What is Service Design?
Services have existed for a long time (think hotels and restaurants), and designers should hold no illusions that they are treading in new territory. Rather, the perspective they bring to services is what makes their approach different and successful. That perspective is one of user-centered design, and can be boiled down to that simple, well-known phrase: the customer is always right.
Well, at least some of the time. Sometimes the customer doesn't know what he or she wants or needs. That's when service design skills of ethnography and experience prototypes can yield significant benefit by revealing insights into the often unspoken needs and desires of customers. Building off these insights, service designers can produce results which are more satisfying, rewarding, and meaningful for customers.
Service design can (in Dave's opinion) be considered a super-set of interaction design. In other words, service design can be seen as a way of framing interaction design components, or touch-points: the customer-facing means of interacting with a service.
Thus, a service strings together a series of touch-points through time, constantly adapting and responding to its customers' changing needs and desires. Time is the key differentiating factor in services, as how someone joins a service is just as important as how they leave the service. Throughout the delivery of a service, continuity and a focus on customer needs is paramount.
(The views expressed above are solely those of Dave Chiu at the time of creating this site and are constantly evolving.)
Some other views
From the brief for the Service Design class at the former Interaction Design Institute Ivrea: Interaction design is not only about forming an action and reaction between a person and an artefact, whether a computing device or a space. It also concerns the socio-cultural, economic and ecological systems embedded in and connected to these interactions. In this framework, the design of services is becoming a crucial activity towards innovation.
The live|work definition of service design: Design of experiences that reach people through many different touch-points, and that happen over time.
Engine's two-minute guide to service design.
Several other definitions are available at ServiceDesign.org.
Service Design Resources
Design Council on Service Design
live|work has a glossary of service design terminology.
The Emergence 2006 website has an extensive collection of service design resources.