co-creation and customer value evaluation · 1 day ago · • co-creation of unique value begins...
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1.3.2021CS-E4940 Requirements engineering
Marjo Kauppinen, Sari Kujala, Karolina Drobotowicz, and Marie Monkam Ngatcheu
Co-creation and customer value evaluation
2The focus of the session
Requirementsengineering
SOFTWARE and SERVICE ENGINEERING
Why to invest in RE?
What are the main RE activities?
What kind of good RE practices are there?
What kind of approaches are there to RE?• Engineering and agile• Customer value creation• Creative and critical thinking
How does RE link to other processes?• Solution planning• Customer value evaluation
Learning goals of the courseSOLUTION PLANNING AND DEVELOPMENT
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Learning goals of the session
To discuss• what customer value can mean
• what co-creation with stakeholders can mean
• how customer value can be evaluated
• which practices support successful teamwork
What can customer value mean?
• Racheva et al. (2009) conducted a literature review on how business value is created in agile projects.
• According to this review, most published studies do not define what business value means.
4Racheva, Z., Daneva, M., & Sikkel, K. (2009). Value creation by agile projects: Methodology or mystery?. International Conference on Product-Focused Software Process Improvement (pp. 141-155
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Customer value creationWhere is customer value created?
• Customer value isnot embedded in products. 1
• Products and systems are only facilitators of customer value. 1
1 Grönroos (2007, page 27)
The focus needs to beon the customers’ processes,
where value emerges for customers and is perceived by customers. 1
Value is created in customers’ processes when individual consumers or industrial users
make use of the solution. 2
2 This conclusion has been made by Christian Grönroos (2007) andit is based on the article written by Normann and Ramirez (1993).
Frominside-out approach
tooutside-in approach
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Customer value creation
Customer value = Benefits Sacrifices-
Benefits and sacrifices can be both tangible and intangible.Quality
TimeMoney
FrustrationFears
Fun
Satisfaction
Value is created in the customers’ processes and it is perceived by customers.
Value Pyramid1
• 30 elements in 4 categories• A tool for defining value propositions
1 Almquist E, Senior J and Bloch N (2016)The Elements of Value: Measuring and delivering what consumers really wantHarvard Business Review, 94(9) 47-53
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Anatomy of customer value
Benefits, e.g.- Fulfilled needs- Quality- Monetary worth
Sacrifices, e.g.- Price, costs- Material, time and psychologicaloverhead
Customervalue
Perceived or evaluated by the
customer
”Wha
t’s g
et”
”Wha
t’s g
iven
”
Relative oraffected by
- Expectations- Values- Competition- Relationship
Through- Usagecontext
- Over time
Figure created by Harri Töhönen based on Ravald & Grönroos (1996); Woodruff (1997), Zeithaml (1988); Payne & Holt (2001)
Analyse this figure for 5 min in teams What would you point out?
What can value co-creation with stakeholders mean?
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Assignment 6 – Part C: RE process and co-creation
• Describe stakeholders who will be participate in the RE activities including the evaluation of customer value
• Explain co-creation practices to be used during the solution development and summarise the possible motives of stakeholders to participate in co-creation activities.
Customers, users and other stakeholders• A stakeholder is a person or organization who influences a
system’s requirements or who is impacted by that system [Glinz and Wieringa 2007].
• The role of customers, users and other stakeholders is often pretty passive in RE and co-development i.e. information provider.
• Co-creation of unique value begins by recognising that the role of customers has changed [Prahalad and Ramaswamy 2004]:
• from isolated to connected• from unaware to informed• from passive to active
9Glinz and Wieringa (2007) Stakeholders inRequirements Engineering, IEEE Software 24(2):18–20.
Prahalad and Ramaswamy (2004) Co-creating Unique Value with Customers, Strategy & Leadership 32(3):4-9.
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The principles of user-centred design
• Early focus on users (+ direct contacts)
• Iterative design, prototyping
• Empirical measurement with real users early
in the development process
Gould, J.D. & Lewis, C. 1985. Designing for usability: Key principles and what designers think. Communications of the ACM, 28, 3, 300-311.
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Users as a success factor
• Direct contacts to users and customers are a success factor (Keil and Carmel 1995).
• Users as an information source decreased the number of iterations (Chatzoglou and Macaulay 1996).
• Company survey (Kujala et al. 2005): In the most successful projects with lower costs, the requirements were based on information gained from users and customers.
Keil M & Carmel E (1995) Customer-developer links in software development. Communications of the ACM 38, 33–44.Chatzoglou P.C. & Macaulay L.A. (1996) Requirements capture and analysis: A survey of current practice. Requirements Engineering 1(2) 75-87.Kujala S, Kauppinen M, Lehtola L, Kojo T (2005) The role of user involvement in requirements quality and project success, Proceedings of 13th International Conference on Requirements Engineering, pp. 75–84.
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Benefits of user-centered design
• Direct increase in productivity on the average 50%• Increased sales 25%• Decreased training costs, less time spent in learning 25%• Decreased user errors 1-5%• Increased job satisfaction,
decreased in employment change 10% and 20%• Better service quality• Decreased customer support• Increase in customer satisfaction
Kujala, S. 2003. User involvement: a review of the benefits and challenges. Behaviour & Information Technology, 22, 1, 1-16.
Involving customers and users
Assignment 4: Good RE practices for agile teamsMost of the students (94 %) proposed the involvement of customers, users or stakeholders.
Discuss in your teams for 5 min
How can users be involved in the development of digital services?
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User-centred practices in RE activities
Elicitation Identifying users Describing users (persona, user profiles)Studying users (interviews, observations, workshops)Co-designing with users
Analysis andrepresentation
Developing scenarios (user stories, storyboards, use cases)Prototyping
Validation and testing
Interviewing and observingUsability testing
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Design for all
• Follow the accessibility requirements of authorities• In Finland: https://www.saavutettavuusvaatimukset.fi/
• Extend the range of users including persons with disabilities
• Sensory• Cognitive• Physical disabilities
• http://designforall.org/design.php
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Customers’ roles in co-creation
Tester Marketer
Support specialist
Ideagenerator
Co-Designer
Co-development
Contentprovider
Knowledgeprovider
UserConsumer
Figure created by Harri Töhönen based on Nambisan (2009) and Prahalad & Ramaswamy (2004).
Problem identifier
Experience sharer
Value co-creation
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Motivators for co-creation
Hedonic benefits
Learning benefits
Personal integrative benefits
Social integrative benefits
Playful task
Curiosity
Altruism
Make friends
Self-efficacy
Information seeking
Skill development
Recognition
Dissatisfaction
Compensation
Intrinsic
Extrinsic
Þ more effective product usage
Þ sense of belonging-ness or social identity
Þ reputation, status, sense of self-efficacy
Þ pleasurable experiences, mental stimulation, enjoyment
Motivators byNambisan (2009)
Motivators byFüller (2010)
Figure created by Harri Töhönen based on Nambisan S (2009) and Füller J (2010).
?
How can customer value be evaluated?’
For the time being, customer value evaluation has gained little attention in practice and RE research.
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RE activities
What does this mean?
Elicitation
Analysis
Representation
Validation
Requirements change management
Requirements definition
Acceptance testing
Customer value
evaluation
TestingThe purpose of unit, integration and system testing is to ensure the quality of the software.
The purpose of acceptance testing is to ensure that the software satisfies the requirements of the solution.
The purpose of customer value evaluation is to ensure that the solution satisfies customer and user needs and creates value = benefits - sacrifices.
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Evaluating Customer Value
Starting point: It is important to analyse the current state –what are articulated and hidden needs of customers and users?
User needs refer• problems that hinder users in achieving their goals, or• opportunities to improve the likelihood of users’ achieving their goals.
Kujala 2002
Kujala S (2002) User Studies: A Practical Approach to User Involvement for Gathering User Needs and Requirements. [PhD Thesis], Helsinki University of Technology,
Understanding customers’ processes is the core of value creation.
Value is created in customers’ processes.
customer value = perceived benefits – perceived sacrifices
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Evaluating Customer ValueAnalyzing the current state i.e. what customer and user needs are
Characteristics of users• knowledge and skills• physical properties
Goals and processes• activities (tasks) to be performed to achieve a goal
Emotions of users• expectations• attitudes and fears
Physical and social environment• special physical conditions• social interaction when using the solution
Identifying problems
and opportunities
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Evaluating Customer Value
Which good RE practices can be used for evaluating customer value?
Analyzing the current state i.e.what customer and user needs are
Value propositions Customer value
Analyzing how well the new solutionsupports users’ goals and processes
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Evaluating Customer Value
Analyzing the current state i.e.what customer and user needs are
Value propositions Customer value
Analyzing how well the new solutionsupports users’ goals and processes
Involving customer and users throughout RE and solution development
Interviewing and observing users intheir own environment
Iterative and incremental prototyping (paper, throw away and incremental prototypes)
Actively collecting and analyzing information about the usage of the prototypes and the solution
The same good RE practices can be applied for discovering needs, defining value propositions, and evaluating customer value.
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Anatomy of customer value
Benefits, e.g.- Fulfilled needs- Quality- Monetary worth
Sacrifices, e.g.- Price, costs- Material, time and psychologicaloverhead
Customervalue
Perceived or evaluated by the
customer
”Wha
t’s g
et”
”Wha
t’s g
iven
”
Relative oraffected by
- Expectations- Values- Competition- Relationship
Through- Usagecontext
- Over time
Figure created by Harri Töhönen based on Ravald & Grönroos (1996), Woodruff (1997), Zeithaml (1988), Payne & Holt (2001)
Important questions:• What to evaluate• When to evaluate• How to evaluate• Where to evaluate
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Evaluating Customer Value
During solution planning and software development, potential impacts of the solution on users, other stakeholders, and society need to considered critically.
Ethical guideline1: Consider the impact of the system beyond its users, andconsider the positive and negative consequences of the system.
1 Balasubramaniam N, Kauppinen M, Kujala S (2020) Ethical Guidelines for Solving Ethical Issues andDeveloping AI Systems, International Conference on Product-Focused Software Process Improvement, pp. 331–346,
During the usage and whole life-cycle of the solution,
actual impacts of the solution on users, other stakeholders, and society
need to be evaluated critically.
The whole life-cycle of the solution
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Critical evaluation of solution concepts1
Customer segmentsWho are the customers and what
are their key characteristics?
Value-creation processWhat are the processes and
activities of customers?
SolutionWhat are the components of the
solution from customers’ point of view?
Value propositionsWhat are the most important
benefitsfor the customers?
TaglineWhat is the key message that summarizes the solution concept?
Stakeholder mapsPersonas
Customer journey mapsVideosThese are examples of service design techniques.
Value pyramid2
Whole solution1
1 Lehtola, Kauppinen, Vähäniitty and Komssi (2009) Linking Business and Requirements Engineering: Is Solution Planning a Missing Activity in Software Product Companies?
2 Almquist E, Senior J and Bloch N (2016)The Elements of Value: Measuring and delivering
what consumers really wantHarvard Business Review, 94(9) 47-53
Solution planning includes critical evaluation such as the analysis of sacrifices, risks, and ethical issues.
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Elicitation
Analysis
Representation
Validation
Requirements change management
Requirements definition
Acceptance testing
Customer value
evaluation
Testing
The same good RE practices can be applied for • discovering needs• defining value propositions• evaluating customer value.
It is important to evaluate critically • solution concepts• roadmaps• features = functional and quality requirements• whole solution = digital services and other
services
Critical evaluation should also cover• risk assessment• the analysis of sacrifices and ethical issues• potential impacts of the solution on ‘
users, other stakeholders and society.
Summary: Customer value evaluation
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Discussing in teams for 8 minutes:Which practices support successful teamwork?
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Good teamwork practices
1. Kick-off2. Team rituals3. Team safety4. Kindness5. Expectation
management
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Ideation
• Safety <again>• “yes, and” rule• Triggers do help! • Usual process:
– Icebreaking– 1st: put all your ideas– 2nd: group, triggers– Energizing break– 3rd: choice & validation
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Ideation offer
• Check Miro or Mural for online brainstorming
• I can help by advising or conducting ideation.
• Contact: [email protected]
Good teamwork practices• Build trust
• Define a common goal => shared responsibility• Discuss and agree working practices• Discuss openly - inform if there are problems• Support each other• Provide constructive feedback• Do the tasks of Assignment 6 as a team or
in pairs and use peer reviews
• Learn to know each other • Informal discussions• Coffee breaks
• Use humour
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References • Füller J (2010) Refining Virtual Co-Creation from a Consumer Perspective, California Management
Review 52(2):98-122.• Kujala S (2002) User Studies: A Practical Approach to User Involvement for Gathering User Needs
and Requirements. [PhD Thesis], Helsinki University of Technology.• Nambisan (2009) Virtual Customer Environments: IT-Enabled Customer Co-innovation and Value Co-
creation” in Nambisan (eds.) Information Technology and Product Development, Annals of Information Systems. Springer, pp. 109-127.
• Payne A and Holt S (2001) Diagnosing Customer Value: Integrating the Value Process and Relationship Marketing, British Journal of Management 12(2):159–82.
• Prahalad C and Ramaswamy V (2004) Co-creation Experiences: The next practice in value creation, Journal of Interactive Marketing 18 (3):5-14.
• Ravald A and Grönroos G (1996) The value concept and relationship marketing. European Journal of Marketing 30(2):19–30.
• Woodruff R (1997) Customer value: The next source for competitive advantage, Journal of the Academy of Marketing Science 25 (2):139-153.
• Zeithaml V (1988) Consumer Perceptions of Price, Quality, and Value: A Means-End Model and Synthesis of Evidence, Journal of Marketing 52(3): 2-22.