INTRODUCTION
Requirements for stakeholders' involvement and information flow Requirements for the project management
 
PSS innovation is fundamentally different from incremental innovation that is concerned with exploitation of existing business processes and technology. The introduction of PSS business models can bring substantial change in the operations of the company (its processes, products or services) and transform existing markets or industries, or create new ones.
 
The MEPSS methodology is organised in a modular and flexible way. This allows for possible uncertainties and maximises the likelihood of smart business decisions, focused on the innovation options that are most likely to succeed in the market place. It can be used in full, applying the whole set of processes described for developing a new PSS, or alternatively in part, by choosing only selected modules according to the specific needs of the case under development. The MEPSS "phase model" thus allows for a flexible allocation of resources and optimisation of the business opportunity/risk ratio.
 
The methodology can be applied by either a small team of experts or, in a more participatory planning process.
 
It is helpful to start with a short definition of the terminology used in the MEPSS model. Figure 1 shows the five phases of the MEPSS modular structure. This basic strategic frame will be detailed and adapted for the special demands of a PSS development and design process. Each of the main phases is subsequently structured in steps, and steps are described by a series of processes. The ‘phase-step-process’ hierarchy has been developed to offer a systematic and layered innovation model. The application of tools is supported by a number of worksheets in the Annex of this Handbook (accessible via MEPSS website).
graphic
Figure 1: Five phases in the MEPSS model
 
Phases
At the highest level, the MEPSS model consists of phases. The MEPSS phase model allows for flexible allocation of resources and optimisation of the business opportunity/risk ratio.
The model involves the following five main phases:
  • phase 1: strategic analysis
  • phase 2: exploring opportunities
  • phase 3: PSS idea development
  • phase 4: PSS development
  • phase 5: preparing for launching the PSS (commercial implementation of PSS).

The phases of the MEPSS model are linked by decision nodes, points at which the progress of the innovation project is reported to the management of the company and decisions made about its future. A decision node can be seen as the connecting element between the development phases. Conclusions are drawn by the management from the main results of the preceding phase, and these are fed into the execution of later phases. The project team performs the necessary preparatory steps for each decision node.
Each of the main phases is broken down into steps, and these steps are described in processes. This ‘phase- step-process’ hierarchy has been developed to offer a systematic and layered innovation model.
Steps
At the next level, steps are the sequential building blocks of the phases. They provide a chronological description of the deliverables that need to be realised in a MEPSS-phase.
Processes
At the action level, processes are the key elements for the realisation of a MEPSS-step. Processes are action- oriented descriptions of the activities that need to be executed. They are the key elements described in this handbook. Each description of a process is preceded by the coordinates ‘Phase X / Step Y / Process Z’, enabling simple navigation through the MEPSS model.
 
Decision nodes
A decision node precedes each phase which serves as a link with the management (board) of the organisation. At the decision node, the ‘bottom-up’ results of the PSS innovation phase will meet the ‘top-down’ views of the management board. This will bring additional dynamics to the innovation cycle. The bottom-up and top-down processes offer different ways to look at the business from the outside-in (from the customer's perspective) and also from the inside-out. At the decision node a review is made of the quality of the work executed (process) and the results (content) of the PSS project team. The PSS project team will present and discuss their progress.
Decision nodes deal with three quality issues: quality of execution; business rationale; and quality of the action plan. At the end of the decision node meeting, the management (board) will take a go/no-go decision for continuation to the next phase. In addition, the management (board) will make specific suggestions to improve further the results of the preceding phase or guide the execution of the next phase.
It is important to note that a phase has not failed if management takes a ‘stop’ or ‘go-back’ decision. This can be regarded as normal procedure in an iterative innovation process.
Structure of the decision nodes:
  • Deliverables:inputs into the decision node review (what the project leader and his/her team deliver to the meeting). These are defined in advance and are the results of actions from the preceding phase. A standard menu of deliverables is specified for each decision node.
  • Criteria:clear criteria are set at the start of the project and progress is judged against them in order to make the go/no-go and prioritization decisions. The way that the criteria are used changes from phase to phase. In the later phases, when the actual choice of a preferred PSS business model is approaching, the checks will become more strict and extensive. Criteria have to be checked from time to time against changing external factors (such as market conditions). 
  • Outputs:results of the decision node review. Decision node meetings must have clearly articulated outputs including a decision (go/hold/go-back/stop) and a path forward (including approved project plan, date and deliverables for the decision node meeting of the next phase).