Service business design method utilizing business dynamics

Abstract

In recent years, service business has been strongly remarked by manufacture industries. Consumers are interested in not only the product itself, but also its function and value, and they tend not to own a product, but to use it. Besides, a commoditization proceeds, the profits of products for manufactures is diminishing. Under such environment, many manufacturers try to exploit new value-added service business. A new business which has not been experienced contains a number of uncertain factors, so it's further difficult to design a business model structure and evaluate its effectiveness. Many companies tend to fail their new service business because of ignoring influence of risk factors. This paper proposes the service design method for new business which utilizes Business Dynamics (BD) methodology. BD is useful for a new business design to specify the business structure including feedback loops, and to evaluate the performance quantitatively by changing business scenarios dependent on business environment. This paper shows the process flow of the performance evaluation utilizing BD, and the effectiveness of the proposed methodology is demonstrated through its application to a trial for a new service business.