May 26th 2015

Service Economy & Service Design

Service economy can refer to one or both of two recent economic developments:

  • The increased importance of the service sector in industrialised economies. In the UK the service sector now accounts for around 60-70% of GDP.
  • The relative importance of service in a product offering. The service economy in developing countries is mostly concentrated in financial services, hospitality, retail, health, human services, information technology and education. Products today have a higher service component than in previous decades. Today virtually every product today has some sort of service component attached to it.

The increasing importance of the service sector has been one of the pervasive economic developments of the last thirty years. Since 1970 the service sector has grown from 53 per cent of the UK economy to 77 per cent today. This compared with the manufacturing sector that has declined from 33 per cent to 16 per cent.

The rise of BRIC economies

It has long been espoused that the developed West would turn to a service economy with the rise of the BRIC economies offering cheaper labour. Sure enough given the reports and figures over that last few years it is now central to how well our economy is doing.

“The UK economy could have rebounded with growth of 0.8% in the first quarter of 2011, analysts believe, after activity in the dominant services sector unexpectedly picked up last month. “ ( 2011)1
Stronger-than-expected growth in the dominant services sector last month may have saved the UK economy from contraction in the final quarter of 2011 “ ( 2012)2
“The monthly health check of services – which spans everything from banking to hotels, and accounts for around 75% of Britain's total economic output – showed the sector growing at its fastest pace since last September.” ( 2013)3
Rising order books and increased foreign investment pushed the Markit/Cips purchasing managers’ index (PMI) for the service industries, which account for about 77% of the economy, to a seven-month high.” ( 2015)4

From the perspective of the creative industries, acknowledgement of how important the issue of global competition came about in 2005 via the Cox Report.

Initiated by concerns over the ‘rapidly advancing developing economies’ the report was to address questions surrounding the UK businesses’s long-term economic success in a global economy that is becoming ever more competitive.

The report makes another important statement that creativity cannot be a solely owned skill possessed by the gifted few. It needs to pervade the thinking of the whole business. The idea of ‘creativity’ has always remained the remit of the creative industry; this separation means that design has been largely viewed as an aesthetic bolt on.

Designs place in business

Design was now given a place within the context of business and at the same time it doesn’t remove design from the business, to see it as an external factor to be bought in. By defining innovation as “...the successful exploitation of new ideas. It is the process that carries them through to new products, new services, new ways of running the business or even new ways of doing business...” (Cox Report, 2005) 5

At Cocoonfxmedia we fully understand that what we are doing is more than just building websites, we are delivering a service. This opens up a whole way of thinking about business and marketing that if you leverage correctly means building a competitive advantage over your competition and value to your customers. An organization can do this by applying design processes, in the context of ‘service’ we can arrive at the following definition:

“Service design is the activity of planning and organizing people, infrastructure, communication and material components of a service in order to improve its quality and the interaction between service provider and customers. The purpose of service design methodologies is to design according to the needs of participants, so that the service is user-friendly, competitive and relevant to the customers.” (Service Design Network, 2014)6



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