Service Design Vouchers for manufacturing industry

In 2016 and 2017, a policy experiment on service innovation in the form of so-called Service Design Vouchers was conducted in collaboration between the Ministry of Economic Affairs (at that time), RVO, and Dialogic. The goal was to investigate the need for a separate policy intervention to promote service innovation and to gain experience with policy experiments. Businesses increasingly offer 'solutions', 'experiences', or product/service combinations aimed at 'unburdening' their customers. By adding service elements to their product offerings – a process known as servitization – manufacturing companies strive to differentiate themselves from competitors. Particularly, small and medium-sized manufacturing companies struggle with this transition. The Service Design Voucher policy experiment aimed to specifically support this group with such a transition. To avoid setting up large support programmes that may have little effect later, the intervention was initially tested on a small scale through an experiment. The intervention in the form of an SDV consisted of a 'voucher' that allowed an SME from the manufacturing industry to have a knowledge question answered by a knowledge institution or an advisory firm. An SME from the manufacturing industry received a maximum subsidy of €3000, to be spent on advice from a knowledge institution or advisory firm for a service design project. One of the conditions was that the entrepreneur also invests €1000. Small projects were carried out where manufacturing companies delved into customer needs using various methods (partly service design methods) or considered how to offer services in addition to or closely intertwined with their physical product. Lessons and recommendations regarding the promotion of servitization Analyses on participation and achieved results in terms of service innovation maturity yield the following key findings:

1. It is likely that the service design vouchers contributed to raising awareness and strategy around servitization among SME manufacturing companies.
2. The studied instrument is particularly suitable for the group of companies who know they want to do something with servitization but have not delved into it thoroughly yet.
3. There are multiple rationales justifying policy for servitization; any potential follow-up policy should address the most concrete bottlenecks.

The subject, form, and target group of the voucher are all relevant and acceptable, and have given a push in the right direction towards servitization for a select group of SME manufacturing companies. However, a completely new and independent instrument with its own label and all necessary communication has proven to be daunting for both policy experiments at times. Based on the findings of the policy experiment, we therefore recommend not continuing the service design vouchers in their current form. Looking ahead, we see three ways to promote servitization (and broader service innovation). In a generic variant, existing innovation policy instruments could explicitly make room for servitization or broader service innovation. In a continuation variant, the voucher could be offered again – taking into account the lessons learned. The idea is that now is the right time to develop a version 2.0 that better aligns with the objectives, where the effects can be measured and evaluated again. Finally, in a specific 'integration' variant, vouchers for servitization could be part of local, sectoral, or thematic initiatives. In this final variant, servitization is not the main focus of an (identifiable) instrument but part of a theme where companies proactively, from within, engage with it. Servitization would then be, for example, a means (not an end in itself) to shape circular entrepreneurship, smart production, or business growth through transitioning to new business models. Lessons and recommendations regarding conducting policy experiments Going through the complete cycle of policy design, implementation, monitoring, and evaluation yields various insights into the design and applicability of policy experiments. The key lessons, some of which specifically relate to experiments where the target group needs to actively sign up, include:

1. The combination of a new policy experiment for a new target group is difficult to reconcile with the high standards set by a randomised controlled trial (RCT).
2. The requirements for an RCT are quite stringent, particularly when combined with a limited policy budget for an experiment.
3. New interventions may not yet be well-known, and therefore, significant investment in raising awareness among the target group (which must be precisely defined) is necessary if the RCT form is chosen.
4. Policy experiments require a significant amount of time; this time may not always be available.
5. Finding support for an experiment is not automatic.
6. Framing a policy experiment is not straightforward. A policy experiment in the form of a formal regulation brings additional administrative burdens, which may discourage companies.
7. Consider conducting policy experiments in a setting different from that of a formal policy instrument (e.g., a research environment).

  Further information can be found at: Service Design Vouchers for the transformation of the manufacturing industry