected to be as if that means “zero risk of health damage” from the number
“zero” on the product package by the health-conscious customers. Furthermore, the
biggest barrier to entry for competitors due to business customs and allocation of shelves
at the sales floor was that this product was first released in the saké industry. From this
point, it is necessary to bring products with new value to the market as soon as possible.
To do this, it is necessary to overcome both technical challenges and uncertainties in
introducing products with a distinctive feature into the market.
Independent Interpretation (Hypothetical Thinking) of the Potential Markets and
Technologies. Gekkeikan zero carbohydrate saké was the first carbohydrate-free saké
released in the saké industry. Before its release, the target was a potential market, not an
existing market. It was shown that, for successful product development that responds to
potential market needs with a new value prospect, R&D staff such as Researcher I and
Marketer S need to not only pay attention to an existing market, but also independently
interpret (hypothetical thinking) the potential markets and technologies based on their
missions. Their interpretations (hypothetical thinking) led to greater intrinsic motiva-
tion, which became the driving force for product development. Researcher I had a
belief (in the creation of innovation) and sought to “develop a technology that can
reduce the carbohydrate content of saké to zero” which was a technical issue. On the
other hand, Marketer S had a belief (in the spread of innovation) and sought to release
carbohydrate-free saké as a successful selling product without any reluctance for

introducing products with a distinctive feature into the market.
The Implementation of the Product Development Process Involving Organiza-
tions. Both Researcher I and Marketer S combined their mission with the needs of a
customer segment that had not yet become apparent at that time and with the seeds of
technological development that had not yet been perfected, respectively. Furthermore,
organizational trust in them played a key role in product development. This organi-
zation’s involvement led to commercialization without the executive departments
freezing development. Thus, a product with a new value was born.
As shown in Fig. 6, intelligences in this case study on carbohydrate-free saké are
summarized by using the intelligence frame. TI, MI, and BI, which are required for an
innovation in product development in terms of the ability (intelligence) dimension,
were divided into two individuals, Researcher I and Marketer S.
The success of Gekkeikan zero carbohydrate saké can be mostly attributed to the
fact that the product was realized with normal organizational functions including
existing facilities, even if the target was a potential customer. However, when a product
is commercialized by organizational actions within a company, such as the creation of a
new business, the innovative ideas of internal entrepreneurs face fierce resistance from
those who act on existing common sense. Because the production of new products
within a company often involves many irregular events, it is essential to obtain an
understanding of other departments, especially the manufacturing department.
Fig. 6. Relationship between intelligence and the practical process. Intelligence in this case study
is summarized by using intelligence frame. TI, MI, and BI needed to inspire innovation in product
development, changed over time, was largely into two individuals, Researcher I and Marketer S.
Analysis According to the Sensemaking Theory. In the “practice” involving orga-

nizations, their BIs are analyzed according to the sensemaking theory. Gekkeikan zero
carbohydrate saké was a new product that had never been put on the market before. It
was in a critical state, wherein the product was introduced to the market before its
manufacturing technology was completed. Thus, it was necessary for Researcher I and
Marketer S to “make sense” (1: scanning). Researcher I and Marketer S are trusted by
their respective headquarters and have the element of “more persuasive than accurate.”
Because Gekkeikan advocates the basic philosophy of “Quality, Creativity, Humanity,”
it was possible to “to align the various interpretations” without substantially changing
the broad interpretation (2: interpretation).
Then, the action to place the product on sale before the manufacturing technology
was completed can be recognized as “retrospective sensemaking.” Thus, innovation is
not only achieved through “intuition,” but also through “practice.” (3: enacting).
4.2 Case Analysis from Extant Entrepreneurship Studies
Need for the Recognition (Bias) Analysis of the R&D Staff - Causation and
Effectuation. A case study examining the development process of the Gekkeikan Zero
carbohydrate saké used the intelligence frame (see Sects. 2.2 and 4.1). This frame is
interpreted as the result of individuals’ competencies once the necessary elements of
innovation as intelligence are clarified. Each individual’s independent interpretation
based on intuition is understood from the perspective of identifying potential markets
and technologies; that is, from the perspective of causation, or discovery of the market.
In particular, the implementation of the product development process involving
organizations is analyzed by using the sensemaking theory. At this stage, an R&D staff
often faces a trade-off relation between speed and accuracy. In order to achieve results in a
limited amount of time, sensemaking then becomes crucial to focus on plausibility,
consistency, reasonableness, and creativity rather than on accuracy. Therefore, in
Sect. 4.1, in order to achieve product realization, Researcher I and Marketer S as the
leader of each department constructed the vision using conceptual skills and communi-
cated the vision to the surroundings highlighting the purpose and goal. As a result, the
surroundings were able to embody carbohydrate-free saké products at concrete steps
using the company’s producing facilities. Therefore, we adopted an analysis based on the
concept of causation.
However, carbohydrate-free saké products were developed without the pursuit of
good taste, which is against the conventional common sense of the saké industry. In
addition to the promotion of technology development, there was a high level of
uncertainty on how to interpret quality or taste, and thus decide on commercialization.
In this respect, the recognition (bias) of the R&D staff of Gekkeikan zero-carbohydrate
saké strongly influenced decision-making. Further, in the product development process,
the element of effectuation (“create a market for”) and causation (which is common in
marketing) exerted influence [14].
Explanation of This Case Using Activity Theory. It is important to effectively use
both causation and effectuation within the company to develop a product that meets the
latent needs of the customer. For this reason, activity theory can be applied to this case
study—it clarifies the organization’s actions to generalize and reproduce this process of
innovation in a versatile manner [15].
Figure 7-A illustrates the conventional development of a new regular saké product
using activity theory. For the product development of an ordinary nonessential grocery
product such as saké, a marketer who is a Subject discovers a customer (business
opportunity) in an existing market with the help (Division of labor) of R&D staff who
mainly develop a new product containing the technology seeds created by researchers.
The Outcome is obtaining Existing customer’s satisfaction through the taste and Tools
and Signs is centered on Marketing research based on causation.
Fig. 7. Activity theory based on Engeström [15]. A: applied to the conventional development of
new regular saké products, B: applied to the development of carbohydrate-free saké. The different
points between the two figures are shown in blue for A and green for B. (Color figure online)
On the other hand, it is necessary to reconsider the case of product development of

carbohydrate-free saké through the effectuation of market creation. This is because the
product differentiation by technology seeds and application to the brewery is a product-
out type development wherein the decisions and sales are driven by the soft skills of
recognition of and trust in the developer.
Figure 7-B illustrates the development of carbohydrate-free saké using activity
theory. Here, Tools and Signs is at first set as the effectuation in comparison with
Fig. 7-A, to be analyzed by the effectuation element. Effectuation starts with the
existence of “Tools and Signs” and then proceeds to ask “What can we do with these
tools?” By designing the result as much as possible, Tools and Signs is defined as
Research for exploring new technology seeds. The Subject is defined as the Researcher
and the Object is A new product design containing the technology seeds, respectively.
Application of the Concept of Effectuation to This Case. From the perspective of
the lifecycle of an enterprise, effectuation is effective in the Turn zero into valuable
existence (0 to 1) phase, which is the phase of starting a business. Causation is then
effective in the Increase the amount of what is generated (1 to 10) phase, which is the
management phase. However, the actual new product development process within a
company, each in series, does not shift to the causation phase after the effectuation
phase. At the start of a startup or new business, there is often scarce capital and few
facilities. The only solution is to use the resources already available (principle of “a
bird in the hand”). Hence, starting with the Set 0 to 1 phase, the result serially pro-
gresses to the Set 1 to 10 phase by following this principle. On the other hand,
regarding the development of new products within a company, the Set 1 to 10 phase
always occurs in the organization due to the large amount of existing capital and
facilities available for the production of existing products. The emphasis on efficiency
and the reluctance to take risks then lead to only gradual development of new products,
which makes it difficult for so-called Value Innovation to occur. Under these cir-
cumstances, Research for exploring new technology seeds has the highest effectuation
factor. As determined by activity theory in Fig. 7-B, a researcher designs A new
product containing the technology seeds using his/her Research (for exploring new
technology seeds) to achieve A differentiated product that could create the potential
market even if needs have not yet come up to the surface in the market.
What is the Specific Action to be Taken Next as an Organization? The activity
theory diagram in Fig. 7-B does not fully express the details of the development case of
carbohydrate-free saké. Here, the roles of R&D are roughly divided into causation
(Fig. 7-A) by Marketer S and effectuation (Fig. 7-B) by Researcher I. In addition to A
new product design with which researchers combine seeds, the activity of conventional
development of a new regular saké product (Fig. 7-A) is necessary to achieve A dif-
ferentiated product that could create the potential market. Thus, it is hypothesized that
researchers are the main participants in the commercialization of the seeds-containing
product, and these activity theories must occur in parallel. This parallel activity theory
also increases the likelihood of the product “not selling well,” because there is the gap
of the objects between A new product (development and design) and A new product
design combined the technology seeds with (in Fig. 7-A and -B, respectively). Here, the
effectuation principle, Affordable Loss is applied to the development case of
carbohydrate-free saké. Affordable loss involves decision-makers estimating what they

might be able to put at risk and determining what they are willing to lose in order to
follow a course of action. Applying affordable loss to this case reveals that it is
important to begin product prototyping and sales experiments on a small scale to apply
technology seeds and immediately take the next action without fear of failure. As
shown in Sect. 3.3 of this case, a low-carbohydrate saké was informally tested for the
taste and whether it goes well with meals by Researcher I and members of the product
development department in December 2006, approximately one year and nine months
before the official release of Gekkeikan zero carbohydrate saké. This is consistent with
the evaluation method shown in Fig. 4, which is similar to the evaluation of the
commercialization process of technology by effectual logic. Thus, a scenario should be
created that tolerates failure, in some cases, by adopting an evaluation system that
minimizes false-negative errors toward new markets.
As described in Sects. 2.2 and 4.1, an analysis of this case in terms of competencies
leads to the conclusion that R&D staff should improve his or her ability in TI, MI, and
BI, respectively. However, the organizational action to develop new products that
predict potential markets remains unclear. By applying the concept of effectuation to
this case while explaining the case in activity theory, the specific action to be taken next
as an organization can be derived.
5 Conclusions
5.1 Summary of the Case

This paper examines the development process of carbohydrate-free saké, namely,
Gekkeikan zero carbohydrate saké, as a case study. The successful marketing of a so-
called innovative product entails the rapid introduction of a product with new value.
The product development of carbohydrate-free saké was carried out under high
uncertainty, contrary to conventional rationale in the saké industry—that is, there was
no pursuit of good taste. Thus, R&D staffs had to overcome the resistance to introduce
“products with such a distinctive feature” into the market in addition to “overcoming
technical challenges.” In fact, the R&D staff’s recognition (bias) had a significant
impact on their success. The independent interpretation of new products into the future
(hypothetical thinking) by R&D staff leads to their internal motivation, which is a
driving force in the practical stage of development.
5.2 Contribution
Teboul divided “service” into frontstage and backstage [2], where the service itself
forms the frontstage, but production and manufacturing constitute the backstage. Also,
in the development process, customers do not enter the backstage, which conven-
tionally refers to the inside of a factory. In this study, we aimed to help enhance the
success rate of innovation in product development by enabling readers to understand
the pattern of innovation for its efficient management by examining the phenomenon at
backstage in the development process and by applying some frames to the analysis of
the product innovation.
Ansoff Matrix’s growth strategy is insufficient to account for the management of
the innovations because whether R&D staff \ organization allows for the challenges and
risks come from the change of business-as-usual activities and whether possess
transferable skills, flexible structures, and agreeable stakeholders must be taken into
account. For this purpose, the most notable point is considered to be R&D staff’s
recognition. We analyzed this based on the intelligence frame from the viewpoint of
MOT. The application of the intelligence frame to the case revealed that it is important
to generate each “intelligence cross” (TI MI BI) and led to the conclusion that
each R&D staff member should improve his or her competency in TI, MI, and BI
required for innovation.
However, the organizational action to develop new products that capture potential
markets remains unclear. Thus, we attempted to identify the specific action to be taken
next as an organization by applying the concept of effectuation while explaining the
case using activity theory. Here we reported that, in order to create innovation in
product development, organizations should develop prototypes of products that apply
technology seeds based on the intrinsic motivation of R&D staff and further begin
small test marketing without hesitation from fear of failure.
5.3 Implications/Future Directions

In order to create innovation in product development, those who are using the per-
spective of causation first consider “What should I do?”, whereas those who using the
perspective of effectuation first consider “What can I do?” Employees of saké manu-
facturers, including researchers and engineers, are often heavy saké drinkers. They
have a fixed belief that “As a saké manufacturer, we should focus on palatability and
satisfaction in new product development.” Due to restrictions in the production method
of saké, health consciousness and taste have not been compatible traits, leading to a
trade-off relationship. The employees of saké manufacturers placed excessive emphasis
on palatability, thus resisting a new customer segment’s value of health consciousness.
However, both Researcher I and Marketer S developed their own interpretation (in-
tuition) by going against the grain, which led to product commercialization.
Researcher I took a relativistic approach by focusing on technology and search
seeds, including new businesses. Marketer S, on the other hand, took a positivistic
approach to identifying markets (customer), which can be described as environmental
analysis. However, Marketer S also exhibited effectuation in addition to causation
because he promoted commercialization by realizing the existence of a potential market
that did not match up with the available market data.
Intrinsic motivation arising from independent interpretation is an important pre-
requisite for innovation. This applies not only to Researcher I, but also to Marketer
S. Evidently, both individuals have been a driving force for commercialization.
Although attempts to grasp Marketer S based on effectuation are meaningful, Marketer
S also acted from the perspective of causation. Thus, his perspective boundary is not
yet clear. As a result, we should discuss whether Marketer S discovered these new
customers, or whether he created them through product realization. It is reasonable to
assume that Marketer S had prospects of effectuation because he emphasized not only
market data, but also his own interpretations and intuition, taking manufacturing risks
with Researcher I. However, to generalize this assumption, it is necessary to clarify the
simultaneity in individuals considering both causation and effectuation.
5.4 Limitations
There are some limitations to this study. First, this study includes locality and context
because it conventionally refers to the backstage, inside of a factory, where customers
do not enter. Therefore, the viability of results asked for further exploration of the
relationships proposed in the model with a large sample size. Secondly, this study deals
with R&D staff’s recognition, which is intangible soft skill. No matter how detailed we
conduct an interview with them and diligently we analyze, there are still some unclear
points.
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Problem Structure for Employee Well-Being
in the Workplace
Personal and Organizational Well-Being
Kei Shibuya1(&), Makiko Yoshida1, and Bach Q. Ho2

1
Biometrics Research Laboratories, Central Research Laboratories,
NEC Corporation, 1753 Shimonumabe, Nakahara-ku, Kawasaki-shi,
Kanagawa 211–8666, Japan
[email protected]
2
Research into Artifacts, Center for Engineering (RACE),
School of Engineering, The University of Tokyo, Bunkyō, Japan
[email protected]
Abstract. This study proposes causal loop diagrams to identify factors that
inhibit employee well-being on the basis of the problem structure in a Japanese
workplace. The well-being and productivity of Japanese employees is low.
Thus, human resource department needs to understand the organizational
problem structure to increase employee well-being. We identify it by designing
causal loop diagrams through workshops for two divisions. As the results, we
identify a framework of employee well-being in which there is a trade-off
between concentration and communication based on health. We also obtain the
different problem structure and determine the problems of each division. Our
findings contribute to practical knowledge of serviceology by identifying a
framework of employee well-being.
Keywords: Well-being Workplace Causal loop diagram Value

co-creation HR-tech
1 Introduction
The workplace has become the main area where people can fulfill their abilities because
working hours occupy most of their time. However, the well-being of Japanese
employees is lower than that in other countries [1], despite Japan’s recent work style
reform law, such as reduction of overtime work [2]. Work engagement, one element of
well-being, has a particularly low score [3] due to increasing organizational cynicism [4].
While stress management intervention has been researched as a method to reduce
organizational cynicism, it has only been applied to individual employees rather than to
organizational problem structure [5]. A service provider, such as human resource
management, in the Japanese workplace needs to solve the fundamental problems by
understanding the problem structure. The purpose of this study is to clarify the factors
that inhibit employee well-being from the perspective of the problem structure of the
workplace.

Problem Structure for Employee Well-Being in the Workplace 127
2 Theoretical Background
2.1 Employee Well-Being in the Workplace
In human resource management (HRM), both the organization and its employees are
meant to have a relationship built on caring and trust [6]. According to the mutual gains
perspective based on social exchange theory [7], HRM has the potential to increase
both employee well-being and organizational productivity [8, 9]. Ideally, the human
resource department should suggest interventions to increase both employee well-being
and organizational productivity. However, Japanese employee well-being is low [1],
which indicates that many Japanese companies do not have a service design to increase
them. One cause of low employee well-being is organizational cynicism [4], which can
be broadly defined as a negative relationship between employees and their organization
[10]. More specifically, organizational cynicism is a social failure of exchange between
employees and the organization, in which employees do not perceive there is any
organizational support [11] and feel distrust for the organization as a whole. The
foundation of organizational cynicism in a particular organization depends on how that
organization operates [12]. One study showed a negative correlation between perceived
organizational support (i.e., the extent to which employees feel supported by their
organization) and organizational cynicism [13].
Stress management intervention has been performed to reduce psychological and
physical stress in individuals [5]. This will improve the ability of employees to adapt to
their workplace by improving their coping skills (conflicting outcomes perspective)
[9, 14, 15]. However, because this is done on an individual basis, it cannot solve the
structural problems in each organization as a whole. Clarifying why employees do not
trust their organization (i.e., the reason for the organizational cynicism), and why
Japanese employee well-being is low, will lead to a more cohesive understanding of the
organization.
A recent study by Voorde et al. categorized employee well-being into three
dimensions: health, relationships, and happiness [16]. Health means a stress and
stressor, relationships means interactions with others, and happiness means employee
satisfaction. It is necessary to confirm that these three dimensions are appropriate to
current Japanese employee well-being, and we also need to know the specific details of
them when designing a service.
To increase employee well-being by solving the problem structure of workplace,
employees and their organization need to co-create values that will lead to their mutual
well-being. Therefore, the factors that inhibit employee well-being need to be clarified
by examining the problem structure of workplace and using the insights gained to get a
clear understanding of how employees feel about their working environment.
2.2 Solving the Problem by System-Thinking

An effective way to clarify problem structures is system-thinking, an approach that
regards the analysis subject as a system constructed by different elements. By using the
system-thinking approach, we can consider how different elements affect each other
and how they function as a whole system [17, 18]. A causal loop diagram is a tool that
128 K. Shibuya et al.
visualizes causal relationships by means of feedback about the mutual effects of dif-
ferent elements. A mental model of individuals or teams as a system structure should be
formed [18].
We can understand the problem structure of a workplace by regarding the work-
place as one system. Issues in the workplace are deconstructed into different elements
and adjusted to determine their effect on each other. For example, the NIOSH model of
job stress explains the process of increasing stress in the workplace, where different
elements (A, B, and C) form a simple, one-way relationship of influence: A ! B ! C.
In reality, however, a causal loop (i.e., feedback) exists. To suggest concrete services,
real-world problems should be visualized with a causal loop diagram. This diagram can
be designed by more than one person by applying Minato’s method [17, 19], where a
structure can be agreed upon between the employees rather than creating a personal
phenomenon by carrying it out with only one person. The causal loop diagram for the
problem structure of a workplace designed by working employees through a workshop
makes it possible to accurately determine the factors that inhibit employee well-being.
In this study, we carry out interviews and workshops to design causal loop dia-
grams for one workplace. The overall process is shown in Fig. 1.
Fig. 1. Overview of this research.
3 Study 1: Interview for Understanding the Goal of Division
Two divisions (division A and division B) participated in these studies (study 1 and
study 2). Both divisions belong to the same Japanese IT company, which was estab-
lished over 100 years ago and has about 20,000 employees.
3.1 Method of Interview

We carried out interviews to clarify the organizational goals and issues from the
viewpoint of the division leaders. The procedures of these interviews are detailed in
Table 1.
Table 1. Procedures of interviews.

Division A Division B
Date 22 May 2019 Responses to questions sent via e-mail were
Total time: 30 min returned on 21 May 2019
Interviewee The division president of A manager of eight employees
20 employees
Question (A) What are the goals of your organization?
(B) What are the organizational issues or solutions?
3.2 Answers
Tables 2 and 3 show a summary of the answers to Questions A and B.
Table 2. Goals and issues of division A.

(A) Goals of organization To keep on schedule for the team’s business plan, ensure cost-
benefit performance, and keep within budget
To communicate with different divisions
To maintain a workplace with a friendly atmosphere
(B) Organizational issues Employees can’t communicate casually
or solutions Employees don’t know when they should consult colleagues
about their job
Table 3. Goals and issues of division B.

(A) Goals of organization To carry out the organizational mission in an efficient
way
To provide a new value for output
(B) Organizational issues or Retain human resources
solutions Re-examine existing processes, rules, and mindset
Improve communication within the team
Improve communication with people concerned about
their job
Develop expertise
These goals and issues were then used in the workshop (study 2), as discussed in
the next section.
4 Study 2: Workshop for Designing Causal Loop Diagram
As discussed earlier, causal loop diagrams created by system‐thinking are used to

clarify organizational structures, including the causal loops among issues. We facili-
tated two workshops in which the author was the facilitator and asked participants to
design a causal loop diagram.
4.1 Participants
Division A. Participants were seven employees working at division A in the Japanese IT

company. These seven were among the 20 employees working in division A.
Division B. Participants were eight employees working in division B at the same
company. There were only eight employees in division B in total.
4.2 Date
Division A. 27 May 2019. 13:00–15:00 (required time was two hours)

Division B. 23 May 2019. 9:00–12:00 (required time was three hours)
4.3 Process
In both workshops, the process of making a causal loop diagram comprised four steps
(Fig. 2) based on Minato’s method [17]:
Step 1. Extraction of issues
Step 2. Input of interview results
Step 3. Extraction of issues
Step 4. Construction of causal loop
Before the workshop, participants were shown four keywords—work productivity,
private productivity, workplace innovation, and workplace comfort—and asked to
brainstorm at least ten issues related to keywords.
Fig. 2. Four steps of the workshop.
In Step 1, Extraction of issues, we taught the participants how to brainstorm,

which is a group creativity technique that encourages the gathering of ideas [20].
The facilitator placed four keywords—work productivity, private productivity, work-

place innovation, and workplace comfort—on the table. Participants brought stickies
on which they had written issues about their workplace in advance and stuck them on
the table. During the workshop, if participants came up with any new issues or ideas
from ideas introduced by others, they could write it on a new sticky and add it to the
table at any time.
In Step 2, Input of interview result, the facilitator introduced issues written on a
sticky as based on the interview results (Tables 2 and 3).
In Step 3, Extraction of issues, participants extracted issues about their workplace
on the basis of added insight from the interview results, in the same manner as Step 1.
In Step 4, Construction of causal loop, participants were asked to think about causal
structures among the issues extracted in Steps 1 and 3, and to draw arrows between
issues having causal relationships. They were also told to draw arrows between rela-
tionships such as “B occurs for A”; if there were logical gaps between A and B, they
could add the issue as an element in the middle (Fig. 3). In the process of construction,
participants were asked to combine similar issues having the same meaning.
Fig. 3. Method of constructing causal loop (Step 4).
4.4 Ethical Considerations

We obtained consent from the participants under the following conditions.
1. The results of this workshop will be used only for research.
2. The identities of participants will not be revealed in the results.
3. Participants are requested not to discuss anything about the workshop that may lead
to the identification of other participants.
5 Results
After the completion of the workshops, we had obtained two causal loop diagrams (one
for division A and one for division B). First, we show the causal loop diagram for
division A and explain its structure. We then do the same thing for division B’s. We
also explain how the problem structure derived from the causal loop diagrams includes
conversations and contents summarized in workshops, as the authors participated in the
workshops as facilitators.
5.1 Division A
Division A was a planning division and had one division president, two division
managers, and 16 members. It was organized into three distinct groups. Each group had
different missions, and the employees recognized these differences. The mission of
division A as a whole was to proceed with a plan as scheduled while keeping within the
budget and ensuring a good cost performance (Sect. 3, Table 2).
Figure 4 shows the causal loop diagram that visualizes the problem structure of
division A’s workplace.
First, we explain the influences on “work productivity.” “Individual learning” and
“sleeping time” directly affect “work productivity.” If employees were able to learn
about their job on their own time and get enough sleep, they could increase work
productivity.
Next, we explain the influences of the amount of communication (Fig. 4, bottom).
The “amount of communication” and the “quality of communication” have multiple
effects. High-quality communication decreases the amount of communication. On the
other hand, a lot of communication increases the quality of communication. Appro-
priate communication in terms of amount and quality affects each of the elements,
influencing “work productivity” via “information”. In other words, poor communica-
tion quality influences work productivity negatively by shortage of information, which
means that great communication increases work productivity.
The amount of communication influences “individual concentration” and “work
productivity” via “group concentration,” meaning that appropriate communication
increases group concentration (e.g., in meetings, etc.), resulting in employees being
clear on their role and job, thus increasing their concentration. Employees can con-
centrate individually by “deciding on a time to concentrate.”
As for “time difference”, we found that it affects “work productivity” and “private
productivity” via “the degree of freedom.” Division A has what is known as a jet lag
job, which means that if they don’t have a certain degree of freedom, they can’t
increase their work or private productivity.
Deciding on a time
Individual
to concentration
learning
Individual Sleeping time

concentration
Group
concentration The degree
Work productivity Private productivity
of freedom
Information Time difference
Quality of Useless work

communication
Amount of
Decluttering
communication
Fig. 4. Causal loop diagram of division A.
5.2 Division B
Division B had one division manager and eight members. The mission of division B as
a whole was to carry out the organizational mission in an efficient way and provide new
value for output (Sect. 3, Table 3).
Figure 5 shows the causal loop diagram that visualizes the problem structure of
division B’s workplace.
We first explain a causal chain in this diagram that consisted of four elements
(Fig. 5, upper-right)—“over work,” “private time,” “mental space,” and “efficiency”—
connected by arrows. This causal chain shows a negative loop, meaning that increasing
over work decreases private time, decreasing private time decreases mental space, and
decreasing mental space negatively influences job efficiency. At the same time, this
causal chain shows a positive loop: decreasing over work increases private time. This
positive/negative loop chain has an influence in three directions.
The first direction is “private productivity.” Here, decreasing “private time”
decreases “private productivity.” The second direction is “thrill” and “independence.”
Thrill and independence have a mutual effect on each other in the sense that if
employees feel a thrill for their job, they can work independently. This relation shows a
positive attitude to their work. The “efficiency” influences “independence” via
“worthwhile work,” meaning that if employees can carry out their jobs efficiently, they
can focus more on worthwhile work, and then they can have a more positive mindset
about the job. There is an additional effect of “over work” on “thrill” via “expertise.” It
suggests that decreasing over work increases private studying time for developing
expertise, which can lead to employees feeling more of a sense of meaning in their
jobs. The third direction is “work productivity.” “Over work” influences “work
productivity” via “sleeping time,” “physical & metal health,” and “concentration.” This
suggests that when employees over work, they can’t sleep enough, and as a result they
can’t concentrate on their work and put their own physical and mental health at risk.
Next, we explain the influences of “mental reward” (Fig. 5, bottom). “Mental
reward” affects “work productivity” via “smile,” “necessary communication,” and
“sharing ideas.” This suggests that employees can get a mental reward when they
appreciate the work of others and when they are appreciated for their own work, and that
makes them smile. Smiling employees makes for a friendly atmosphere, and they can
communicate smoothly and share information about their jobs, which increases work
productivity. In addition, “mental reward” affects “motivation,” meaning that employees
want to do a better job when they are being appreciated for their job. “Motivation” has a
direct positive effect on both “independence” and “work productivity”.
Physical & mental Private productivity

health
Concentration Sleeping time Private time

Mental space
Sharing Overtime work Efficiency

Ef
ff
information
Work productivity
Sharing idea Worthwhile

Expertise
work
Necessary
Communication Thrill Independence
Smile Motivation
Mental reward
Fig. 5. Causal loop diagram of division B.
5.3 Comparison of Division A and Division B

We compared the causal loop diagrams of divisions A and B to interpret the infor-
mation contained in the two divisions. Our findings revealed both common categories
and different categories.
Common Categories. Three common categories were extracted: physical & mental
health, concentration, and communication. Table 4 shows these three categories and
the elements they contain.
Table 4. Common categories of division A and B.

Common category Issues
Physical & metal health Sleeping time Sleeping time
Physical & metal health
Concentration Deciding a time to concentrate Concentration
Individual concentration
Group concentration
Communication Amount of communication Necessary communication
Quality of communication Sharing ideas
Information Sharing information
We found a common structure of the workplace: specifically, that good physical &
mental health was required as a basis for work, and individual concentration and
communication with other employees were important to improve employee well-being
and work productivity.
Different Categories. We focused on particular elements excluding common cate-
gories from each division’s causal loop diagram. Table 5 shows each different category
based on these elements.
Table 5. Different categories of division A and B.

Category Issues Category Issues
Business configuration Time difference Motivation Motivation
Degree of freedom Thrill
Worthwhile work
We found that the “business configuration” of division A, and the “motivation” of

division B, were two distinct categories expressing the characteristics of each division.
6 Discussion
6.1 Theoretical Contribution

In this study, three categories—mental & physical health, communication, and con-
centration—were extracted from causal loop diagrams designed through workshops.
Regarding the problem structure of the workplace, we modeled that individual con-
centration and communication are achieved on the basis of good physical & mental
health.
We compare the existing studies and a result of this study. In a previous study on
HRM, Voorde et al. defined organizational performance and employee well-being to
include three dimensions: health, relationships and happiness [16]. According to
Voorde et al. (2012), because trade-offs among these three dimensions may exist, they
have to be examined simultaneously. For example, someone with high job satisfaction
(i.e., high happiness) might get too absorbed in their work and put their health at risk
because of workaholism.
In this study, we extracted a concept that was synonymous with physical & mental
health. In addition, communication was a concept that has a relevant relation-
ship. Individual concentration is a new category uncovered in this study. No category
that corresponds to the happiness postulated by Voorde et al. was extracted. Table 6
shows a comparison of the existing theory (i.e., Voorde’s three dimensions) and the
results of this study.
Table 6. Comparison of existing theory and this study.

Existing theory [16] This study
Health ¼ Physical & mental health
Relationships ≒ Communication
Happiness
Concentration
Health/Physical & Mental Health. Because physical & mental health is known as a
basic building block of well-being in this field, it comes as no surprise that it was
extracted in both the existing theory and this study. Physical & mental health is also
included in the definition by WHO [21] and in Maslow’s theory [22] of traditional
well-being. The results of our study support these, as we found that employees prized
their physical & metal health to exercise their abilities and to work with high pro-
ductivity. The mutual gains perspective as well as the concept of theoretical dimensions
were supported by the feedback of employees.
Relationships/Communication. The concept of communication in our study resem-
bles the relationship dimension in the existing theory. According to Grant et al. [23],
relationship is the dimension of well-being that emphasizes interactions with other
employees or supervisors in the workplace. This dimension is a new idea because the
well-being research area has mainly examined the subjective view. Communication is a
method used in the construction of relationships.
Improving the quality of communication leads to an increase in trust between
employees and supervisors, and consequently to a decrease in organizational cynicism
[24]. The issues in the communication category (Table 4) that are relevant to organi-
zational cynicism includes information (i.e., employees cannot share information with
colleagues or supervisors (Fig. 4)) and sharing information (i.e., employees cannot
share information with different divisions (Fig. 5)). Our findings indicate a shortage of
information about employees. This is important because clear communication among
employees and supervisors is essential for a Japanese company to run smoothly. We
need to investigate appropriate ways of communicating in order to increase inter-
personal well-being and thereby decrease organizational cynicism.
Happiness. Happiness, which was not extracted in this study, is defined as employee
satisfaction [9, 25]. In the workshops we conducted, practical factors were extracted
rather than abstract concepts such as happiness, presumably because we asked par-
ticipants to think about factors disturbing their productivity. Solving these practical
issues could increase happiness (i.e., employee well-being).
Concentration. Concentration was extracted as a new category of employee well-
being. Calvo & Peters’s well-being research, which takes the engineering approach and
includes not only employees but also general individuals, defines well-being as
stemming from nine factors [26], one of which is concentration. In workplaces where
IT tools such as Skype and Slack are used, it is possible that employees may com-
municate too much. Calvo & Peters are concerned about excessive notifications from
IT tools that disrupt concentration (i.e., inhibiting focus on a task deeply), while human
resource management or traditional organizational theories assume employees always
focus on their tasks while they are at work. It is convenient that employees can contact
each other anytime and anywhere, but it may be detrimental to their individual con-
centration. In this study, concentration was extracted as an important category to
increase work productivity.
Frameworks for Employee Well-Being. We propose a framework that contributes to
employee well-being research based on our comparison of the existing theory and the
results of this study (Fig. 6). The proposed framework is based on physical & mental
health and examines a balance of communication and concentration. Communication
and concentration are complicated because they have a trade-off relation due to
restricted time. For example, we need to hold meetings in order to share information
and build consensus, but on the other hand, employees cannot concentrate on personal
tasks if they are always attending meetings. According to Morrison & Robinson [24],
the most effective way to minimize any gap between the perceptions of employees and
an organization is communication, meaning that quality of communication has a
negative correlation with organizational cynicism. We need to examine the most
appropriate communication that enables a balance between the effect on concentration
and the decrease in organizational cynicism causing low employee well-being.
It is important to create a service that can promote an appropriate balance between
any two things that result in a trade-off, such as communication and concentration. This
perspective will be the future work of service research.
Fig. 6. Framework for employee well-being.
6.2 Practical Contribution

From causal loop diagrams obtained in this study, we were able to identify an inter-
vention point to improve organizational productivity. We propose a specific inter-
vention point for the two divisions we examined based on the problems that appeared
in each division’s causal loop.
Division A. We focus on the “business with time difference” problem of division A.
Employees in division A work with people internationally, so there is often a signif-
icant time difference. Thus, they had time constraints on their work and low flexibility,
which caused low productivity in both work and life. By making use of options like
flextime and telework, they can have more flexibility in terms of both work time and
place. Thus, the negative effect on work and private productivity will decrease. For
example, if they have a voice meeting at night, they can attend it from home using
telework so that they don’t need to stay in the office for a long time. In addition, they
can shift the next day’s work hours by using flextime. This solution can be imple-
mented by using IT tools (for telework) and a flexible personnel system. However, this
work style might have a negative effect on physical & mental health and communi-
cation among employees. Therefore, a new service that copes with the negative effects
accompanying flextime and telework should be provided.
Division B. Next, we explain the particular issue of “motivation” for division B. While
motivation is included as one of the factors of well-being [26], in this study, it was not
extracted as a common category with division A. It was extracted for division B,
meaning that these employees recognize their low motivation as an issue to resolve.
Because their work involves supporting other workers in a staff position, it might be
that creating meaning in their job is difficult. According to division B’s causal loop
diagram, they desire to get gratitude for the daily tasks they fulfill. While there are apps
that can be used to send messages of gratitude to others (e.g., Unipos [27]) as an
existing service to resolve this problem. This service provides daily interaction to
improve short term well-being. Evaluation from supervisor to recognize the progress
toward the goal increase the motivation for a given task and longitudinal well-being.
Companies may require new services to recognize contributions themselves or to share
them within the team.
7 Conclusion
In this study, we clarified the factors that inhibit employee well-being by examining the
problem structure of a workplace.
In our theoretical contribution, we identified common categories within two divi-
sions of the same organization. Three categories—physical & mental health, concen-
tration, and communication—were extracted from causal loop diagrams designed by
employees through workshops. These problem structures showed that physical &
mental health is crucial for employee well-being, and individual concentration and
communication are important. In particular, we found that to increase employee well-
being, examining the appropriate balance between concentration and communication is
key. In the future, it will be necessary to create a service to achieve an appropriate
balance between them while considering the inevitable trade-off.
In our practical contribution, we identified distinct categories belonging to the two
separate divisions. While existing services can be used to solve the issues particular to
each division, it is not enough, and it raises new issues. To effectively increase
employee well-being, we need to solve the structural problem by using the framework
—physical & mental health, concentration, and communication—and the causal loop
diagram visualizing the problem structure of the workplace.
In the future, we will improve the framework of employee well-being presented in
this study by means of a qualitative approach (such as interviews and workshops) in
addition to a quantitative approach (such as surveys or sensing). Further, in the process
to improve the framework, we will investigate the importance of employees and their
organization needing to co-create values for employee well-being, and come up with a
method to achieve these values.
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Service Marketing and Consumer
Behavior
Differences in Customer Delight Rating Linked
to Customer Actions in Japanese and Foreign
Residents Using Restaurant Services in Japan
Hisashi Masuda(&)
Graduate School Management, Kyoto University, Yoshida-honmachi, Sakyo-ku,

Kyoto 606-8501, Japan
[email protected]
Abstract. Customer satisfaction is seen as an important perspective that affects

customer loyalty. But it is difficult to analyze each customer’s evaluation reason
in a simple manner. In this research, a web questionnaire system is applied to
handle this issue, allowing a respondent who is the customer to describe their
actions in the service experience and to evaluate it. Customer delight in the use
of restaurant services by Japanese and foreign residents in Japan is selected to
validate hypotheses related to the targeted issues. And then, the data acquisition
and analysis are conducted. The results indicate that there are differences in
customer actions related to customer delight based on the comparison. 40% of
the factors that impressed Japanese customers in restaurant service were the taste
and appearance of food. On the other hand, foreign residents have the factors
related to taste and appearance, but they are more than satisfied with the pro-
vision of services, and there are not many descriptions of evaluation from the
perspective of cross-cultural communication. We suggest that a more elaborate
customer loyalty design is possible based on customer action by clarifying the
impact of customer delight based on this kind of research approach.
Keywords: Customer delight Restaurant Cross-cultural comparison
1 Introduction
1.1 Background
In a globalized economy, service companies need to properly grasp the points at which
various customers with diverse cultural backgrounds evaluate their service provision.
Currently, many customers in the service industry use mobile devices such as smart-
phones. Also, in the provision of services, the use of such technology has created an
environment for providing services based on the characteristics of individual cus-
tomers, from mass marketing to one-to-one marketing [1].
However, the data acquisition environment is insufficient in place to determine
what kind of service is appropriate for each customer in providing services that involve
real interactions between service providers and customers, such as the hospitality
industry. The more specific problem is that the cost of data collection and analysis is
high for methods such as current interviews and questionnaires. Thus, it is challenging

144 H. Masuda
to put analysis to obtain the viewpoint of what reason each customer has evaluated the
service based on the machine learning and automation system using AI. In other words,
it is difficult to automate the one-to-one marketing that takes into account the indi-
viduality of customers in the analysis based on the current customer survey method in
the service provision with real interaction.
In conventional service research, the interaction between a customer and a service
provider is called service encounter, and its constituent elements are not only the
provision of products and services but the provision of the entire series of processes [2,
3]. Service provider behavior at the forefront of service delivery is critical to customer
evaluation of services [4]. The quality of service encounter has been recognized as a
source of competitive advantage for service companies [5, 6]. How service experience
affect customer loyalty is an essential concern for service companies. The measure of
customer loyalty is related to the customer’s intention to act after providing the service,
such as the intention to repurchase/reuse the service, the intention to recommend to a
specific company or business, or a positive or negative review [7–10].
Factors affecting customer loyalty were identified in the evaluation of service
encounters at retail stores, hotels, and restaurants. In particular, as a leading indicator of
customer loyalty, it has been pointed out that customer cognitive responses such as
service quality have the strongest influence on future customer behavior [11–13].
Typical service quality cognitive measures include SERVQUAL’s evaluation on the
axis of Reliability, Assurance, Responsive, Tangibles, and Empathy. Other dimensions
have also been proposed and verified [3, 14, 15]. For example, it has been verified that
food quality in the restaurant industry is a factor in the future purchasing behavior of
customers [16–18]. The view that service companies are not just providing physical
products has evolved their service quality metrics [19, 20].
At the same time that management progress has been made to improve the quality
of services, efforts are being made in consumer research to deepen understanding of
customer satisfaction [7, 21–23]. It has been confirmed that the customer’s emotional
reaction when the customer is treated favorably at the service encounter also affects
customer behavior such as repurchasing and reuse [24].
However, while customer satisfaction has long been a pursuit for companies,
research on customer satisfaction has consistently shown a weak relationship with the
customer loyalty scale [25, 26]. In the industry, a high level of customer satisfaction,
known as “customer delight”, was considered a clear goal for customer loyalty and
profit [27]. Academically, the concept of customer delight, a very high level of satis-
faction, has been described as a “surprisingly unexpected function of pleasure”
resulting from “very pleasant performance” [28]. In emotion research, there is an
agreement that delight is one of the synthesized emotions characterized by a combi-
nation of high pleasant (joy, uplifting) and high activation [29, 30]. Customer delight is
a strong predictor of crucial outcomes such as commitment, willingness to pay, and
purchase intent in customer loyalty [31–36].
A comprehensive view is given that the cognitive response of the customer in such
a series of service encounters stimulates an emotional response, and in turn affects
behavioral intentions such as customer loyalty [37–43]. At service encounters such as
hotels, restaurants, tourism, and banks, the relationship between service quality and
Differences in Customer Delight Rating Linked to Customer Actions 145
positive emotional responses (e.g., joy, happiness, excitement) and behavioral inten-
tions such as customer loyalty is also being verified [44–47].
In service companies, there is a high interest in identifying specific actions that can
be implemented to delight customers for on-site employees at service encounters. In
terms of service delivery, in a service experience that is difficult to evaluate before
using the service, customers often rely on recommendations from the service provider
when selecting a service. There is an approach to analyze the impact from the customer
regarding whether it is a request from the customer and regarding what kind of rec-
ommendation the employee on the site leads to the customer delight [48]. Given the
nature of these recommendations, service providers can provide customers with high
up-front expectations with experiences that lead to customer delight. However, on the
other hand, unsolicited advice has also proved to be problematic due to its invasive
nature [49].
From the viewpoint of evaluation of service encounters in conventional service
research, the influence from emotional aspects such as the quality of service encounters
and customer satisfaction affecting customer loyalty has been analyzed. There have also
been discussions on ways to reach customers based on recommendations to customers.
However, because of data acquisition, it is difficult to quantitatively analyze the impact
on customer loyalty associated with each action of the service encounter, such as what
kind of service provision will increase customer satisfaction and customer delight.
Given these observations, a simple data acquisition and analysis method are
required to capture the context of the customer during service evaluation. The use of a
web questionnaire method has already been used in many practices and is proposed.
Nevertheless, there is a need to extend the methodology to obtain data to better
understand the context in customer evaluation while utilizing such an approach. In
terms of this viewpoint, a dynamic web questionnaire model was proposed [50].
1.2 Research Purpose and Objective

Here, the Web questionnaire method [50] is applied that can more easily analyze the
reasons for evaluation linked to the actions of each customer in the service encounter.
This will provide essential data that will contribute to the development of One-to-One
marketing. In this paper, based on the data obtained from this Web questionnaire
method, we construct exploratory hypotheses about customer loyalty based on the
evaluations associated with each service behavior in the customer service experience
and the viewpoints of the reasons. This will further expand the data maintenance,
expansion, and verification of marketing theory related to customer loyalty based on
the evaluation criteria and dynamic characteristics of each individual customer.
In addition, a simpler data management and analysis environment will be discussed
based on the data. The first step required to solve the set research subject relates to the
correction required to interpret the customer’s context for the existing web question-
naire. The second step is to conceptualize the automation of data analysis and the visual
confirmation method of the results utilizing the acquired data. Due to current web
questionnaires mainly use static analysis methods with pre-defined question items, it is
difficult to adapt to the wide range of the customer’s criteria to their service provision
automatically.
146 H. Masuda
1.3 Approach
The Web questionnaire system [50] has a two-stage Web page structure. In the Web
form on the first page, the actions from the start to the end of the service used by the
respondents themselves can be described on the Web form in one-line with a one-
action, and then the contents can be sent to the second page. On the second page, in
addition to the questionnaire items related to general service evaluation, question items
related to each customer satisfaction evaluation and the reason is generated in con-
nection with each service action sent from the first page. This means that survey
respondents can perform service evaluations linked to their own service behavior in
addition to the usual service evaluation questions.
An analysis will be conducted on the difference in evaluation criteria when using
restaurant service between Japanese and foreign residents in Japan to build a hypothesis
from evaluation data linked to service behavior for each customer obtained from this
method. In particular, to see the difference in service evaluation standards due to the
different cultural backgrounds of customers, more specific service behavior, and cus-
tomer delight, which is immense pleasure and surprise, were taken up. By constructing
a hypothesis about the relationship between the evaluation linked to the specific service
behavior described by each survey respondent and customer satisfaction, discussions
will be held on theoretical expansion based on the viewpoints of differences in service
evaluation standards for each customer and their dynamic changes.
The following two hypotheses are defined. Hypothesis 1: Among customers who
are impressed by using restaurant services, Japanese people have a higher percentage of
satisfaction with taste than foreign residents. Hypothesis 2: Among customers who are
impressed by using restaurant services, foreign residents are more likely to be based on
cultural factors than Japanese.
2 Method and Data Acquisition

2.1 The Applied Web Questionnaire System
The applied Web questionnaire system [50] has two stages of pages. There are two
input forms on the first web questionnaire page. In the first form (see Fig. 1), the name
of the service used is written. In the second form, the behavior/action of the service
experienced in the evaluation target service of each questionnaire respondent is
described.
On the second questionnaire page, in addition to the usual question items, each
customer satisfaction and open-question item linked to each service action sent from
the first is generated (see Fig. 2). The following items were set as common ques-
tionnaire questions: Usage date/time, number of frequency, number of visitors, prior
expectations, cost, a gap with expectations after usage, overall satisfaction, intention to
revisit, intention to recommend, overall comment (free-answer). For evaluation of prior
expectations, gaps between expectations, overall customer satisfaction, customer sat-
isfaction linked to each service action, intention to revisit, intention of recommenda-
tion, a seven-level Likert scale of −3 to +3 is used.
Fig. 1. Overview of the 1st page of the web questionnaire.
Fig. 2. Overview of the 2nd page of the web questionnaire.

148 H. Masuda
The CS pattern linked to the behavior of the customer experience can be analyzed
from the viewpoint of data analysis. The customers are requested to fill items in the
web questionnaire form based on each customer’s satisfaction linked to the behavior in
the range from entering to leaving the store. The data is plotted on the 0–1 number line
by representing 0 when entering a restaurant and 1 when leaving it (see Fig. 3). By
structuring the CS rating linked to the customer’s actions, the research design can be
made for comprehensive analysis and interpretation.
Fig. 3. An example of the data analysis.
In addition, an implementation of this system using business process models as a

basis to manage and analyze such data visually is available. The business process
models are established using the ADOxx Metamodelling Platform [51] which is a
platform to implement domain-specific metamodels for experimentation. In particular,
ADOxx supports the development of hybrid modeling methods that are composed of
artifacts and fragments required by a specific domain and extended to needs observed.
As the objective is to provide an intuitive environment, graphical tool support is
required. The ADOxx platform is used as a development and deployment environment
following a meta-modeling approach based on building blocks [52] utilizing conceptual
structures as a formal means to identify the syntax and semantics of required constructs.
2.2 Survey Design

A web questionnaire survey was conducted in March 2019 to acquire data for this web
questionnaire method. With regard to the use of restaurant services in Japan, 82
respondents from 39 Japanese (female ratio 54.0%, average age 34.9 years, age stan-
dard deviation 10.6 years), allowing multiple responses to respondents. 82 responses
were obtained from 43 people (44.2% female, average age 33.0 years, standard age
deviation 9.0 years). The respondents of this questionnaire are registrants of research
monitors owned by a marketing research company in Japan. The population of the
Japanese research monitor is 3.87 million across Japan. The population of foreign
monitors in Japan is 5794 throughout Japan. Monitors for foreign residents in Japan
include multiple nationalities such as the United States, the Philippines, China, the
United Kingdom, and India.
3 Result
3.1 Result from the Restaurant Data

In the question on overall satisfaction with service use (7-level Likert scale), data with
an answer of +2 or +3 was judged as the customer satisfaction group. The percentage of
customer satisfaction in restaurant use obtained from this survey was 42.7% for
Japanese respondents and 53.7% for foreign respondents in Japan (Table 1). Com-
paring the customer satisfaction group (N = 35) and the non-customer satisfaction
group (N = 47) in the Japanese data, in the independent sample t-test, the customer
satisfaction group has a statistically significant difference in a gap of expectation,
customer satisfaction, reuse intention, and recommendation intention. Comparing the
customer satisfaction group (N = 44) and the non-customer satisfaction group (N = 38)
in the foreign residents data, in the independent sample t-test, the customer satisfaction
group has a statistically significant difference in a gap of expectation, customer satis-
faction, reuse intention, and recommendation intention.
In addition to the customer satisfaction mentioned above, a question about the gap
in expectations (7-level Likert scale), +2 or +3 respondents who could be interpreted as
having achieved a service experience better than expected was classified as a customer
delight group. This means that the respondent using the service is satisfied and has a
positive service experience that exceeds expectations. In the customer data of service
experience in restaurant usage obtained from this survey, the percentage of responses
judged as customer delight was 22.1% for Japanese and 24.4% for foreign residents in
Japan. There were 18 responses for Japanese customer delight group, and 17 for non-
customer delight and customer satisfaction group. In the t-tests of the independent
samples of both groups, there was a statistically significant difference at the signifi-
cance level of 0.05 only the gap of expectation and the intention of recommendation.
There were 20 responses for foreign customer delight group in Japan, and 24 for non-
customer delight and customer satisfaction group. In the t-tests of the independent
samples of both groups, there was a statistically significant difference at the signifi-
cance level of 0.05 only the gap of expectation.
In this questionnaire method, data for each customer action/behavior in service
experience with customer satisfaction and the evaluation reason is obtained. Specifi-
cally, the data structure that can be acquired is service action (one action per line) with
customer satisfaction and comment on the reason for evaluation (free-answer).
Respondents are asked to rate and comment on their behavior when there is some
notable point of view in the targeted service experience. For service actions that do not
150 H. Masuda
Table 1. Frequency of the data: gender, age, CS, and delight.
Japanese Foreign residents in Japan
Gender Gender
Male 21 Male 19
Female 18 Female 24
39 43
Age Age
20-29 8 20-29 9
30-39 13 30-39 16
40-49 9 40-49 14
50-59 9 50-59 4
39 43
Custoemr Satisfaction
Custoemr Satisfaction Satisfied 44
Satisfied 35 Dissatisfied 38
Dissatisfied 47 82
82
Customer Delight Customer Delight

Delighted 18 Delighted 20
Non-delighted 64 Non-delighted 62
82 82
have a particularly noteworthy point of view, plus/minus 0 (±0), which is the default
customer satisfaction answer item, is attached.
Next, in the data judged to be customer delight in using Japanese restaurants by
Japanese and foreign residents in Japan, an analysis of customer satisfaction linked to
individual behavior in each service experience was made. In the Japanese customer
delight group, 32 data on each service behavior with positive customer satisfaction and
reasons were obtained. On the other hand, the 48 data were obtained from the customer
delight group of foreign residents in Japan. The evaluation and interpretation of these
extracted service behaviors were coded from a qualitative point of view. As a result, the
elements that delight Japanese people in service experiences at restaurants are as fol-
lows (Table 2). Meal contents (taste and appearance of dishes, etc.) is 44%, service
delivery (how to provide the service, customer service, speed, etc.) is 28%, store
exterior/interior/interior maintenance is 9.4%, communication (conversation) is 6.3%,
price is 6.3%, and service recovery (such as an apology from the service provider) is
3%. The elements that delight the service experience for foreign residents in Japan are
as follows (Table 3). Service delivery is 40%, meal content is 35%, exterior/interior/
interior maintenance is 15%, and price is 9.9%. The results show that as a difference in
the proportion of elements that delight in the service experience, foreign residents in
Japan have a higher proportion of service delivery (service delivery, customer service,
speed, etc.) than Japanese.
Table 2. Positive actions in delighted customer (Japanese).

The reasons of the positive service actions
Taste/appearance of meal 43.8%
Service delivery 28.1%
Exterior/interior/interior maintenance 9.4%
Communication 6.3%
Price 6.3%
Service recovery 3.1%
Table 3. Positive actions in delighted customer (Foreign residents).

The reasons of the positive service actions
Service delivery 39.6%
Taste/appearance of meal 35.4%
Exterior/interior/interior maintenance 14.6%
Price 8.3%
3.2 Overview of the Implemented System

Based on the data analysis performed above, the extended system for integrated process
visualization support is also presented by applying the process-based web questionnaire
system [50]. Figure 4 shows an object for data visualization connected to this survey
data. The system can display these data in terms of several aspects, such as one
variable, line-chart of customer satisfaction, and customer action evaluation with the
reason. The uniqueness of this system is the customer action evaluation. It makes
association by connecting one customer action, customer satisfaction for each action,
and the reason for the evaluation (see Fig. 5). And then, the target industry, data
analysis range, data analysis method, and output result are also adjusted. These char-
acteristics establish the continuous dataflow from the process-based web questionnaire
as semantically enriched data assets for analysis and processing.
Fig. 4. Overview of the integrated process visualization support.

152 H. Masuda
Fig. 5. Customer action evaluation with the reason.
4 Discussion
Regarding Hypothesis 1, 40% of the factors that impressed Japanese customers were
the taste and appearance of food. On the other hand, foreign residents have also the
same factors, but they are more than satisfied with the provision of services. Therefore,
Hypothesis 1 was supported. Regarding Hypothesis 2, it was found that foreign resi-
dents didn’t have any descriptions of the evaluation of the restaurant services from the
perspective of cross-cultural communication. And they are actually interested in the
way of providing each service as a function. The results did not emphasize explicit
cultural factors and did not support Hypothesis 2. However, since the evaluation of
uniqueness such as standardized service systems in Japan can be seen as a cultural
aspect, more detailed factor analysis is required for this hypothesis.
The first point of view suggested by the results of this study is the difference in the
background of customers related to the effects of customer satisfaction and customer
delight. The customer delight group in Japan had a statistically significant intention to
recommend to the non-customer delight and customer satisfaction group. However, the
difference was not seen in foreign residents in Japan. In the foreigner group, this means
that the non-customer delight and customer satisfaction group had the same impact on
customer behavior intentions as the customer delight group. From this, it is assumed
that there are two cases. The first case is customer delight is more effective in customer
attitude than usual customer satisfaction. On the other hand, the second case is that
there is no difference in the effect on customer attitude between customer delight and
usual customer satisfaction. Based on the target customer of a service organization, it
will be necessary to make a decision on how to weight regular customer satisfaction
strategy or customer delight strategy.
The second viewpoint obtained from the results of this study is that the priority of
customer service behavior in customer delight can change according to the target
customer attributes. In service companies, it is significant to clarify what evaluation
criteria are related to customer delight of the target customers and how there are
differences among customer groups. Because, by clarifying the conditions under which
customer delight works productively and the factors that strongly influence customer
delight, it is possible to systematically treatment on improving customer delight factors
corresponding to the target customers. And then, the probability of increasing the
customer loyalty of the target customer can be considered. In restaurant services in
Japan, there are elements that are common to Japanese and foreign residents in Japan,
such as the taste of the food, as a factor that triggers customer delight. On the other
hand, it was suggested that for foreign residents residing in Japan, in addition to the
taste of the food, it is possible to more effectively increase the probability of bringing
customers delight in terms of how to provide services.
In the future, it is necessary to consider a customer satisfaction strategy for each
target customer with diverse backgrounds in Japan, where foreign tourists from
overseas are expected to increase. The viewpoint of this research can be used for
decision makings, such as optimization based on the classification of customer satis-
faction strategy and customer delight strategy base on the characteristics of each target
customer.
As a framework for customer loyalty in consumer research, marketing and service
marketing research, the relationship that cognitive aspects such as service quality affect
emotional aspects such as customer satisfaction, and in turn, that affects customer
loyalty, which is the behavioral intention, is being discussed. This study suggests that
evaluation criteria for services are not absolute values, and the elements of service
behavior that affect customer delight and the effect of customer delight on customer
loyalty vary according to customer characteristics. There is room for service organi-
zations to develop strategies that increase customer loyalty more effectively by clari-
fying what factors increase customer delight and what situation customer delight works
effectively against customer loyalty, This proposed research method can also be viewed
from the perspective of providing a new experimental environment that enables the
implementation of empirical research and basic theoretical frameworks for designing
service personalization that increase the probability of customer loyalty with consid-
erate with customer delight.
In the future development of this research, this method will be used to analyze the
impact on customer satisfaction, customer delight, and customer loyalty based on more
detailed customer background information. For example, factors such as the classifi-
cation of services provided based on service prices and brands on the service provider
side, cultural differences in each country on the user side, and experiences of individual
customers’ usage services are considered. On the other hand, in order to further reduce
the input cost of respondents using this questionnaire method, the proposed Web
questionnaire system will be improved as a smartphone application, and an environ-
ment for collecting data more easily will be prepared. The preparation of data handled
in this study will lead to the expansion of basic data sets that contribute to the
development of machine learning and AI utilization in marketing. Thus, contributes to
154 H. Masuda
service personalization based on the characteristics of service provision and customer

characteristics, will be pursued from both theoretical and empirical perspectives.
Acknowledgments. This research was supported by JSPS KAKENHI 15H05396.
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Clarification of the Process of Value
Co-creation Marketing -
Case of Manufacturing Industry
Satoshi Seino(&)
Yasuda Women’s University, Hiroshima, Japan

[email protected]
Abstract. Since Vargo and Lusch [1] advocated SD logic in 2004, research on
considering marketing with the concept of service has been active in recent
years. Grönroos [2] advocated service logic from a practical point of view,
showing the concept of value co-creation where companies interact directly with
customers to create value. The purpose of this paper is to clarify the process of
how value co-creation marketing should be applied to the manufacturing
industry. And that end, we took up an example of an a cafe experience meeting
held by Sony Marketing and clarified the actual situation through an interview
survey. In the analysis, the 4C approach [3] of Contact, Communication, Co-
Creation, and Value-in-Context was used to clarify what kind of marketing is
being performed, and the value co-creation process was clarified.
Keywords: Servitization Value co-creation marketing Value in use Case

studies
1 Introduction
In traditional marketing, the transfer of ownership of a product is considered valuable

and has been focused on how to get a customer to buy a product. Commodity trap has
become an issue that cannot be ignored in all industries [4]. Even if new functions are
added to create new value, following the competition, new homogenization occurs, and
price differentiation, that is, price competition, is awaiting [5]. Based on such a situ-
ation, the manufacturing industry is moving in a direction to give some added value
other than products. Vandermerwe and Rada [6] showed that there is a tendency to
service in the manufacturing industry. In contrast to the trend of commoditization, this
is a movement to acquire new competitiveness based on the limitations of product
differentiation. In this way, the manufacturing industry has expanded not only to
produce and sell goods but also to the service area for more than 20 years.
In 2004, Vargo and Lusch [1] proposed SD logic all products and services should
be regarded as service. Based on this new concept, a product will only have value at the
stage of use, and the company will interact with the customer and co-create value.
On the other hand, Grönroos [2] developed a theory that applies the concept of
services to all in a form close to practical practice. Customers are the ones who create
value at the use stage, and companies have a role to promote it. Up to this point, we

158 S. Seino
have just re-interpreted traditional customer and firm behavior, but at the usage stage,
the firm has opportunity to create new value by having direct contact with the customer
and co-create value together. It is a concept of value co-creation in S logic. According
to a survey of customers who purchased automobiles, customers have experienced
difficulties at the time of use due to lack of their own knowledge and skills, and there is
room for companies to go into customers’ daily life. In other words, Grönroos’s
concept of value co-creation is for practice at service encounters.
2 Research Purpose and Method
The purpose of this study is to clarify the actual situation of value co-creation mar-
keting in the manufacturing industry by analyzing the cases of successful companies
that have expanded their business after sales. Based on that, the author makes a model
of value co-creation marketing applicable to the manufacturing industry.
The research method is as follows. First, a framework for case analysis is presented
based on previous research on value co-creation. Presenting the limitations of the
traditional service-related discussion in the manufacturing industry and the viewpoint
of value co-creation to overcome it, we derive the viewpoints that should be clarified
through case analysis. Based on the results of the post-sales corporate activities,
interviews clarifies the actual state of marketing in successful companies. Since there
are not many enough case studies that are co-creating value with direct interaction with
customers in the manufacturing industry, this study aims to provide a model with
deeply understanding for a single case rather than a generalization from multiple cases
[6]. Based on the consideration of case studies, the key points on how to effectively
increase customer value are derived, and the processes necessary for the application of
value co-creation to the manufacturing industry are presented.
3 Servitization in Manufacture
3.1 Servitization
Vandermerwe and Rada [7] used the term servitization and showed that the number of
firms was increasing in the manufacturing industry and that they provided bundles of
products, services, support, self-service, and knowledge. A service is an intangible
thing that is given to add value to a core product. Baines et al. [8] noted that this is an
innovation related to the ability and process to shift from service sales to sales of
functional value systems that combine products and services. In the technologically
mature manufacturing industry, strategies such as changing the domain from the
manufacturing industry to the service industry, and selling products with enhanced
added value through after-sales services, etc. are positioned as one strategy to get out of
commodity trap of products [9]. Now that we are in the age of more than enough
goods, the value that customers demand is shifting to problem solving using products,
not products themselves, and companies and products and services that have started on
supplementary services such as product maintenance/repair and rental. Increasing
Clarification of the Process of Value Co-creation Marketing 159
number of companies are engaged in integrated management [9]. Manufacturing is

moving towards more profitable products associated with services [10], and serviti-
zation is a way of creating the ability to add value to traditional manufacturing [8].
3.2 Previous Discussion on Servitization in Manufacturing

At first glance, the service-oriented manufacturing industry seems to argue what kind of
service-like behavior a company performs after sales. However, it is only a way to
enhance sales in terms of how to get customers to purchase products. Selling packages
with solutions and services added to products is more competitive than product dif-
ferentiation, but it only adds services to the added value of the product itself. For a
customer, the only difference is whether the product is sold only or the package of the
product with the added service is sold. Therefore, embedding an intangible thing called
a service in a package in advance will eventually lead to homogeneity. Underlying is
4Ps marketing as a base, it just adds a service to the product. Limitation of the
discussion of servitization in the manufacturing industry is in the idea that firms
determine the value in advance and do not change focus on the point of use from the
exchange.
4 Value Co-creation
4.1 Definition of Value Co-creation in This Study

In SD logic proposed by Vargo and Lusch and S logic proposed by Grönroos, value
emerges at the stage of use, and interpretation of value is made by the customer. In that
respect, both are theories that try to capture everything with the concept of service, but
there are many differences between the two. While SD logic is oriented toward the
concept of capturing everything, S logic is a theory that is intended for practical
application. First, the characteristics of each logic will be compared.
Since these logics are based on the concept of services, the concept of processes
characterizes these logics. In traditional marketing, value is defined in advance in a
company, and products with embedded values are manufactured and sold. Therefore,
what is done with the customer is to exchange a product with embedded value for
consideration. This is the exchange value [1]. On the other hand, in the service concept,
a company and a customer interact with each other, and an action that a company
performs on a customer is regarded as a service process. Attached to this is a product,
and value is born at the stage of use. Contrast with exchange value, defined as value in
use or value in context. In SD logic, all of these processes interact, and the process of
manufacturing a product by a company and the process used by a customer. On the other
hand, in S logic, if the company and the customer do not have direct contact, it is
considered that the customer is using the product and creating value independently, and
that the production action of the company supports it. We consider value co-creation
when there is direct interaction. Here is an unconventional concept that puts companies
into the customer’s usage process. Grönroos [11] further defines co-creation. Customers
160 S. Seino
and companies interact with each other as a value co-creation of direct interactive and
positive processes [12, 13].
SD Logic sees everything as co-creation even if the customer is away from the
company, so it’s so vague that it’s not clear where the company can be involved. On
the other hand, S logic is the same as conventional corporate activities when there is no
direct interaction. It also incorporates direct interactions as part of the consumption
process, making it easier to think more realistically and giving specific suggestion for
practice. In value co-creation marketing [3], companies enter the customer’s product
use process and interact directly there. There, service relationships are created between
companies and customers [14]. Then you can physically move away from the cus-
tomer, and you can go beyond the limits of conventional marketing, where firms
determine the value one-sidedly in advance.
4.2 Analysis Framework

Grönroos [2] presents the conventional way of confronting it with S logic as Goods
logic (G logic). It is the concept of exchange value in which value is embedded in a
product, and the idea that a firm makes a product as a resource available to customers.
In other words, a firm cannot enter the product use stage and cannot make an impact in
the G logic [15]. On the other hand, in S logic, the interaction between the firm and the
customer continues in the consumption process, and the firm has an opportunity to
influence the value creation of the customer [16]. To ensure a competitive advantage,
companies tend to adopt S logic [15].
Smith et al. empirically identified 10 generic Product-Service transition attributes
which are abstracted into 4 nested value propositions; asset value proposition, recovery
value proposition, availability value proposition, outcome value proposition in opera-
tion management [17]. Payne et al. [18] illustrated the co-creation process at service
encounter in the service sector. These studies give some suggestions for practitioners.
But especially manufactures need the way to serve customers with direct interactions
which manufactures does not have so far.
In presenting the framework, it is necessary to express the direct interaction
between the firms and the customer, which is a characteristic of S logic value co-
creation. This is expressed by the following 4C approach (Contact, Communication,
Co-creation, and Value-in-Context) [3, 14]. First, in order to interact directly with
customers, it is important how companies make contacts with customers. In traditional
marketing, since the unspecified majority is targeted for marketing, contact with cus-
tomers has not been considered as important, but in value co-creation marketing,
contact with each customer is essential. Contact with customers is the beginning of
value co-creation marketing. It is important how to create a point that should be called
this trigger and what kind of contact it is.
And if a firm and a customer have direct contact, two-way communication is done
there. Exactly at the site where the request occurs, the request is transmitted, and by
exchanging in both directions, the firm knows exactly what the customer wants. Instead
of simply making a request from the customer, the firm side understands the customer’s
demands, including questions and answers, while looking at the situation around the
customer. In traditional marketing, a request is assumed by a firm in advance and
embedded in a product, and it is not certain whether value will be generated from the
use of the product. Even if it is correct, it is unclear whether customers can create value
with their own knowledge skills. By communicating in both directions, companies will
be able to understand customers more securely and deeply.
The company then performs co-creation through direct interaction with the cus-
tomer. The customer creates value, but by incorporating the company in the process,
the firm supports the value that cannot be realized by the customer alone. It’s not just
about product exchange, but customers co-create value-in-context with companies in
their own consumption process. The above 4C is the point that value co-creation
marketing is decisively different from traditional marketing.
5 Case Study
5.1 Selection of Research Case

As a case of the manufacturing industry, we took up Sony Corporation’s a cafe
experience meeting. While there have been few cases of value co-creation in the
manufacturing industry, Sony has announced that it will work on a recurring business
model as its management policy for FY2016. It is a company that is trying to transform
into a value co-creation type. In this research, we clarified the actual situation of value
co-creation marketing in the manufacturing industry through interviews with Sony.
Two points of view were considered in extracting the cases. The first is product
characteristics. In order to extract examples of actual value co-creation marketing,
products that seem meaningful for firms to go into the usage phase and those that need
some kind of support when used are focused on. In addition, in order to capture the
places where customers participate and co-create, those that are likely to be actively
involved are selected. Cars and motorcycles cannot be used or cause difficulties without
driving skills. There are other things where customers can’t feel joy or value without
knowledge skills. Musical instruments, sports equipment, and cameras (especially
single-lens cameras). Since value co-creation is not a unilateral pressing of a firm, but a
two-way action, a product with a customer has a strong will to co-create is desirable.
Products with strong hobbies are highly active by customers and are likely to co-create,
so we extracted products with strong hobbies.
The second perspective is business impact. Considering the original significance of
marketing, it would be desirable for the value co-creation efforts to contribute to profits
of companies or to change the business model in some way. It is not something that can
only be grasped by the existing line of increase in sales volume and increase in
repeaters. Considering the relationship between intrinsic value and reward, ideally,
reward is generated where value is created. The fact that it leads to business can explain
the most direct marketing effect. There are some companies that have received com-
pensation as participation fees and service fees, but the consideration is set in advance,
and it does not feel that the customer feels value, but the consideration is paid
regardless. With Sony’s single-lens camera efforts, participation is basically free of
charge, and only customers who feel the value of participating participate in the process
of purchasing interchangeable lenses. Although direct figures are not disclosed, Sony
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has been expanding the single-lens camera business in recent years through its efforts.
According to the securities report, profits have been on the rise since 2012 due to the
improved mix of highly profitable single-lens cameras and lenses. Beginning in 2012,
Sony started marketing that seems to be value co-creation.
As mentioned above, the case of Sony’s a cafe experience meeting was taken up as
an example of value co-creation marketing from two viewpoints: product character-
istics and contribution to business.
5.2 Survey Overview

Sony is a major Japanese AV equipment manufacturer. For general customers, it
produces and sells TVs, video recorders, cameras, video cameras, audios, smartphones,
and video games. Digital cameras include compact digital cameras with integrated
lenses and interchangeable lens single-lens digital cameras. We also handle replace-
ment lenses. In March 2006, Konica Minolta withdrew from the camera business due to
poor performance, and Sony acquired the single-lens camera division. Utilizing Sony’s
sensor technology and Konica Minolta’s optical lens assets, we released a single-lens
digital camera a.
According to Sony’s financial reports, sales of imaging business including video
and digital cameras have decreased in recent years due to shrinking digital camera
market. However, profits are increasing due to improved mixes with high value-added,
high-value single-lens digital cameras.
Sony is holding an event called a Cafe Experience meeting for customers of the a
series of digital cameras. In 2011, Sony launched an a cafe web that allows users to
post online. In 2013, Sony started an alpha cafe experience meeting where customers
actually met and had a photo session. The a cafe experience meeting introduces a wide
range of contents, such as the basics of how to use digital single-lens cameras, tips for
shooting, and how to enjoy after shooting. The alpha cafe experience meeting is
operated by 11 employees, and is held approximately 2000 times a year at five loca-
tions in Sapporo, Tokyo, Nagoya, Osaka, and Fukuoka.
Regarding the value co-creation marketing of Sony’s a cafe, we conducted two
direct interview surveys with managers and stuffs who were in charge of the a cafe of
Sony Marketing Inc. In the first session, we conducted an interview about the overall
activities of a Cafe and the background of such marketing. The second time, Sony
Marketing conducted an interview specializing on value co-creation in 2016. Both
surveys were semi-structured interviews.
5.3 Result
5.3.1 Contact
Setting Up Contact Points with Customers
First, an announcement is made about the establishment of an a cafe on the Internet,
and customers apply on the Internet. In fact, customers go to the Sony store and
shooting locations where they are held. In this way, direct contact points are set in such
a way that customers gather in the space prepared by the firm.
Building Long-Term Relationships with Customers

Many operations have a virtuous cycle in which customers want to rejoin the alpha
cafe, and long-term relationships with customers have been established. For example,
as a result of knowing the enjoyment of a single-lens camera through an a cafe
meeting, a mechanism that motivates the user to participate next time turns around, or
the participating customers become friendly, the community revitalizes, and partici-
pates again.
Identify Customers Who Are Willing to Co-create
The customers who participate in the a cafe experience meeting are enthusiastic fans,
and these customers are active and have a strong will of co-creation. Since the a cafe is
held and applied to these customers at the time of application, it is possible to have
contact with customers who have a strong will of co-creation.
Ensuring the Quality of Contact Management
When it comes to contact management, Sony focus on quality rather than efficiency.
There are about 10 participants in one experience meeting, and it is run by one
instructor and one assistant. There are many people who want to participate, and the
capacity is often filled immediately after recruitment, but the number of participants is
not increased.
Increasing Contact Frequency
Eleven employees at Sony stores in five locations nationwide are trying to increase the
frequency by holding 2,000 experience sessions almost every year. However, there are
7 to 8 participants at one time, and even about 2,000 times can handle only about
20,000 people.
Customer Contact by Internal Organization
Sony has established five directly operated stores in major cities in Japan (Sapporo,
Tokyo, Nagoya, Osaka, and Fukuoka). Sony Marketing Co., Ltd., which handles sales
and marketing within the Sony Group, is in charge.
5.3.2 Communication
Understanding Customer Wants
Employees engaged in the a cafe experience meeting actually have a direct dialogue
with each customer individually at the experience meeting. Listening to the customer’s
wants directly from the dialogue and extract the wants to support the customer to
realize it.
Efforts for Effective Dialogue
Before the a cafe experience meeting begins, the list of customers coming on the day is
watched, and employees keep in mind what customers are doing and what they are
doing so that they can better understand the customer’s situation.
Ability Required for Employees to Engage in Dialogue
It is considered important that human resources with hospitality can serve customers
even if they do not have knowledge and skills of camera, and how they can understand
what they think and feel.
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Know-How for Dialogue

In order to increase customer satisfaction, they have know-how to interact with cus-
tomers, such as reaching out if they are in trouble, and making sure their eyes are
aligned with the customer, and learn what is important in the dialogue.
5.3.3 Co-creation
Implementation of Co-creation
When actually doing co-creation, take the customer to the shooting location, rent the
latest lens, and teach the optimal settings and shooting method. Provide advice tailored
to each individual customer while watching the customer’s skills. And before doing co-
creation, they go to the site in advance and take their own photos, and at this spot, they
use this lens to propose settings.
Efforts to Improve Employee Skills
It is necessary to improve customer service skills, how to keep distance with cus-
tomers, and presentation skills in order to draw customer’s heart. For example
instructors are invited from Disneyland.
Feedback and Backward Support System
There is a system to make use of the voices of customers of a cafe in products, and
information by taking a questionnaire is transmitted from the co-creation site to
development.
5.3.4 Value in Context

Context Management
At a cafe meeting, customers can experience to learn how to take photos and to enjoy
shooting, and customers are satisfied. Prior to the a cafe meeting they prepare some like
what kind of location to shoot, what kind of lens to bring, and what to advise. They
actually takes the customer there, rents out a lens, takes a picture, and gives advice. In
addition, customer information is obtained in advance, and what kind of lens is rec-
ommended and what advice is given. The customer context is managed as described
above.
Value Confirmation and Follow-Up
After finishing, they are sure to take a questionnaire to discuss what went wrong. At the
same time as confirming whether it has become customer value, it is structured to spiral
up. When conducting an experience meeting, they follow up with one customer as a
lecturer and another as an assistant to see if the customer is satisfied.
Value in Context
The value in context that the customer feels varies depending on the individual, but can
be roughly summarized into three.
The first is that by receiving advice, they are able to take pictures that could not be
taken by themselves. The second is that they are able to join the a experience meeting
together to connect with friends, go to off-sites, and connect with people. Third, they
hear the thoughts of the single-lens camera from the engineers and the stories they had
a hard time developing, and deepened their understanding of the single-lens camera
that they had, and they are attached to the cameras and lens.
6 Discussion
6.1 Considerations from the 4C Perspective
(1) Contact
Setting Up Opportunity of Contact with Customers
In the case of a cafe meeting, firms set up experience meetings to create the oppor-
tunity of use for customers. Regular products are used by customers at any place and
time. However, when a customer uses a product at an arbitrary location, it is very
difficult for the firm to interact with each customers. For this reason, the firm creates a
location for co-creation, invite multiple customers at the same time, and create value
together with customers.
Building Long-Term Relationships with Customers
Long-term relationships are important when inviting customers to a point of contact.
Since co-creation with customers who have the will of co-creation is a prerequisite, it is
not a promotion through regular advertisements, but the customer understands that
value co-creation is beneficial and continues by building long-term relationships. This
is effective for customers to participate in co-creation.
Identifying Customers Who Are Willing to Co-create
In co-creation, it is necessary to extract customers who are willing to co-create and
have contacts. A system that secures participation = intension of co-creation is
required.
Optimization of the Number of Participating Customers
There are about 10 participants in one experience meeting, and it is operated by one
instructor and one assistant. There are more applicants who want to participate, and the
number of participants is often filled immediately after recruitment, but the number of
participants is not increased. Sony is optimizing the number of people so that they can
respond adequately. The number of customers per employee will depend on the quality
of interaction and must be carefully determined. When the purpose of co-creation is to
directly create customer value creation and co-create a value to the point where it feels
like value in context, it is fatal to reduce satisfaction.
Creating Contact Points with Customers by Internal Organization
Sony has four directly-managed Sony stores (Tokyo, Nagoya, Osaka, and Fukuoka).
As a retail store, it has direct contact with customers and at the same time it is used as a
direct contact for value co-creation, such as an a cafe experience meeting.. In the case
of Sony, the internal organization itself has direct contact with customers. Creating a
directly managed store means that Sony will set up a place for value co-creation by
integrating the resources inside. Whether it is internal or external is not a problem, but
how to make contact with customers.
Creation of Product Usage Scenes
Sony store employees hold classes on how to shoot for customers, gather customers at
shooting spots, and set up direct contact points in the form of customers gathering in a
space prepared by the firm. In this case, the setting of the venue creates the point of use
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of the customer. The meaning of a firm creating such a place and co-creating is to
create a new point of use so that it can obtain value in context that could not be
obtained by the customer alone.
Usually, customers use their products to create value. Basically, it creates value on
its own without any involvement of the company [2]. But one customer may not be
able to create value on his own. It is value co-creation where firms are involved to
support customers and create value together with customers. The value there is
something that is difficult to realize by the customer themselves, or is very time
consuming and labor intensive. Of course, the value in context itself is determined by
the customer, but in the marketing of the a cafe experience meeting, a firm create the
point of use and help the customer value in context that is difficult to create alone. It can
be said that.
What customers need is not always understood by prior research. These advance
preparations are to create a base for co-creation. Customer requests do not occur in the
absence of anything, but are only manifested after setting the appropriate situation.
There is no need for a single-lens camera in a situation that does not have a single-lens
camera and has nothing to do with it.
(2) Communication
Understanding Wants Focused on Individual Customers
By providing direct contact points, they are trying to escape from the conventional
indirect understanding of customer wants. In order to ascertain the demands reliably, it
is most effective to search for customer demands when the customer needs something.
In conventional marketing, grasping customer’s demands has the aspect of investi-
gating in advance and guessing the future. As a result, even customers cannot fully tell
their future needs. Regardless of how you investigate, there will always be leaks and
discrepancies. It is possible to avoid this risk by grasping at the site where it is actually
used, and it becomes a more reliable grasp of the demand.
The employees on the company side can see the situation at the site of use, so that
the situation can be grasped, and the wants can be grasped more reliably. In conven-
tional marketing surveys, customers are usually grasped collectively, and the average
demand is grasped. By grasping the demand at the site of direct use, each individual
customer is individually. It is also possible to make a custom-made response to this
want.
According to the conventional mass marketing concept, there is a possibility that it
can respond to a certain degree of efficiency, but the satisfaction of each person is not
always high enough. However, if they are tailor-made, each person’s satisfaction will
be much higher.
Efforts for Effective Dialogue
At the a cafe at Sony, employees look at the list of customers coming to the day before
the experience meeting started, understand what kind of single-lens camera they have
and how was the customer the last time, and consider what they should recommend this
time in advance.
How to conduct dialogue in value co-creation marketing is an important issue. To
that end, it is important not only to acquire the skills of dialogue but also to make an
effort to know the customer deeply. By collecting information in advance, it is possible

to achieve more accurate communication when directly facing the customer, and to
grasp exactly what the customer wants in a shorter time.
Assignment of Employees with High Relationships
What is important for communication is the importance of human relationship skills,
how sensitive customers are. It turns out that people with hospitality can serve cus-
tomers even without camera knowledge skills. It shows the requirements for human
resources who are in contact with customers. In value co-creation marketing, human
resources who directly co-create with customers are the most important in the com-
pany, and it is necessary to assign talented human resources who are most skilled in
human relations.
(3) Co-creation
Intangible Support and Resource Integration Support
The firm leads the customer, invites the customer into the context assumed in advance,
and photographs what the customer likes freely. And when some difficulties arise for
the customer, the company provides a service as a process of applying the knowledge
and the skill to support the customer.
When customers try to do something new, they need not only intangible support,
but also physical support, such as renting out lenses that are optimal for shooting. Later,
when it is decided that the customer should always have it, the lens is purchased. The
act of co-creation shows that the firm needs to manage the resources necessary for
customers to create value by integrating resources.
Products Suitable for Co-creation
Sony is sure that it is important to change the lens and master the technology of a
single-lens camera. When customers use single-lens cameras, they cannot reach the
expression they wants to do after a certain level unless they learn. Because a single-lens
camera has such characteristic, it is possible to connect with customers many times.
Because of these product features, marketing such as value co-creation where cus-
tomers need firm’s support is effective. Something that is difficult to feel worth without
some support. Furthermore, based on the case of the single-lens camera, it is a product
that have the characteristics that they can take higher and higher level photographs by
preparing tools and polishing skills and this leads to customers’ joy. It seems that this
type of product is suitable for such value co-creation.
(4) Context value
Context Management
So far, in S-D logic and S logic, the value has been treated as being determined by the
customer. Certainly, the value in context is definitely determined by the customer, but
in more detail, companies can be involved in the customer’s context. In fact, even in
the case of the a cafe experience meeting, a place for the customer to take a picture
with a single-lens camera is prepared in advance, and lenses etc. are prepared in
advance. The context of this is formed and value is created through photography. And
the context can be managed by the firms. However, the degree of involvement in the
customer context varies. In the a cafe experience meeting, the customer performs
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actions such as shooting in an environment prepared in advance by the firm to control

the context. In addition, when a customer holds an off-line meeting, the firm does not
actively participate, but only supports it to some extent. It means that the firm manage
the context strongly or weakly depending on what the customer wants.
Next, consider what context management means. Customers shoot while thinking
about how to take pictures of landscapes, etc., which is an act that is triggered by the
context prepared by the firm. Then, troubles and requests that trigger the next inter-
action with the firm, such as not being able to shoot as expected, occurs. The man-
agement of customer’s contexts performed by firm is the basis for customers to
generate wants.
Value Confirmation Process
The a cafe has a process to check whether value is actually created and to provide
feedback to the employees. It is based on a questionnaire after the complete of the
meeting. They specify the cause of dissatisfaction. Then, they correct it and use it for
the next a cafe experience meeting. In addition, while actually co-creating, while
observing the customer, it is confirmed that the customer can use the single-lens camera
as expected. They make sure to follow the customer who is not doing well on the spot.
This contributes to increasing the probability of customer value being created.
Value in Context
The value of taking a picture customers want can be easily assumed by the firm in
advance, but in fact, customers enjoy gathering and going out, making a reason to go
out, meeting a single-lens camera, changing life, etc. Value in context that cannot be
found in is seen at the a cafe experience meeting.
6.2 Items to Be Added to 4C
(1) Value co-creation preparation process

Before starting the competition, employees visit the shooting location in advance,
examines shooting points and lenses to rent in advance, and prepares camera settings.
This is nothing but the creation of a context for day-to-day management, helping
customers create value by integrating resources on the day, and providing support of
value creation such as advice. These are necessary as advance preparations for co-
creation.
(2) Backup by the whole company
Importance of Internal Marketing
All employees must act in accordance with the company’s will to make value co-
creation as well as the employees who are in contact with customers. In addition to the
in-house backup system, unified will and action are required, and the internal marketing
concept is important. “An active, co-ordinated and goal-oriented approach to all
employee-oriented efforts, which combines these internal efforts and processes with an
external orientation of the firm.” ([19] p. 410).
Necessity of Human Resource Enhancement for Value Co-creation

Eleven employees at Sony stores in five locations nationwide are trying to increase the
frequency by holding 2,000 experience sessions a year almost every day, but the issue
is that only about 20,000 people can handle even 2,000 times. In the a cafe example, if
the number of co-creating employees is small, it is not possible to create sufficient co-
creation opportunities even if they limit to customers who have the will of co-creation.
It can be said that firm are losing business opportunities. For this reason, in order to
prepare a sufficient number of contact persons with customers, it is necessary to change
the resource allocation within the company and increase it.
Education for Skill Improvement
They think that it is better to focus on customer service skills, how to keep distance
with customers, and presentation skills, so they invite people from Disney’s customer
service department to conduct training and support employee education as a contact
person for co-creation.
System to Support from Backward
Sony has a system to collect information such as product improvements from
employees in the co-creation site with customers and feed it back to development. If the
shape of a single-lens camera is difficult to grasp when shooting, an attachment for
grasping is being developed.
6.3 Overall Process of Value Co-creation

Based on the above, the process of value co-creation as a corporate system is as
follows.
(1) Setting an environment for value co-creation
First, in order to create value co-creation, the manufacturing industry also needs direct
contact with customers. It requires either external integration that incorporates retailers
into a system for value co-creation, or internal integration that expands internal
departments and has a function to have direct contact with customers.
(2) Preparatory stage for value co-creation
Firms develop a plan for co-creation of the value in context with customers. Here,
things that are difficult to achieve with just one customer, or things that are difficult,
such as requiring labor and time on their own, are meaningful contexts for firms to co-
create with customers. And in order to build a long-term relationship, the context is
necessary to make customers feel that they want to participate next time and realize to
have mastered the skill by using the product fully.
Once a firm have a context plan, they plan the necessary products and other
resources needed for co-creation. This is for customers to integrate resources in co-
creation and connect to value.
In addition, as intangible support, firms plan the contents of support, such as usage
instructions, advice, and environment settings. If the customer who actually participates
can be identified, information about the customer is collected. A firm gets as much
customer information as possible, such as what requirements customers have, knowledge
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skill level, what session they participated in last time, what products they have, and
prepare for communication.
What customers need is not always understood by prior research. These advance
preparations are to create a base for co-creation. Customer wants do not occur in the
absence of anything, but are only manifested after setting the appropriate situation.
There is no need for a single-lens camera in a situation that does not have a single-lens
camera and has nothing to do with it.
(3) The practical stage of value co-creation
In practice, a firm first announces what value co-creation opportunities exist. A cus-
tomer makes a willingness to participate in it. This triggers value co-creation. At the
same time, it will identify customers who are willing to co-create value. At that stage,
in order to ensure the quality of co-creation, the number of participants is controlled
and the number of people is optimized. It actually has contact with the customer, but it
is setting the place of product usage, which leads to the expression of some wants by
the customer in the environment of use. On the other hand, a firm communicates
directly with each customer at the communication stage, and draws out and understand
the customer’s demands at the site they are using. Based on this understanding,
employees provide support and advice while looking at the customer’s knowledge
skills and the environment in which the customer integrates products and related
resources to create value. In such a process, employees actively get in the customer’s
context and manage the context. Naturally, customers also participate there and co-
create, resulting in value in context.
In addition, it is necessary to follow up to see if value in context has been created,
such as by confirming in communication with customers or conducting questionnaires.
(4) Process after value co-creation
What has happened in the field of value co-creation needs to be fed back as a lesson to
the next value co-creation, and to be spiral up. If the problem is related to the product,
feedback to product development.
(5) Backup process by the whole company
In order to carry out such value co-creation marketing, the power of the person in
charge alone is not enough. It is necessary to conduct internal marketing for the entire
company and consistently work within the company for value co-creation marketing.
Since the need for conventional advertisements and promotions is decreased, resource
allocation for value co-creation is also necessary. The allocation of resources over the
product will need to be reconsidered. In addition to increasing the number of persons in
charge who are in contact with the most necessary customers, there should be
employees who are capable of sensing customers. Human resource education is also
required, and it is necessary to create an environment that can enhance the resource-
fulness, customer service, presentation skills, etc. so that employees can understand
customers deeply, not just product knowledge (Fig. 1).
Customer Process
Preparatory stage for

value co-creation Co-creation by a customer and a firm Value in context
Process after
Backup process by the whole company value co-creation
Firm process
Fig. 1. Overall process of value co-creation marketing
7 Implication
7.1 Theoretical Implication

Focusing on the product called Sony’s single-lens camera, the actual state of value co-
creation is described deeply and elucidated in consumer goods marketing, and as a
case, a process of value co-creation marketing of consumer goods is built and con-
ceptualized. In recent years service dominant logic [1] triggered drastically active
researches on service concept in terms of conceptual and empirical perspectives. It is
required to provide milestones for corporates to create markets when considered the
role of the new theoretical studies in marketing. This article contributes to the theo-
rization for applying to real manufactures by generalizing the corporate process from a
case study.
7.2 Practical Implication

By clarifying the case process, it has refined the level of practical value co-creation to a
level that practitioners can consider. In this point of view, firms can apply how mar-
keting is realized based on this process not only for value co-creation, but also for
internal systems that have no contact with customers. In the manufacturing industry,
this article contributes to practical work in terms of co-creation practices.
8 Conclusion
As described above, we have clarified the actual state of value co-creation marketing by
interpreting post-sales corporate activities from the perspective of 4C based on the case
of Sony’s a cafe experience meeting. Based on this, the value co-creation marketing
process was clarified. First, an environment setting process for value co-creation is
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required. Next is the preparation stage for value co-creation. After that, value co-
creation is put into practice. There is actually a process after the end of value co-
creation, not the end here. And there is a backup process that supports all of these by
the whole company.
In addition, this case study may have the peculiarity of an expensive single-lens
camera. In the future, it is necessary to consider a wider range of cases in the manu-
facturing industry.
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Customer Experience and Service
Design
Conceptualization of a Smart Service
Platform for Last Mile Logistics
Michael Glöckner1(B) , Luise Pufahl2 , Bogdan Franczyk1 ,

Mathias Weske2 , and André Ludwig3
1
Leipzig University, Leipzig, Germany
{gloeckner,franczyk}@wifa.uni-leipzig.de
2
Hasso Plattner Institut, Potsdam, Germany
{luise.pufahl,mathias.weske}@hpi.de
3
Kühne Logistics University, Hamburg, Germany
[email protected]
Abstract. Digitization in logistics bears enormous potential for

increased efficiency. Especially, the logistics of the last mile that causes
between 13% and 75% of the overall logistics cost of parcel shipment
could strongly benefit from digitization and an increased transparency.
This transparency and a smart process control can be achieved with the
help of a smart service platform. Such a platform connects with sensor,
ID, and authentication technology in order to operate approaches, such
as crowd logistics and sharing concepts with the goal of enabling an effi-
cient, sustainable and user friendly last mile process. The contribution
of this paper is a first conceptualization of the smart service platform for
last mile logistics with special regards of the underlying business process
management. A design science research approach is applied.
Keywords: Last mile logistics · Smart service platform · Business

process management · Conceptualization · Design science research
1 Introduction
Last mile logistics describe the final delivery activities in the very last section of
a supply chain. The source of the goods or parcels to be delivered is either the
final warehouse or distribution center, and the destination comprises the supply
chain option of the direct-to-consumer delivery [5]. Figure 1 depicts the last mile
in the context of a generic supply chain from raw materials, over production
facilities to warehouses or distribution centers (DC). From the DC there are two
options: either delivering to retail or the direct-to-customer delivery, i.e. the last
mile.
The work presented in this paper was funded by the German Federal Ministry for
Economic Affairs and Energy within the project Smart Last Mile Logistics (SMile).
More information can be found under the reference BMWi 01MD18012D and on the
website www.smile-project.de.
c Springer Nature Singapore Pte Ltd. 2020
176 M. Glöckner et al.
Due to the increase in e-commerce, the last mile logistics has gain in impor-
tance in the last years. E-commerce offers customers to get products delivered
directly at home. This comfort has lead to an accelerated growth in the e-
commerce sector in the past and a forecast of growth from 1.3 trillion e global
revenue per year in 2017 up to 2.1 trillion e in 2022 [16]. Often receivers of the
parcels are not at home and changes in the social structures lead decreasing will-
ingness of neighbors to takes parcels of the neighbors [9]. This leads to several
delivery attempts of a parcel or storing of the parcel until the receiver will pick
it up such that last mile logistics cause up to 75% of the complete supply chain
costs [5]. Main cost drivers are non-successful first-time delivery, the resulting
extra processes, and low occupancy rates of the delivery vehicles. Subsequently,
traffic volume is rising and sustainability is decreased.
Some CEP (courier, express, parcels) service provider try to optimize the
last mile by different means, such as parcel boxes, regarding customer prefer-
ences (location, delivery window) in order to reach a successful first-time delivery.
Limited real-time information about the location and schedule of customers and
parcels limit the full potential of optimization. Further, existing CEP parcel IDs
are based on proprietary formats that are not open to the crowd or to other small
delivery service providers. Hence, the CEP only optimize internally and stati-
cally. A sustainable last mile logistics approach [5], is based on flexibility and has
to take innovative concepts into account such as crowd logistics [11] and sharing
economy [14]. Further, innovative technology, such as sensors, identification and
authentication, enable a smart, efficient, and user-friendly operation of last mile
processes. In order to exploit the full potential of this approach standardized
processes are essential to meet the challenges of the last mile.
In this work, a smart service platform with the purpose of enabling a smart
last mile logistics is conceptualized. Goal of this platform is the optimization
of last mile processes in terms of flexible customer oriented delivery process
(time, location and means of transport), in a sustainable way (bundling parcels
carrier-independent to increase occupancy rates and avoid traffic). The struc-
ture of the paper follows the design science research (DSR) process of [6]. First
the topic is introduced and motivated. Related work in Sect. 2 is followed by a
brief presentation of the methodological approach in Sect. 3. Section 4 discusses
challenges and requirements of the last mile logistics. The main contribution,
Retail
Last
Mile
Fig. 1. Depiction of the last mile option in a supply chain, adapted from [5].
Conceptualization of a Smart Service Platform for Last Mile Logistics 177
the conceptualization of the smart last mile service platform is presented and
discussed in Sect. 5. The paper is concluded by Sect. 6.
2 Related Work
2.1 Literature
Literature also contains first ideas in the field of smart service platforms and last
mile logistics. Publications can be divided into several categories: enhancement of
physical logistics system and infrastructure, and better use of existing resources
through higher transparency by software platforms.
The first category about physical systems and infrastructure of the last mile
contains papers, such as [3], discussing different forms and locations of transship-
ment areas for a reduced traffic between the depot and remote areas of distribu-
tion as well as a modular box system in order to increase drop rate on the first
attempt. Even though, an improved infrastructure can tremendously improve the
situation by making every first drop attempt successful, this kind of infrastruc-
ture with modular parcel boxes is very expensive and thus a widespread roll out
appears to be a rather strategic goal for future infrastructure planning. Neverthe-
less, this approach shows the effectiveness of a dense net of drop locations. The
idea of urban consolidation centers (UCC) is picked up by [7]. The UCC could be
operated by governments’ initiatives [12] or company alliances, and function as
a cross docking point for re-ordering shipments provider-independent concern-
ing destination area. The authors tried to optimize the profit of the UCCs by
auction mechanism.
The second category focuses more on an advanced matching and synchro-
nization of existing resources on the base of an increased flow of information.
The article of [10] proposes a freight-pooling service in order to reduce traffic and
increase occupancy rates. The authors of [13] suggest an advanced interactive
end-to-end communication between service providers and customers in order to
increase delivery quality. They also emphasize the need of integrating the infor-
mation of all stakeholders, i.e. senders and recipients. Further, they interestingly
outline a shift from location-oriented to person-oriented services in the last mile
sector. As a conclusion of their paper [15], the authors raise questions for future
development effort. This comprises collaboration of multiple stakeholders (such
as shippers, LSP, and customers) via a common platform, as well as the demand
for a common framework and possibilities of visualization and real time data
availability. The article of [17] demonstrates the feasibility and increased effi-
ciency of an intelligent last mile approach enabled by a mobile ICT platform
providing real-time communication and thus an enhanced transparency. The
authors state a main challenge is the amount and distribution of central pickup
locations. Further research directions comprise the creation of individual recipi-
ent networks in order to increase efficiency of the crowd approach as well s the
integration of alternative transportation technologies. The smart service plat-
form of [19] focuses on the logistics of retailers and an intelligent replenishment
in order to not lose revenue due to an out-of-stock situation. The efficient use of
the crowd as a transport resource is not focus.
Further, approaches of mobile crowd sourcing are related to the topic of
sustainable last mile logistics, e.g. see [18] or the participation of citizens in an
urban context of smart cities in [1] and [2].
2.2 Research Projects

There are several research projects that focus on modern last mile logistics con-
cepts. The project SMILE1 represents rather an overarching initiative of the
city of Hamburg in order to bundle research activities concerning mobility in an
urban context. Projects from the topics of last mile and smart city are inter-
weaved. The research project Guided AL2 focuses on authentication approaches
in a smart city context, which could be interesting for delivery to flexible but
restricted location, such as private car or apartment.
2.3 Findings
The result of the related work analysis shows several important points and chal-
lenges that are to be taken into account when tackling problems of the last
mile logistics field. On the one hand there is a need for improvement of the
physical infrastructure, in terms of a dense net of hubs for pick up that are
carrier-independent. On the other hand there are several points to increase the
efficiency in the use of existing resources by advanced information systems for
a higher transparency. This comprises a collaborative approach with the pooling
of resources as well as the integration of information and collaboration of sev-
eral stakeholders, i.e. carriers, CEP, LSP, and recipients. This can be realized
via a platform that is ideally operated by an independent third party to avoid
discrimination. Especially, the integration of the crowd and flexible recipients’
networks will foster sustainability and acceptance.
3 Method
The paper follows the DSR paradigm as the leading methodology with its proac-
tive characteristics and a focus on the creation of new IS (information systems)
artifacts [8]. This comprises the incorporation of business needs in order to shape
research goals (relevance) that are reached with the help of the scientific knowl-
edge base (rigor). Goal is to build artifacts that extend the current knowledge
base and can be applied in the appropriate environment. The presentation of
DSR artifacts follows seven steps [6] described in the introduction and reflected
by the structure of the paper.
Main method is the conceptual modeling [4] that is about describing the
semantics of software applications at a high level of abstraction in terms of
1
http://www.hamburg.de/pressearchiv-fhh/7495190/2016-11-25-bwvi-smile/.
2
http://guided-al.de/.
structure, behavior, and user interaction. The developed model is nascent design
theory and thus on the second level of DSR contribution types [6] and extends
the knowledge base of the prescriptive lamda knowledge in the field of last mile
logistics. As smart service platforms already exist in other fields, the artifact
of this paper can be located in the field of exaptations in the DSR knowledge
contribution framework [6], which implies the extension of known solutions to
new problems and new fields of application, i.e. last mile logistics.
Consignor Carrier Carrier Receipient

First Mile Main Haul Last Mile
Direct Delivery
- Personal
- Parcel box
- Preferred location
Indirect Delivery
- Post office
- Neighbor
- Micro depot
Fig. 2. Parcel delivery process
4 Challenges and Requirements

Next to the analysis of literature, interviews with experts from the CEP industry
and related fields are conducted. Represented by the German Federal Association
of Courier-Express-Post (BdKEP)3 their views created insights in the current
state of last mile logistics and current challenges. This section first presents the
delivery process of parcels in general and will then present current challenges in
the last mile delivery. Based on the identified challenges, requirements for a smart
service platform supporting and improving the last mile logistic is presented.
When analyzing the issues and challenges in the last mile delivery, the com-
plete process of the parcel delivery has to be considered which is shown in Fig. 2.
When a consignor wants to send a parcel, a carrier is selected. In the first step,
the first mile, the parcel is transferred from the consignor to the carrier’s pickup
point which can be done by the consignor, the carrier, or another service provider.
Thereby, information about the parcel (e.g. size, weight) and the recipient (e.g.
name, address) are provided to the carrier. The carrier then tags the parcel with
an individual ID and encrypted information about the consignor and recipient.
In the next step, the main haul, the carrier transports this parcel consolidated
with other parcels of the same main direction to a hub near by the recipient
where the last mile starts.
The main goal for the carrier on the last mile is to deliver the parcel in at
first attempt to the recipient. However, the not-at-home problem leads often
to high delivery failures. Another challenge is that in certain areas, especially
in rural areas, the critical mass is not reached which leads to financial loss by
3
https://bdkep.de/.
the carrier. The CEP service provider tries to increase their success rate in the
first-attempt-delivery with different means of direct delivery to the recipient,
e.g. private parcel box or a (static) preferred location, as depicted in Fig. 2.
Additional to the personal delivery, some of the CEP also provide the delivery
to a private parcel box of the recipient or a preferred location, such as a garage,
if the recipient has given an approval. If a direct delivery is not possible, in a
second step, the parcel is dropped as near as possible to the recipient, i.e. in
a post office, at a neighbor’s apartment, or at a micro depot. The micro depot
today could be something like a public parcel box (e.g. DHL Packstation4 , parcel
service integrated in a Kiosk or retail location). Still, the following issues remain:
1. Distributed storage: Several parcels for one recipient are sent via different
carriers and in case of non-successful delivery attempt they end up at different
locations, e.g. parcel 1 at the post office, parcel 2 at the charmeless neighbor
X, and parcel 3 at the retail shop down the road. Thus a high effort has to
be invested by the recipient to get all the shipments.
2. Low density of possible drop locations and dependency on physical infrastruc-
ture: As CEP currently only drop packages at their proprietary drop locations
in case of non-successful delivery attempt, customers might have to cover a
long distance in order to get their parcels.
3. Low occupancy rates in certain areas: All CEP have to deliver to all locations
and city districts as well as to all rural areas. This leads to low occupancy
rates of the delivery vans.
4. Proprietary shipment information: CEPs’ parcel IDs are based on carrier-
proprietary formats that are not available to other CEP.
5. Static preferences: Even with recipient-approved drop locations in case of
being not-at-home, CEP miss the chance of reacting to flexible preferences
and adapted scheduling depending on the current life or work situation of the
recipient.
6. Omission of crowd potentials: Appropriate concepts and IT systems are miss-
ing to unlock the potential of the crowd to make the last mile more sus-
tainable. In terms of a high sustainability, the involvement of the crowd is
absolutely essential.
The results of the interviews reflect the issues and challenges found in litera-
ture. Thus the following requirements can be derived that lead the conceptual-
ization of the smart service platform for last mile logistics:
1. white label micro hubs where parcels of all carriers can be dropped and later
on collectively gathered by the recipient.
2. new micro hubs have to be created easily and virtually in order to increase
density of the drop locations. This comprises the creation and management
of virtual micro hubs for flexible last mile infrastructure.
4
https://www.dhl.de/content/de/en/privatkunden/pakete-empfangen/an-einem-
abholort-empfangen/packstation-empfang.html.
CEP service providers Cooperative Last Mile service providers

professional CEPs professional CEPs
hub crowd
Smart Service Platform for Last Mile Logistics

- discrimination free (service provider independent) information management via white label IDs and cooperative hubs
- matching of customer demand and shipment information
- creation and management of dynamic/virtual micro hubs
- connection to innovative means of transport
- involving the crowd
- sensors (location, NFC, RFID, barcode, bluetooth)
Fig. 3. First draft of the Smart Service Platform (solid arrows presenting the physical
flow of goods, dashed ones representing the flow of information).
3. white label shipment IDs are necessary in order to make an exchange of parcels
between different CEP possible. Thus, CEP could also carry shipments of
other CEPs and increase their occupancy rates.
4. Flexible last mile processes that are able to react on re-scheduling needs
induced by the recipient.
5. Involvement of the crowd in order to unlock the potential for a higher sus-
tainability of last mile logistics.
5 Smart Service Platform for the Last Mile
5.1 Artifact Description
In order to meet the above mentioned requirements, a fundamental paradigm

shift has to be initiated, due to incompatibility of the proprietary ID formats
of shipments of different CEP service providers. This paradigm shift consists
of white label approach of shipment IDs and white label approach for micro
hubs, both managed by independent third parties in order to grant a non-
discriminating access to the market for all CEP and the crowd as well. With
such a shift, the exchange of parcels from different CEP to other CEP or the
crowd is enabled. Further, with a independent smart service platform, cooper-
ative hubs can be opened, managed and retired flexibly. The option of creating
virtual micro hubs is an important functionality.
As depicted in Fig. 3 this paradigm shift is bound to a strict separation
between the main haul that is operated by a standard professional CEP and the
last mile that is to be operated by some kind of a last mile service provider.
The latter one could be a professional CEP but also a member of the crowd
or maybe even an alternative option of transportation (such as transportation
robot, drone, bike courier, cargo bike or cargo tram).
The physical flow of goods is realized from the main haul CEP to the cooper-
ative hub which could also be a virtual location as a central drop location. After
the parcel has been dropped at the hub, the recipient is able to choose from a
variety of options in order to finally receive its shipment. Next to a preferred
location and a preferred time it is also imaginable to offer a preferred means of
transport, in case the recipient would like to choose the most sustainable or the
fastest option for the last mile.
The informational flow is more complex in order to gather as much data
as needed for a flexible and sustainable last mile logistics. The smart service
platform acts as an intermediary between the both sides of the consignor and
main haul CEP on the one side and the last mil process and the recipient on
the other. Therefore, a white label approach is absolutely essential. This com-
prises (1) the creation and management of shipment ID and information under a
white label approach and (2) the operation of the cooperative hub under a white
label approach. With this a discrimination free proceeding of the process can be
granted and a emancipated access to the last mile market for either professional
CEP (global players but also small and medium sized) as well as for crowd par-
ticipants. Important functionality comprises the matching of stored shipments
at the cooperative hub and the (daily) routes of the participating crowd mem-
bers in order to give push notifications of participation possibilities. Especially,
in the context of new technologies such as the Internet of Things (IoT) and
the requirement of real-time data processing the connection to new technolo-
gies gathers more importance. Hence, the link to sensors and identification and
authentication technology is obligatory for the smart service platform.
Business model and incentives of the smart service platform could be various.
For CEP the incentive is to reduce costs by not operating the last mile in the
classic way. The avoidance and the inherent cost savins could be used to pay
for the last mile operation in order to not pass on the costs for the system to
the final recipient. Even though, it is possible to let the recipint pay for the
fulfillment of special demands on the last mile, such as special location or time
slot. Or, as already mentioned, the demand for special means of transport or
special option such as very fast and/or very sustainable delivery on the last mile
could be paid by the recipient. The incentive for the crowd participants could
be realized by some kind of virtual coin system, making special options available
for free in case someone of the crowds wants to use the services of the platform
or also just social kindness or just ecological awareness.
5.2 Discussion
The results are high level, but still they mark an important and remarkable
step in the current situation of the field of last mile logistics. By laying the
foundation for a white label approach, an important step could be done towards
opening up the market of the last mile logistics to small and medium logistics
enterprises but also to the crowd, while unlocking a high potential for increased
sustainability. With the functionality of virtual micro hubs/cooperative hubs,
the infrastructure of dropping locations can be easily adapted to a change in
demand. Future research directions should aim at improving the concept and
adding more detail in order to realize all the functionality mentioned in the
conceptualization.
6 Conclusion
The paper introduced the research field of last mile logistics. After motivating
the need for a more flexible solution with the potential of a higher sustainability,
related work from literature and current research projects was presented. Fur-
ther, results of interviews conducted with experts from the field of CEP were
presented. The synthesis of the literature findings and the results of the inter-
views matched and from this the requirements for the smart service platform
were derived. A first conceptualization of the smart service platform was intro-
duced and the discrimination-free white label approach for the shipment IDs and
the cooperative hubs was emphasized.
The concept presents a remarkable and important paradigm shift in the field
of CEP and last mile logistics as currently CEP work only on proprietary for-
mats, making a flexible reaction to recipient demand and a participation of the
crowd in a sustainable last mile logistics impossible.
Future research will focus on further detailing the concept and developing
technical specifications for the approach.
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Enriching Design Thinking with Data Science:
Using the Taiwan Moving Industry as a Case
Kai-Lun Yang1, Shih-Chieh Hsu1(&), and Hui-Mei Hsu2(&)

1
National Sun Yat-Sen University, Kaohsiung 80424, Taiwan, ROC
[email protected], [email protected]
2
National Kaohsiung Normal University, Kaohsiung 80201, Taiwan, ROC
[email protected]
Abstract. Design thinking is a problem-solving approach that utilizes many

qualitative-based tools to support each step. Those qualitative-based tools adopt
a subjective approach to capture insights. Recently, the development of data
science allows problem solvers to get deeper insights from objective evidence.
The study proposes how data science techniques can be used to enrich design
thinking process. The research also empirically demonstrated parts of the pro-
posed approach with the Taiwan moving industry. The results of this study
include suggestions and notices on each quantitative approach. The paper pro-
vides an enriched step-by-step design thinking method, with understandable
guidance, to help design thinkers to improve their product design or service
design.
Keywords: Design thinking Data science Text mining Conjoint analysis
1 Introduction
Design thinking is a solution-based approach first mentioned by Simon [1] for finding
out what would users need. The methodology focuses on the qualitative way, with a
human-centered mindset to solve problems in business, engineering, and academic
fields [2]. Design thinking utilizes many techniques during its process to help people
communicate with each other via prototype, which has the systematical outline in each
step. It also can be viewed as a customer-centered approach with clear design principles
and guidelines.
From the 21st century, data is accessible to achieve, such as big data and open data.
Data science has developed rapidly since the 1990s (Fig. 1). The progress of data
science can deal with mass data with various techniques and apply to the real world.
The data source can be not only from open data but also from personal online behaviors
on the website. Therefore, data can play a role to make an objective, explainable, or
reasonable validation and to enhance the traditional design thinking process.

186 K.-L. Yang et al.
Fig. 1. Development trend of design thinking and data science (via Google Ngram Viewer).
2 Problem Statement
In spite of some significant advantages, design thinking also has some disadvantages in
previous research, such as ambiguity [3–7], unanalyzability [8, 9], universalizability
[10, 11], unverifiability [8, 10, 12], uncertainty [9] and simplicity [13]. In practice,
design thinking also has several problems that did not mention in previous research.
For example, it requires expertise. Besides, cognitive biases may take place and affect
the design because of overconfidence, optimism, familiarity, and narrative fallacy. It is
being argued that design thinking requires an objective and systematic approach to
identify problems faced by the designer since most tools highly rely on the subjective
evaluation of the designer. If one designer solely uses traditional design thinking
techniques, he/she may face the problem that information or feedback is based on
subjective evaluation to cognitive biases are more likely to take place.
Humans are bounded rationality, which is the idea individuals are searching for
satisfied but not optimal decisions [14]. Can we use for us to use external resources or
data to improve the design thinking process? Design thinking methodology is cross-
domain, human-centered, creative, powerful, and wicked problem-solving. Because of
the development of data science, there are many opportunities to access and deal with
big data (e.g., big data, open data, user-generated data) with a renewing algorithm. If
people integrate the original design thinking process with quantitative approaches as
evidence involved in the process, it may let design thinking be more reliable. More-
over, it enhances design thinking’s results based on a proof.
Is it possible to integrate the advantages of two different kinds of methodology
(design thinking and data science) to rebuild an enriching design thinking process with
data-involved? With criticism of design thinking, it is considered to design an enriching
design thinking with data-involved as a methodology with a case to demonstrate how it
works via accessible data resources and techniques of data science. The problem
statement in this research is: “How to use data science to enrich design thinking?”
Enriching Design Thinking with Data Science 187
3 Methodology
3.1 Research Methodology
Design science is a methodology which creates and evaluates IT artifacts and solve
identified organizational problems, describing the performance of design science
research in an information system. It structures in a nominally sequential order [15].
However, there is no expectation that researchers would always proceed in sequential
order [16]. Based on previous research [15, 17–21], there are three primary design
science process: problem identification, solution development, and evaluation. The
development of design science help IS researchers have a better understand the sci-
ences of design and provide an effective way to bridge the gap between the IS field and
academic research. It is also an appropriate way to solve wicked problems what require
innovative solutions in a more effective way [22] (Table 1).
Table 1. Design science stages in this research.

Design Research Chapter
science
Problem How to use data science to enrich design thinking? Problem
identification statement
Solution Enriching design thinking process Research
development framework
Evaluation More details about “advantage”, “disadvantage”, and Findings and
“suggestion” for each data science methods discussion
3.2 Research Framework

The research wants to design a research framework (Fig. 2) as an integration process
which combines traditional design thinking process with data science (data-involved).
It also wishes to be a renew, redesign, data-involved, and enriching design thinking
process, as a solution to solve problems that tradition design thinking faced with.
To have a glimpse to know the interaction between design thinking and data
science, the research proposed an initial framework that integrates both design thinking
process and data science (with both qualitative approaches and quantitative approa-
ches) in Fig. 2. The research framework can separate into three different parts: vertical
way, interaction, and horizontal way.
To see in a vertical way, the left side of the graph (without background color) is the
traditional design thinking process and approaches. Design thinking is a non-linear
process (Fig. 3). The main stages of design thinking as below: empathize, define,
ideate, prototype, and test. With the sequence of qualitative approaches, the research
unfolds design thinking process into five main stages with nine actions and ten outputs.
The right side of the graph (with the background color) are data science methods that
can use in design thinking process in each stage. The background color, which is the
same as five main stages means they correspond to the same stages. For instance, data
collection can use in empathize stage of design thinking, and simulation can use in test
stage of design thinking. There are six main actions with twelve quantitative approach
that purposed it can use in practice.
To see the interaction, not only two parallel processes but also connection and
interaction between two methodologies (design thinking and data science). Both side of
data collection (qualitative data and quantitative data) can use as an input data source (e.g.,
interview transcripts and user-generated contents on social media). The research can get
more comprehensive outputs by doing analyzing in enriching design thinking process.
To see in a horizontal way, there are five rounded rectangles with transparent
background color, because of design thinking is a non-linear process which may be
flexible in practice. In Fig. 2, several gateways may let our process return to every of
the previous stages depends on the situation in practice. When it returns to previous
stage, it will return to the integrated stage, which has comprehensive data analysis
results, but does not solely interact with the traditional design thing process.
Fig. 2. The process of conducting design thinking (non-linear).
3.3 Research Subjects

In this research, it is not only design a new enriching process, but also demonstrates
how can use a real case in this enriching design thinking process. The research chooses
the Taiwan moving industry as a case to run for enriching design thinking (data-
involved) process from empathize, define, ideate, prototype to test stages. Why the
research chooses the Taiwan moving industry as an example is because that there are so
many moving groups, such as individuals, family, or company, for every day in Tai-
wan. Still, there are no transparent or specific rules belongs to the Taiwan moving
industry. More specifically, a moving company works more focus on moving furniture
and goods. In Taiwan, the moving industry did not have its specific industry, but
belongs to freight forwarders, which means both customers and company are free from
standard. Because of the reason, there are so many complains about moving company
from different channels. The research chooses the Taiwan moving industry as an
example to demonstrate how to use enriching design thinking as a way to deal with
issues that happened in the Taiwan moving industry. That’s the reason why the
research chooses the Taiwan moving industry as an example to be demonstrated in this
research.
Fig. 3. Enriching design thinking and data science framework.

3.4 Research Procedure

To integrate different methodologies, the research draws a research procedure by using
three main stages: “problem identification”, “solution development”, and “evaluation”
of design science structure (Fig. 4) to prevent from being confused in reading.
In problem identification part, the research observes design thinking’s problems
based on literature review and expert meeting. Therefore, in solution development part,
the research design a research framework which integrates traditional design thinking
process and potential data science methods with quantitative approaches and qualitative
approaches at the same time to collect various data sources as our material to do
analysis and uses the output for holding the enriching design thinking workshop. After
the workshop, the research uses the results, which are brainstormed from team
Fig. 4. Research procedures.

members of the workshop, to design an online questionnaire and run for conjoint
analysis. Finally, in the evaluation part, the research lists advantage, disadvantage, and
suggestion to evaluate each quantitative approach.
4 Results
4.1 Demonstration
With the Taiwan moving industry as an example in this research, the research chooses
seven out of twelve quantitative approaches (i.e., social listening, text mining, senti-
ment analysis, clustering analysis, dimensionality reduction, keyword extraction, and
conjoint analysis) to enrich design thinking process in each stage. By using both
qualitative approach and quantitative approach, the research can list all methods, data
sources, and outputs of the enriching design thinking process (Table 2).
Table 2. Enriching design thinking and methods and data sources of data science.
Design thinking Data science Data sources Outputs
stage methods
Empathizes Data collection Primary data –
• Stakeholder • Social listening • In-depth
analysis • Text mining interview
• Observation
• Interview
• Literature
review
Define Data analysis Secondary data • Dendrogram
• Unpack Data visualization • Social listening • Word cloud
• Synthesize • Clustering analysis • User-generated • Sentiment trend
• Definition • Dimensionality content • Sentiment bar chart
reduction
• Keyword
extraction
• Sentiment analysis
Ideate – – –
• Brainstorming
• Selection
Prototype Selection • Questionnaire • Service combination
• Prototyping • Conjoint analysis cards design
• Utility estimate
• Ranking preference
Test Simulation • Questionnaire • Methods’ evaluation
• Subjective user • Conjoint analysis • Prediction
test
4.2 Case Results
Design Science Stage in This Research. Before the enriching design thinking
workshop, the research needs to collect both qualitative data and qualitative data as
data source.
In empathize stage, the research collects data from different sources without doing
analysis. By using social listening methods, the research can get seven main clustering
issues (i.e., place, quality, moving company, service, appliance, transport, and money),
engagement (e.g., duration time, page per visit and bounce rate), marketing channels,
and traffic sources in visualization way based on online behaviors of audiences.
In define stage, the data scientist of the workshop team does data analysis and data
visualization to make dendrogram, word cloud, sentiment trend, and the frequency of
sentiment (positive/negative) words. The research use R language to do data analysis in
traditional Chinese (zh-TW). The research shows one of the data analyzing results
(Figs. 5, 6, 7 and 8). In the dendrogram (Fig. 5), the graph can find out the relationship
and distance between words. In word cloud (Fig. 6), by the results of dimensionality
reduction (i.e., dendrogram), with color clusters, the graph can find different cluster of
words, which usually be mentioned at the same time. In sentiment trend (Fig. 7), the
graph can find out the pattern about the sentiment trend of your audiences based on
your marketing strategy, promotion, news, etc. In the frequency of sentiment
(positive/negative) words (Fig. 8), the graph can help us know why cause you audience
with positive/ negative sentiment.
Fig. 5. Dendrogram (binary distance): Mobile01.

Fig. 6. Word cloud: Mobile01.
Fig. 7. Sentiment trend: Mobile01.
The Progress of Enriching Design Thinking Workshop. In the progress of the

enriching design thinking workshop, the data scientist of the workshop team printed
out visualize results, i.e., outputs of data science (e.g., Figs. 5, 6, 7 and 8), and stick
them on the wall as material to let team members to define real issues and brainstormed
for solutions.
Fig. 8. The frequency of sentiment (positive/negative) words: Mobile01.
To talk about the team composition of the workshop, the research gathered seven
people from 20 to 40 years, all with different backgrounds and design thinking/ moving
experience to run for the workshop (Table 3).
Table 3. Design thinking team members’ profile.

Gender Age Background/major Design thinking Role
experience
M 23 Management of Information System N • Participant
F 26 Management of Information System Y • Participant
M 37 Manager of Giant Power moving N • Domain
company expert
• Participant
M 23 Business Management Y • Participant
F 23 Management of Information System Y • Participant
M 32 Supervisor of Giant Power moving N • Domain
company expert
• Participant
F 25 Chinese Literature Y • Coach
• Participant
• Data scientist
Fig. 9. The progress of enriching design thinking workshop (Define stage: Empathy map).
Fig. 10. The progress of enriching design thinking workshop (Define stage: Affinity diagram).
In the practice of running an enriching design thinking workshop (Figs. 9 and 10),
the research use data analysis/visualization results act as supporting roles to enlarge
pain points and issues that members in work do not know when they solely interview
with several users. Based on the traditional design thinking process, the research has
gotten 129 pain points that are related to stakeholders, having reached 149 problems
after providing visualize data with team members.
Conjoint Analysis Results. In ideate stage of enriching design thinking, the research
find out three main issues (i.e., employee’s quality, consumers’ hesitation, and price)
and develop seventeen service (i.e., personal monitor system, service evaluation,
moving alliance, pre-moving meeting, mover’s profile, moving, price estimation
competition, moving planner, scannable APP, remote moving equipment, waterproof
foam vacuum, VR moving, training (geomancy), moving industry’ s platform, service
resource platform, AR Measure, video estimation, and moving fair trade network)
(Table 4).
Table 4. Design elements of moving company’s service.

Services/attributes Levels design
Price Online estimation (EST) Self-service
Personal service
Consumers’ hesitation Moving plan service (PL) Collision avoidance
Dustproof
Convenience
Employee quality Service evaluation (EVA) Company
Mover
Price Service resource integration (RES) No
Yes
Price AR Measure (AR) No
Yes
To do conjoint analysis, the research design five attributes, eleven levels with forty-
eight cases (2 3 2 2 2). The research makes 16 cards (combinations) with
verbal description (Table 5), then the research design online form to do the survey and
return 122 questionnaires. The utility estimate of each attribute level (Table 6). With
orthogonal design and calculate for total utility for each combination (cards), the
research can get a ranking of these 16 optimal designs (Table 7).
Table 5. Verbal descriptions of 16 cards’ design.

Card EST PL EVA RES AR
number
1 Self-service Collision avoidance Company Yes Yes
2 Self-service Collision avoidance Company Yes No
3 Personal service Collision avoidance Mover No Yes
4 Personal service Convenience Company No Yes
5 Self-service Collision avoidance Company No No
6 Personal service Convenience Company No No
7 Self-service Convenience Mover Yes No
8 Personal service Dustproof Company Yes Yes
9 Self-service Convenience Mover Yes Yes
10 Self-service Dustproof Mover No No
11 Self-service Collision avoidance Company No Yes
12 Personal service Collision avoidance Mover Yes Yes
13 Personal service Collision avoidance Mover Yes No
14 Self-service Dustproof Mover No Yes
15 Personal service Collision avoidance Mover No No
16 Personal service Dustproof Company Yes No
Table 6. The utility of different design attributes.

Attributes Levels Utility estimate Std. error
Estimation (EST) Self-service 0.656 Yes
Personal service −0.656 No
Plan (PL) Collision avoidance 0.578 Yes
Dustproof −0.466 Yes
Convenience −0.112 No
Evaluation (EVA) Company 0.358 No
Mover −0.358 No
Resource (RES) No 0.809 Yes
Yes 1.619 Yes
AR Measure (AR) No 0.498 No
Yes 0.996 No
Constant 2.394 1.034
Table 7. Ranking of 16 optimal orthogonal design.

Ranking Card EST PL EVA RES AR Utility
number (U)
1 1 Self-service Collision Company Yes Yes 6.601
avoidance
2 2 Self-service Collision Company Yes No 6.103
avoidance
3 11 Self-service Collision Company No Yes 5.791
avoidance
4 5 Self-service Collision Company No No 5.293
avoidance
5 9 Self-service Convenience Mover Yes Yes 5.195
6 7 Self-service Convenience Mover Yes No 4.697
7 12 Personal Collision Mover Yes Yes 4.573
service avoidance
8 8 Personal Dustproof Company Yes Yes 4.245
service
9 13 Personal Collision Mover Yes No 4.075
service avoidance
10 14 Self-service Dustproof Mover No Yes 4.031
11 4 Personal Convenience Company No Yes 3.789
service
12 3 Personal Collision Mover No Yes 3.763
service avoidance
13 16 Personal Dustproof Company Yes No 3.747
service
14 10 Self-service Dustproof Mover No No 3.533
15 6 Personal Convenience Company No No 3.291
service
16 15 Personal Collision Mover No No 3.265
service avoidance
5 Finding and Discussion
The research use design science methodology to evaluate all data science methods
which are used in the research framework that the research proposed (Table 2). By
using the Taiwan moving industry as a demonstrate case, the research gives more
details about “advantage”, “disadvantage”, and “suggestion” for each data science
methods based on interviews with four team members (Table 3) who has traditional
design thinking experience before.
Data Collection (Empathize Stage)
Social Listening. Social listening helps us have the ability to understand customers’
keywords searching, behavior, reaction, and emotion for their online activity. In design
thinking workshop, keywords that be displayed can make us focused on issues that the
user was searching on the browser. It helps us to know problems in a more concretely
way to know about issues or insight that our potential customers are facing with based
on their online behavior. However, data collection from social listening tools is not all
useful except for keywords in this research. The output of both social listening tools
solely with little support in design thinking workshop.
Design thinking is a convergence and divergence process which started from wicked
problems to specific. It means that the research gathered data and information from
extensive to depth. In the research case, even the data scientist of the workshop team
provided data and information in detail, members in design thinking workshop will
ignore some data sources that is too complex. Therefore, it’s better to provide data in
keywords when running design thinking workshop in empathize stage.
What industry you choose is also essential when you use social listening. In the
research case, the moving industry in Taiwan, is more focused on by telecommuni-
cation with customer service and face to face interaction with appraisers and movers.
Website for the company in the Taiwan moving industry is usually a way to introduce
what service they provided and rough estimation on the cost of their moving service.
People who have demand in moving will not spend too much time browsing the
website, so the data of customers’ online behavior may not be neutral. The research
infers that social listening tools are more useful in the network industry when doing
digital marketing.
Text Mining. Text mining has the ability to collect data from a different source and
analysis data into clustering information. In define stage, the power of data is being
shown in the visualization way. When the team of the workshop does not have any
domain knowledge/ domain experts involved in the design thinking workshop. It is the
quickest and accurate way to know about what customers’ thinking about by their
comments or reaction. However, the disadvantage of doing text mining is that when
doing data collection and data transformation with widely crawl data from a different
platforms, the output is annoyed that cannot easy to be identified. It will let you feel
confused and feel the output with a little usage in design thinking workshop.
When doing text mining, there are five main issues that people need to notice. The
first issue is data preprocessing. Text mining is a process of dealing unstructured data.
“Unstructured” means it cannot be organized in the same way depends on different
situations. How the research defined words in the dictionary (user word, positive/
negative words) will affect the output of our data. The second issue is the of culture.
Based on Hall [23] research, to compare the context of culture, it can separate culture
into a low-context culture and high-context culture (in relative, but not absolute).
A low-context country such as the United States, Australian, and Germans. The high-
context country such as Taiwanese, Chinese, and Korean. When doing traditional
Chinese text mining, there still some words or sentences in which users’ comments are
not they mean because they may speak tongue in cheek. The third issue is about the
amount of data you collect on social media if there are more people. The more data the
data scientist can get, the more accurate about outputs of text mining when using the
moving industry as a case. The different industry may have varied amounts of data. The
research can find out a few comments from the information technology industry.
The fourth issue is that different data sources will show you different outputs when you
do text mining. For instance, the output of data analysis between google and PPT is
different. The data scientist cannot just mix all data as a dataset to do analytic but need
to do separated analysis with different datasets based on the segmentation of each social
media. The last issue is about content farms, disinformation, or fake news. It is not easy
for us to identified who spread wrong information on the website if the data scientist
crawled all comment data on social media. In computer science, there is a specific
phrase so-called “garbage in, garbage out (GIGO)”, if the research collects data with
illegal contents, the outputs of data analysis and data visualization will also have a bias.
Data Analysis and Data Visualization (Define Stage)
Keyword Extraction. Keyword extraction is one of the must-do steps in text mining.
The advantage of using keywords extraction technique is that it can automatically
separate sentences into countable words but not need to do it manually. However, the
disadvantage of using the keyword extraction technique is that it cannot give you real-
time feedback on whether the segment is right or not. You need to adjust the user
dictionary and stops again and again after doing data analysis and data visualization in
text mining. The leading suggestions of keyword extraction have been mentioned in the
“text mining” part.
Clustering Analysis. Clustering analysis is one of the must-do steps in text mining. It
helps us to gather several comments, words together automatically. It is highly helpful
when running design thinking workshop. In the original “define” stage in design
thinking process, members of the workshop team can only group different problems/
pain points from customers manually. Still, it cannot separate and group issues sci-
entifically. Bt traditional way, it can only use our instinct to group potential problems.
With data clustering analysis involved and draw for word clouds, members of the
workshop can use these visualize data to make sure our original grouping outputs as a
kind of validation. However, the disadvantage of using the keyword extraction tech-
nique is that it cannot give you real-time feedback on whether the segment is right or
not. You need to adjust the user dictionary and stops again and again after doing data
analysis and data visualization in text mining.
The result of clustering analysis can be seen as a kind of data source to help us to
make sure for problem statement as a supporting role, but do not think that the output
of conjoint analysis is correct when running design thinking workshop. If members of
the workshop team are too relying on or believing the results gotten from clustering
analysis, the research will get a reasonable problem statement, which may only have
the ability to develop a feasible solution or do not fit for customers’ demand.
Sentiment Analysis. Sentiment analysis is a useful tool if the research wants to know
about how your customers react to significant issues or online marketing activities. In
our case, the output of sentiment analysis does not be used to find out problems or
make good ideas in practice. If the research or the company want to do sentiment
analysis in practice, they need to build a dictionary comprehensively. The results will
have less reference value when not well define the sentiment dictionary.
Selection (Prototype Stage)

Conjoint Analysis. There are several advantages of conjoint analysis. One of the most
significant advantages, which is also mentioned be Green, Wind [24], is that conjoint
analysis does not need to do normality, homogeneity of variance, and independent
testing. It can quickly set up, collect your survey without too many works. Further-
more, it is easy for respondents to respond to your questionnaire solely based on their
intuition. The other advantage of conjoint analysis is that the research can get data from
many potential customers to prove and make sure whether the service design and
provide are what they like or not before executing based on statistic evidence. How-
ever, the disadvantage of conjoint analysis, in this case, is that it is too complicated.
The research got feedback from respondents are that it is too difficult to rank for 16
service design with a short description. Because of this problem, the research cannot
validate their preference is right or not. The most significant disadvantage of conjoint
analysis, which is also be mentioned by Hair, Tatham (25), is that when the definition
of attributes does not clear, or with high interaction/ correlation between attributes. It is
not a good situation to use conjoint analysis.
If the research wants to do conjoint analysis in the marketing field, it is better to
design fewer attributes, levels, and cards, so that the research can get more convincing
responses.
6 Conclusion
The research uses the Taiwan moving industry to demonstrate whether the research or
the industry can use data science to enrich design thinking process. After executing
enriching design thinking workshop, the research finds out that by data-involved, it can
gain more information in design thinking workshop from different resources in both
know or unknown to enrich our knowledge in define stage.
Data-involved sometimes will make team members feel confused when executing
enriching design thinking workshop. Quantitative approaches are accessorial to explore
unknown when design thinking team do not have the background, ideas, or without any
domain experts, but people cannot see data science as a remedy. Using quantitative
approaches have something to be focused on that data-involved is a double-edged
sword. People who want to execute the enriching workshop need to identify when the
information resources are believable or not; if members in the workshop team cannot
identify data truth, all processing of data is invalid.
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Holistic Measurement Approach of Customer
Experiences – Findings from a Japanese
New Car Buyer Study
David Marutschke1(&) and Ted Gournelos2

1
Faculty of Business Administration, Soka University, 1-236 Tangimachi,
Hachioji, Tokyo 192-1877, Japan
[email protected]
2
Department of Communication and Theatre Arts, Old Dominion University,
5115 Hampton Blvd, Norfolk, VA 23529, USA
[email protected]
Abstract. Literature on customer experience management suggests that a

seamless integration of touchpoints would create stronger customer experiences,
but how to effectively do so is a key point of debate. This paper presents
findings from an empirical study that surveyed Japanese car buyers in terms of
their perception of touchpoints throughout their customer journey. The study is
based on a framework drawing from “fluency” as a way to understand tech-
nology integration, in which the authors propose an integrated and holistic
approach to measuring challenges that impede the “fluency” of experiences and
result in what they call “friction.” Findings of this study show that while the
majority of customers report that their car purchase experience was smooth and
hassle free, a significant share also report points of resistance that made the
customer journey more difficult or fragmented. Furthermore, a correspondence
analysis of open-ended questions asking for suggestions to make the experience
easier and hassle free demonstrated that each purchase stage is characterized by
distinct word combinations, with a significantly high rate of requests to increase
online touchpoints and enhancing test drives in the early pre-purchase stage, to
facilitate negotiation in the purchase stage, and to increase after-sales contact
and support activities in the post-purchase stage.
Keywords: Customer experience Customer journey Service quality

Touchpoint Service marketing
1 Introduction
Measuring and managing the complex network of service encounter touchpoints is a

growing research area. Past literature has studied aspects and elements of customer
experience such as customer buying behavior process models and relationship mar-
keting. However, little work has been done on the customer experience as a compre-
hensive, integrated series of multi-channel, time-based touch points. While Lemon and
Verhoef [1] suggest that seamless integration, measurement, and improvement of
touchpoints would create stronger customer experiences, how to effectively do so is

204 D. Marutschke and T. Gournelos
still a key point of debate. This research gap is getting larger due to dynamic changes in
the business and technological environment resulting in an increasing number of
touchpoints via a wider selection of channels, media, and devices. In addition,
touchpoints challenging for an organization to control become more important, espe-
cially peer-to-peer interactions (e.g., on social media) which might increase customer
dissatisfaction but be difficult or even outside of the organization’s purview like
partner-owned touchpoints (e.g., airlines vs. airports). Hence, there is a growing need
for academics and practitioners to understand what makes brand experiences more or
less seamless, consistent, and positive. Insights from such a holistic view of customer
research can be used by organizations to better identify problems regarding the process
and dynamics of touchpoints through time and across channels/platforms, thereby
enhancing value for both customers and businesses. Understanding these problems
would also be the basis to improve customer journeys so that positive brand impres-
sions outweigh or counteract negative ones.
Scholars have consistently argued that customers evaluate the performance in each
touchpoint in a service encounter, but also as a single, integrated experience and
narrative [2, 3]. However, precisely how to measure customer experience in a way that
takes its multidimensional nature into consideration, and what the implications are in
terms of integrating touchpoints across the customer journey, is still undefined in the
literature.
This paper presents findings from an empirical study that investigates how cus-
tomers perceive touchpoints during the pre-purchase, purchase, and post-purchase
stages. The study is based on a framework developed by Marutschke et al. [4] which
proposes measuring challenges that impede an optimal customer experience and result
in what is called “friction.” The framework is based on the concept of “fluency” from
the engineering, consumer behavior, and omni-channel literatures and suggests survey
items across five dimensions (Table 1). These are Task (ability of customers to easily
and timely complete a task or solve a problem), Content (ability of easily accessing and
exploring the right amount of information), Interaction (ability to continuously interact
with the company, product, brand or person in charge), Cognition (ability to remain in
the same level of cognitive engagement) and Feeling (ability to remain in the same
level of emotional engagement) [4–8]. While fluency is often used to design new
optimal experiences, friction is a useful framework through which we can locate and
address challenges in existing experiences.
The study addresses the following research questions:
RQ1: At what point in the purchasing process (pre-, during, and/or post) do customers
experience friction (defined as impediments to purchasing and reflected in “too much,”
“too little,” “difficult,” and “complex” responses)?
RQ2: What sorts of friction do customers experience by dimension (Task, Content,
Interaction, Cognition, Feeling)?
RQ3: Do previous purchasing experiences make a difference in the perception of
friction (i.e., whether or not the customer bought a car before, and from the same
brand)?
RQ4: What makes the experience for customers easier or more positive across the
stages of the customer journey?
Holistic Measurement Approach of Customer Experiences 205
2 Methodology
This empirical study, a survey with a variety of forms of scale items (from likert to just-
about-right to open-ended qualitative responses), was intended to test the applicability
of the friction model. The Japanese automotive industry was chosen for three reasons.
First, purchasing a car is a highly structured process, with clearly defined steps in each
stage of the customer experience (e.g., sales talk and test drives in the pre-purchase
stage, negotiation and pick-up of the car in the purchase stage, and follow-up main-
tenance or brand recommendations in the post-purchase stage). Second, car buyers are
considered to be highly involved, due to the high cost of the product and complexity of
the buying process [9]. Customers are therefore more likely to remember details about
touchpoints and the overall experience, even if some time has passed since the purchase
was completed. Third, Japan is considered to have a high service quality standard, and
Japanese customers evaluate a relatively wide array of service performance criteria
[10]. This does not make the study of Japanese customer experiences more important,
but it does make it easier to identify even subtle distinctions and nuances in responses.
An online survey (n = 309) was conducted among customers that had purchased a car
in the previous three years, located and tested by a leading market research firm
specializing in Japan.
The field study was performed in two steps. First, a self-administered online
screening survey was sent to 10,000 panel members registered at a leading Japanese
market research firm to identify customers who have purchased a new car from a
certified dealership within the last 3 years. Priority was put on most recent purchases to
make sure buyers remember their purchase experience as much as possible. Used cars
and purchases from non-certified dealerships or workshops were ignored as they are not
considered as a brand-initiated market offering and thus often follow a different buying
process. Also, situations were ignored where the customer did not perform a test drive
when shopping for the car, to ensure that all buyers were actively going through all
purchase stages. The screening resulted in a pre-sample of 421 car buyers.
In a second step, a self-administered online main survey was sent to these buyers,
which includes survey items across five dimensions of friction shown in Table 1. A five
point just-about-right scale ranging from “far too little” to “far too much” was used to
measure Task, Content, and Interaction. A five-point Likert scale ranging from very
complicated/difficult to very simple/easy was used for Cognition, and a second five-
point Likert scale ranging from very low to very high was used to measure Feeling. The
online survey was returned by 321 respondents. These were screened for errors and
non-eligible responses, resulting in a final sample of 309. To collect data for RQ3,
customers were asked in the first screening survey whether they have ever owned a car
before the one they purchased, and whether the car was from the same or a different
brand. According to the answers, the sample was categorized into the three types of
customers: repeat brand buyers (122), first-time brand buyers (122) and first-time car
buyers (65).
Table 1. Survey items by time (purchase stage and touchpoints) and dimension. Adjusted based
on Marutschke et al. [4]
Dimension Pre-purchase Purchase Post-purchase (After Measurement
of friction (From initial (Negotiation, car delivery and scales
consideration to paperwork and initial car usage)
test drive and picking up the
evaluation) car)
Task Time needed to Time spent in the Time needed to Far too little/too
gather final negotiation resolve any little/the right
information and paperwork. unanswered amount/too
Time spent questions much/far too much
picking up the car
and learning from
the dealer how to
use features
Content Amount of Amount of Amount of Far too little/too
information information information received little/the right
easily available received when from the brand after amount/too
you picked up you picked up the car much/far too much
the car
Interaction Amount of Amount of Amount of Far too little/too
communication communication communication with little/the right
with the with the the sales department amount/too
salesperson or salesperson, (after car delivery much/far too much
dealer (initial dealer, finance, and initial car usage).
consideration) after sales Opportunity to
department communicate with
(negotiation, dealer, company
paperwork and about questions or
picking up the problems (after car
car) delivery and usage)
Cognition Complexity to Complexity to Complexity of using Very
consider and do price the car, getting help difficult/somewhat
choose models negotiation, for any problems or difficult/neither
and options, complete unanswered easy nor
understand paperwork, pick questions, paying the difficult/somewhat
information up the car and bill, maintenance and easy/very easy
about the car and learn basic car repair
finance options features
Feeling Positivity of Positivity of Positivity of Very
communication communication communication and low/low/neither
and approach and approach approach from high nor
from customer from customer customer point of low/high/very high
point of view point of view view after car
(initial (negotiation, delivery and initial
consideration to paperwork and car usage)
test drive and picking up the
evaluation) car)
To analyze data for RQ4, an open-ended question at the end of each purchase stage
section asked customers what could have made the experience easier or hassle-free for
them. A correspondence analysis of the verbatim data (in Japanese to prevent trans-
lation bias) was performed using the text mining software “KH Coder” to identify not
only words used with high frequency, but also the links with other words and in what
purchase period the words were used. In correspondence analysis, uncharacteristic
words uniformly found in all purchase stages are plotted near the origin (0, 0) while
words which appear especially frequently in a specific purchase stage are plotted away
from the origin and in the direction of the corresponding purchase stage. This allows us
to see how major words change with the progress of the customer journey, similar to
the analysis of a literary story flow [11]. This corresponds with previous findings in the
marketing literature that customers link touchpoints together into a single, integrated
narrative [3].
The raw data consisting of 927 comments (n = 309 3 purchase stages) were
screened to filter out all comments that did not include any suggestions for making the
experience easier or hassle-free (responding “nothing”, “no idea of improvement,”
etc.). The remaining dataset included 357 comments, consisting of 121 comments for
the pre-purchase, 134 for the purchase stage, and 102 for the post-purchase stage.
91 frequently occurring words were located that appear 5 or more times in the dataset.
For clarity and visibility, the plot was generated for the 40 most occurring words after
indistinct words were filtered by chi-square value to screen them out (see Fig. 1).
3 Results
3.1 Data from the Survey Responses
The following explores the descriptive data from the survey responses which are used
for RQ1 and RQ2. Since this study focuses on friction, i.e., the dis-fluency rather than
the fluency of the journey experienced by customers, the figures only show the dis-
tribution of negative responses which can be attributed to friction. For the task, content
and interaction dimension, these are items marked as either “far too little/too little” or
“far too much/too much.” For the cognition dimension, these reflect items marked as
“very/somewhat complex or difficult,” and for the interaction dimension items marked
as “very low/low.”
Figure 1 plots the answers attributed to friction in task (perception of time needed or
spent to complete a critical task). This dimension has the highest percentage of cus-
tomers experiencing issues, especially during negotiation and paperwork stages (27.8%
of all customers had an issue with time constraint or time waste). A slightly negative
trend over time can be observed which is caused by a decreasing trend of “far too
much/too much” responses. However, the responses are distributed relatively evenly
across “too little” and “too much” responses, which suggests that customers focus on
their time as a critical dimension of the experience, and respond negatively and in nearly
equal numbers to both feeling rushed and feeling like their time is being wasted.
Managers must therefore emphasize a more flexible approach to tasks that focuses on
what the customer wants rather than a pre-determined checklist of necessary tasks.
30.0 Both
Far too little/too little
25.0 Far too much/too much
20.0
15.0
10.0
5.0
0.0
Time needed to gather Time you spent in the final Time spent picking up the Time needed to resolve
information negotiation and car and learning from the any unanswered
paperwork dealer how to use questions
features
Fig. 1. Friction in Task (share of customer responding “too little” and “too much” time needed
to complete a critical task across the journey)
Figure 2 allocates answers attributed to friction in content (perception on amount of

information). Overall, friction is the highest at the beginning of the customer journey
(24.6% of all customers during the initial consideration phase). 15-16% of customers
state there was “too little” information available during the entire journey. Overall cus-
tomers were more willing to rate their experience as getting too little information than too
much, suggesting that car buyers might experience uncertainty or be seeking knowledge,
and that dealers are not providing them with enough information to ease their minds.
30.0 Both
20.0
15.0
10.0
5.0
0.0
Amount of information Amount of information Amount of information Amount of information
easily available received during the price received when you picked you received from the
negotiation up the car dealer or brand after you
picked up the car
Fig. 2. Friction in Content (share of customer responding to have “too little” and “too much”
information received across the journey)
Figure 3 plots answers attributed to friction in interaction (perception of amount of

communication). The highest share of customers experiencing issues in the amount of
communication (23%) is at the beginning of the journey. However, while “far too
much/too much” responses continuously decrease over time, customers feel they had
too little communication after the car is sold. This finding suggests that managers need
to focus on providing opportunities for touch points after a car is sold to make sure that
customers have any questions or concerns answered once they begin using their new
car, which is important for both loyalty and word-of-mouth marketing considerations.
25.0 Both
15.0
10.0
5.0
0.0
Opportunity to communicate
with the dealer about questions
Amount of communication with

the sales department (after car
delivery and initial car usage)
Opportunity to communicate
(negotiation, paperwork and
(initial consideration to test
with the company about

the after sales department
the salesperson or dealer
the salesperson or dealer
questions or problems
the finance department
drive and evaluation)
picking up the car)
(service advisor)
or problems
Fig. 3. Friction in Interaction (share of customer responding to have “too little” and “too much”
communication with the sales person, dealer or brand across the journey)
Figure 4 summarizes answers attributed to friction in cognition (perception on the

complexity of information or performing a task). The highest share of customers raising
the issue of complexity or difficulty is identified in price negotiation and completing the
paperwork, as part of the purchase stage (18.4%–20.1%). While customers seem to find
financing relatively easy to understand, and the post-purchase experience even more so,
they located choosing options, negotiating prices, and completing paperwork as high
rates of friction (more than 15% reporting somewhat or very high levels of difficulty).
As these items should be handled at least in part in sales departments, a key aspect of
any car dealer, this is a clear challenge to overcome. It also explains the rise of “no
haggle” prices and transparent financing options.
Very /
25.0 somewhat
complex or
20.0 difficult
15.0
10.0
5.0
0.0
Picking up your car and learning

models/accessories/options
Completing paperwork
Understanding about the
models/accessories/options
Price negotiation
Paying your bill

Using the car
Maintenance and repair

Understanding information about
Understanding information about
Choosing finance options (loans,
Getting help for any problems or

about basic features from the
Considering and choosing
financing options
unanswered questions
the purchase options
payment options)
Choosing
dealer
the car
Fig. 4. Friction in Cognition (share of customer perceiving high complexity of information or

difficulty to perform a task across the journey)
Finally, Fig. 5 plots responses attributed to friction in feeling (perception of the

positivity of communication and an approach from customer’s point of view). While
friction in feeling tends to decrease in the purchase stage of negotiation, paperwork and
picking up the car, it increases again after the purchase during car delivery and initial
car usage, reaching the highest values (12.6–13.9%). This suggests that a relatively
large proportion of customers tend to feel both as if the dealer both communicates
negatively and doesn’t think about their point of view when selling the car, another
clear area of improvement for management.
16.0
14.0
12.0
10.0
8.0
Very low / low (posiƟvity of
6.0 communicaƟon)
4.0 Very low / low (approach

from customer point of
2.0 view)
0.0
From iniƟal consideraƟon to test NegoƟaƟon, paperwork and AŌer car delivery and iniƟal car
drive and evaluaƟon picking up the car usage
Fig. 5. Friction in Feeling (share of customer perceiving low positivity of communication and
low customer-oriented approach)
For RQ3, a t-test was performed to determine whether there are statistically sig-
nificant differences in the distribution of responses according to the three customer
groups (repeat brand buyers (n = 122), first-time brand buyers (n = 122) and first-time
car buyers (n = 65). Overall, no significant variance has been found, but two significant
differences were identified for the cognition dimension. First, 7.7% of first-time car
buyers stated that understanding information about the car in the initial consideration
phase was “very difficult,” which was not the case for the other groups (0%). Second, a
significantly high share of first-time car buyers (18.5%) found that choosing finance
options (loans, payment options) during negotiation was “somewhat complex or dif-
ficult” compared to the other groups (4.9%–7.4%).
These findings may be an indicator that previous purchase experience overall does
not have a significant impact on the perception of friction, except on the ability to easily
understand car information in the initial consideration phase. Repeat car buyers may be
challenged less by the complexity of car information, since they have processed
information about the same brand before, while first-time car buyers need to process it
for the first time. Nevertheless, while many marketers design different customer
journeys for first-time and repeat customers, the difference in previous purchase
experience might have a lower impact on how these journeys are perceived than
commonly anticipated.
3.2 Correspondence Analysis of Free Comments for RQ4

Figure 6 shows the results of the correspondence analysis for the 40 most occurring
words whose frequencies greatly change in each purchase stage. The size of each circle
is proportional to the number of occurrences of each word. The circles are located away
from the origin (0, 0), which indicates that each purchase stage has a unique set of
frequently occurring words.
For the pre-purchase stage, the most frequent words are “car”, “car delivery”, “test
drive”, “reservation” and “information.” A closer examination of these words reveals
several interesting concepts. First, information about the cars should be made clearer
and simpler (if necessary, using supplementary materials). Second, easier (e.g., online
rather than via phone or in person) reservations for dealer visits and test drives should
be made accessible, including the ability to check availability of cars to test drive to
reserve them in advance. Third, interestingly customers emphasized that more com-
parative information from competitors should be given. This implies that customers
rely less on brand loyalty than they do on the perception that one model or brand is
superior to another. Therefore, they require or expect transparency regarding features
and prices.
For the purchase stage, the most frequent words used are “price”, “negotiation”,
“car delivery”, “contract,” and “discount.” The majority of customers who wrote
comments argued that price negotiation was troublesome and should be made more
transparent and easier to understand. However, while some customers stated they did
not have had enough time for negotiation, others stated that it took too much time.
These comments suggest not that customers necessarily are reacting to the time itself,
but also perhaps that they are frustrated by the attitude of the dealer either rushing them
through the process or delaying them intentionally in order to push for a lower price.
Again, transparency and time seem to be key points for reducing friction.
Comments also note that they would like to improve the conditions of car delivery,
especially shortened delivery time, to be able to choose delivery location and to have a
quick onboarding process.
For the post-purchase stage, the most frequent words were “explanation,” “con-
tact,” and “person in charge.” A closer look into these words reveal that customers
prefer more and easier explanations about the usage of the purchased car using sup-
plementary contents, such as pamphlets and online videos, as well as updates on
upcoming car inspections. However, some customers prefer more detailed explanation
while others prefer it to be more concise, with detail that could be consulted when
needed/desired rather than all at once. Finally, customers also state that they want to
increase communication with the person in charge after the purchase using email,
phone or instant messaging apps such as LINE to follow-up on the car usage and clarify
any questions.
Fig. 6. Results from the correspondence analysis. Size of the bubbles represents frequency of
words (created with KH Coder).
4 Discussion
Findings for the entire sample suggest that the majority of customers report that their car
purchase experience was smooth and hassle free across all five dimensions (answering
“just about right” or “easy/simple” for the survey items). This is expected, due to the fact
that the sample consists of car buyers who eventually moved through all critical
touchpoints and completed critical tasks to make a new car purchase. In other words,
customers with very negative experiences likely went to another brand or dealer.
However, a significant share also reports points of resistance that made the cus-
tomer journey less seamless and continuous. Task dimension had the highest per-
centage (27.8% in price negotiation and paperwork). This was caused by time
constraints (too little time) and time waste (too much time) across the entire journey.
Supporting customers in a way that they can complete tasks efficiently but also with
high levels of available information (e.g., people to answer questions when needed,
online access, transparency, etc.) thus seems to be a challenge for experience managers.
Customers also experience problems across the content dimension with the amount of
information provided, especially in the beginning of the process before they are fully
familiar with the product line. More customers perceive issues of information insuffi-
ciency than overload, which is noticeable especially after the car is sold and delivered
(15.9% vs 6.8%). Therefore, companies need to make sure that enough information is
available in all purchase stages, and especially in the pre- and post-purchase stage, in
ways that customers can access it as needed or desired. Difficulties in cognition are
mostly identified in the beginning of collecting information and in the purchase stage,
during negotiation, choosing finance options, and completing paperwork. Companies
also need to carefully balance intrusive vs distant interaction throughout the journey in
content, interaction, and cognition, foregrounding customer choice and making
themselves available via multiple channels rather than forcing communication or
making it more challenging to get answers if needed. A major challenge is to provide
enough information in these parts of the journey without overwhelming customers in
terms of information complexity, actionable information that supports customers to
easily complete critical tasks is key.
Car purchasers also sometimes say that dealers seem to give less priority on
communicating after the car has been picked up, despite the fact that a significant share
of customers (15%) want to interact more. Car companies therefore need to make sure
that they keep in touch with customers after the car purchase and proactively identify
and solve problems that occur when the car is used. The emotional gap between the
customer and the company similarly suggests that organizations put too little attention
on after-sales service. This means that marketers not only need to continue interacting
with customers after sales, but also make sure that these interactions are adjusted to the
emotional state of customers who are now car owners and to approach them from a user
(rather than buyer) point of view.
The correspondence analysis of free comments (suggestions of improving the
experience) shows that each purchase stage is characterized by distinct word combi-
nations. The early pre-purchase stage is characterized by a significantly high rate of
requests to make information more understandable and to increase online touchpoints
and enhancing test drive (especially by adding the ability to make online reservations
and availability checking). In the purchase stage, perceived friction appears to be
directed towards critical tasks such as price negotiation and a long time gap after
finalizing the contract until the delivery of the vehicle, which should be either short-
ened or addressed in a manner that the customer is regularly updated about the delivery
status. Although many features of the purchased car were explained during the sales
talk and negotiation, some customers feel that the explanation of using the car at the
point of delivery is either too detailed and long or too vague and short, expressing the
need to better facilitate the onboarding process. Finally, customers want to be able to
communicate more with a person in charge after handing over the car, either to get
answers for any remaining questions or be updated about future events or inspections.
Overall, suggestions for improvement include both ends of either reducing or
increasing the amount (and level of detail) of each element of fluency. This means that
making experiences easier or more hassle-free does not automatically imply that ser-
vice encounters should be shorter, more concise, or more intensive. Instead, it suggests
that customer experiences are very different depending on the customer, and therefore
managers should emphasize making the process simple and easy but also provide
optional points of contact and additional forms of information throughout the entire
process.
The implications from the quantitative and qualitative data for Customer Experi-
ence Managers is that there is a need to design customer journeys which are less based
on the customers previous purchase experience and more on their potential perceived
level of friction across all dimensions and across both extremes of the survey scales.
Marketers need to design customer journeys that support the different levels of cus-
tomer expectations of the “fluency” of experiences, and to make sure that customer
journeys are flexible enough to meet the specific needs towards the amount of time,
information, and communication while the customer progresses through the purchase
experience. These needs are most likely not specific to car purchases, and indeed not to
purchases at all. It is likely that the same issues of customer experiences requiring
flexibility, transparency, and openness on the part of the organizations they patronize
applies to other consumer sectors as well as user experience models in technology and
even the desire to volunteer or donate to non-governmental organizations and/or
charities.
4.1 Limitations
While this study provides several interesting points of critique for managers, there are
also several limitations that should be noted. First, the study would need to be repeated
for different sectors, which would require in many cases a reworking of the survey
items to reflect the requirements/processes of another industry. Second, the study
would need to be repeated for additional demographics, as a Japanese consumer might
be very different than a U.S.-based or European consumer with a different relationship
to products and automotive purchases. Third, the scale items themselves should be
extended from five-point to seven or nine-point scales to dissuade participants from
choosing “muddled middle” responses. As Japanese are more likely to select midpoints
[12] possibly because they might be culturally predisposed to avoiding blame or
conflict, the more that can be done to encourage a spectrum of responses, the stronger
the data will become. Additionally, two types of scale items could be added: first, items
drawing from other studies that have been found to be valid and reliable in order to
correlate those to the new scale items, and second, items that might engage additional
elements of branding and product/organization perception like predispositions to think
of a brand as high quality, innovative, or friendly.
Subsequent studies should focus on expanding the scales and adding new scale
items, as well as change the focus to either a new product/service/organization or to a
new culture to be studied. This would allow us to determine with more validity how
much friction might influence the overall customer experience, as well as how that
friction might be interpreted differently across different sectors and/or demographics.
5 Conclusion
This study proposes and tests a new method to measure customer experience based on
previous studies which have explored the concept of fluency. Findings of this study
show that customers experience challenges of what we call “friction” across the entire
customer journey, some of them decreasing or increasing over time. Service Marketers
can use these insights to take a multidimensional approach in measuring customer
journeys and match them better to the ways how customers might potentially perceive
these challenges.
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Service Ecosystem Design Using Social
Modeling to Incorporate Customers’
Behavioral Logic
Masafumi Hamano(&), Bach Q. Ho, Tatsunori Hara, and Jun Ota

{hamano,ho,ota}@race.t.u-tokyo.ac.jp,
[email protected]
Abstract. The Customer dysfunctional behaviors affect service providers’

workloads. However, few studies on service ecosystem design have investigated
how to prevent these behaviors. This study thus proposes a service ecosystem
design tool that can analyze how dysfunctional behaviors affect other actors in
the service ecosystem. To this end, customers’ behavioral logic is incorporated
into social modeling to analyze their dysfunctional behaviors. This study also
uses goal-oriented requirement language as design and analysis tools. Then,
structural equation modeling is used to analyze the effects of behavioral logics.
A case study of a home delivery service demonstrates the applicability of this
methodology to analyze the effects of customer behavioral logics on service
ecosystem actors.
Keywords: Service design Service ecosystem Behavioral logic Customer

dysfunctional behavior
1 Introduction
Service value is co-created by service providers and customers [1], where customer
dysfunctional behaviors affect the workload of service providers. However, service
design has focused mainly on developing customers’ cooperative behavior by shaping
their service experience without sufficient consideration being given to customer
dysfunctional behaviors [2]. Moreover, service value is not co-created in the interac-
tions between employees and customers, but in those among various actors [1].
Teixeira asserted that the modeling methods of goal-oriented requirement engineering
(GORE) are useful for designing a service ecosystem [3]. These methods can describe
the dependent relationship between actors and non-functional requirements, which can
be used to evaluate customer satisfaction. However, service design methods in GORE
have not been developed to predict customer dysfunctional behavior.
According to Ullman, as design proceeds and knowledge about the design problem
increases, it is more difficult to change the system and solve the problem [4]. Therefore,
it is more effective to prevent customer dysfunctional behaviors in the service design
phase than in the service provision one. For this reason, it is necessary that service

218 M. Hamano et al.
design takes into account the characteristics of customers who exhibit dysfunctional
behavior. Understanding behavioral logic is thus the fundamental solution to prevent
customer dysfunctional behaviors.
However, there are few studies that examine how to prevent these behaviors. Our
study fills this gap by focusing on customer behavioral logic and including it in service
design. The purpose of this study is to propose a service design tool that incorporates
customer behavioral logic. This study contributes to the service ecosystem literature by
developing a design method that can predict customer dysfunctional behaviors in the
service design phase by incorporating behavioral logic into the GORE methods.
The rest of this paper is structured as follows. Section 2 reviews previous studies on
service ecosystems, service design, and system modeling. Section 3 describes the
service design method of this study. Section 4 presents a case study of a home delivery
service. Section 5 discusses the contributions of the study.
2 Literature Review
2.1 Service Ecosystem
For decades, goods-dominant (G-D) logic was widely accepted in both practitioners
and researchers. It regards physical goods as the main value for customers, and service
as an added value. Recently, however, there has been a shift to service-dominant (S-D)
logic, which considers service the main value for customers because products have
become more commodified [1, 5]. It is important to view the market as value co-
creation and to design service with an understanding of the service ecosystem.
The service ecosystem is defined as a “relatively self-contained, self-adjusting
system of resource-integrating actors connected by shared institutional arrangements
and mutual value creation through service exchange” [1]. Based on S-D logic, cus-
tomers and service providers contribute equally to service success. If customers behave
inappropriately, other actors in the service ecosystem will be negatively affected.
However, previous studies on the service ecosystem do not sufficiently explain how to
decrease customer dysfunctional behaviors.
2.2 Service Design

Service design methods are roughly divided into process design methods and system
design methods. Represented by service blueprinting [6], process design methods
establish each actor’s tasks by focusing on service processes and product flows [7].
System design methods, represented by i* [8], create the service concept by consid-
ering the interactions among actors and focusing on actors’ goal achievement levels
and the dependent relationship among actors [8].
Service design has traditionally emphasized customer experience [3]. There are
many process design methods, in which customer psychology is described as a journey
map [9]. In each service process, services are designed based on customer psychology.
However, since service providers’ tasks are determined by customer needs and
behaviors, it is difficult to use process design methods to design service ecosystems that
Service Ecosystem Design Using Social Modeling 219
can treat customers and service providers equally. To overcome this limitation, this
study incorporates behavioral logic into the system design methods.
2.3 System Modeling

In business design, the system modeling method of social modeling is commonly used.
Since social modeling focuses on interactions among actors, it can be adapted for use in
a service ecosystem design. Intentional strategic actor relationship modeling (i*: “i-
star”) is one of the social modeling methods that can be adapted for service ecosystem
design. i* can clarify system requirements in business design and service design [8]. It
can also be used to analyze how the change in an element value affects other actors. In
i*, actors are described as circles. Actor rationales are described inside of these circles
using notation links, including elements such as goals, tasks, and resources. Depen-
dency relationships among actors are described outside of the actors’ circles. Goals are
classified as hard or soft goals based on their nature. Hard goals are the objectives of
actors and evaluated as achieved/not achieved. Soft goals reflect the nature or quality of
goal achievement but is usually difficult to judge as achieved/not achieved.
i* can quantitatively evaluate the effects of the introduction of a new system on
each actor’s goals and soft-goal achievement levels. To analyze the social effects on
actors, each actor’s task achievement levels are intentionally determined by analysts.
Each actor’s task achievement levels propagate each element by following the calcu-
lation rule defined in i*, and each actor’s goal achievement levels are evaluated. Since
the elements described in i* are limited to four elements (i.e., goals, soft goals, tasks,
and resources), task achievement levels are intentionally determined.
In this study, customer characteristics were incorporated into the social modeling
method of i* to predict customer dysfunctional behavior in the design phase. This study
focuses on behavioral logics as customer characteristics. Traditional social modeling
methods first determine task achievement levels and then analyze propagated goal
achievement levels. By contrast, this method first determines the value of behavioral
logics, which propagate task achievement levels, and then analyzes the propagated goal
achievement levels. This method can help predict not only intentional dysfunctional
behaviors but also non-intentional dysfunctional behaviors.
3 Methodology
3.1 Overview of Methodology
This study achieves its objective in three steps. Figure 1 shows this approach.
(1) Model a service ecosystem by interviewing service providers and reviewing the
relevant literature.
(2) Use a questionnaire to quantitatively analyze the effects of behavioral logics on
customer behaviors in each customer segment.
(3) Reflect the calculated results on the service ecosystem model and quantitatively
analyze the effects of behavioral logics on the goals of each actor in each customer
segment.
i* can design a service ecosystem and roughly determine how the introduction of a
new system affects each actor’s goals and soft goals. The authors developed i*. Fur-
thermore, quantitative analysis based on the customer rationales obtained by the
questionnaires was used in combination with i* to analyze the effects of behavioral
logics on other actors’ goals and soft goals.
To analyze the effects of customer dysfunctional behavior, including non-
intentional dysfunctional behavior, on other actors, this study focuses on customers’
behavioral logic that determine customer behaviors. The variables of behavioral logics
change for each customer segment. Goal achievement levels were calculated for each
behavioral logic value in each customer segment. Finally, how the goal achievement
levels change with behavioral logic was evaluated. This study defined behavioral logic
as factors or concepts that affect behavior.
To quantitatively analyze the effects of behavioral logics on behaviors, structural
equation modeling (SEM) was used. SEM quantitatively analyzes the effects of
unmeasurable variables that cannot be analyzed by other methods, such as text mining,
by using questionnaire data.
To quantitatively analyze the effects of behavioral logics on other actors, goal-
oriented requirement language (GRL) was used. GRL is one of the i* framework
methods and has the same notation as i*. Whereas i* can only qualitatively analyze 10
ranges, GRL can quantitatively analyze in a range of [−100, 100]. To compare the
effects on each customer segment in detail, this study used GRL for system analysis.
Fig. 1. Three-step approach of the proposed method

3.2 Service Ecosystem Modeling

This study followed the standard i* modeling, which is generally based on interviews
with employees and literature reviews. The i* modeling procedure was as follows:
(1) Describe the actors. Actors in a service ecosystem are represented as gray-colored
circles.
(2) Describe the actor goals in the actor circles. The objectives of each actor are
represented as goals in the circles.
(3) Decompose goals into sub-goals and tasks, which are the processes followed to
achieve actors’ goals. Relationships among these elements are described as
Means-Ends and Decomposition-Links.
(4) Describe the dependency relationship among actors. Other actors’ activities,
necessary for executing tasks or achieving goals, are described as Dependency-
Links with tasks or resources.
(5) Describe criteria as soft goals. While goals are judged as achieved/not achieved,
achievement quality and criteria were described as soft goals.
(6) Describe the effects of behavioral logic on behaviors. These effects are described
as Contribution-Links. The procedure for this advanced notation is explained in
the next paragraph.
The traditional i* does not have any notations to describe behavioral logic (e.g.,
psychology and knowledge) or the effects of behavioral logic on behaviors. The ele-
ments described in i* are limited to goals, which are objectives to be achieved by
actors; soft goals, which are criteria to judge goal achievement quality; and tasks and
resources, which are necessary for achieving goals and soft goals. This study advances
the i* notation in two ways. First, behavioral logic is described as soft goals, that is,
criteria for describing customers’ natures. Second, the effects of behavioral logic on
behaviors are described as Contribution-Links between soft goals that are behavioral
logics and soft goals that are task achievement criteria decomposed from each task. The
Contribution-Links notation in the traditional i* is limited to describing to what extent
tasks affect soft goals or to what extent soft goals affect other soft goals. In other words,
there are no notations to describe the effects of behavioral logic on behaviors. We
decomposed task achievement criteria from each task and then applied Contribution-
Links to describe to what extent behavioral logics affected behaviors. Figure 2 shows
the notations for describing the effects of behavioral logic on behaviors in the studied
home delivery service. In this figure, the left-hand side shows the traditional i* notation
and the right-hand side shows the advanced i* notation. A circle in each side represents
the customer as an actor. Inside the actor circle, a goal—specify the delivery time—is
described. Two tasks—specify the delivery time with a fee and follow the default
specified delivery time—are decomposed from the goal with Means-Ends. On the right-
hand side, a behavioral logic—psychological ownership—was described as a soft goal
at the bottom. Two task achievement criteria—degree of specifying the delivery time
with fee and degree of following default settings—are decomposed from each task. The
effects of psychological ownership on each behavior were described as Contribution-
Links.
Fig. 2. Advanced i* notation for describing the effects of behavioral logics toward behaviors.
3.3 Quantitative Analysis in Customer’s Rationale

SEM was used to quantitatively analyze the effects of behavioral logic on actors’
behaviors. SEM is a statistical method used to identify causal relationships between
latent, unmeasurable variables. It uses multiple regression and positive factor analyses.
This study describes behavioral logic and behaviors as latent variables and calcu-
lates the variables of the effects of behavioral logics on behaviors, setting observation
variables for each latent value. A questionnaire survey was conducted to collect data for
these observation variables.
3.4 Ecosystem Analysis with Behavioral Logics Change

SEM was used to calculate the variables reflected in the i* model. However, i* cannot
be applied to quantitative analysis. Therefore, GRL [11], which can analyze both
quantitatively and qualitatively, was used for quantitative analysis.
To analyze how the change in customer behavioral logics affected other actors,
SEM was used to calculate variables that reflected Contribution-Links between
behavioral logic and behaviors in GRL. The variables calculated by SEM were in the
range of [−1, 1]; those calculated in GRL were in the range of [−100, 100]. The SEM
variables were multiplied by 100 to substitute them for Contribution-Links in GRL.
In GRL, each actor’s goal achievements were quantitatively analyzed by changing the
value of customer behavioral logics to the range of [−100, 100].
4 Case Study: Home Delivery Service
4.1 Subject: Home Delivery Service

We used a case study to verify the utilization of the proposed design method. A home
delivery service—in particular, receiving goods bought via e-commerce through a
home delivery service—was chosen as the subject of this case study. That is because
the home delivery service ecosystem consists of many actors including customers, e-
commerce providers, and delivery service providers (i.e., headquarters, branch offices,
drivers, pickup persons, and delivery persons). If customers exhibit dysfunctional
behavior, other actors will be affected by it. For example, recently, home delivery
service providers in Japan have experienced heavy workloads caused by the increasing
number of re-deliveries, which is caused by customer’ absence during delivery time
[12]. This study focused on psychological ownership and visibility as parts of the
behavioral logic that affects customer behaviors.
The ministry of Land, Infrastructure, Transport and Tourism issued a questionnaire
to customers about their home delivery service usage in 2015. More than 42% of
subjects chose “I forget I had ordered the delivery service” as a reason for failing to
receive their parcels on time [12]. This result can be explained by the fact that excessive
demands from customers—specifically, their lack of psychological ownership towards
receiving parcels—increased service providers’ workload based on Japan’s Omote-
nashi culture. Psychological ownership is defined as “the state in which individuals feel
an object or a piece of one object as ‘theirs’” [13]. In the context of a home delivery
service, psychological ownership was defined as the state in which people felt that the
collaborative behavior of receiving parcels was their duty. People who have psycho-
logical ownership are likely to engage with organizational employees [13]. Promoting
psychological ownership is therefore necessary to decrease service providers’ work-
load, as it encourages customers to exhibit the collaborative behaviors essential for
service success.
Additionally, customers who have experience sending parcels exhibit behaviors
essential for service success [14]. Their experiences meant that they were familiar with
the roles and processes of service providers. Shostack defined the level of customer
awareness as the line of visibility [6]. Accordingly, this study proposed and verified the
hypothesis that the more visibility customers receive, the more collaborative behaviors
they exhibit, which helps decrease service providers’ workload. The case study fol-
lowed the process below:
(1) The home delivery service ecosystem was modeled by i* using interviews and
literature reviews.
(2) Customers were administered a questionnaire on visibility and psychological
ownership.
(3) Based on responses to the questionnaire, customers were divided into four groups
by their level of visibility.
(4) In each customer group, the effect of behavioral logic (psychological ownership
and visibility) on behaviors was calculated using SEM.
(5) Variables of the effects of behavioral logic were substituted for Contribution-
Links in the i* model.
(6) The value (−100, −50, 0, 50, 100) of psychological ownership was substituted in
each customer group and each actor’s goal achievement level in each group was
calculated.
4.2 System Modeling in Home Delivery Service by I*

To model the home delivery service ecosystem using i*, interviews were conducted
with employees in the headquarters of a home delivery service company on October 29,
2018 and employees in a branch office of the company on November 20, 2018. These
interviews collected information about the service process, each actor’s tasks, and the
dependency relationship among actors.
Based on the interviews, i* was used to model the rationales of the actors in the
home delivery service ecosystem and the dependency relationships among them, fol-
lowing the modeling rules in Sect. 3. Figure 3(a) shows the modeling result of the home
delivery service ecosystem. The modeling process in this case study is as follows:
(1) Actors in the service ecosystem are shown as gray-colored circles in Fig. 3(a).
Each circle indicates the boundary of each actor. The upper-left circle is the e-
commerce provider; the lower-left is the head office; the lower-middle is the
branch office; and the upper-middle is the customer. Additionally, pickup persons,
drivers, and delivery persons were respectively described as employee roles for
home delivery in the lower-right, middle-right, and upper-right.
(2) Each actor’s goal (customers: get the item; e-commerce provider: run the e-
commerce website; head office: run delivery service; branch office: run branch
office; pickup persons: sort parcels; drivers: deliver parcels by a car; delivery
persons: deliver parcels) was described as a hard goal.
(3) Each goal was divided into sub-elements such as sub-goals and tasks with
Decomposition-links and Means-Ends. For example, customers’ main goal (get
the item) was divided into two sub-goals (buy the item and receive the item) with
Decomposition-links. One of the sub-goals (buy the item) was decomposed into
one task (buy the item on the e-commerce website) with Means-Ends. This task
was divided into three subtasks (select the item, enter the name and the address,
and pay for the item) with Decomposition-links.
(4) The dependency relationships between actor circles were described. For example,
the e-commerce provider in the upper-left depends on the resource (payment)
provided by customers to execute the task (sell the item). To produce the resource
(payment), customers execute the task (pay for the item).
(5) The criteria of each actor were described as soft goals. In the case of customers,
low effort was described as a soft goal.
(6) Customer behavioral logic and their effects on behaviors were described following
the advanced i* notation. Behavioral logic (psychological ownership and visi-
bility) was described in the bottom of the customer circle and was connected to
each behavior with Contribution-Links. At this point, the strength of the Con-
tribution-Links was set to Some+ , because each link’s strength would be sub-
stituted with the value calculated by SEM.
4.3 Quantitative Analysis in Customer Rationale by SEM

The effects of customers’ behavioral logic on behaviors were quantitatively analyzed
by SEM. Four kinds of customer behaviors—customer participation behavior, cus-
tomer citizenship behavior, dysfunctional behavior, and optional behavior—were
analyzed. Customer participation behavior is customer behavior that is necessary for

the success of services, for example, specify the delivery time [15]. Customer citi-
zenship behavior is customer behavior that is not necessary for service success, but
helpful for service providers to deliver services smoothly, for example, be kind
regarding the delivery persons’ minor mistakes [15]. Dysfunctional behavior is cus-
tomer behavior that disturbs service delivery, such as pretend to be outside during the
delivery time. Optional behavior, which is located between customer participation
behavior and customer citizenship behavior, is customer behavior that is not necessary,
but helpful for customers to receive services correctly, for example, receive notifica-
tions about the delivery.
(a)
Fig. 3. Home delivery service ecosystem model by i*

(b)
Fig. 3. (continued)
To analyze the effects of behavioral logics on these four behaviors, a hypothetical

model was developed. In this model, each behavioral logic was connected to each
behavior. To collect the observation variables that determined the latent variables
(customer behaviors), a questionnaire survey was conducted in February 2019. The
subjects were customers who were more than 15 years old and who used the home
delivery service more than once a month. There was a total of 10,000 valid subjects.
Their average age was 55.12 years; 52.2% were male and 47.8% were female. A total
of 3,947 customers (39.5%) made “almost no” requests for re-delivery in the past year,
4,040 customers (40.4%) requested it for “about 20–30%” of deliveries, 1,301 (13.0%)
customers requested it for “above 50%” of deliveries, 488 (4.9%) for “almost 70–80%”
of deliveries, and 224 (2.2%) for “almost all” deliveries. In the aforementioned survey
conducted by the government [16], 46.5% of customers made “almost no” requests for
re-delivery in the past year (“I have not requested re-delivery” or “I haven’t used the
delivery service”), 27.5% requested it for “about 30%” of deliveries, 16.1% requested it
for “over half” of deliveries; and 9.4% for “almost all” deliveries.
The results of the present survey were similar to those of the government survey.
Therefore, the questionnaire data obtained in this study are highly generalizable.
Before analyzing the data using SEM, customers were divided into four groups
based on the value of visibility. Observation variables of the latent variable (visibility)
consisted of six questions. Customers were equally divided into four groups based on
the average value of the six variables in the questions. Group (1) consisted of 1,960
respondents, group (2) of 2,062 respondents, group (3) of 3,323 respondents, and group
(4) of 2,655 respondents. The boundary variables of the groups were 2.0, 2.83, and 3.3.
After the hypothetical model in each group was analyzed, the variables (25, 50, 75,
100) were substituted for the value of visibility in GRL. Groups (1), (2), (3), and
(4) were respectively called Visibility 25, 50, 75, and 100, respectively, referring to the
visibility variables used in the GRL analysis.
SEM was used to analyze the variables of the effects of each behavioral logic on
each behavior and the fitness value of the model in each customer group. AMOS
graphics of IBM SPSS Statics 25 was used for the analysis. The questions used for the
SEM analysis are listed in the appendix.
Tables 1 and 2 show the results of the effects of customer psychological ownership
and visibility on each customer’s behavior, respectively. The variables in each table
show the strength of the effects of psychological ownership and visibility on each
behavior. These variables were calculated in the range of [−1, 1] [10]. The fitness value
of the hypothetical model was (goodness of fit index (GFI) = 0.907, adjusted goodness
of fit index (AGFI) = 0.889, comparative fit index (CFI) = 0.840, and root mean square
error of approximation (RMSEA) = 0.031).
Table 1. Effects of customer psychological ownership on customer behaviors.

PO ! CPB PO ! CCB PO ! OB PO ! MB
Visibility 25 0.53*** 0.11*** 0.15*** −0.24***
Visibility 50 0.63*** −0.07 0.19*** −0.62***
Visibility 75 0.51*** 0.12*** 0.19*** −0.48***
Visibility 100 0.42*** 0.11*** 0.15*** −0.33***
Table 2. Effects of customer visibility effects on customer behaviors.

PO ! CPB PO ! CCB PO ! OB PO ! MB
Visibility 25 0.53*** 0.11*** 0.15*** −0.24***
Visibility 50 0.63*** −0.07 0.19*** −0.62***
Visibility 75 0.51*** 0.12*** 0.19*** −0.48***
Visibility 100 0.42*** 0.11*** 0.15*** −0.33***
(PO: psychological ownership, VI: visibility, CPB: customer partici-
pation behavior, CCB: customer citizenship behavior, OB: optional
behavior, MB: dysfunctional behavior)
4.4 Ecosystem Analysis in Service Ecosystem by GRL

The i* model was copied into GRL and the results from the SEM analysis were
substituted for Contribution-Links between customer behavioral logics and behaviors
in each customer group. Figure 3(b) shows the results of the analysis. In the case of the
initial values of behavioral logic as follows: psychological ownership = 50 and visi-
bility = 25 in group (1). The achievement level of each element was in the range of
[−100, 100] with five colors (red, orange, yellow, yellow green, and green).
To evaluate each actor’s goal achievement level, bar graphs were plotted. Figure 4
shows each actor’s goal achievement for each psychological ownership value with four
customer groups. From these graphs, differences in each actor’s goal achievement
levels can be seen. Even though customers’ psychological ownership variables changed
linearly, customers’ goals (get the item) changed to a U-shaped curve. The branch
office’s goal (sort parcels precisely) changed in a mirrored L-shaped curve, and other
actors’ goals changed linearly. These different results were caused by different manners
of propagation.
These results show the actual effects of customer behavior on actors’ goal
achievement levels. In the case of customers’ goals (get the item), when their visibility
increased, the goal achievement level increased in all psychological ownership vari-
ables. These results suggest that customers who are knowledgeable about service
processes are more likely to receive service properly and customers who have high
psychological ownership exhibit collaborative behaviors so that they can receive ser-
vices properly. However, customers who have low psychological ownership can
receive service as well as those who have high psychological ownership, because
service providers compensate for customers’ mistakes. In the case of the branch office
and pickup persons, the results are mirrored L shapes. This means that, even though
customers’ psychological ownership was low, the branch office and pickup persons
were not influenced by it. In the case of the head office and delivery persons, the results
were linear. This means that customers’ psychological ownership value equally
affected their goal, so that when customers had low psychological ownership, they
were negatively influenced by it. These two results explained the fact that customers
who had low psychological ownership exhibit dysfunctional behavior, which nega-
tively influences the head office and delivery persons, but not the branch office or
pickup persons. This is because customers have closer relationships with the head
office (via using service options) and delivery persons (via receiving parcels) than with
the branch office and pickup persons.
(a)
Fig. 4. Analysis results about the effects of behavioral logics on each actor’s goal by GRL (in
the case of psychological ownership: 50, visibility: 25) (Color figure online)
(b)
Fig. 4. (continued)
The results of this case study clarified that this methodology can analyze the effects
of behavioral logics on actors’ goal achievement in such detail that this methodology
can reflect realistic customer behaviors in impact analysis (Fig. 5).
Fig. 5. Each actor’s goal achievement level in different psychological ownership value with 4
different visibility groups.
5 Conclusions
5.1 Theoretical Contributions

This study proposed a service ecosystem design method to predict and evaluate how
customer dysfunctional behavior affects other actors by incorporating behavioral logic
in social modeling. Previous social modeling methods supported impact analysis.
However, impact analysis has a limitation in analyzing the impact of customer dys-
functional behavior because the elements described in the methods were limited in
goals, soft goals, tasks, and resources, impact analysis basically began from inten-
tionally determining task achievement levels.
Customer dysfunctional behaviors are sometimes unpredictable, and thus, these
behaviors cannot be described and analyzed using prior methods. Behavioral logic and
its effects on behaviors were described and used for impact analysis. By incorporating
behavioral logic into a social modeling method (i*), realistic customer behaviors were
reflected in the impact analysis.
5.2 Managerial Implications

As the methodology of this study can predict customer dysfunctional behaviors and
analyze their impact on other actors, it can be used for service design. Previous service
design methods only focused on collaborative customer behavior. However, workers
still needed to deal with customer dysfunctional behaviors. The service design method
developed in this study contributes by decreasing the probability of customer dys-
functional behavior, which can also reduce service providers’ workload.
This study, however, has a limitation in predicting dysfunctional behavior. Task

achievement levels were analyzed by incorporating behavioral logic into i*. However,
the advanced i* notation in this methodology still depends on describing tasks.
Therefore, tasks which were not described in the i* model were not analyzed. Customer
dysfunctional behaviors that were outliers cannot be analyzed. Therefore, further
research is necessary to address this problem.
Acknowledgments. This study is based on results obtained from the Strategic Advancement of
Multi-Purpose Ultra-Human Robot and Artificial Intelligence Technologies (SamuRAI) project
commissioned by the New Energy and Industrial Technology Development (NEDO).
Appendix
Table 3. Questions used for SEM analysis (questions were answered on a five-point Likert
scale, ranging from 1 (totally disagree) to 5 (totally agree))
Visibility • I have heard of the job role of delivery persons
• I have heard of the job role of head office
• I have heard of the job role of pickup persons
• I understand the job role of EC provider
• I understand the job role of delivery persons
• I understand the job role of pickup persons
Psychological • It is important for me to confirm the current status of the parcel
ownership • If I meet delivery persons with cheerful personality, I feel happy
• To reduce the number of re-deliveries, I need to cooperate
• If consumers including me cooperate, working environment of
delivery persons will improve
• I can decrease the number of re-deliveries if I do my best
• The reason for increasing number of re-deliveries is that
consumers are not paying attention to their deliveries
Customer participation • I do not exhibit unnecessary behaviors which may cause
behavior problems with delivery persons
• I am polite to delivery persons
• I am kind to delivery persons
• If wrong parcels are delivered, I immediately contact the service
provider
Customer citizenship • If I come up with ideas for new, convenient services, I will tell
behavior them to the service provider
• If I receive good service, I will spread it by word of mouth
• If I receive good service, I will recommend this service to others
(continued)
Table 3. (continued)
Customer optional • I have used optional service in which we can change delivery
behavior time and delivery spot before the delivery time
• I have used optional service which sends notification of delivery
completion
• I have used optional service which sends notification of shipment
of parcels
• I have used optional service in which we register the affordable
time and parcels are delivered in registered time
Customer • Forgetting I had specified the delivery time, I have gone out and
dysfunctional behavior failed to receive parcels
• I have pretended to be outside during the delivery time to escape
meeting delivery persons
• Even though I had known I could not have stayed at home during
the delivery time, I have not changed the delivery time
• Without requesting re-delivery, I have waited for delivery persons
re-delivering
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The Application of the Cultural-Historical
Activity Theory to the Value Co-creation
Process in Higher Education
Takashi Tsutsumi1(&) and Masaru Unno2

1
Graduate School of Management, Kyoto University, Kyoto 606-8501, Japan
[email protected]
2
Osaka Seikei University, Management, Osaka 533-0007, Japan
Abstract. Value co-creation is a central topic for service science, but the
mechanism of value co-creation remains unclear. This research establishes a
framework for value co-creation with the assistance of Cultural-Historical
Activity Theory (CHAT). CHAT is an interdisciplinary theoretical framework
used to understand activities with tools. The proposed framework adds the
object of service and resources into the service system, which enables us to see
value co-creation. Focus is placed primarily on the micro-level of value co-
creation between lecturers and learners in higher education utilizing text analysis
of the lecturers. Higher education needs to address the fact that Massive Open
Online Courses (MOOC) have spread around the world, and the value of tra-
ditional classes has become more questionable. Such traditional classes have
sought to become more interactive, but how they can do that is unclear. Based
on the factor analysis of thirteen classes, we identified lecturers who conducted a
formal intervention relying on three factors—“psychological safety,” “direc-
tion,” and “low hurdle” in the utterance of the lecturers.
Keywords: Value co-creation Higher education Service science
1 Introduction
Value co-creation in higher education is a central theme in this research. Many studies
have attempted to analyze service, and the role of services has been growing in the
economy due to the advancement of ICT. The abundance of information about people,
technological artifacts, and organizations has never been higher, nor the opportunity to
configure them into service relationships that create new value [1]. Education, especially
higher education, should play a critical role in the Service-Dominant world by helping
learners organize information and interpret it to create new value. The advancement of
ICT has been building new types of educational opportunities as represented by Massive
Open Online Course. Higher education faces critical change. However, most lecturers,
both in the online and traditional classes, speak to learners in a unidirectional manner.
Learners have few opportunities to exchange opinions. It has thus become more and
more critical to analyze higher education from a service perspective.
The objective of this paper is to build a new framework for value co-creation that
will be applicable to higher education. Firstly, we reviewed prior research on value
236 T. Tsutsumi and M. Unno
co-creation and found that current research on service science looks at service as a
system. However, little is known about how value is co-created in that system. In this
paper, we began by suggesting a new framework for value co-creation. After intro-
ducing this new framework, we applied it to interactions observed at a business school.
We found three critical factors related to the lecturers’ utterance associated with high
satisfaction: psychological safety, direction, and relevancy.
2 Prior Research on Value Co-creation
2.1 S-D Logic and Value Co-creation

Prahalad and Ramaswamy were the first to point out that consumers no longer consume
products or services, but rather co-create the experience with providers [2]. Vargo and
Lusch went on to throw new light on the subject of service, by developing the notion of
value co-creation through the introduction of Service-Dominant Logic (S-D logic) [3].
S-D logic has five set axioms (Table 1).
Galvagno and Dalli conducted a systematic review of 421 research papers and co-
citation analysis of value-cocreation. They found three theoretical streams: service
science, innovation and technology management, and marketing and consumer research
[4]. According to their research, S-D logic adopts the service science perspective.
Service science is the study of the application of resources of one or more systems for
the benefit of another system in economic change [5]. The second perspective—inno-
vation and technology management—regards value co-creation as collaborative and part
of open processes involving providers and customers. Marketing and consumer per-
spective, the third perspective, asserts that consumers and providers are responsible for
creating the value of goods and services available on the market [4].
Grönroos criticized S-D logic as not setting a clear definition of roles for the service
provider and customer, and, as a result, he worked to develop these roles, locus, the
nature of value creation, and value co-creation. He suggested that value creation
referred to only the customer’s creation of value-in-use and that the customer is the
value creator. In addition, he claimed that the locus of value creation is the customer’s
activities [6]. On the other hand, Vargo et al. define value in terms of improvement in
system well-being [7].
This research regards service as a system and focuses on the study of value co-
creation from a service science perspective.
Table 1. The axioms of S-D logic [8].

Axioms
Axiom 1 Service is the fundamental basis of exchange
Axiom 2 Value is co-created by multiple actors including the beneficiary
Axiom 3 All social and economic actors are resource integrators
Axiom 4 Value is always uniquely and phenomenologically determined by the beneficiary
Axiom 5 Value co-creation is coordinated through actor-generated institutions
and institutional arrangements
The Application of the CHAT to the Value Co-Creation Process 237
2.2 Service Science and Service System

Maglio et al. introduced the notion of a service system into service science to establish
the theories of service. They defined the service system as “a configuration of people,
technologies, and other resources that interact with other service systems to create
mutual value [5].” Vargo et al. described value co-creation and the relationship between
value-in-exchange, value-in-use, and value co-creation (Fig. 1). They explained the
relationship between value-in-use and value-in-exchange. The service system 1 (Firm)
accesses, adapts, and integrates resources with the public, private, or market, and then
proposes value to the customer. Value-in-exchange realizes when the customer does not
have enough resources to improve its service system. Although value itself has long
been an exciting topic, it is not the purpose of this paper to analyze the features of value.
Value-in-context for Service System 1 Value-in-context for Service System 2

(Access, Adapt and Integrate Resources) (Access, Adapt and Integrate Resources)
Service Service
System System
(Public) (Public)
Service
Service System
System 1
Service 2 (Customer) Service
(Firm) Value-
System Value-in-Use System
in-Use
(Private) Derived Value (Private)
Derived Value
Value-in-Exchange
Value
Service Proposition/Money Service
System System
(Market- (Market-
facing) facing)
Fig. 1. Value co-creation in service systems [7].
Moreover, Vargo et al. expanded the S-D logic and service system perspective and
further broadened it. They introduced the ecosystem concept and institutional theory.
The definition of the service ecosystem is self-contained; it is a self-adjusting system of
resource-integrating actors connected by shared institutional arrangements and mutual
value creation through service exchange [9]. They argued that value co-creation occurred
in networks, and the links between actors represent service-for-service exchange.
Resource integration activities define actors, and the network has the purpose of survival
[8]. Also, they claimed that institutions such as rules or norms coordinate service
exchange and value co-creation [8] (Fig. 2).
Establishing
nested &
interlocking Actors
involved in
Service
Ecosystems of
Value
Endogenously
Co-creation
Generated
Resource
Institutions & integration
Institutional and
Arrangements
Service
Exchange
Enabled &
Constrained
by
Fig. 2. The narrative and process of S-D logic
However, this description does not make it clear how actors are involved in the
process of value co-creation and how the resource integration process occurs, so
Storbacka et al. developed a framework that describes the actor engagement of value
co-creation in terms of Coleman’s bathtub model (Fig. 3). This model clarifies the
actors’ involvement in value co-creation and resource integration through a multi-level
explanation.
Macro
Service ecosystem, Value co-
institutional logic creation
Resource integration
Actors, resources, Meso patterns
engagement
platforms
Micro
Actor disposition Engagement
properties
Fig. 3. The bathtub model of value co-creation
2.3 Research Questions

The bathtub model of value co-creation clarifies the relationship between multiple
concepts such as resource, actor, platform, ecosystem, and value co-creation. However,
actor engagement is still unclear, so the following question is worthy of examination:
• What does actor do in value co-creation at micro-level?

To answer the question, we suggest a new framework for value co-creation at
micro-level by introducing the Cultural-Historically Activity Theory (CHAT). Then we
focus on the relationship between the service activity with the case of higher education.
Before introducting this framework, we will review the key characteristics of CHAT.
2.4 Introduction of the Cultural-Historically Activity Theory (CHAT)

CHAT is an interdisciplinary theoretical framework based on the work of Vygotsky
and his colleagues in 1920 [10]. There are three generations of CHAT [11]. The first
generation was produced by Vygotsky, who invented the idea of mediation. As he
explained, humans use artifacts as mediation to affect objects. An example of that
would be the use medical knowledge or medical tools by physicians to treat patients.
The second generation of CHAT grew out of the work of Leont’ev, who expanded the
framework to encompass the social aspect of human existence. He incorporated within
CHAT an historically evolving division of labor and regarded that activity as a col-
lective activity within a community. Looking again at the example of physicians, in this
second generation of CHAT, the physician would be viewed as working together with
nurses and pharmacists to treat patients. The third generation was brought about
through the work of Engeström, who has developed the CHAT concept by adding the
expansive learning theory (Fig. 4).
Fig. 4. The activity system of the CHAT
There are two features worthy of noting regarding CHAT. The first is the concept of
contradiction. The inner contradiction of each element or contradiction between ele-
ments leads to the transformation of the activity [12]. For example, the subject may
face a contradiction between value-in-use and value-in-exchange. In the case of higher
education, a value-in-use can be seen in the experience of teaching, e.g., a lecturer
enjoys teaching at a school. By contrast, a value-in-exchange would be seen in the
market value for his teaching level. While he enjoys teaching, the lecturer would like to
enhance his market value by increasing his reputation. When he faces this contradic-
tion, a dialectic solution will transform the activity of teaching. One transformation
might be that the lecturer starts sharing his teaching via video streaming, which then
assists in overcoming the contradiction.
The second is the concept of zone of proximal development, which was originated
by Vygotsky. Vygotsky’s definition is that the zone of proximal development is the
distance of the actual development level as determined by the independent problem
solving and the level of potential development as determined through problem solving
under adult guidance or in collaboration with more capable peers [13]. For example, the
zone of proximal development within higher education is a transformation from uni-
directional teaching into interactive teaching.
3 A Suggested Framework for Value Co-creation
Although value co-creation has been an object of study for a long time, there is little
agreement as to the framework. Having made the point that the current frameworks
lack an explanation of the situational mechanism based on the institution and visual-
ization of value co-creation, it should now be possible to suggest a new framework for
value co-creation with the CHAT (Fig. 5).
Resources
Subjective Object Outcome

actor
Rule Actor Resources

(Provider)
Fig. 5. Value co-creation framework at micro-level
The value co-creation framework at the micro-level is a service network system

characterized by a structure that reflects actor engagement between a subjective actor
(Beneficiary) and an actor (Provider). The beneficiary and provider interact with each
other under rules, which corresponds to the lower-left corner of the activity system of
the CHAT. The beneficiary and the provider exchange their service with their
resources. Value co-creation represents a process from the object to the outcome. In
higher education, the beneficiary is a learner. The learner uses operand services such as
textbooks to tackle the object, which is the service target. The interesting point is that
value co-creation would not occur unless the object is in the zone of proximal
development. This paper does not deal with the philosophical aspects of whether inner
contradiction will occur or not.
The first point to notice is that while value co-creation belongs to the macro level in
the bathtub model, it belongs to each level in the value co-creation framework, though
this paper deals with the micro-level. The second point is that our framework visualizes
the object due to the make up of the issue of visualization of value co-creation. The
third point is that our framework visualizes the rules to identify the situational
mechanism.
This paper examines the interaction between the customer and the provider in the
community at the micro-level service activity in the following section.
4 Research
4.1 The Research Design

Firstly, we conducted preliminary research. The dataset is from a business school in
Japan. The school provides management training programs such as executive educa-
tion, corporate training, online education, open enrollment programs, and an MBA
program. We used their satisfaction survey (Table 2) for the open enrollment programs
to find the main elements related to the learners’ satisfaction. The sample size is 9868
from April 2018 to March 2019. The open enrollment classes are held biweekly and
last for three months. Learners accepted for the open enrollment programs may have
different motives for taking courses, so we used data only for open enrollment pro-
grams. After the preliminary research, we found that lecturers play with the element of
satisfaction among the learners, so we picked up classes provided by lecturers with
high satisfaction scores to identify the interaction between the lecturer and the learners.
All the classes dealt with critical thinking skills to exclude the effect of the content
itself. We recorded all the classes with a voice recorder, then described the interaction
of an exercise, which took an hour. Then we conduct a quantitative analysis of the
utterances of lecturers.
4.2 Preliminary Research

The learners answered the questions in Table 2. The mean score calculated for total
satisfaction was 4.48 out of 5, and the standard variation was 0.68. Table 3 shows that
total satisfaction highly correlates with total usefulness (0.735), contents (0.685), and
lecturer total (0.616). Principal component analysis found two main components.
Component 1 consists of the lecture’s behavior, contents, and colleagues, which
explains 44%. Component 2 is about the learners themselves, which includes prepa-
ration, participation, and understanding the contents. Component 2 explains the 18%
(Table 5). This analysis is appropriate based on the KMO and Bartlett’s Test (Table 4).
Table 2. Satisfaction survey

Please select 1 (Unsatisfactory) to 5 (Highly satisfactory)
Self-preparation Was your class preparation sufficient to follow each class?
Self-contribution Were your participation and attitudes productive in creating an
active team-based learning environment?
Self-understanding Were you able to understand the essence of the course?
Total satisfaction How satisfied were you with the course?
Total usefulness Was what you learned valuable for your professional life?
Contents Was the course content relevant to today’s business context?
Colleagues How satisfied were you with other students’ participation and
attitude?
Lecturer deep Did he/she help you to think deeply about the contents?
discussion
Lecturer Did he/she help fully understand the content?
comprehensive guide
Lecturer Did he/she offer you enough chances to participate?
encouragement
Lecturer total How satisfied were you with the lecturer?
satisfaction
Table 3. Correlation of survey items
Correlations
lecturer_ lecture_c lecturer_ self_und
total_sati total_use lecturer_ deep_dis omprehe encourag self_cont erstandin colleagu
sfaction fulness total cussion nsive_gu ement ribution g contents es
total_satisfaction Pearson Correlation 1 .735
**
.616
**
.574
**
.585
**
.520
**
.316
**
.423
**
.685
**
.450
**
Sig. (2-tailed) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
N 9868 9868 9868 9868 9868 9868 9868 9868 9868 9868
total_usefulness Pearson Correlation .735
** 1 .549** .523
**
.537
**
.477
**
.260
**
.377
**
.716
**
.419
**
Sig. (2-tailed) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
N 9868 9868 9868 9868 9868 9868 9868 9868 9868 9868
lecturer_total Pearson Correlation .616
**
.549** 1 .736** .740** .731** .196** .297** .538** .452**
Sig. (2-tailed) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
N 9868 9868 9868 9868 9868 9868 9868 9868 9868 9868
lecturer_deep_disc Pearson Correlation .574
**
.523** .736** 1 .712** .646** .195** .284** .512** .445**
ussion Sig. (2-tailed) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
N 9868 9868 9868 9868 9868 9868 9868 9868 9868 9868
lecture_comprehen Pearson Correlation .585
**
.537
**
.740
**
.712
** 1 .629
**
.215
**
.320
**
.522
**
.402
**
sive_guide Sig. (2-tailed) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
N 9868 9868 9868 9868 9868 9868 9868 9868 9868 9868
lecturer_encourage Pearson Correlation .520
**
.477
**
.731
**
.646
**
.629
** 1 .201
**
.274
**
.471
**
.430
**
ment Sig. (2-tailed) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
N 9868 9868 9868 9868 9868 9868 9868 9868 9868 9868
self_contribution Pearson Correlation .316
**
.260
**
.196
**
.195
**
.215
**
.201
** 1 .453
**
.255
**
.154
**
Sig. (2-tailed) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
N 9868 9868 9868 9868 9868 9868 9868 9868 9868 9868
self_understanding Pearson Correlation .423
**
.377
**
.297
**
.284
**
.320
**
.274
**
.453
** 1 .370
**
.199
**
Sig. (2-tailed) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
N 9868 9868 9868 9868 9868 9868 9868 9868 9868 9868
contents Pearson Correlation .685** .716** .538** .512** .522** .471** .255
**
.370
** 1 .426
**
Sig. (2-tailed) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
N 9868 9868 9868 9868 9868 9868 9868 9868 9868 9868
colleagues Pearson Correlation .450
**
.419
**
.452
**
.445
**
.402
**
.430
**
.154
**
.199
**
.426
** 1
Sig. (2-tailed) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
N 9868 9868 9868 9868 9868 9868 9868 9868 9868 9868
**. Correlation is significant at the 0.01 level (2-tailed).
Table 4. KMO and Bartlette’s test for satisfaction survey

KMO and Bartlett’s Test
Kaiser-Meyer-Olkin measure of sampling 0.842
adequacy
Bartlett’s test of sphericity Approx. chi-square 28015.143
df 28
Sig. 0.000
Table 5. Total variance explained

Total variance explained
Component Initial eigenvalues Extraction sums of squared Rotation sums
loadings of squared
loadingsa
Total % of Cumulative Total % of Cumulative Total
Variance % Variance %
1 3.572 44.651 44.651 3.572 44.651 44.651 3.354
2 1.483 18.540 63.191 1.483 18.540 63.191 2.322
3 0.682 8.528 71.718
4 0.596 7.452 79.170
5 0.507 6.341 85.511
6 0.494 6.169 91.681
7 0.382 4.781 96.461
8 0.283 3.539 100.000
Extraction Method: Principal Component Analysis.
a
When components are correlated, sums of squared loadings cannot be added to obtain a total
variance.
Table 6. Component matrix

Component matrixa
Component
1 2
Contents 0.736 −0.094
Colleagues 0.613 −0.254
lecturer_deep_discussion 0.800 −0.317
lecturer_comprehensive_guide 0.800 −0.276
lecturer_encouragement 0.765 −0.296
self_preparation 0.457 0.674
self_contribution 0.487 0.658
self_understanding 0.586 0.508
Extraction: Principal component analysis
a
2 components extracted.
Principal component analysis confirmed that excellent lecturers and contents are the
essential items, and that the issues around learners function as the secondary item.
Although the evaluation of the contents is an exciting research topic, the interaction
between the lecturers and learners is the focus of this research (Table 6).
4.3 Primary Research

As we found that lecturers play an essential part of higher education, we try to identify
the service exchange between the lecturer and learners at the micro-level (Fig. 6).
Resources
A learner Object Outcome
Rule A lecturer Resources

Fig. 6. Higher education service activity at the micro-level
We selected 13 classes provided by lecturers that had been evaluated as having high
satisfaction. All the programs incorporated critical thinking, which allowed us to avoid
focusing on the effects of contents. Table 7 shows the lecturers’ mean score of total
lecturer satisfaction in the past. L35, L45, and L39 are within the rank of the top 10%
of all the lecturers. L51, L13, L24, L14 are within the top 20%. L25 and L1 are within
the top 30%. L32 and L4 are within the top 40%. L4 is within the top 50%. L14 and L1
have two classes, so the authors analyzed thirteen classes in total. Table 8 shows the
profile of the class we observed.
Classes are held six times every two weeks. Before day 1, the learners already
introduced themselves to each other over the school’s SNS community.
The exercise we recorded focused on an internal recommendation letter to the HR
department on day 1. A manager wrote a recommendation letter of Mr. A, his sub-
ordinate, to send him on an overseas assignment, but the letter is not convincing due to
a lack of logical reasoning. The letter consists of three paragraphs, and the manager
recommended Mr. A for three reasons: his global mindset, his sense of responsibility,
and his strong English ability. However, the manager did not show any relevant evi-
dence to support his arguments. On the contrary, the manager included different topics
and described an episode. Key learning objectives were the overall logical structure,
logical reasoning, concreteness, sticking with main arguments.
We asked permission to record the interaction between the lecturers and learners
and set a voice recorder in front of the lecturer. The lecturer firstly explained the
background of the letter. Learners read it individually, then two or three people
discussed what went wrong with the letter and why. The group discussion took roughly
10 min in each class. After the group work, the lecturers started a class discussion. The
shortest discussion took 23 min, and the longest one, 49 min.
Table 7. Lecturers’ score

Faculty Average Degree Variance Subject
L35 4.88 155 0.16 CRT
L45 4.87 31 0.116 CRT
L39 4.83 108 0.159 CRT
L51 4.82 62 0.181 CRT
L13 4.8 88 0.28 CRT
L14 4.77 86 0.181 CRT
L25 4.75 106 0.325 CRT
L1 4.74 114 0.302 CRT
L32 4.7 105 0.287 CRT
L4 4.69 70 0.335 CRT
L42 4.68 97 0.282 CRT
Table 8. Class profile

Lecturer Class size Contents Time_min
L35 27 Mr. A 28
L45 31 Mr. A 29
L39 36 Mr. A 24
L51 21 Mr. A 23
L13 24 Mr. A 27
L25 18 Mr. A 28
L14_1 30 Mr. A 23
L14_2 33 Mr. A 32
L1_1 35 Mr. A 31
L1_2 26 Mr. A 32
L32 20 Mr. A 22
L42 34 Mr. A 49
L4 33 Mr. A 28
After recording the class discussion, we described what lecturers and learners had
said to analyze the interactions between lecturers and learners in the text. All the
discussions started with the lecturers. Most lecturers started from the first paragraph
through the third one, then ended up discussing the overall structure. Typically, lectures
kicked off the discussion in the following manner:
A lecturer: “OK, Let us discuss it in the class. As there are so many things to be
discussed, let’s start from the first paragraph. Where do you find the ideas
unconvincing?”
A learner: “I do not think Mr. A is interested in the global business environment
simply because he has foreign friends and traveled overseas.”
A lecture: “Yes, that is a good point. You are not convinced. In this sentence, what
does the manager maintain?”
Another learner: “Mr. A is interested in global business.”
There were some unusual ways used by lecturers to kick-off the class discussion.
L1 started by confirming three reasons. L51 and L25 first asked learners what the main
problem was. Surprisingly, there were no instances when the lecturer initiated a
question and got no response in any of the classes.
4.4 Text Analysis

When we conducted text analysis, we used KHcoder, software for quantitative content
analysis, or text mining [14]. We set the codes to classify the utterances (Table 9). We
translated the text into quantitative data with the code. For example, “Where do you
feel the ideas are not convincing in the first paragraph?” is labeled where and feeling.
“Let’s go into that point further?” is labeled as direction. “Any other concrete exam-
ple?” is labeled concrete and diffusion. The words related to key learning objectives is
labeled learning (Table 10).
As shown in Table 10, the number of sentences varied. There seemed to be many
codes for agree, confirm, learning, but why and how were rarely observed. The min-
imum number of sentences was 135 by L14_2, and the max was 310 by L4. The
description of L14_2 indicated that the lecturer did not ask what or where, but he
always asked about feelings. The description of L4 showed that the lecturer left aside
the contents. He discussed other issues. He asked what and why in the class (Tables 11
and 12).
To be more objective, we conducted a factor analysis with the data. The method of
extraction was the Maximum Likelihood with Promax rotation. KMO test score is 4.61,
so the output of this analysis cannot say perfectly adequate. The factor analysis found
three main factors (Table 14). The first one represents agree, learning, and confirm,
what we call “psychological safety [15].” This factor explains that 31.9% of the total
variance and summarized that the interaction showed appreciation for the participation.
Learners felt psychological safety and took part in the interactions. The second factor is
direction, meaning lecturers indicated where they would discuss and to what extent
they would discuss. This factor explains 12.4% of the total variance. This factor is
interesting because we can see the existence of rules (Fig. 6). Rules govern service
exchange between the lecturer and learners. The third factor is feeling and concrete,
which we call “low hurdle.” This factor explains 20.3% of the total variance and
indicates that the lectures lower the hurdle for the learners to express their opinion by
encouraging them to speak about concrete examples. In addition, “psychological

safetgy” and “direction” are correlated, but “low hurdle” is not correlated to these two
factors (Table 13).
Table 9. Code
Words examples
What What is the most problem? What do you mean?
Where Where is the problem? Where do we need to write better in the paragraph?
Why Why do you feel? Why did the manger write an example of baseball players?
Feeling How do you feel? Any other questions? Are you convinced? What did you think?
How How do you rewrite it?
Agree Your comment is good. I see. I agree. That is right
Practical Company, Practical example, subordinate, innovation, customer satisfaction
Confirm You’re saying the example is vague? Is it OK to say there is no rationale? I
suppose he said Mr A does not have responsibility
Concrete For example, to be specific,
Diffusion There are still more, any other comments? Anything is fine
Direction Let us start from the first paragraph. Please tell us your opinion. We will deal
with it later
learning Pyramid structure, requirements, objectivity, subjectivity, concreteness, logical,
reasoning
Table 10. Code matrix
item what where why feeling how agree practical confirm concrete diffusion direction learning no_code sentence time lecturer_satis satisfaction_var
L35 19 15 3 7 1 17 9 29 7 2 9 62 72 187 28 4.88 0.16
L45 25 5 4 8 0 25 2 37 5 5 7 54 86 218 29 4.87 0.12
L39 12 7 4 5 0 6 11 13 4 5 9 24 66 142 24 4.83 0.16
L51 17 13 2 15 4 9 6 24 5 2 12 43 54 151 23 4.82 0.18
L13 10 13 5 14 3 16 9 29 5 9 2 49 86 204 27 4.80 0.28
L14 8 9 1 14 9 9 3 19 5 10 6 35 92 184 28 4.77 0.18
L14 6 13 1 25 1 13 11 22 9 6 6 43 36 135 23 4.77 0.18
L25 10 7 5 19 2 13 0 34 5 3 6 26 57 145 32 4.75 0.33
L1 14 5 3 9 0 9 3 31 1 2 9 44 86 180 31 4.74 0.30
L1_ 20 20 2 12 2 15 2 38 6 2 10 53 75 197 32 4.74 0.30
L32 12 14 6 23 2 18 4 22 5 9 7 56 50 167 22 4.70 0.29
L4 23 13 14 16 3 20 5 46 8 4 12 94 117 310 49 4.69 0.34
L42 11 11 3 8 0 7 2 14 4 8 2 46 74 159 28 4.68 0.28
Table 11. KMO and Bartlett’s test for text analysis
KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. 0.461
Bartlett's Test of Sphericity Approx. Chi-Square 65.558
df 45
Sig. 0.024
Table 12. Total variance explained
Total Variance Explained
Rotation Sums of
a
Initial Eigenvalues Extraction Sums of Squared Loadings Squared Loadings
Factor Total % of Variance Cumulative % Total % of Variance Cumulative % Total
1 4.038 40.375 40.375 3.193 31.934 31.934 3.519
2 2.058 20.575 60.951 1.240 12.401 44.335 2.497
3 1.377 13.771 74.722 2.026 20.263 64.598 1.519
4 0.954 9.537 84.258
5 0.680 6.799 91.057
6 0.339 3.391 94.448
7 0.269 2.688 97.136
8 0.174 1.738 98.874
9 0.091 0.908 99.783
10 0.022 0.217 100.000
Extraction Method: Maximum Likelihood.
a. When factors are correlated, sums of squared loadings cannot be added to obtain a total variance.
Table 13. Factor correlation matrix
Factor Correlation Matrix

Factor Correlation Matrix 1 2 3
1 1.000 0.440 -0.020
2 0.440 1.000 -0.233
3 -0.020 -0.233 1.000
Table 14. Pattern matrix
a
Pattern Matrix
Factor
1 2 3
agree 1.019 -0.284 0.090
learning 0.753 0.068 0.091
confirm 0.745 0.140 0.088
what 0.706 0.301 -0.396
why 0.524 0.084 0.172
practical -0.306 0.187 0.220
direction -0.079 1.058 0.167
diffusion 0.032 -0.722 0.124
feeling 0.055 -0.016 0.924
concrete 0.387 0.042 0.528
Extraction Method: Maximum Likelihood.
Rotation:Promax with Kaiser's normalization(a)
a. Rotation converged in 5 iterations.

4.5 Consideration
Psychological safety, direction, and low hurdle are factors in the service exchange at e
highly satisfactory classes. A learner and a lecturer exchange their services under rules.
As a provider, the lecturers give the learners psychological safety and low hurdle to
encourage them to take part in the service activity.
Although this paper deals with the case of higher education, the service activity
triangle could well apply to other services. For example, physicians give patients
psychological safety and relevancy. Hotel receptionists also do the same as physicians.
This analysis has a limitation due to the lack of data on low satisfactory classes.
Fortunately, or unfortunately, the business school in this research has a rule that lec-
turers who receive low satisfaction evaluations are not allowed to give lecturers, so that
data was not available.
5 Conclusion
The research question is:

• What does actor do in value co-creation at micro-level?
In an effort to examine the question, we proposed a value co-creation framework
(Fig. 5). This framework identifies the mechanism of value co-creation and visualizes
the relationship between actors and rules. We conducted quantitative text analysis that
confirmed the existence of institutional logic (rule) in the service exchange between the
beneficiary and the provider. For further research, it will be necessary to examine the
validity of the value co-creation framework, especially at the meso- and macro-level.
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Service Engineering and Implementation
Toward Service Process Improvement
in Nursing-Care Services
Application of Behavior Measurement
Hiroyasu Miwa(&) and Kentaro Watanabe
National Institute of Advanced Industrial Science and Technology (AIST),

AIST Kashiwa, c/o Kashiwa II Campus, University of Tokyo, 6-2-3,
Kashiwanoha, Kashiwa, Chiba 277-0882, Japan
[email protected]
Abstract. Population aging rates are increasing, not only in Japan but also in
many other countries. Nursing-care services, which help to support the aging
population, are becoming one of the most important utilities in aging societies,
and its demand is increasing year by year. In this study, we considered that the
analysis of service processes was important and proposed new methods to
encourage service process improvements as well as technologies for sustainable
nursing-care services. We quantitatively measured the behaviors of five care
workers by using the time and motion study and the movement of all care
workers and nurses for two weeks via the indoor positioning system, visualized
them as service processes based on the timeline, trajectory and heatmap, and
compared the measurement techniques. Finally, the advantages and disadvan-
tages of the time and motion study and the indoor positioning system for service
process analyses were considered. Also, the application of service process
measurements in nursing-care services was discussed.
Keywords: Nursing-care Elderly care Service process Productivity

Technology introduction
1 Introduction
Japan is among the countries with the highest population aging rate, which is the ratio
of people aged 65 years and older to the total population. This rate reached 27.7% in
2017 and is projected to be approximately 40% in 40–50 years, as shown in Fig. 1 [1,
2]. Additionally, the population aging rate is also increasing in many other countries
around the world [3]. Nursing-care services, which help to supports the aging popu-
lation, are becoming one of the most important utilities in aging societies.
In Japan, the Long-Term Care Insurance Act was enforced in 2000. According to
this law, various nursing-care services such as facility-based long-term care services,
home-based care services, and day services are provided by nursing staff such as care
workers, nurses, and care managers. Elderly individuals use nursing-care services
according to the care plans designed by their care managers based on their conditions
and needs. A majority of these service providers are managed by private companies.

254 H. Miwa and K. Watanabe
The long-term care insurance funds 80–90% of the service fee through the municipality
and the government, and 10–20% of the service fee is paid by the elderly themselves.
As the demand for nursing care services increases, the number of nursing staff is
expected to increase by four times that of 2000 by 2025. However, because of the
anticipated decrease in the working population, it is estimated that there will be a
shortage of 300,000 nursing staff by 2025. Addressing this shortage is a current social
issue and necessitates measures to sustain nursing-care services [4].
40.0
35.0
30.0
25.0
Aging rate %
20.0
15.0
10.0
Actual Estimated
5.0
0.0
Fig. 1. Actual and estimated aging rate in Japan
Several measures have been employed in an attempt to solve this issue. The first
measure involved the improvement or reform of the service processes. A service
process is defined as the sequential flow of items, such as humans, information, and
tools, in the service field. Service providers have attempted to improve service pro-
ductivity and service quality through the management of service process to compensate
for the shortage of human resources. However, managers and nursing staff very only
able to find few viable solutions to address the current issue. They often attempted to
improve their service process by relying on their experiences and intuition. The second
measure involved the application of technologies. Information technologies and robot
technologies, such as electrical record systems, robotic devices, and monitoring sen-
sors, were expected to reduce the human workload. However, many robots were unable
to perform well in the field due to insufficient support and evaluation of the technology.
Hence, we inferred that understanding and evaluating the information representing
actual service fields were essential to develop, introduce, and utilize technologies that
satisfy the requirements of service fields. For a better introduction of technologies, an
assessment and a redesign of service processes are necessary [5].
Based on these previous experiences, it is deemed essential to analyze service
processes. Behavior measurement is a key factor in understanding service processes. In
a previous study, measurement and visualization methods for evaluating nursing-care
service processes, based on the behavior measurement of nursing staff, was developed
[6]. Kurata proposed “6MV” method to visualize the working processes of services [7].
Toward Service Process Improvement in Nursing-Care Services 255
However, in these previous studies, the measurement of the service processes in

nursing-care services were limited to the time and motion study.
Therefore, we measured the behaviors of nursing staff during work hours by using
the time and motion study as well as the indoor positioning system to compare their
advantages and disadvantages. We aimed to establish new methods to encourage the
improvement of service processes and the introduction of new technologies.
2 Method
2.1 Time and Motion Study

A time and motion study is one of business efficiency improvement techniques that
involved the observation and analysis of workers’ movements during a task. It is
commonly used in the field of industrial engineering and is defined as “the observation
and analysis of movements in a task with emphasis on the amount of time required to
perform the task” [8]. Generally, a continuous measurement method or a work sam-
pling method is employed in these studies. The subjects’ behaviors are assessed
through observations by a third person or by self-reporting of the subjects.
In our measurements, we followed nursing staff providing nursing-care services to
the elderly, visually observed their work, and recorded the items listed below by using
a tablet device (iPad mini 4, Apple Inc.) [9].
• Behaviors (Operations)
• Start and End time of each behavior
• Workplace
• Interactions with coworkers
• The person to whom they provided services
• Other observational comments
The behaviors were chosen from a predefined list including 144 fundamental
operations [10]. After the measurements, the quantity and total duration of each
operation, the duration of stay at each location, and rate of direct work were considered
as Key Performance Indicators (KPIs).
2.2 Indoor Positioning System

Recently, indoor positioning systems have been applied in various service fields such
as logistics restaurants and maintenance services [11, 12]. For the indoor positioning
system, several methods such as beacon surveying [13] and PDR Plus [14, 15] were
proposed.
In our measurements, a commercial indoor positioning system employing beacon
surveying was applied. The position of the nursing staff was estimated using a
smartphone via the signals transmitted from Bluetooth beacons that were installed in
the nursing-care facility in advance. The sampling frequency was 1 Hz. The trajectories
of nursing staff, duration of stay at each location and moving distance were then
calculated as KPIs.
3 Behavior Measurement in Nursing-Care Facilities

3.1 Measurement Conditions
The authors measured the service processes of nursing staff based on both the time and
motion study and the indoor positioning system. Then, we presented the results to the
nursing facility to indicate potential service process improvements. Subsequently, the
advantages and disadvantages of the measurement techniques were considered.
The measurement condition was as follows: A facility providing facility-based
long-term care service in Shizuoka Prefecture, Japan, participated in our measurements.
The behaviors of four care workers on the daytime shift and a care worker on the
nighttime shift were measured based on the time and motion study. Additionally,
workers’ movement of all care workers and nurses were measured using the indoor
positioning system for seven consecutive days.
Before the measurements were taken, the Committee on Ergonomic Experiments of
AIST reviewed and approved all experimental protocols (HF2018-880). The purpose
and procedure of the experiment were explained to the nursing staff and facility
manager. In addition, signed consent forms were obtained from them.
3.2 Results
Based on the time and motion study, the mean working time of the care workers on the
daytime shift was 8 h and 29 min, and that of the care worker on the nighttime shift
was 14 h and 23 min. Figure 2 shows the change in the chronological behavior of the
care worker, and Fig. 3 shows the average amount of time spent by care workers in
performing various activities. In Fig. 3, the top three items, which were preparation,
assistance for cleanliness and assistance for eating, accounted for approximately half of
all operations, whereas the top six items accounted for three-quarters of all work.
Figure 4 shows the average amount of time spent by care workers at various locations.
Each behavior was defined as including or not including transfer. “Transfer” in the
workplace included employees’ transfer as well as operations involving transferring
such as walking assistance and wheelchair guidance. The mean rate of “Transfer” was
15.6% of the total working duration.
Figure 5 shows the trajectories of the care workers in a single day, obtained using
the indoor positioning system. In this figure, each circle indicates the nursing staff, and
the colored lines indicate their trajectories. As shown in Fig. 5(a), three care workers
gathered at the center of the facility. They were assumed to be in a morning meeting.
Then, two care workers in a residential room supported the transfer of resident, as
shown in Fig. 5(b). At night, only two care workers supervised the elderly, as shown in
Fig. 5(c). We calculated the moving distance by using the trajectories. The mean
moving distance of the care workers on the daytime shift, the care workers on the
nighttime shift, and the nurses on the daytime shift were 11.2 km, 18.4 km, and
5.76 km, respectively, as shown in Table 1.
Wake up/Sleep
Change of position
Dressing/Cosmetic cleaning
Residentsí transfer
Excretion
Eating
Cleanliness
Environmental maintenance
Laundry
Understanding residents
Information share
Data recording
Other care
Medical procedure
Management of medicine
Measurement of vital sign
Confirmation
Employeesí transfer
Cleaning of office
Other indirect work
Fig. 2. Chronological behavior changes of a care worker measured using time and motion study
We also separated the facility into 1 m2 segments and mapped the total sojourn
time of a day by using the heatmap, as shown in Fig. 6. This figure was calculated
using the position data of the same care workers shown in Fig. 2. We were also able to
change the mapping condition to display the sojourn time for all nursing staff. Figure 6
(b) was calculated based on the position data of five care workers on the daytime shift,
two care workers on the nighttime shift, and a nurse on the daytime shift. The care
workers spent longer periods of time at the locations marked in red, which were in
proximity to nurse stations. Then, we calculated the amount of time the care workers
spent, under the same measurement conditions as the time and motion study.
Kobayashi et al. reported that the mean velocity of normal walking pace of healthy
adults is 1.35 m/s [16]. We assumed that the walking velocities inside nursing facilities
would be less than those during normal walking, and set the threshold to 0.45 m/s,
which was one third of the reference velocity. The working place of nursing staff was
classified as “Transfer” when the nursing staff moved faster than the threshold. Fig-
ure 7(a) shows the mean working place rate of the same care workers shown in Fig. 4.
Figure 7(b) shows the mean working place of all care workers and nurses measured via
the indoor positioning system.
100
90
80
70
Working duration min 60

50
40
30
20
10
0
(a) Mean working duration of care workers on the daytime shift
Environmental Ohter indirect work

maintenance 1.0%
1.0%
Management of
medicine
1.2%
Confirmation
1.5% Preparation
Wake up / Sleep 19.4%
1.9% Excretion
Understanding 5.4%
residence
3.9%
Data recording
5.8%
Cleanliness
13.9%
Residents' transfer
7.6%
Information
share
7.9%
Eating
Employees' 13.7%
transfer
11.9%
(b) Mean working rate of care workers on daytime shift
Fig. 3. Behaviors of care workers on daytime shift measured using time and motion study
40
Daytime shift (Average)
35
Nighttime shift
30
Rate of working place %
25
20
15
10
Fig. 4. Working place rate of care workers measured using time and motion study
Table 1. Moving distance of nursing staff

Staff Shift Mean of total moving Moving distance per
distance (km) hour (km/h)
Care workers Daytime 11.8 1.34
Care workers Nighttime 18.4 1.14
Nurses Daytime 5.76 0.604
(a) At the morning meeting (b) In the daytime shift
(c) In the nighttime shift
Fig. 5. Trajectory of care workers and nurses measured via indoor positioning system
0 sec
1 min
3 mins
5 mins
10 mins
15 mins
30 mins
1 hour
1.5 hours
3 hours
(a) One care worker
0 sec
1 min
3 mins
5 mins
10 mins
15 mins
30 mins
1 hour
1.5 hours
3 hours
(b) All nursing staff
Fig. 6. Total sojourn time of one day

35
Daytime shift (Average)

30
Nighttime shift

25
20
15
10
(a) Care workers measured by the time and motion study
60
Care workers in daytime shift (Average)

50
Care workers in nighttime shift (Average)
Nurses (Average)
40
30
20
10
(b) All care workers and nurses measured for seven days
Fig. 7. Working place rate of care workers measured using the indoor positioning system
4 Discussion
4.1 Comparison of the Time and Motion Study and the Indoor
Positioning System
In this section, we compare the result of the behavior measured using the time and
motion study and the indoor positioning system. According to the result obtained by
the time and motion study, the time spent on assistances for “Eating” and “Cleanliness”
were higher than that of other behaviors. This result could be considered as a reason for
the high rate of working place in the dining and living area. Also, we classified the
behaviors into direct work and indirect work. The former included behaviors directed
towards aging persons, such as eating assistance and bathing assistance. The latter
included backend tasks that were necessary for direct work, such as data recording and
preparation. In this facility, the mean direct work rate was 51.2%.
The quantity of indirect work could be evaluated according to its output and
duration. In addition to the working duration, safety and service quality should be
reviewed to evaluate the quantity of direct work in nursing-care services. We deter-
mined that this analysis could contribute to identifying time-consuming or redundant
work and optimizing indirect work. The authors assumed that there was a correlation
between the direct work rate and customer satisfaction. Therefore, we proposed the
direct work rate as a KPI to evaluate the service processes in nursing-care services.
Next, the indoor positioning system measured the positions of nursing staff with a
high accuracy and calculate multiple parameters such as moving distance, moving
velocity, and sojourn time. This made it possible to visualize the changes in the nursing
staff’s behaviors caused by service process improvements, introduction of technolo-
gies, and environmental changes. We were also abele to evaluate the relevance of
human resource input through the heatmap of sojourn time.
We then compared the results of the time spent at various location obtained by the
time and motion study and the indoor positioning system. Based on a comparison of
Figs. 4 and 7(a), the time and motion study significantly indicated higher result in the
“Residential room,” and “Dining area” and lower results in “Passageway,” and
“Transfer” than those obtained via the indoor positioning system by paired t-test
(p < 0.05). Regarding “Passageway,” the nursing staff worked substantially at the
“Residential Rooms,” “Dining Area,” and “Nurse Stations” close the boundary with the
passageway as shown in Fig. 6. This indicated that the working place was recognized
according to the context in the time and motion study and according to the precise
position in the indoor positioning system when the nursing staff worked the boundary
with the passageway. Regarding “Transfer,” each behavior was defined as including or
not including transfer in the time and motion study. Even if the behaviors were defined
as not including transfer, they included short transfer in the actual service. The indoor
position system classified movement as “Transfer” when the nursing staff traveled
faster than the threshold value. The definition of “Transfer” was differed for each
measurement technique, and the threshold of walking velocity was not sufficiently
validated. We considered that these factors resulted in the difference in the rate of
“Transfer” of the measurement techniques. In addition, it was impossible to record
behaviors that had a duration of less than five seconds in the time and motion study due
to limitation of human performance. The difference in the sampling rate was also
determined as one of causes of the difference in the working place rate. However, the
major trend in the rates of area duration seemed to be similar for the time and motion
study and the indoor positioning system. We determined that they were interchangeable
for the evaluation of major trends.
Finally, in the manufacturing industry, operations and workflows are clearly
defined before the introduction of robots and technologies. The authors considered that
insufficient analysis of the service field was one of the reason why robots and tech-
nologies have not been introduced in nursing-care services. As described above, the
visualization and analysis of service processes, based on behavior measurement, could
be used to quantitatively evaluate the service field. The behavior measurements in the
nursing service were considered to be significantly useful to introducing new
technologies.
4.2 Advantage and Disadvantage of Time and Motion Study and Indoor
Positioning System
As described in Sect. 3.2, various indices and KPIs were obtained from the behavior
measurements. Based on the results obtained, we discussed the advantages and dis-
advantages of the time and motion study and the indoor positioning system. One of the
advantages of the indoor positioning system is that it could simultaneously provide
more accurate measurements of the position and time of all nursing staff. It can also be
used to calculate multiple parameters such as the moving distance, moving velocity,
and number of steps. Moreover, the use of indoor positioning system minimized the
feeling of being monitored and had less influence on nursing staff and the elderly due to
the absence of observers. On the other hand, the advantage of the time and motion
study was that it could classify and record operations, the context of service processes
and working place. The abovementioned features are summarized in Table 2.
The authors determined that the disadvantages of the time and motion study were
difficult to improve due to the limits of human performance. Accordingly, improvement
of the disadvantages in the indoor positioning system would be more important for the
development of new techniques that could be integrated in the time and motion study as
well as the indoor positioning system. We consider this development to be the first
future challenge in this study.
Table 2. Comparison of time and motion study and indoor positioning system
Time and motion study Indoor positioning system
Accuracy of position Low High
Accuracy of time Low (>5 s) High (<1 s)
Number of target A few or limited staff All staff
Moving distance and steps Impossible Possible
Influence on service Middle Little
Classification of operation Possible Impossible
Measurement of context Possible Impossible
Accuracy of place classification High Middle
4.3 Application of Service Process Measurement in Nursing-Care Service

After the measurements, we presented the results to the facility for the improvement of
the service. The facility manager gave us feedbacks about the behavior measurements
and service process visualization. Initially, they felt that our data was useful for gen-
erating new ideas to improve their working style and service processes. However, some
of the nursing staff were conservative and hesitant to change their working style. The
data also made it easier for them to understand current performance, reasons for
inefficiencies, and effects of the improvements and introduction of technologies.
In this study, data was only provided to the facility. The nursing staff and manager
used the data by themselves. Accordingly, if we provided details on more effective
usage of the data, improvement of service processes, introduction of technologies, and
productivity management would have been more effective. We determined that the
development of an intervention method involving service process measurements was
the second future challenge in this study.
Additionally, our data was useful to the nursing staff as well as engineers, according
to feedback from the facility. The nursing staff could remember and reflect on their own
behaviors, and the engineers could use our data for future developments. Therefore, we
considered that the measurement of service processes bridged the actual service fields
of the nursing staff and the engineers.
5 Conclusions
In conclusion, we measured and visualized service processes in the nursing-care service

industry by using time and motion study and indoor positioning systems. Then, we
compared the advantage and disadvantages of each of these measurement techniques.
Finally, we established that the measurement of service processes bridged the actual
service fields, the nursing staff and the engineers, thus providing useful data to them to
improve their service processes.
In this study, after the measurements, we only provided our data to the nursing-care
facility. In the future, we plan to incorporate intervention methods to encourage
workshops and discussions among the nursing staff and engineers. We also plan to
develop new techniques to integrate the advantages of the time and motion study and
the indoor positioning system for synergistic effects.
Acknowledgments. This study was conducted as a commissioned research from Shizuoka

Prefecture, Japan, and as a joint research with Fuji Data System, Inc. We would also like to
express our appreciation to the nursing-care facilities for collaborating with us and Mr. Jun
Hasegawa for his support towards this research.
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Socially-Conscious Service System Design
in the Digital Era: Research Agenda
Kentaro Watanabe1(&) , Yusuke Kishita2 , Kaito Tsunetomo2,

and Takeshi Takenaka1
1
National Institute of Advanced Industrial Science and Technology,
Chiba 277-0882, Japan
[email protected]
2
The University of Tokyo, Tokyo 113-8656, Japan
Abstract. Digital technology is being integrated in various scenes and pro-

cesses of our industry and society. Meanwhile, there is a growing concern about
the rapidly progressing digitalization. Social responsibility in digitalization is
becoming a global agenda in the research on Artificial Intelligence (AI) and
robotics. While various principles and guidelines have been proposed by the
international authorities, NGOs and national governments, these principles are
still too abstract to provide significant impact to actual technology development
and integration processes. Service researchers, especially in the service science
and engineering communities, have been interested in development and inte-
gration of digital technologies in service systems. Various concepts of
technology-embedded or -assisted service system as well as methods for
designing and developing them have been proposed. However, research on
managing social impacts, including negative effects by using digital technolo-
gies, for service system design is still very limited. This study aims at devel-
oping a socially-conscious design method for digital technology assisted service
system. In this paper, we first introduce the theoretical background of this study.
Because digital technologies tend to bring a broad range of impacts to our
society, it is important to take diverse values of various stakeholders into con-
sideration. In addition, long-term evolution of service systems induced by digital
technologies and the corresponding impacts on stakeholders should be exam-
ined. Therefore, we adopt scenario design and value sensitive design (VSD) to
better understand the system of interest. Based on these theoretical foundations,
we illustrate the research framework for designing digital technology assisted
service systems, consisting of three main topics; system modelling, design
process and assessment method.
Keywords: Digitalization Service system Design Scenario design

Value-sensitive design
1 Introduction
Digital technology is being integrated in various scenes and processes of our industry
and society. Digitalization and its impact to value creation processes have been actively
discussed in service research [1, 2]. Meanwhile, there is a growing concern about the

Socially-Conscious Service System Design in the Digital Era 267
rapidly progressing digitalization, including job loss, privacy and security issues and
any negative impact to our society. Social responsibility in digitalization is becoming a
global agenda in the research on Artificial Intelligence (AI) and robotics [3, 4]. In
response to this argument, various principles and guidelines have been proposed by the
international authorities, NGOs and national governments. One of the most famous
principles is Asilomar AI principles suggested by Future of Life Institute [5]. The
national governments such as UK, France and Japan also proposed the AI principles in
development and use from the societal perspective. IEEE is developing the design
principles of autonomous intelligent systems, called Ethically Aligned Design v2 [6].
These principles and guides provide basic concepts such as responsibility, explain-
ability and fairness [7] in the development and use of AI and other types of digital
technologies. While active discussion on how to regulate and control the development
and use of digital technologies, these principles are still too abstract to provide sig-
nificant impact to actual technology development and integration processes [3]. Under
this condition, concrete design and development methodology of digital technologies is
required [8].
Service researchers, especially in the service science and engineering communities,
have been interested in development and integration of digital technologies in service
systems [9, 10]. Information and Communications Technology (ICT) has been tradi-
tionally considered as a driver to increase the efficiency and productivity of service
[11]. The evolution of digital technology has promoted the research on the impact of
digitalization in service and utilization of digital technologies in service for creating
more values. Various technology-embedded or -assisted service system concepts such
as smart service system, smart Product-Service Systems (PSS) and digital service, as
well as their design and development methods have been proposed [9, 10, 12].
However, the study on the management of social impacts in service system design
is still very limited. Given that the concept of service highlights values for stakeholders,
further research on the impact of digital technology in service system is needed. In
addition, digital technology including AI and robotics at this moment is generally still
non-autonomous while most of the discussions on ethics on AI are about autonomous
agents presuming future situations [13]. Considering the current level of technologies,
we need to focus on how to integrate these technologies in value creation processes
conducted by human beings. This research question is exactly what service research
needs to tackle, and such research activities could also contribute to better application
of autonomous agents in the future.
This study aims at developing a method for designing digital technology assisted
service systems in a way that is socially acceptable. In this paper, we first introduce the
theoretical background of this study. Digital technology could bring a broad range of
impacts to our society. It is important to take care of diverse values of various
stakeholders in this study. In addition, long-term evolution of service systems and the
corresponding impacts toward stakeholders should be considered. Therefore, we adopt
scenario design [14] that focuses on the long-term impact of development/intervention/
policy, and value sensitive design (VSD) that considers diverse values in technology
design [18], in addition to the service system research. Based on these theoretical
foundations, we illustrate the research framework including three main topics of this
study; system modelling, design process and assessment method.
268 K. Watanabe et al.
2 Theoretical Background
2.1 Service System and Digitalization
The service system concept has been discussed in a variety of service research,
including service management, service innovation research and service science. Most
of the concepts and definitions include technology as a part of the system. For example,
Medina-Borja [9] defines service systems as “sociotechnical configurations of people,
technologies, organizations, and information designed to deliver services that create
and produce value.”
Recent evolution of digital technology has stimulated the conceptual update of the
existing service system definition. In this paper, we introduce three concepts including
smart service system, smart PSS and digital service. Table 1 shows the summary of the
updated concepts and their definition.
Table 1. Updated concepts of service systems in relation to digital technologies.

Concepts Definition (Authors)
Smart service system “A “smart” service system is a system capable of learning, dynamic
adaptation, and decision making based upon data received,
transmitted, and/or processed to improve its response to a future
situation” (National Science Foundation [19])
“Smart service systems are service systems in which smart products
are boundary-objects that integrate resources and activities of the
involved actors for mutual benefit.” (Beverungen et al. [20])
“A smart service system is a service system that controls things for
the users based on the technology resources for sensing, connected
network, context-aware computing, and wireless communications.”
(Lim et al. [21])
Smart PSS “…we define Smart PSSs as the integration of smart products and e-
services into single solutions delivered to the market to satisfy the
needs of individual consumers.” (Valencia et al. [12])
“…a novel definition of Smart PSS is given as: “an IT-driven value
co-creation business strategy consisting of various stakeholders as
the players, intelligent systems as the infrastructure, smart, connected
products as the media and tools, and their generated e-services as the
key values delivered that continuously strives to meet individual
customer needs in a sustainable manner”.” (Zheng et al. [22])
Digital service and “Digital service will be defined as a service executed in full by a
digital service technical system, when a user invokes a digital Information,
membrane Computing, Communication and Automation Technology (ICCAT)
based system that (co-)creates the desired outcome.”
“Digital service membrane will be defined as a collection of digital
service offerings in use and involved in advanced forms of value co-
creation interactions between service system entities; the digital
service membrane helps to protect the rights and to ensure the
responsible interaction of entities in the long-term evolution of
smart/wise service systems.” (Pekkala et al. [10])
• Smart Service System

The concept of smart service system has arisen from the service science community.
According to National Science Foundation [19], smart service system is “a system
capable of learning, dynamic adaptation, and decision making based upon data
received, transmitted, and/or processed to improve its response to a future situation”.
The other definitions [20, 21] also emphasize the role of ‘smart’ product with cognitive
functions. Beverungen et al. [20] specifically focus on the role of smart product as a
boundary object for resource integration.
Another relevant discussion on smart service system is in relation with Viable
Systems Approach [23]. Barlie et al. [23] highlighted the importance of long-range
evaluation of viability of smart service system in parallel to the satisfaction of each
stakeholder. In addition, the recent work on service science emphasized human-
centered view in utilizing AI, and the concept “Intelligence Augmentation” has been
proposed to enhance human intelligence with the support of AI technologies [24].
• Smart PSS
Product-Service System (PSS) as an integrated product-service offering is another well-
known research topic [25]. In response to the evolution of digital technologies, a new
concept “Smart PSS” was coined by Valencia et al. [12]. Their original definition of
Smart PSS takes e-services based on data from smart products as its key element [12].
Zheng et al. [22] extend its focus to multiple stakeholders and value co-creation among
them in the use of smart products and associated e-services. According to these defi-
nitions, the design process and design support methods have been proposed.
• Digital Service
Digital service is an extended concept of smart service systems. Digital service is “a
service executed in full by a technical system,” and its collection called digital service
membrane realizes “advanced forms of value co-creation interactions between service
system entities” “in the long-term evolution of smart/wise service systems” [10]. Based
on the definition, Pekkala et al. [10] propose a modelling method of service system
enacted by digital services.
These concepts share the same characteristics including consideration of multiple
stakeholders, value creation among them and the full use of digital technology and
data. These characteristics are the common ground for service system design in this
study. Several studies have also mentioned the long-term evolution of service systems
and social responsibility. However, the concrete approach to manage these issues is still
understudied.
2.2 Scenario Design

The term “scenarios” refer to narrative stories describing how futures might happen
with a particular focus on future uncertainties. Unlike a prediction, it is common to
describe multiple scenarios so that those scenarios can cover a range of possible
futures. Scenario design aims to provide a scientific way of understanding, describing,
and analysing scenarios [14]. Workshops with the involvement of stakeholders are
often used in the scenario design process in order to incorporate their knowledge and
opinions into the scenario. As a device to deepen mutual understanding among
stakeholders, the scenario design process is regarded as a “learning machine”, pro-
viding stakeholders with a communicative function [15]. Creating a full range of
scenarios based on profound knowledge and imagination that arise from stakeholders
involved will bring a better understanding of what might happen in the future, what
will critically change the future and what will be needed to reach a desirable future.
Combined with quantitative simulations, the power of scenario is strengthened where
simulation assumptions are clarified in narrative format while scientific rigor is
underpinned by the simulation model [16]. In this way, scenarios and simulations
complement each other.
Potential applications of scenario design are diverse, including policy design,
energy system design, and service system design. Applying it to digital technology
assisted service systems will enable:
1. To describe a possible range of positive and negative consequences (e.g., an
increased convenience of everyday life and a security breach, respectively) that
might be caused by introducing digital technologies to the service system of
concern,
2. To help generate effective countermeasures to mitigate or solve the negative effect
on the service system due to digital technologies,
3. To analyse possible social changes over time (e.g., changes in lifestyles and the
relationship between stakeholders) that might be induced by digital technologies
and
4. To help find out appropriate ways to use digital technologies in the system in order
to arrive at a desirable future where desired values by stakeholders are satisfied.
As described above, a scenario design approach is promising to analyse the long-
term evolution of service systems considering their social impacts. When addressing
the item 4, the concept of backcasting [17] is effective because it helps to have a shared
vision among stakeholders after the transition paths (including how the digital tech-
nology is used) are drawn to reach the vision.
2.3 Value Sensitive Design

Value sensitive design (VSD) is “a theoretically grounded approach to the design of
technology that accounts for human values in a principled and comprehensive manner
throughout the design process” [18]. VSD is recently attracting more attentions espe-
cially from researchers on AI and ethics, as a means to take ethical values into con-
sideration for AI development and implementation [26]. In VSD, value refers to “what
a person or group of people consider important in life” [18]. VSD consists of three
types of investigations [18].
1. Conceptual investigation exploring values to be considered from the theoretical
viewpoint
2. Empirical investigation, specifying values to be cared in actual situations
3. Technological investigation, evaluating impacts of technological intervention
VSD provides a generic and effective framework. This can enhance a method for
service system design from the perspective of diverse values.
3 Research Agenda Toward Socially-Conscious Service

System Design
Based on the aforementioned theoretical background, this study mainly focuses on the
following three topics for socially-conscious service system design, including system
modelling, design process and assessment method. Figure 1 is the conceptual sketch
for the research framework with the research topics.
3.1 System Modeling

System modelling is commonly applied to represent a complex structure of the system,
in this case, service system. As is included in the existing definition of service systems,
actors as stakeholders (including their roles), digital technology and their interactions
are the main elements of the modelling scheme in this study. In addition, values for
each actors and underlying institutions are also essential in the modelling scheme. The
definition of value is based on VSD research as discussed below. Institution includes
norms, regulations and cultures [27], which affects the transition of service systems.
Another aspect to be considered is the evolution of service system. According to the
scenario design approach, the transition of a service system will be described with the
modelling method. Values and institutions may become drivers or inhibitors of this
system transition. The analysis of drivers and inhibitors will be one of the main features
of this study, compared with the existing service system studies.
3.2 Design Process

The design process of service systems in this study takes an iterative, participatory
approach. Actual test and intervention using digital technologies are essential to esti-
mate their potential impacts. By involving stakeholders such as direct beneficiaries,
service providers and technology developers in the design and trial process of the
service system, they are able to experience how the service system works, and then
they can mention its actual and potential values and risks as a part of the design team.
According to the result, designers can redesign service systems to augment values or
mitigate risks, and then enter into further iteration with more stakeholders. Through this
process, the service system and transition plan will be refined.
3.3 Assessment Method

The benefit and risks of digital technologies need to be assessed based on various
values of actors. According to the VSD concept, the diverse values such as functional,
financial, psychological and social values will be taken into account in the afore-
mentioned design process. Value extraction and assessment should be integrated in the
design process, which would be effective to highlight the positive and negative impacts
of digital technologies. For example, the behavioural change of users thorough their
adaptation to a new digital technology-embedded environment should be considered
for the assessment of new technologies. Human beings can change their behaviors or
norms consciously or unconsciously based on learning or adaptation to the environ-
mental change for survival. However, such a change could sometimes sacrifice some
aspects of value for human. For example, replacement of the role of actors with
technologies in a service provision process could change their mindset and behaviors.
Consequently, they may become to ignore an important value of the service for cus-
tomers. We will combine both quantitative and qualitative approaches to assess such
impacts in service systems. The modelling and assessment methods would also resolve
the conflicts in values. In addition, the quantitative analysis to capture the diversity in
the same stakeholder group is also an issue to be tackled.
Fig. 1. Conceptual sketch of the research framework.
4 Conclusion
This paper presented the preliminary result of our research toward socially-conscious
design of digital technology assisted service systems. We first illustrated the trend of
digitalization and the corresponding discussion from the aspect of its social impact. In
response to the needs for concrete methods to develop and use digital technologies in a
socially-conscious manner, we set digital technologies assisted service system as a
research target. We then presented the theoretical foundation of this study, scenario
design and value-sensitive design in addition to the research on service system and
digital technology. Finally, we proposed the research framework with the topics
including service modelling, design process and assessment method.
One of our ongoing work is to concretize a system modelling method based on the
aforementioned four main elements; actor, digital technology, value and institution. In
addition, the design process and assessment method are being investigated based on the
analysis of previous cases, design workshops and practices., which will be introduced
in future reports.
Acknowledgement. This study was supported by JSPS KAKENHI Grant Number JP19H04416.
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Maintenance IoT Project Framework
for Extending Effects
to All Stakeholders’ Benefit
Toshiaki Kono(&), Yui Sugita, and Tomoaki Hiruta
Hitachi Ltd., Research & Development Group,

7-1-1, Omikacho, Hitachi, Ibaraki 319-1292, Japan
{toshiaki.kono.aq,yui.sugita.nd,
tomoaki.hiruta.dp}@hitachi.com
Abstract. Asset management is one of the important application areas of new

Internet of Things (IoT) technologies such as data analytics and artificial
intelligence (AI). However, in many cases, the application area of IoT is limited
to only a small part of the maintenance operation, so only a small maintenance
improvement is obtained for maintenance companies, and at the same time, IoT
sales also remain small for IT companies. Maintenance IoT solutions sometimes
fail to be introduced into actual operations even though the technology trial is
successfully completed. To avoid such situations, the customer cocreation
method has been introduced into maintenance IoT projects. However, the
knowledge and interest gaps between maintenance and IoT companies prevent
the discussion. In this research, we introduce our maintenance service menu,
which contains various ideas for maintenance improvements and connects
maintenance improvements and IoT solution sets. We also introduce a new
customer cocreation method based on the service menu. The service menu and
new cocreation method are expected to realize practical and effective mainte-
nance IoT project organization and cross-selling of solutions to expand both
maintenance improvement effects and IoT sales.
Keywords: Asset management Customer cocreation process IoT solution

Maintenance design
1 Introduction
Asset maintenance is one of the important application areas of Internet of Things

(IoT) technologies. For example, prognosis [1] and fault finding support [2] are
expected to improve asset reliability and availability. Many information technology
(IT) companies have been trying to introduce their solutions to maintenance companies
or organizations. Especially, the recent progress in data analytics and artificial intel-
ligence (AI) has been encouraging both IT and asset maintenance companies to
introduce new technologies.
However, these projects sometimes fail at the proof of concept (PoC) or proof of
value (PoV) phase and cannot introduce new IoT into maintenance business even when
the data analytics trial and proof of technology (PoT) are successfully completed. This

276 T. Kono et al.
means that these maintenance IoT projects are lacking maintenance operations and
business viewpoints and that introducing new IoT technology into actual operations
presents more problems than introducing core IoT technology.
To avoid this situation, the customer cocreation method is expected to play an
important role in maintenance IoT projects. For example, it gathers both IT and
maintenance companies’ expectations for the project so that a best practice can be
found for each side’s benefit. However, huge gaps are often observed in IT companies’
technical knowledge of maintenance and maintenance companies’ technical knowledge
of IT. In other cases, the conventional customer cocreation method, which is based on
interviews and workshops, fails due to maintenance specialists not attending.
To solve these problems and enable maintenance IoT projects to succeed, we have
developed a maintenance service menu, which combines various maintenance
improvement ideas with IoT requirements, and our new customer cocreation process.
In this paper, we will introduce the developed maintenance service menu.
2 Problems of Customer Cocreation Process in Maintenance

IoT Projects
2.1 Problems Found in Maintenance IoT Projects
Several problems are typically found in maintenance IoT projects.
1. Knowledge and interest gap between stakeholders
IT companies specialize in analytics technologies, and maintenance companies
specialize in actual maintenance work. However, connecting the specializations is
not easy because it requires identifying key performance indicators (KPI), workflow
with new IT, and data requirements. This in turn requires IT/maintenance integrated
design work, but not many people can handle this process.
2. Lack of maintenance specialists
In the cocreation process, experienced maintenance engineers are requested to
attend workshops and are expected to have a good understanding of maintenance
technology. However, in some cases, they have knowledge about current mainte-
nance operations but do not possess systematic and comprehensive knowledge
about new maintenance designs. This limits discussion to ideas to improve daily
operation and only small changes obtained from these ideas because such ideas do
not change organization structure or the basic cost/profit structure of the mainte-
nance business.
3. Small start but no expansion
Because the effect and usage of IoT are not clear for maintenance companies, small-
start strategies are often taken. In this case, a typical IoT solution (hook technology)
is tested first and after the success of the initial solution, the project is expected to be
expanded. However, maintenance-target assets usually have hundreds or thousands
of failure modes, so the effects of a small application are difficult to even recognize
within whole maintenance operations. Also, in many cases, maintenance periodicity
is long (e.g., every three years) and critical failures are very rare, so accumulating
Maintenance IoT Project Framework for Extending Effects 277
evidence of a solution’s effect takes years. This makes return on investment unclear
for maintenance companies and too small sales for IT companies, so the second-
phase project will not be pursued and no one will benefit.
2.2 Difficulty in Customer Cocreation Process

The customer cocreation process is sometimes deployed for maintenance IoT projects
to find effective solutions, but it is hindered by the problems above. Very experienced
maintenance consultants with IoT knowledge can facilitate the project effectively, but
people with such talent are very limited, which prevents scaling of the maintenance IoT
solution.
A method is required for supporting maintenance IoT project facilitation that
mitigates the knowledge gap and lack of maintenance specialization and gives guidance
to maximize both maintenance effect and IoT sales for all project members’ benefit.
3 Maintenance Service Menu
3.1 Maintenance Service Menu

We developed a maintenance service menu, which contains possible maintenance
improvement ideas with their KPI effect and related IoT solutions. Figure 1 shows the
structure of the service menu format. The important point is that this menu is organized
around the maintenance improvement layer, not the technology layer. This enables the
discussion to focus on actual maintenance application, not only IoT technology or data
analysis.
Fig. 1. Structure of maintenance service menu format
Table 1 shows examples of the maintenance service menu items. The maintenance
service menu currently lists around 27 menu items, and more will be added in the future.
Because this menu summarizes required information for conducting maintenance
278 T. Kono et al.
changes, maintenance IoT projects and customer cocreation process for them will
become a process of choosing and applying the menu items.
Table 1. Examples of maintenance service menu items

Menu item KPI effect Technology (major item) Data req. Data out.
Maintenance Availability, RCM, Long term task Work log, Long term
period Spare usage, scheduling, LCC, Operation maintenance
extension Task Reliability analysis, CMMS plan timetable
plannability
Workload Num. of Log analysis, Short/Mid- Work log, Mid-term
levelling workers, term task scheduling, (Prognosis maintenance
Overtime work CMMS event) timetable
Failure Availability, CMS, CMMS, Short term Monitoring Prognosis
avoidance by Plan-actual failure prediction, Event data, Work event, Short-
prognosis error, management, Dynamic task log term
Unplanned scheduling maintenance
maint. time timetable
NFF Unplanned CMS, CMMS, Event Monitoring Failure event
avoidance maint. time, detection data
Customer
satisfaction
Work report Record quality CMMS, Ontology, (Event (Event type Work log
quality management) data)
improvement
Real time Response time, CMMS, Reliability Reliability Spare
optimization stock level analysis, Prognosis, Stock data, procurement
of Spare prediction and adjusting Prognosis and transfer
stock event, plan
Current stock
The menu is created on the basis of both market surveys and our expertise in
various maintenance fields. The effect of each menu item is different for different
industries or areas in a company. To clarify the area of the menu-item effect, menu
items are given properties to distinguish effective asset type or effective area in a
business flow based on the Application Domain Integration Diagram (ADID) [3].
3.2 Maintenance Service Menu Catalogue

To easily understand the abstract of the service menu, we prepared a maintenance
service menu catalogue. Figure 2 shows the configuration of the catalogue. Ideas of
maintenance changes listed in the service menu are not very familiar to many of the
stakeholders, especially IT company employees and business management people who
will decide investments for the project, so we summarize the information graphically.
We also limit the technology and KPI effects to major items only, as depicted in the
catalogue with icons. The service menu lists the maintenance change ideas, but the
discussion can start from the customer’s current problem. Thus, typical customer issues
are also listed in the catalogue.
Fig. 2. Maintenance service menu catalogue
Fig. 3. Examples of maintenance service menu catalogue

280 T. Kono et al.
This catalogue is expected to enhance common understanding of IoT usage in

maintenance for both maintenance and IT company employees. Also, the customer
cocreation becomes a process to check and choose from the catalogue interactively.
Figure 3 shows examples from the service menu catalogue.
4 Cross-Selling and Roadmap-Based Project Planning
Our service menu is expected to make cross-selling of menus and IoT solutions easy.
Here, cross-selling means that the project starts from an initial solution that achieves a
small improvement with a small investment, and then another menu item is applied that
is related to already applied menu items. Through this process, IoT applications and
maintenance improvements will be continuously expanded.
Figure 4 shows an example of cross-selling based on IoT and data correlation
between the menu items. This sequence of maintenance improvements constitutes a
maintenance maturity model. In this example, the project starts from “Work report
improvement” and “No fault found (NFF) avoidance” because these menu items
includes basic and commonly used IoT technology, such as the computerized main-
tenance management system (CMMS) and asset condition monitoring system (CMS).
Once these solutions are introduced, on the basis of the data generated by the initial
solutions, the project can go to the next level solution such as “Failure avoidance by
prognosis” or “Asset reliability improvement” with the small addition of a new IoT
solution. These solutions and their data enable the next-level solution “Real-time spare
stock optimization,” so this sequence continues.
Fig. 4. Cross-selling between menu items

In the maintenance service menu, relations between the menu items are defined in
multiple ways as shown in Fig. 1.
1. KPI effect
Choosing the next service menu item that has the same KPI effect to extend
improvement for the KPI, or choosing a menu item that has a different KPI effect for
obtaining another type of improvement.
2. IoT and maintenance technology
Choosing the next menu item that has an IoT requirement already introduced in the
preceding service menu item or existing user system. By taking this strategy, a new
service menu item can be realized by a small investment.
3. Required data and output data
Each IoT item is defined with input data requirements and output data as a result of the
solution. Choosing the service menu item that has the same data requirement as the
preceding service menu item or uses the output of the preceding service menu item is a
good strategy to extend the data utilization level in the maintenance. A strategic data
accumulation target can also be set on the basis of the data requirement for the
ultimate maintenance change target from relatively easy menu items.
This maintenance maturity model created through the cross-selling process enables
roadmap-based maintenance IoT project planning by combining it with financial
planning. This process clarifies the kind and size of the KPI effect that can be obtained
when a project reaches a specific level, so the business management side can decide
mid- to long-term investment plans, which will ensure the maintenance IoT project
does not shrink after only a small start.
5 Customer Cocreation with Maintenance Service Menu
5.1 Customer Cocreation Process

By using our maintenance service menu, the customer cocreation process becomes
easier for maintenance improvement IoT projects. Figure 5 shows the customer
cocreation process based on the service menu and the catalogue material. In this
process, the IT company can prepare an initial proposal by choosing menu items on the
basis of the profile of the maintenance company.
Fig. 5. Customer cocreation process with maintenance service menu

282 T. Kono et al.
In the next step, the project members set the cocreation process to decide which menu
items fit the maintenance company’s needs and to consider the whole picture of main-
tenance change, which includes both maintenance workflow and all required IT systems.
In this process, the catalogue enhances the discussion. In our process, the customer
cocreation discussion or workshop process will be a process of choosing from the service
menu catalogue, not a process of gathering opinions from scratch. Because each main-
tenance change idea, requirements, and effects are summarized in a one-page document,
and the workshop will be simplified while more detailed discussion becomes possible.
5.2 Development of Cocreation Supporting Tool

To connect the service menu and create a maturity model, we are also developing a
web-based support tool that helps users to choose menu items relevant to KPIs and
required IoT solutions. Figure 6 shows the idea of the support tool. With the support of
the catalogue and the tool, a facilitator can lead the discussion by showing applicable
menu items, and the project members can create a maintenance maturity model and
then set a roadmap to realize the maturity model.
Fig. 6. Discussion support tool
6 Evaluation
6.1 Coverage of Maintenance Service Menu

We checked the coverage of the service menu by mapping the menu on the lifecycle
maintenance framework shown in Fig. 7, which is created by Takata [3]. Figure 8 shows
the mapping of the selected service menu items from the whole list on the diagram.
We develop the service menu to cover the whole lifecycle of maintenance as shown
in Fig. 8, so the project can avoid discussions kept within limited topics. For example,
non-maintenance experts’ discussion is often limited within the maintenance operation
side in Fig. 7, because observing actual maintenance operation and preparing use cases
are typical starting points of the discussion, and also, the direct applications of IoT are
mapped on the maintenance operation area such as prognosis or worker support system.
However, most of the cost and profit structure of the maintenance company is
already fixed when maintenance design is fixed. In the maintenance design phase,
maintenance item sets are defined on the basis of product design, the estimated
workload and risk management plan are created, and then the organization plan is
fixed. This means that most of the business KPIs and expected performance level of
activity KPIs are all decided in this phase. The maintenance operation phase works
within the limitation of maintenance design.
For the IoT project, maintenance design is quite important because IoT investment
needs to be included within maintenance design. Without that, IoT will be just an
additional factor for improving maintenance operation and cannot introduce funda-
mental changes in KPIs. IoT gives maximum effect when IoT and maintenance are
designed simultaneously [5].
We prepared 12 maintenance design related menu items within the 27 menu items
to attract the attention of project members on the maintenance design side, and through
the cross-selling model, we connect direct maintenance operation improvement to
maintenance design improvement for larger effects. We set Reliability Centered
Maintenance (RCM) [6] as a standard maintenance design technology to connect
various menu items through maintenance design and guarantee applicability to a wide
range of industries.
Fig. 7. Diagram of lifecycle maintenance framework

284 T. Kono et al.
Fig. 8. Mapping of selected service menu on lifecycle maintenance diagram
6.2 Evaluation Approach of Customer Cocreation Process

Currently, we are trying to apply the service menu to actual customer cocreation for
maintenance IoT project. We are planning to evaluate the method for the following
items. A quantitative evaluation method and feedback to the menu and process will be
further researched in the future.
• Project management viewpoint: Smooth project facilitation and investment decision
– Reduction of project planning period
– Success of long-term roadmap development
– Smoothness of investment decision making
• Maintenance viewpoint: Improvement size and IoT introduction process
– Correspondence rate of maintenance company’s idea to the service menu
– New maintenance change idea quoted from the service menu
– Expectation and actual gap of IoT application in maintenance work
• IT viewpoint: IoT sales size and clear development plan
– Number of IoT technologies (IT products) included in the roadmap
– Remaining uncertainty of data collection and technology application plan
– Data utilization rate within all available data
6.3 Mitigation of Problems in Maintenance IoT Projects

We listed three common problems in maintenance IoT projects in Sect. 2.1. These
problems are expected to be solved in the following ways.
1. Knowledge and interest gap between stakeholders

Contents of the maintenance service menu and graphical catalogue provide a shared
understanding of maintenance changes and IoT solutions for both maintenance and
IT company employees in an easily understandable way. Shared knowledge and
interest will make the project easier to facilitate.
2. Lack of maintenance specialists
Wide coverage of the service menu for all maintenance activities will help dis-
cussion to expand the area usually only specialists can debate such as maintenance
design changes. Detailed discussion still requires specialists. However, the menu
enables the necessity of specialists to be limited to really specific matters. It also
helps scaling of the project.
3. Small start but no expansion
The cross-selling method is included in the service menu from various aspects. The
roadmap-based project planning and investment decision making from the start of
the project will prevent it becoming stuck at an initial small solution.
7 Conclusion and Further Research
In this research, we developed a maintenance service menu, which integrates mainte-

nance changes, IoT requirements, and KPI effects, and also developed a new customer
cocreation process on the basis of the menu. By using the service menu and cocreation
method, common problems found in maintenance IoT projects are expected to be solved.
The maintenance service menu and graphical catalogue can provide a shared
understanding of maintenance changes and IoT solutions for both maintenance and IT
company employees in an easily understandable way to overcome their knowledge and
interest gaps. Wide coverage of the service menu for all maintenance activities will help
discussion to expand the areas usually only specialists can debate such as maintenance
design changes. Finally, the roadmap-based project planning and investment decision
making from the start of the project will prevent it becoming stuck at an initial small
solution. These results will enhance the application of IoT in actual maintenance fields
and will enable us to realize safer and more reliable asset management cost-efficiently.
In the next step of this research, we are planning to expand the customer discussion
method and tools in parallel with the application of our maintenance service menu in
actual business processes. Also, the management method of the service menu and its
application cases also need to be considered since the menu will be expanded along
with its applications and more ideas will be generated within the workshops.
References
1. Gupta, C., Ahmed, F., Hiruta, T., Ristovski, K., Dayal, U.: Collaborative creation with
customers for predictive maintenance solutions on Hitachi IoT platform. Hitachi Rev. 9, 403–
409 (2016)
2. Liu, Z., Liu, Y., Zhang, D., Cai, B., Zheng, C.: Fault diagnosis for a solar assisted heat pump
system under incomplete data and expert knowledge. Energy 87, 41–48 (2015)
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3. ISO18435-1: Industrial automation systems and integration (2009)

4. Takata, S.: Life Cycle Maintenance. JIPM-Solutions, Tokyo (2006)
5. Kono, T.: Maintenance change and process in remote condition monitoring and reliability
centred maintenance. In: Railway Engineering 2013 - 12th International Conference &
Exhibition, London, UK (2013)
6. Moubray, J.: Reliability-Centered Maintenance II. Industrial Press Inc., New York (1997)
Ecosystem Strategies for IoT Service Platform
Ecosystems: A Case Study of RFID Linen Tags
and the Japanese Linen Supply Market
Yuki Inoue1,2(&) , Takami Kasasaku3, Ryohei Arai3,

and Takeshi Takenaka1
1
National Institute of AIST, Kashiwa, Chiba 277-0882, Japan
[email protected]
2
Hiroshima University, Naka-ku, Hiroshima 730-0053, Japan
3
Fujitsu Frontech Limited, Inagi, Tokyo 206-8555, Japan
Abstract. The importance of Internet of Things (IoT) platforms and services

has frequently been emphasized. This study focused on radio frequency iden-
tifier (RFID) linen tags and investigated Japanese linen supply markets
regarding the application of RFID technology, expected IoT services, and
approaches to platform ecosystem evolution. A total of 1,176 questionnaires
were sent to Japanese linen supply firms and 136 responses were received. The
results identified a promising business area in which the RFID platform provider
cultivates an IoT service platform ecosystem in the Japanese linen industry. This
has several implications for transportation management and services for hotels,
restaurants, medical, and nursing, and firms in these sectors tend to show a high
willingness-to-pay and willingness regarding the introduction of RFID. Addi-
tionally, since this area is located in the center of the linen firms’ network, the
platform provider can extend the ecosystem in several ways. Based on these
results and a consideration of eco-systemization based on previous literature, the
authors suggest a method for the realization of IoT service platform ecosystems
with RFID linen tag technology.
Keywords: IoT services Platform ecosystems Ecosystem strategies Radio

frequency identifier (RFID) Linen supply
1 Introduction
In recent years, the importance of Internet of Things (IoT) platforms and services has
frequently been highlighted. IoT means that several things are connected across the
internet. To implement IoT, motions or states of objects are measured in certain ways,
such as by attaching sensors to objects. The representative example is a “radio fre-
quency identifier” (RFID). RFID is a short-range wireless communication technology
by way of RF tags, which memorizes the identical information of attached objects.
Although attempts at the utilization of RFID have been actively made since around
1997, the high cost of RFID tags did not allow this technology to spread across
industries at a broad level. However, the achievement of system-on-a-chip for the
integrated circuit (IC) chips of RFIDs facilitated cost-cutting in production, and the
288 Y. Inoue et al.
spread of RFID accelerated from around 2014. Currently, RFID is used in several
situations such as management of goods in stores or offices, improvement of work
efficiency in logistics, process management in the manufacturing industry, individual
identification of employees, and so on.
On the other hand, although the spread of RFID has accelerated, data acquired
through scanning RFIDs has not reached the level of IoT services. The purpose of this
study is to determine ways to realize IoT platform ecosystems by connecting RFID to
IoT services. Specifically, this study focuses on RFID linen tags, and investigates the
Japanese linen supply markets regarding the application of this technology, expected
IoT services, and an approach for the evolution of platform ecosystems. Since diffusion
of RFID linen tags is currently widespread, this study focuses on the possibility of
future introduction of this technology. The authors consider the methods to realize such
IoT platform ecosystems through questionnaire survey of Japanese linen firms.
The rest of this paper is organized as follows. In Sect. 2, a literature review
regarding platform ecosystems is presented. In Sect. 3, the approach for IoT platform
ecosystems based on RFID linen tags is discussed. Questionnaire survey methods and
analysis are explained in Sect. 4 while the results are discussed in Sect. 5. In Sect. 6,
the authors summarize the results and discuss the application of an ecosystem strategy.
2 Platform Ecosystems
In platform ecosystems, the platform providers draw in outside complementary firms

and consumers onto their platforms and configures their ecosystems [1, 2]. The concept
of platform ecosystems has recently been established and developed from the research
stream of internal and intermediary platforms [3]. The authors summarize definitions of
internal, intermediary, and platform ecosystems as follows.
2.1 Definition of Internal Platforms

Internal platforms are also called product or product family platforms, depending on the
context [3]. The definition of these platforms is “common core technology for all
members in the product family,” and it provides a fundamental technological archi-
tecture for derivative products [4]. This type of platform allows firms to shorten the
lead time associated with the development of new products [5], enables them to better
leverage investments in product design and development [6], and easily design tech-
nologically superior products [7].
Typical examples of this type of platform include automobiles [3] and consumer
electronics [2]. Thus, the utilization of internal platforms can lead platform firms to
develop new products effectively and efficiently.
2.2 Definition of Intermediary Platforms

Intermediary platforms are also called two-sided (or multi-sided) markets (or platforms)
[8, 9]. The interaction between various participants in two-sided (or multi-sided)
markets are called indirect network effects. This effect means that the profits of one
Ecosystem Strategies for IoT Service Platform Ecosystems 289
group depend on the size of groups on the other side [10]. Researchers studying two-
sided (or multi-sided) markets largely focus on indirect network effects [8–12]. Since
these effects can lead to winner-takes-all situations, in which only one platform wins in
the market, it is regarded as significant in terms of the competition among platforms
[13–15].
Typical examples of this type of platform include credit card systems (involving
member stores and cardholders as two-sided markets) and dating systems (involving
men and women as two-sided markets) [10, 14]. Thus, the construction of intermediary
platforms can lead to a large increase in platform users through indirect network effects.
2.3 Definition of Platform Ecosystems

As stated above, the concept of platform ecosystems has been developed from internal
and intermediary platform streams. Therefore, the focus of such ecosystems tends to
cover both new product development (or innovation management) and the evolution of
two-sided markets.
Platform ecosystems are made up of the platform as a system or architecture and a
collection of complementary assets [1, 3, 16]. Complementary asset providers, which
produce complementary goods for the platform, are called complementors [17]. Plat-
form ecosystems possess the capability to induce unlimited innovation through the
participation of organizations having various resources as complementors [1]. They can
also attract consumers with various needs to adopt the platform [18]. The success of a
platform ecosystem depends upon the success of the entire ecosystem [19].
A typical example of such ecosystems is video game markets [20–24]. Although a
platform ecosystem has boundaries, it is an open system, that is, complementors and
consumers can be autonomous parts of the platform, and exit from the ecosystem
relatively freely [25]. Therefore, to sustain the ecosystem, platform providers need to
retain the profitability of both complementors and consumers [26, 27].
2.4 Ecosystem Strategies

To structure platform ecosystems in practice, recent researchers in the field of man-
agement have suggested “ecosystem strategies.” Adner [28] (p. 47) defines an ecosystem
as the “alignment structure of the multilateral set of partners that needs to interact in order
for a focal value proposition to materialize,” and an ecosystem strategy as “the way in
which a focal firm approaches the alignment of partners and secures its role in a com-
petitive ecosystem.” Additionally, Jacobides, Cennamo, and Gawer [29] suggest ways
distinguishing the degree of ecosystems as follows:
(a) They defined the complementarity of production and consumption in the fol-
lowing ways:
• Generic: production or consumption of items can be independent of each other.
• Unique: joint production or consumption of items is either mandatory or has
superiority over their independent production or consumption.
• Supermodular: more production or consumption can bring benefits to other
items.
290 Y. Inoue et al.
(b) When both complementarity levels of production and consumption are “unique”
or “supermodular,” the situation is defined as an ecosystem.
In this study, the authors referred to this literature on ecosystem strategies and
considered the ways in which IoT platform ecosystems can be configured from RFID
linen tag technology.
2.5 Difference from Service Ecosystems

In the marketing field, the concept of a “service ecosystem” exists in the context of
“service dominant logic.” This is defined as “a relatively self-contained, self-adjusting
system of resource-integrating actors connected by shared institutional arrangements
and mutual value creation through service exchange” [30] (p. 10). Thus, this definition
is fundamentally different from the concept of platform ecosystems in the management
field. Although the authors use the term “ecosystem” in this study, it implies platform
ecosystems, not service ecosystems.
3 Approach for IoT Platform Ecosystems Based on RFID

Linen Tags
3.1 RFID Linen Tag

An RFID linen tag is mainly attached to clothing and linen. It is waterproof, pressure‐,
heat‐, and alkali-resistant. It can generally endure around one hundred rounds of
laundry, dehydration, and ironing. Around one hundred RFID linen tags can be
simultaneously scanned and they can also be reused. Since this allows the improvement
of efficiency in the management of linen goods, this technology is spreading rapidly.
On the other hand, RFID linen tags tend to be expensive in comparison to general
RFID tags. This is due to their strong structure and relatively low sales volume due to
their reusability. Additionally, the existence of small and medium firms in the linen
industry is relatively higher than in other RFID-focused industries such as apparel.
These factors make it difficult to introduce RFID linen tags.
3.2 Considerations for Eco-Systemization

Based on the previous studies of platform ecosystems discussed in Sect. 2, the authors
considered two methods of introducing IoT platform ecosystems to RFID linen tag
technology.
The first is as follows. The complementors are data analysis firms that provide IoT
services based on RFID data, and the consumers are linen supply firms. In this
structure, the relationship between data analysis firms and linen supply firms becomes
two-sided. Additionally, data analysis firms can provide new services with platform
technologies (and acquired data); therefore, this structure can be a platform ecosystem.
However, the reason for the underdevelopment of current IoT platform markets is due
to the difficulty for third-party firms to generate values from the utilization of data.
Therefore, the authors consider it difficult to expand this ecosystem.
The second method is as follows. The complementors are linen supply firms, and
the consumers are linen service receivers. This is different from the first method; since
complementors and consumers exist in advance and are connected with each other
through a contract, the expansion of this ecosystem is not impossible. However, the
contract is generally signed individually between a linen firm and a linen service
receiver. Therefore, the platform providers must attempt to improve such relationships
from the individual to the ecosystem level.
As shown in Subsect. 2.4, to become platform ecosystems, both sides of production
and consumption must satisfy certain conditions, such as “joint production or joint
consumption of items is either mandatory or has superiority over their independent
production or independent consumption” and “more production or more consumption
can bring benefits to other items.” One way for RFID platform providers to do this is
for the platform provider to improve the value of linen supply services through the
provision of IoT services from collected RFID data. Since greater collection of data and
accumulation of knowhow of data utilization can provide more valuable IoT services
leading to the improvement of linen supply services, the platform providers can satisfy
the condition of “supermodular” for both sides if the data is acquired by both sides.
Data collection by both sides is possible since RFID linen tags can be used not only by
linen supply firms, but also by linen service users. Thus, the authors consider that
platform providers with RFID linen tags can lead to the emergence of IoT platform
ecosystems by utilizing RFID data from both linen supply and service user sides.
This study focused on the second method of the realization of IoT platform
ecosystems with RFID linen tag technology. In the next section, as the first step to
reveal ways to realize such an ecosystem, the authors investigate the promising types of
linen supply firms for the creation of IoT platform ecosystems.
4 Methods
This study focused on RFID linen tags as IoT platform core technology and investi-
gated the Japanese linen supply market. As the investigation method, the authors
administered a questionnaire survey to linen supply firms. The analysis framework of
this study is summarized in Fig. 1. The detail of each analysis method is explained in
the following subsections. The authors collected data on business types, business
issues, willingness-to-pay to solve issues, and willingness for RFID introduction. This
study analyzed these data and specified promising areas as the first step to expand IoT
service platform ecosystems in the Japanese linen industry.
4.1 Sampling
The subject of the survey was Japanese linen supply firms. A Japanese private
investigation firm, Tokyo Shoko Research Ltd. (TSR) printed, distributed, and col-
lected the survey on our behalf. The respondents were all firms included in the category
of “linen supply” in a list provided by TSR (1,176 firms). The survey period was from
September 18, 2018 to October 12, 2018. Finally, 136 responses were obtained (col-
lection rate: 11.6%).
292 Y. Inoue et al.
Fig. 1. Analysis framework
4.2 Survey Design

Although our survey included several questions, the following items were used in this
study. In the survey, sufficient explanation about RFID technology and its usage was
presented.
• Item 1. Handling linen products (multiple choice)
(1) Business-use clothing: for employees (uniform, medical garments, etc.).
(2) Business-use clothing: for customers (dressing gowns in hotel, patients’ gowns
in hospital, etc.), excluding expensive clothing such as wedding dresses
(3) Clothing for general consumers (costumes, cloth diapers, etc.), excluding
expensive clothing such as wedding dresses
(4) Expensive clothing such as wedding dresses
(5) Bedding
(6) Towels, napkins, or moist towels
(7) Tablecloths
(8) Mats
(9) Cleaning tools
• Item 2. Supply destination of line products and services (multiple choice)
(1) Hotel or accommodation
(2) Warm-bathing facilities
(3) Restaurant
(4) Medical facilities
(5) Nursing facilities
(6) Esthetic salon
(7) Bridal
(8) Public transportation
(9) Government offices
(10) Educational institutions
(11) Security firms
(12) Retail
(13) Private transportation and taxis
(14) Private offices
(15) Factories
(16) General consumers
(17) Other linen supply firms
• Item 3. Investable issues in linen business (multiple choice)
(1) Improvement of efficiency in transportation of products
(2) Improvement of efficiency of linen rental
(3) Improvement of efficiency in inventory management
(4) Improvement of efficiency in stocktaking
(5) Improvement of efficiency in incoming and outgoing of products
(6) Management of washing process
(7) Sanitary supervision for products
(8) Employment management
(9) Management of number of rentals for each product
(10) Management of disposal timing of linen products
(11) Customer information management
(12) Linkage among business systems
(13) Security from theft or outflow
(14) Utilization of business data
(15) Improvement of product quality
(16) Improvement of service quality
(17) Cooperation with other firms
• Item 4. Willingness-to-pay for issues (free answers)
The authors asked the following question: “If your firm can solve issues selected in
Item 3, how much can your firm invest?”
• Item 5. Willingness regarding introduction of RFID (multiple choice)
The authors proposed the same selections as in Item 3, and asked two questions:
“Are there issues your firm solved by applying RFID?” and “Are there issues that your
firm can solve in the future by investing in RFID?”
294 Y. Inoue et al.
4.3 Analysis
The analysis of this study is configured in the following three steps.
Step 1. The authors classified the survey results based on two areas: business type and
issue type. Business type is defined as the combination of handling linen products (Item
1) and the supply destination (Item 2). Issue type corresponds to responses regarding
investable issues (Item 3). The authors converted the survey answers to binary
responses. When any selection was made, the value was set as 1; if not, it was set as 0.
Then, the authors classified these data through hierarchical clustering (Ward method).
The number of classes was decided through the balance between the sample number of
each class and degree of separateness of the meaning for classes.
Step 2. For each class calculated in step 1, the authors calculated the degree of
willingness-to-pay for issues (Item 4) and willingness regarding introduction of RFID
(Item 5). For each combination between divided classes and indicators (Items 4 and 5),
the mean values and standard deviation values were calculated. In the case of the
calculation for Item 4, since the values tended to follow a logarithmic normal distri-
bution, the calculation was conducted after the logarithm had been calculated. In the
case of the value of willingness regarding introduction of RFID, the value was set as 1
when either of the two selections was checked (i.e., “Are there issues your firm solved
by applying RFID?” or “Are there issues such that your firm can solve in the future by
investing in RFID?”). If not, the value was set as 0.
Step 3. The authors connected the calculated results of the business type and issue type
classification, which is the novelty of this study. The aim of this step is to show groups
of similar business models of IoT services and to visualize connections among possible
IoT service business models for practically extending the ecosystems. The analytical
procedures were as follows. (a) For each respondent, the three nearest respondents for
the answers to Items 1, 2, and 3 were identified (in cases in which the respondents had
the same answer, there may be more than three nearest respondents). (b) The authors
created an adjacency matrix according to the relationship among nearest respondents
identified in procedure (a). (c) Following Fruchterman and Reingold, the authors
depicted the networks of these relationships based on the adjacency matrix. (d) The
separated areas were defined based on the generated network image. (e) The authors
connected the results of step 2 to the generated network and considered the features of
each separated area in the network.
5 Results
5.1 Summary of Survey Results
Figure 2 shows the survey results for Item 1 (Handling linen products). The largest
value was for “Towels, napkins, or moist towels,” at around 60%. Conversely, the
lowest value answers were for “Clothing for general consumers” and “Expensive
clothing such as a wedding dress,” which were 9% and 5%, respectively.
Fig. 2. Summary of results for handling linen products
Figure 3 shows the survey results for Item 2 (Supply destination of line products
and services). The largest values were for “Hotel or accommodation,” “Restaurant,”
“Medical facilities,” and “Nursing facilities,” at around 60 to 70%. Conversely, the
lowest value answers were “Public transportation,” “Security firm,” “Private trans-
portation and taxi,” and “Other linen supply firms,” at around 15 to 20%.
Fig. 3. Summary of results of supply destination of line products and services

296 Y. Inoue et al.
Figure 4 shows the survey results of Item 3 (Investable issues in linen business).
The largest values were for “Improvement of efficiency for transportation of products,”
“Improvement of efficiency of work on linen rental,” and “Improvement of efficiency
of inventory management,” which were valued at around 50 to 60%. Conversely, the
lowest value answers were “Security for theft or outflow” and “Linkage among busi-
ness systems,” which were valued at around 15 to 20%.
Fig. 4. Summary of results for supply destination of line products and services
Figure 5 shows the survey results for Item 4 (Willingness-to-pay for issues). The
data shown here is original and was not calculated by a logarithm. As per the results,
although the values of most respondents were less than 10 million Japanese yen, some
were willing to spend more than that.
Fig. 5. Summary of results for willingness-to-pay for issues

Finally, Figs. 6 and 7 show survey results of Item 5 (Willingness regarding

introduction of RFID). Figure 6 shows the results of the rate of current introduction of
RFID for each issue. Figure 7 shows the results of the rate of willingness regarding
introduction of RFID for each issue. The results revealed that most linen firms in the
current Japanese market have not introduced RFID. Even in other selected issues, the
rates were only about 5 to 7%. However, the degree of willingness regarding the
introduction of RFID is larger. The larger values were for “Improvement of efficiency
in work on linen rental” and “Improvement of efficiency in incoming and outgoing of
products,” and these were about 20%. Therefore, the results indicated that there is room
for future introduction of RFID technology in this market.
Fig. 6. Summary of rate of current introduction of RFID for each issue

298 Y. Inoue et al.
Fig. 7. Summary of results for willingness regarding RFID introduction for each issue
5.2 Classification of Business Type

Table 1 shows the results of classification of business type. Based on the created
dendrogram, the authors defined the following 10 classes:
(1) Comprehensive supply of clothing, bedding, and table linen.
(2) Supply of clothing, bedding, and table linen for hotels, hospitals, and nursing.
(3) Supply of bedding and table linen for hotels, restaurants, warm-bathing, hos-
pitals, and nursing.
(4) Supply of clothing, bedding, and napkins for hospital and nursing.
(5) Supply of napkins for restaurants, hospitals, and nursing.
(6) Comprehensive supply of mats and cleaning tools.
(7) Moderate-scale supply of mats and cleaning tools.
(8) Supply of mats, cleaning tools, and napkins for restaurant.
(9) Non-linen supply firms.
(10) Other.
Table 1. Classification of business type
Class 1 2 3 4 5 6 7 8 9 10
Sample 5 15 21 14 9 23 19 10 15 23
1. Business-use clothing: employee 100% 80% 57% 79% 22% 22% 16% 20% 0% 30%
2. Business-use clothing: customers 80% 80% 29% 79% 11% 4% 0% 0% 0% 9%
3. Clothing for general consumers 80% 7% 19% 21% 11% 0% 0% 0% 0% 0%
4. Expensive clothing 40% 0% 14% 0% 11% 0% 5% 0% 0% 4%
5. Bedding 80% 100% 86% 93% 0% 0% 0% 20% 0% 35%
6. Towel, napkin, or moist towel 100% 100% 90% 71% 89% 35% 37% 90% 7% 9%
7. Tablecloth 100% 100% 95% 0% 0% 9% 11% 0% 0% 13%
8. Mat 40% 40% 10% 21% 11% 91% 95% 70% 0% 13%
9. Cleaning tool 20% 13% 0% 7% 22% 100% 95% 40% 0% 13%
1. Hotel or accommodation 100% 100% 90% 0% 89% 100% 79% 70% 7% 22%
2. Warm-bathing facilities 60% 100% 52% 0% 67% 91% 42% 0% 0% 9%
3. Restaurant 100% 93% 62% 7% 89% 100% 95% 70% 0% 0%
4. Medical facilities 100% 60% 43% 100% 67% 100% 89% 0% 0% 9%
5. Nursing facilities 100% 93% 57% 100% 100% 100% 95% 0% 0% 13%
6. Esthetic salon 80% 87% 10% 0% 67% 96% 42% 20% 0% 0%
7. Bridal 60% 47% 24% 0% 56% 78% 11% 0% 0% 4%
8. Public transportation 60% 20% 5% 0% 11% 100% 21% 0% 0% 4%
9. Government offices 100% 33% 5% 7% 11% 91% 58% 0% 0% 9%
10. Educational institutions 80% 0% 10% 14% 0% 87% 47% 0% 0% 26%
11. Security firms 40% 7% 10% 0% 11% 87% 5% 0% 0% 4%
12. Retail 60% 0% 19% 0% 0% 100% 79% 0% 0% 0%
13. Private transportation 60% 0% 0% 0% 0% 96% 16% 0% 0% 9%
14. Private offices 80% 7% 10% 0% 33% 96% 95% 40% 0% 0%
15. Factories 100% 40% 24% 0% 11% 96% 95% 10% 0% 22%
16. General consumers 40% 13% 10% 29% 0% 91% 79% 20% 0% 17%
17. Other linen supply firms 60% 60% 5% 21% 11% 26% 11% 20% 0% 13%
Figure 8 presents the results of the mean and standard deviation of willingness-to-
pay for solving issues, and willingness regarding RFID introduction for each business
type. As per the results, the values of willingness-to-pay from classes 1 to 5 were
relatively higher in comparison with those of classes 6 to 10. Additionally, the values
of willingness regarding RFID introduction of classes 1, 2, 4, and 5 were larger than
those of other classes. Accordingly, these results indicated that classes 1, 2, 3, and 4
were promising for the cultivation of RFID markets in the Japanese linen industry as a
first step. Common factors among these classes are supplying towels, napkins, or moist
towels for nursing facilities.
300 Y. Inoue et al.
(a) Willingness-to-pay for solving issues (common logarithm). The y-axis is the common loga-
rithm of Japanese Yen.
(b) Willingness regarding RFID introduction. The y-axis is the rate of RFID introduction.
Fig. 8. Values of evaluation indicators for each business type classification
5.3 Classification of Issue

Table 2 presents the results of classification of issues by type. Based on the dendro-
gram, the authors defined six classes, as follows:
(1) Almost all issues related to linen services
(2) Excluding issues relating to IT systems
(3) Transportation, washing process, sanitary supervision, and product quality
(4) Transportation, linen rental, and inventory management
(5) Excluding issues relating to IT systems and washing
(6) Other/no issues
Figure 9 shows the results of the mean and standard deviation of willingness-to-pay
for solving issues, and willingness regarding RFID introduction for each issue type. As
per the results, the values of willingness-to-pay from classes 1 to 3 were relatively
higher in comparison with those for classes 4 to 6. Additionally, the values of will-
ingness regarding RFID introduction for class 2 was particularly high in comparison to
others. Accordingly, in the aspect of issues, these results indicated that class 2 was
promising for the cultivation of RFID markets in the Japanese linen industry as a first
step.
Table 2. Classification of issues.
Class 1 2 3 4 5 6
Sample 19 11 24 17 23 42
1. Transportation of products 95% 82% 67% 65% 61% 12%
2. Linen rental 95% 73% 50% 65% 83% 14%
3. Inventory management 89% 82% 29% 94% 96% 21%
4. Stocktaking 84% 91% 0% 12% 57% 12%
5. Incoming/outgoing of products 100% 91% 29% 18% 83% 17%
6. Washing process 89% 100% 92% 29% 13% 2%
7. Sanitary supervision 79% 73% 71% 29% 61% 10%
8. Employment management 100% 55% 54% 29% 70% 17%
9. Number of rental times 95% 100% 50% 71% 0% 2%
10. Disposal timing 89% 73% 0% 35% 4% 0%
11. Customer information 84% 18% 21% 6% 78% 10%
12. Linkage among systems 79% 9% 17% 6% 22% 5%
13. Security 47% 18% 4% 12% 26% 7%
14. Data utilization 95% 18% 8% 6% 35% 5%
15. Product quality 95% 73% 67% 24% 61% 7%
16. Service quality 100% 45% 46% 0% 74% 14%
17. Cooperation with others 89% 27% 17% 47% 35% 12%
5.4 Area Separation Based on Business and Issue Types

Figure 10 shows the results of area separation based on business types and issues. In
this image, the authors defined six areas considering the groups of respondents in the
network. Within the same area, similar RFID services can be adapted among respon-
dents. Focusing on respondents, which are located across different areas, can be sig-
nificant to extend RFID services from one area to others.
302 Y. Inoue et al.
(a) Willingness-to-pay for solving issues (common logarithm). The y-axis is the common loga-
rithm of Japanese Yen.
(b) Willingness regarding RFID introduction. The y-axis is the rate of RFID introduction.
Fig. 9. Values of evaluation indicators for each issue type classification
6 Discussion and Conclusion
6.1 Application of Ecosystem Strategy

Table 3 shows the summary of the results of the study. The most promising area, where
the RFID platform provider can establish an IoT service platform ecosystem, is area 2.
This is because the business and issue type classification within this area tends to show
a high willingness-to-pay and willingness regarding the introduction of RFID. Addi-
tionally, since this area is located in the center of the linen firms’ network, the platform
provider can extend the ecosystem in several ways. Accordingly, the ecosystem
strategy for such RFID platform providers is as follows: (1) cultivating area 2 in Fig. 2
to establish the start point of the platform ecosystem and, (2) developing IoT service
based on the provided RFID technology in area 2, and (3) extending the ecosystem to
other areas.
Fig. 10. Results of area separation based on business and issue types. Color of plots denotes
business type classification, and number in plots denotes issue type classification. (Color figure
online)
304 Y. Inoue et al.
Table 3. Summary of results

Area 2. Area 3.
Transportation Transport,
management + rental work,
Willigness
Willingness Area 1. services for and inventory
for RFID
-to-pay Niche service hotels, management
introduction
restaurants, service for
medical, and medical and
nursing nursing
1. Comprehensive supply of clothing,
High High
bedding, and table linen
2. Supply of clothing, bedding, and table
High High
linen for hotel, hospital, and nursing
3. Supply of bedding and table linen for
hotel, restaurants, warm-bathing, hospital, High Low
and nursing
4. Supply of clothing, bedding and napkins
High High
for hospital and nursing
Type of 5. Supply of napkins for restaurants,
Business hospital, and nursing High High
6. Comprehensive supply of mats and

Low Low
cleaning tools
7. Moderate-scale supply of mats and
Low Low
cleaning tools
8. Supply of mats, cleaning tools, and
Low Very low
napkins for restaurants
9. Non-linen supply firms Very low Low
10. Others Low Low
1. Almost all High Medium
2. Excluding issues relating to IT systems High High
3. Transportation, washing process,
High Medium
sanitary supervision, and product quality
Type of
4. Transportation, work on linen rental, and
Issue Medium Medium
inventory management
5. Excluding issues relating to IT systems
Medium Medium
and washing
6. Other/no issues Low Medium
Area 5. Area 6.
Area 4. Comprehensiv Medium level
Willigness
Willingness Comprehensiv e issue solving issue solving
for RFID
-to-pay e issue solving services for services about
introduction
services mats and mats and
cleaning tools cleaning tools
1. Comprehensive supply of clothing,

High High
bedding, and table linen
2. Supply of clothing, bedding, and table
High High
linen for hotel, hospital, and nursing
3. Supply of bedding and table linen for
hotel, restaurants, warm-bathing, hospital, High Low
and nursing
4. Supply of clothing, bedding and napkins
High High
for hospital and nursing
Type of 5. Supply of napkins for restaurants,
Business hospital, and nursing High High
6. Comprehensive supply of mats and

Low Low
cleaning tools
7. Moderate-scale supply of mats and
Low Low
cleaning tools
8. Supply of mats, cleaning tools, and
Low Very low
napkins for restaurants
9. Non-linen supply firms Very low Low
10. Others Low Low
1. Almost all High Medium
2. Excluding issues relating to IT systems High High
3. Transportation, washing process,
High Medium
sanitary supervision, and product quality
Type of
4. Transportation, work on linen rental, and
Issue Medium Medium
inventory management
5. Excluding issues relating to IT systems
Medium Medium
and washing
6. Other/no issues Low Medium
Based on this result and the consideration of eco-systemization in Sect. 3, the

authors suggest the following method for the realization of IoT service platform
ecosystems with RFID linen tag technology. The platform ecosystem includes an RFID
service provider as a platform provider, linen supply firms as complementors, and linen
service users as consumers. The platform provider connects RFID linen tags and data
platforms and utilizes the data to try to improve the value of linen services provided by
the complementors. Since the platform providers and complementors (and comple-
mentors and consumers) are connected by a contract, this ecosystem is not based on
free participation. However, since values generated from data will increase as more
linen supply firms participate in the platform, the expectation of extension of the
ecosystem will increase. Focusing on area 2 shown in Fig. 10 is promising as the first
step for generating an ecosystem in the Japanese linen market. After the platform
provider establishes IoT services based on RFID linen tags and acquired data, it can
extend these to other areas since this area is the center of the network.
In addition, the authors consider a sub-strategy for the proposed ecosystem strategy.
As shown in the results, sensitivity to RFID in the Japanese linen market was not high.
Therefore, if the platform provider succeeds in starting an IoT service ecosystem in this
market, the authors expect that large profits will be realized through digitization.
Additionally, if this aspect is realized, all participants in this market will gain larger
profits from platform ecosystems. To do this, the platform provider may seek methods
of digitalization in the first area (possibly area 2). When it succeeds in this, since
complementors (linen supply firms) will be locked in the ecosystem to sustain the
digitalization of their businesses, the authors expect the ecosystem to attain greater
stability.
6.2 Implications for Serviceology

This study contributes to serviceology in terms of suggesting one method for estab-
lishing platform ecosystems based on IoT service in linen service industries. Although
the terms “platform,” “ecosystem,” and “IoT service” are sometimes used in RFID
markets, the research focusing on such fields was underdeveloped. This study focused
on the linen supply service markets and elaborated an ecosystem strategy for culti-
vating IoT service platform ecosystems. The authors believe the implication of this
study could contribute to such industries in terms of expansion of IoT services. The
authors also believe it could support the generation of new IoT services from RFID
technology, which in turn could activate future research on serviceology regarding IoT
services.
6.3 Limitations and Future Works

This study has several limitations, as follows. First, it is a case study of Japanese linen
supply markets. Therefore, future research should investigate other markets to seek
generalized ways for the establishment of IoT platform ecosystems. Second, the
analysis is restricted by the dataset caused by the market size. Future studies can
analyze more aspects by investigating larger RFID-introducible markets, such as the
apparel industry. Third, the investigation was restricted to the linen supply firms’ side
306 Y. Inoue et al.
and did not focus on user and consumer sides. Future research should consider a more
detailed ecosystem strategy by investigating both sides.
Acknowledgments. This study is based on the achievement of collaborative research between

National Institute of Advanced Industrial Science and Technology and Fujitsu Frontech Limited.
The authors would like to acknowledge the helpful comments and suggestions of Akio Sashima,
Tadafumi Tamegai, Fumino Sugaya, and Kiyotaka Awatsu.
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Author Index
Arai, Ryohei 287 Liu, Wenlong 20

Arimitsu, Narito 3 Ludwig, André 175
Marutschke, David 203

Fan, Xiucheng 20
Masuda, Hisashi 143
Franczyk, Bogdan 175
Matsumura, Kengo 106
Fujino, Hirotaka 84
Miwa, Hiroyasu 253
Fukushima, Ryo 3
Ota, Jun 3, 217
Glöckner, Michael 175
Gournelos, Ted 203
Pufahl, Luise 175
Hamamoto, Ami 84 Seino, Satoshi 157

Hamano, Masafumi 217 Shibuya, Kei 126
Hara, Tatsunori 3, 73, 217 Shimada, Satoshi 54, 106
Hara, Yoshinori 106 Shirasaka, Seiko 84
Hiruta, Tomoaki 275 Sugita, Yui 275
Ho, Bach Q. 126, 217
Ho, Bach Quang 3 Takenaka, Takeshi 266, 287
Hoshiyama, Eiko 54 Tsunetomo, Kaito 266
Hsu, Hui-Mei 185 Tsuru, Satoko 73
Hsu, Shih-Chieh 185 Tsutsumi, Takashi 235
Inoue, Yuki 287 Unno, Masaru 235
Kasasaku, Takami 287 Watanabe, Kentaro 253, 266

Kawada, Rena 3 Weske, Mathias 175
Kishita, Yusuke 266
Kobayashi, Nobuyuki 84 Yang, Kai-Lun 185
Kono, Toshiaki 275 Yasui, Seiichi 73
Kuboyama, Tetsuo 34 Yoshida, Makiko 126

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Takeshi Takenaka

Communications in Computer and Information Science 1189

Editorial Board Members

Chieko Minami (Eds.)

ISSN 1865-0929 ISSN 1865-0937 (electronic)

January 2020 Takeshi Takenaka

Steering Committee Chair

Program Committee Chair

Publication Committee Chair

Kyrill Meyer Institute for Applied Informatics, Germany

Cognitive Competencies of Front-Line Employees in the Hospitality

Exploring the Impact of Managerial Responses to Online Reviews

“Omotenashi” Must Comprise Hospitality and Service: The Importance

Analysis of Service Staff’s Observation on a Customer:

Service Innovation and Employee Engagement

Models for Designing Excellent Service Through

A Proposal for the Work Engagement Development Canvas

R&D Staff Perception Leading to Product Innovation: Case Study on

Problem Structure for Employee Well-Being in the Workplace:

Service Marketing and Consumer Behavior

Differences in Customer Delight Rating Linked to Customer Actions

Clarification of the Process of Value Co-creation

Customer Experience and Service Design

Conceptualization of a Smart Service Platform for Last Mile Logistics . . . . . 175

Holistic Measurement Approach of Customer Experiences – Findings

Service Ecosystem Design Using Social Modeling to Incorporate

The Application of the Cultural-Historical Activity Theory to the

Service Engineering and Implementation

Toward Service Process Improvement in Nursing-Care Services:

Socially-Conscious Service System Design in the Digital Era:

Maintenance IoT Project Framework for Extending Effects to All

Ecosystem Strategies for IoT Service Platform Ecosystems:

Author Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309

Ryo Fukushima1(&), Bach Quang Ho1, Tatsunori Hara1, Jun Ota1,

Abstract. This paper focuses on the cognitive competencies enabling front-line

Keywords: Hospitality Competency Front-Line employee Grounded

Services are typically provided by front-line employees, meaning the ability of

© Springer Nature Singapore Pte Ltd. 2020

Study1: Model cognition during service Study2: Identify features representing

Set questions according

Fig. 1. Overview of the proposed methodology.

This analysis contributes to hospitality research by extending the understanding of

2.2 Competency of Front-Line Staff

Competency depends highly on individuals, thus research on emotional compe-

process of interaction and phenomena between characters, based on the researchers

Table 1. Created categories, codes, and sub-code.

ObservaƟon No Decide service service

Cognition of customer service environment

Estimation of Estimation of Review of past Referring to

Consideration Other flight attendant

Fig. 2. Cognition model during service.

4.1 Questionnaire Survey

Development of Questionnaire Survey. In order to identify the cognition of flight

Table 2. Number of respondents by years of experience.

Extract Variables of Cognition. Structured semantic codes enable qualitative data to

Extraction of Composite Variables Representing Cognitive Competencies. When

Part 1 of Questionnaire. Part 1 of the questionnaire extracts cognition referred to

Table 3. Result of principal component analysis for part 1.

Results of Principal Component Analysis. Table 3 summarizes the information up to