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RESHAPING MENTAL MODELS THROUGH SERVICE DESIGN TO FOSTER SERVICE INNOVATION Josina Vinka, Bård Tronvollb, Bo Edvardssonc, Katarina Wetter-Edmand Experio Lab, County Council of Vårmland and CTF – Service Research Center, Karlstad University, Sweden b Hedmark University of Applied Sciences, Norway and CTF – Service Research Center, Karlstad University, Sweden c CTF - Service Research Center, Karlstad University, Sweden d County Council of Sörmland and Örebro University, Sweden

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ABSTRACT While service innovation is a growing priority for organizations, it is difficult achieve when actors are stuck in the status quo. Despite the growing body of literature on service innovation, there remains a pressing need to better account for the context of innovation within service research. The purpose of this paper is to investigate how innovation can happen amid inertia in service ecosystems. Through an ethnographic case study of innovation in healthcare, this paper brings forward the important role of mental models and delineates how service design practices can help to reshape them to enable service innovation. KEYWORDS service innovation, mental models, inertia, service design, service ecosystems INTRODUCTION Amid the growing body of research on service innovation (Carlborg et al., 2014; Witell et al., 2015), there is an urgent need to build an understanding of innovation that more adequately accounts for context (Ostrom et al., 2015). Recognizing the importance of context, the authors of this paper adopt a service ecosystem view of innovation as a process of changing the institutional arrangements that govern value co-creation (Vargo et al., 2015; Koskela-Huotari et al., 2016). While service innovation is high on the agenda for many organizations, it can be a significant challenge when actors are stuck in the status quo of an existing service ecosystem. Inertia, or a reduced willingness to cannibalized current ways of operating, acts as a critical inhibitor to innovation (Chandy and Tellis, 1998; Hillebrand et al., 2011; Nijssen et al., 2005). Related to this innovation challenge, mental models have been identified as a key source of inertia (Guiette and Vandenbempt, 2013). Mental models are shared cognitive beliefs that guide actors’ behaviour and interpretation of their environment (Dequech, 2013, Strandvik et al., 2014).

While mental models are recognized as a central guiding force for actors’ actions, they have been largely ignored within service research in recent years (Strandvik et al., 2014). As such, the purpose of this paper is to investigate how innovation happens amid the inertia of existing service ecosystems with a focus on the role of actors’ mental models. To do this, the authors draw on an 18-month ethnographic case study of efforts to innovate within the Swedish healthcare system through service design. Service design is a human-centred, creative and iterative approach to realizing preferred futures (Blomkvist et al., 2010; Wetter-Edman et al., 2014) that has been linked to service innovation (Andreassen et al., 2016; Bitner et al., 2008; Patrício et al., 2011). This paper contributes to the evolving discourse on service innovation by bringing forward the underappreciated and intertwined role of actors' minds and bodies. In response to calls for a more contextual understanding of service innovation, this research posits that innovation in service ecosystems not only requires actors to alter external institutional arrangements, but that innovation necessitates that actors shift their own shared beliefs and routines. This paper begins by drawing together theory on innovation, mental models and service design into a conceptual framework. This framework is contextualized and the related service design practices are identified through the findings of the case study. The insights brought forward through this research are then synthesized into four propositions. THEORETICAL FRAMING Discourse on service innovation has evolved significantly in the last twenty years with many divergent perspectives on what this concept entails (Carlborg et al., 2014; Witell et al., 2016). To build an understanding of innovation in context, researchers highlight the value of a service ecosystems perspective (Lusch, 2011; Lusch and Nambisan, 2015; Vargo and Lusch, 2016a). Cconceptualizations of innovation from a service ecosystem perspective emphasize the importance of actors altering institutional arrangements to enable novel forms of value co-creation (Edvardsson and Tronvoll, 2013; Vargo et al., 2015; Koskela-Huotari et al., 2016). However, the question remains: how are actors able to alter institutional arrangements while being influenced by them (Seo and Creed, 2002)? Recent research suggests the need to focus on the cognition of individual actors to fully understand their ability to disrupt the status quo within existing institutional arrangements (Suddaby et al., 2016; Voronov and Yorks, 2015). While cognitive aspects of innovation haven’t been widely discussed through a service ecosystem perspective, its core metatheories of

institutional theory and system thinking (Vargo and Lusch, 2016b) offer relevant insights. Within institutional theory, mental models are seen as the internal representations actors create to interpret their environment, which are intimately linked to actors’ enactment of the institutions that maintain order in their environment (Denzau and North, 1994). Similarly, systems thinking researchers recognize that it is through mental models that actors make sense of the outside world (Senge, 1990). While mental models are valuable in guiding actions, none of these models are accurate and complete depictions of the real world (Meadows, 2009). These mental models persist because actors create defensive routines that safeguard their usual way of thinking about reality, buffering them from experiencing threat (Argyris, 1985). While mental models are often characterized as enduring (Doyle and Ford, 1998), there is increasing evidence that mental models can be changed (Scott et al., 2014). Previous research by the authors of this paper suggests that one possible way to reshape mental models is through design practices (Vink et al., 2017). Many design scholars have highlighted that design practices are associated with unique cognitive processes (Cross, 1982; Dorst and Cross, 2001; Kolko, 2010). In design practices, these cognitive processes are intertwined with embodied, aesthetic experiences, where actors gain information about a situation through their sense of sight, sound, taste, touch, and smell (Stephens and Boland, 2015; Schön, 1992). Through a co-design approach (Steen, 2013), service design engages diverse actors in the bodily and cognitive processes of design practices. As such, while a variety of research has connected service design with service innovation (Andreassen et al., 2016; Sangiorgi and Prendiville, 2015; Wetter-Edman et al., 2014), a closer look at the role of actors’ mental models may help to shed light on this relationship. CONCEPTUAL FRAMEWORK This article investigates how innovation happens amid inertia. Based on the review of related theory, the authors of this paper propose that by engaging in service design actors can alter their mental models to overcome inertia and enable innovation within service ecosystems. Figure 1 shows that amid inertia actors employ defensive routines that reinforce current mental models and facilitate the enactment of existing institutional arrangements. Alternatively, if instead of engaging in defensive routines, actors participate in service design, these practices can support the reshaping of actors’ mental models enabling them to contribute to altering existing institutional arrangements. However, just how the re-shaping of mental models happens through service design is an unresolved issue. To investigate this issue, this paper moves into describing the empirical case.

Figure 1: From inertia to innovation METHODOLOGY In this research, the case of Experio Lab, a national centre for patientfocused service innovation employing a service design approach within healthcare in Sweden, was investigated. This ethnographic case study examined and followed multiple service design projects as well as the overall lab initiative. To investigate service innovation amid inertia, an ethnographic case study is well suited to produce such context-dependent knowledge (Creswell and Clark, 2007; Eisenhardt, 1989; Flyvbjerg, 2006; Yin, 1984). As is typical in ethnographic research, the case study was conducted through participant observation, interviews and document analysis (Czarniawska-Joerges, 2007; Silverman, 2013). The first author of this study was embedded within Experio Lab's setting for 18 months. The knowledge gained from observation was extended through 14 semi-structured interviews of Experio Lab team members and healthcare staff who participated in service design projects. Insights from the field research were synthesize in an iterative process of moving between data collection and analysis, and between field work and existing theory. Based on initial data collection and a review of related literature, a conceptual framework was developed. This framework was refined and related service design practices identified through additional interviews and observations. A final round of interviews and review of archival data was completed to falsify (Flyvbjerg, 2006) and refine the propositions. FINDINGS Within the Swedish healthcare system, the inertia of the status quo was palpable in lunch-time conversations and service design project meetings.

There was a great deal of frustration amongst those working to catalyze change about how stuck everyone was in the current system. One interviewee reflected on this sentiment by saying: “The whole system is just set up to maintain itself – not to evolve over time, just to maintain itself . . . some days I just want to put a grenade in a part of it and let it explode.” While standard routines for health care providers are valuable to support quality care, these routines also seemed to be a significant part of what was keeping the system stuck in historical ways of operating. One Experio Lab team member described it as follows: “Health care personnel are drawn into the core of their work. The core is to take care of patients. The core of their work is not to develop health care or find innovations . . . The core is like a black hole. It has a gravitational pull. I have to do this; I have to do this.” Service providers and administrators talked about the expert mindsets of their colleagues as barriers to innovation. They connected this mindset to the hierarchy and siloed nature of the healthcare system. One Experio Lab team member highlighted the challenge in the following way: “A lot of people here have a lot of experience working in this organization. Maybe 20 or 30 years. They have been doing things in one way for many years. They have so much competence and experience and you want to bring that into a project, but it might be a hindrance.” These routines of regular service provision along with mutually reinforcing beliefs of healthcare providers being experts, created significant inertia as practitioners were trying to innovate within the healthcare system. However, during observations it quickly became apparent these shared beliefs, or what we call in this paper mental models, were being changed as people participated in the service design process. One interviewee alludes to this by saying: “It is not just about changing services; people are changed in the process.” By participating in Experio Lab’s service design projects, people were having ‘aha’ moments. They talked about seeing things differently and changing their way of thinking. One designer even went so far as to compare it to a spiritual awakening:

“It is like there is a light in their eyes. They stop what they are doing. Freeze for a fraction of a minute. You can feel it in your body. It is a very bodily feeling – like being over-through or lit up. It is like finding Christ.” While others described it more subtly as something ‘clicking’ in their heads, the pattern was clear – people’s thinking was changing by embracing service design practices. Through field research, it became evident that aesthetic experiences were fundamental to the shifts in beliefs that people had through participation in the service design process. Another designer further reinforced the importance of aesthetic experiences saying: “It goes into your spine. You feel, you hear, you see. If someone just tells you, it doesn’t go into your bones. You have to have a personal insight.” The overwhelming sense from the field research was that these aesthetic experiences had an important effect on actors’ mental models. This prompted inquiry into the types of service design practices that were contributing to reshaping mental models. What emerged from theming the interview and observational data were three iterative and intertwined practices (as shown in figure 2): sensing surprise, perceiving multiples and embodying alternatives.

Figure 2: Reshaping mental models through service design Firstly, one of the most transformative practices conducted in service design projects was using one’s senses to gain novel insights, or what is labeled here as sensing surprise. Within observations and interviews actors repeatedly described having their way of thinking transformed by experiencing something unexpected. By noticing new things that existing mental models would have otherwise filtered out, actors began to

challenge and expose the fallibility of their mental models. One Experio Lab team member recalled a moment of sensing surprise: “And you know what happened there, when you use all your senses, and you smell. People are scared, they are sick, and the nurses just leave. I saw people crying because they didn’t like the situation. Something happened with [the doctor] when I said, do you smell that? He started to look and take a more curious perspective.” Secondly, another clear theme in the data was the important practice of perceiving multiples. Perceiving multiples entails actors stepping outside of their own dominant perspective and recognizing the multiplicity of perspectives possible within a certain situation. By exposing actors to different ways of perceiving the same situation, Experio Lab’s service design practices help actors recognize that many mental models exist and are possible. This was done by helping participants to “walk in others’ shoes” and bringing actors with different backgrounds into dialogue together. Often seeing things from the patient’s point of view was emphasizes as being particularly important: “Then we transformed things to see it from another point of view - the patient's point of view.” Thirdly, another core practice that Experio Lab utilized that seemed to have a significant effect on actors' mental models is the process of embodying alternatives. This involves materializing new ideas or finding ways for actors to experience alternative approaches to a situation. Engaging actors in building out or enacting new approaches seemed to aid actors in reshaping their own mental models and embracing the alternatives necessary for fostering service innovation. A project team member described how this was supported by having participants build out their new ideas with Lego and craft supplies: “We had this table there…a prototype table and they just ran and took things and tried to build system things . . . we had a kid here who built a completely new school system.” PROPOSITIONS Previous research pointed to the need to recognize the central role of mental models in innovation amid inertia. This study supports this presupposition, which has several implications for the conceptualization of innovation in context. Below are four propositions that articulate these implications.

Proposition 1: Mental models are a central source of inertia in service ecosystems. In the Swedish healthcare system, mental models, such as the shared belief that “the providers are the experts”, were a key source of the behavior which maintains the current structures within clinical settings. Proposition 2: Amid inertia, actors employ defensive routines that protect current mental models and inhibit innovation. For example, actors in the healthcare system had routines around blaming other departments for errors and filtering out information about their own responsibility. Proposition 3: Innovation amid inertia relies on actors reshaping mental models to enable change. In the Swedish healthcare system to innovate through a patient-centered approach, the expert mental model shared among actors needed be exposed and altered. Proposition 4: Service design practices can reshape mental models through an iterative process of sensing surprise, perceiving multiples, and embodying alternatives. In the case study, Experio Lab supported all three of these transformative practices in their projects which contributed to reshaping mental models through the aesthetic experience of participating actors. REFERENCES Andreassen, T. W., Kristensson, P., Lervik-Olsen, L., Parasuraman, A., McColl-Kennedy, J.R., Edvardsson, B., and Colurcio, M. (2016), "Linking service design to value creation and service research", Journal of Service Management, 27(1), 21–29. Argyris, C. (1985), Strategy, Change, and Defensive Routines, Pitman, Boston. Bitner, M.J., Ostrom, A.L., and Morgan, F. N. (2008), “Service blueprinting: a practical technique for service innovation”, California Management Review, 50(3), 66-94. Blomkvist, J., Holmlid, S. and Segelström, F. (2010), ‘‘This is service design research: Yesterday, today and tomorrow”, in Stickdorn, M. and Schneider, J. (Eds.), This Is Service Design Thinking, 308-315, BIS Publishers, Amsterdam. Chandy, R. K., and Tellis, G. J. (1998), “Organizing for radical product innovation: The overlooked role of willingness to cannibalize”, Journal of Marketing Research, 474-487. Creswell, J. W., and Clark, V. L. P. (2007), Designing and Conducting Mixed Methods Research, 2nd ed., Sage, London. Cross, N. (1982), “Designerly ways of knowing”, Design Studies, 3(4), 221227.

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