Four types of stakeholders in services

Every service has four types of stakeholders, whose interests define the outcomes and experiences, and give shape to the contract.It is these stakeholders you’re designing for. Payers and enterprises are entities that define the outcomes. Users and agents are personas that define the experiences.

Four types of stakeholders and how they’re related

In general there can be 1…N entities and personas on each side of the service contract. In the simplest cases there is exactly one entity and persona on each side, as in the case of the a single-person household hiring someone who is a solo act to clean the house, or fix the plumbing.

payer:user :: agent:enterprise (entity:persona :: persona:entity)

In the most complex cases, there are multiple entities and personas (NNNN), as can be found in government services paid for by taxpayers, made use of by other taxpayers, operated by a collective of government agencies, who employ civil servants to deliver the service.

1 1 1 1

1 1 1 N

1 1 N 1

1 1 N N

1 N 1 1

1 N 1 N

1 N N 1

1 N N N

N 1 1 1

N 1 1 N

N 1 N 1

N 1 N N

N N 1 1

N N 1 N

N N N 1


Entities and personas are driven by their respective motivations and expectations.  It follows that there are can be up to four different sets of motivations and expectations. There are two sets when users are the payers, and the agents are the enterprise. For example, Peter pays Paul to cut his hair. Paul is a fantastic hair stylist and a solo act. He promises and then he delivers. Otherwise there may be three.  From a design perspective, even if their interests aren’t in direct conflict, it’s problematic enough if they’re not incongruent. The more divergent they are separate, the greater the agency problem.

The agency problem will be lesser, since the agent acting in their own self-interest will still be acting in the best interest of the enterprise. The problem in the case of an incompetent, irresponsible, or unethical agent, there is no recourse with an enterprise. Also, such service providers being so dependent on usually a single person, are usually unable to assure continuity or scale.

The good news is, there is less likely to be a conflict between the motivations of the buyer and that of the consumer, assuming people know what they want. Negotiations can be quick and simple, not consumers have just as much the right to be fickle-minded or unsure. It is easier to get consumers to check a box and click to accept a service agreement without reading the fine print.

Humans or machines

Entities and personas can be human or machines. By machines we mean autonomous agents embodied in hardware and software, capable of projecting both presence and intelligence, capable of dialog and interaction, and vested with responsibility and authority. 2017 saw the emergence of artificial intelligence and machine learning, both, in the consumer and enterprises segments of markets such as healthcare, transportation, and financial services.

















Say something

For selfish and unselfish reasons, close the loop. It is critically important to give service providers feedback on the quality of their service, even if it’s awkward and inconvenient, and especially when they don’t ask. Why? Every piece of feedback is like pixel being updated. The service provider gets a more complete and updated picture of the design of their service may be lacking. The picture emerges over time and changes as the service encounters new challenges and opportunities. Services are complex products that even when designed, take time to evolve in way that is more continuous than the manufactured product. Services are products of materialization.

Birds, bees, and services

You can know the name of a bird in all the languages of the world, but when you’re finished, you’ll know absolutely nothing whatever about the bird …

So let’s look at the bird and see what it’s doing — that’s what counts.

I learned very early the difference between knowing the name of something and knowing something.

~ Richard Feynman, physicist, 1918-1988

The same is true with services. There is a difference in being able to point at a service, or defining and describing it, and knowing the services, especially why it is.


Services exist,
Because people own things.
Some things they own; some others they don’t.
Some people own things because others, they won’t.
Things that are useful and valuable.
From tractors, towers, and transmission lines,
To privacy, privilege and peace of mind.

When things they really care about,
Have affinity and attraction, and there is no doubt,
There are economies in sharing and caring,
To promote the dynamic pairing,
Of supply and demand.
Thus human and machine overlords,
Make agreements of all sorts.

What they do is formalize,
How performances and affordances will actualize,
For outcomes and experiences to materialize.
So when users and agents they do engage,
Across field, channel, platform or stage,
There aren’t painful protractions, in
Their dialog and interactions.

Design thus seeks to minimize,
Transaction costs that could jeopardize,
The value each side expects to realize.
For profit’s sake or public good,
What’s clear and well-understood,
The payments made (in cash or in kind), are for
The welfare and wellbeing of humankind.

Services are equations

Service are equations.

Customers and service providers are equated in terms of the outcomes and experiences. Each sides puts in time, money and effort. Feelings and emotions perhaps. Tangibles and intangibles. Experiences are part of what each side puts in. Outcomes are what they get.

Customers receive a payoff usually in terms of the results and benefits of whatever job the service gets done, such as the transferring funds, the issuing of a permit, the daily supplying of electricity, or placing in orbit of a communications satellite. Service providers receive a payment, directly or indirectly, in cash or in kind.

It is quite obvious users go through the experience primarily defined by dialog and interaction they have with the staff, facilities, and infrastructure that are part of the service. Agents, acting on behalf of the service enterprise, have a corresponding experience.

The design of dialog and interaction aims to minimize the cost of engagement and fulfillment. In services, experience is a transaction cost. Improving the experience results in the lowering of transaction costs.


Even the simplest of services is a closed-loop system. What goes around, comes arounf. The demand side of the equation balances out with the supply side. We learned how to balance equations, in physics, chemistry and math. The same is with services.

Analogical reasoning as applied to services 

The base value system is a simple technique I’ve developed to be able to strip away all the words describing a service and get to the essence of it in verb-noun pairs. Apart from forcing a certain level of clarity, base values are also the basis for applying analogical reasoning to services as part of a method called This is Like That or TILT. It’s like tilting your head while looking at a service with a bit of curiousty and letting the realization appear like a rainbow.

Now, as I review the draft of my book, to identity parts I need to cut out, because there is too much material, I’m wondering if should leave in TILT or keep it out for some other time in future. Below are screenshots of some of the sections as displayed on the Ulysses app I’m using for writing and editing.


Small disturbances

The need to deliver superior sets of outcomes and experiences is constant over the lifecycle of a service offering. Services need to get a job done better than not just competitors but also customers because their ability to do-it-yourself (DIY) is always an option. Indeed, new solutions in the market create competition when they make DIY more attractive and reduce the need for a service. This makes the design of a service never good enough and never complete, because the components of demand may yet require change. Customer needs change for manufactured goods as well, but manufacturers have time to adjust.

Services are products of concurrently projected supply and demand, therefore changes on either side have an immediate effect. The synchronous nature of services makes them riskier to produce than an equivalently complex product from manufacturing. In every design there is residual risk that materializes as costs, often in unexpected ways. Service providers must either absorb these costs, or pass them on to customers. Passing on costs simply introduces the risk of competition from other services or DIY.

Therefore, the design of a service is subject to constant change. However, change can be a destabilizing force, with unintended consequences adding new risk. The methods of service design should be such that they introduce change and innovation that the service more attractive to both sides, and at the same time reduce costs and risks and keep them stable below a threshold. What’s the smallest amount of change we can introduce for greatest amount of impact in terms of outcomes and experiences, at the lowest possible cost and risk? What aspect or element of design can we change so that other elements can be the same?

Some of the best designs are beautiful variants and innovative more in terms of the new effect they produce, rather than radical change. Across the Boeing 737 family of aircraft, we can see decades of design in incremental changes leading to the 737MAX. Strategists use the idea of adjacent possible to identify opportunities for growth through expansion into new market spaces. Design is the ultimate expression of strategy, therefore it the means to transfer knowledge, skills and experience to a space.

It requires creativity and imagination to systematically introduce change to design without also introducing systemic or structural risk. We need to consider change from multiple perspectives. We need to generate and explore many options from a few critical parameters. We need to see how a change in element of the system might affect another with “if this then that”. We need to see differences in similarities, and similarities in differences. “This is like that”. We need to see early more clearly.

All the effort put through multidisciplinary methods, tools and techniques, can still lead to the “relatively complicated scripts” that fail, if enough of the detail is either superficial or superfluous. That should not be the case. Design can be simple, flexible, and strong if our thinking is sophisticated. We could learn from in biology. The design of a service should be more adaptive and open to change, so we can make it more hardy and resistant to failure, by grafting elements of design from other services.

Being able to visualize design in terms of a few key parameters also helps establish cause-and-effect relationships between design elements and failures. Introduced in the 1960s, as part of the quality movement, the Ishikawa diagram made it possible to map defects in any manufactured product to six major categories. We should be able to do the same for services, with the eight design perspectives across four categories of failure. Mazda Motors used an Ishikawa diagram to focus on the few aspects of design that produce the effect of “horse and rider as one” for its very successful Miata. We should be able to do the same with services.

To make the design of a service less prone to failure, it needs to be more flexible and strong and therefore more adaptive and open to change, and therefore simpler and more sophisticated.