04 new service design
TRANSCRIPT
New Service Development and Process Design
Learning Objectives
• Discuss the new service development process.• Prepare a blueprint for a service operation.• Describe a service process using the dimensions of
divergence and complexity.• Use the taxonomy of service processes to classify a service
operation.• Compare and contrast the generic approaches to service
system design.• Place an example of service automation in it proper
category.• Discuss the managerial issues associated with the adoption
of new technology.
New Service Development Cycle
• Service design and testing• Process and system design and testing• Marketing program design and testing• Personnel training• Service testing and pilot run• Test marketing
People
Technology Systems
Product
Full Launch Development
Design Analysis
Org
aniz
atio
nal
Con
text Team
s
Tools
Enablers
• Formulation of new services objective / strategy• Idea generation and screening• Concept development and testing
• Business analysis• Project authorization
• Full-scale launch• Post-launch review
Levels of Service Innovation
Radical Innovations• Major Innovation: new service driven by information and
computer based technology• Start-up Business: new service for existing market• New Services for the Market Presently Served: new services
to customers of an organization
Incremental Innovations• Service Line Extensions: augmentation of existing service
line (e.g. new menu items)• Service Improvements: changes in features of currently
offered service• Style Changes: modest visible changes in appearances
Technology Driven Service Innovation
• Power/energy - International flights with jet aircraft• Physical design - Enclosed sports stadiums• Materials - Astroturf • Methods - JIT and TQM• Information - E-commerce using the Internet
Adoption of New Technology in Services
• Challenges of Adopting New TechnologyThe Process is the ProductBack Office vs Front Office ChangesNeed for Standardization
• Managing the New Technology Adoption Process
Ten step process with concern for employees and customers
Service Blueprint of Luxury Hotel
Blending Blueprinting with LeanWomack and Jones, “Lean Consumption”, HBR March 2005.
• Principles of Lean Consumption:1. Solve the customer’s problem completely by ensuring that all the
goods and services work, and work together– Home: search, find, purchase, maintain, repair, upgrade– Cell phone: calling, pda, pictures, music, hot synch., downloads, internet…
2. Don’t waste the customer’s time– Enhanced blueprint: add value-creating, and wasted time for customer and
provider. Calculate total time and % value added.3. Provide exactly what the customer wants
– Prevent stockouts from long supply chains– Nike’s custom bags from NuSewCo in San Francisco
4. Provide what’s wanted exactly where it’s wanted– Offer services through all desired channels, on-line, local, big-box,
phone…5. Provide what’s wanted where it’s wanted exactly when it’s wanted
– Sometimes this may be some time off. Could I get it customized merely by sharing plans?
6. Continually aggregate solutions to reduce the customer’s time and hassle.– One stop for the really big problems: mobility, communications, shelter,
health care, financial management, shopping.
Strategic Positioning Through Process Structure
• Degree of Complexity: Measured by the number of steps in the service blueprint. For example a clinic is less complex than a general hospital.
• Degree of Divergence: Amount of discretion permitted the server to customize the service. For example the activities of an attorney contrasted with those of a paralegal.
Structural Alternatives for a Restaurant
No ReservationsSelf-seating. Menu on Blackboard
EliminateCustomer Fills Out Form
Pre-prepared: No Choice
Limit to Four Choices
Sundae Bar: Self-service
Coffee, Tea, Milk onlyServe Salad & Entree Together:
Bill and Beverage Together
Cash only: Pay when Leaving
TAKE RESERVATIONSEAT GUESTS, GIVE MENUSSERVE WATER AND BREAD
TAKE ORDERSPREPARE ORDERS
Salad (4 choices)
Entree (15 choices)
Dessert (6 choices)
Beverage (6 choices)SERVE ORDERS
COLLECT PAYMENT
Specific Table SelectionRecite Menu: Describe Entrees & SpecialsAssortment of Hot Breads and Hors D’oeuvresAt table. Taken Personally by Maltre d’
Individually Prepared at table
Expand to 20 Choices: Add Flaming Dishes;Bone Fish at Table; Prepare Sauces at TableExpand to 12 Choices
Add Exotic Coffees; Sherbet betweenCourses; Hand Grind Pepper
Choice of Payment. Including House Accounts:Serve Mints
LOWER COMPLEXITY/DIVERGENCE CURRENT PROCESS HIGHER COMPLEXITY/DIVERGENCE
Taxonomy of Service ProcessesDegree of Customer Contact
Low Divergence (Standardized Service) High Divergence (Customized Service)
Processing of Goods
Processing of Information or Images
Processing of People
Processing of Goods
Processing of Information or Images
Processing of People
No Customer Contact Dry cleaning
Restocking a vending machine
Check processing
Billing for a credit card
Auto repair
Tailoring a suit
Computer programming
Designing a building
Indirect Customer Contact Ordering groceries from a home computer
Phone-based account balance verification
Supervision of a landing by an air controller
Bidding at a TV auction
Direct Customer Contact
No customer-service worker interaction (self-service)
Operating a vending machine
Assembling pre-made furniture
Withdrawing cash from an automatic bank teller
Taking pictures in a photo booth
Operating an elevator
Riding an escalator
Sampling food at a buffet dinner
Bagging of groceries
Documenting medical history at a clinic
Searching for information in a library
Driving a rental car
Using a health club facility
Customer-service worker interaction
Food serving in a restaurant
Car washing
Giving a lecture
Handling routine bank transactions
Providing public transportation
Providing mass vaccination
Home carpet cleaning
Landscaping service
Portrait painting
Counseling
Haircutting
Performing a surgical operation
Generic Approaches to Service Design
• Production-line• Limit Discretion of Personnel• Division of Labor• Substitute Technology for People• Standardize the Service
• Customer as Coproducer• Substitution of Customer Labor for Provider• Smoothing Service Demand
• Customer Contact• Degree of Customer Contact• Separation of High and Low Contact Operations
• Information Empowerment• Employee and Customer
Discussion Questions
• What ethical issues are raised in the promotion of sales during a service transaction?
• What are some drawbacks of customer participation in the service delivery process?
• What are the limits in the production-line approach to service?
• Give an example of a service in which isolation of the technical core would be inappropriate.
Commuter Cleaning - New Venture Proposal
1. Prepare a service blueprint for Commuter Cleaning.
2. What generic approach to service design is illustrated by Commuter Cleaning, and what competitive advantage does this offer?
3. Using the data in Table 4.6 calculate a break-even price per shirt if monthly demand is expected to be 20,000 shirts and the contract with a cleaning plant stipulates a charge of $0.50 per shirt.
4. Critique the business concept, and make recommendations for improvement.
100 Yen Sushi House Questions
• Prepare a service blueprint for the 100 Yen Sushi House
• What features differentiate 100 Yen Sushi House and how do they create a competitive advantage?
• How has the 100 Yen Sushi House incorporated the just-in-time system into its operations?
• Suggest other services that could adopt the 100 Yen Sushi House service delivery concept.
100 Yen Sushi House Layout
Miso and Tea Station
CONVERSATION AREA
CO
NV
ER
SA
TIO
N A
RE
A
Dishwashing Counter in Back
ENTRANCE
CONVEYOR BELT
TAKE-OUT POSITION
= CHEF
100 Yen Sushi House Service Package
• Supporting Facility
• Facilitating Goods
• Information
• Explicit Service
• Implicit Service
INTERACTIVE CLASS EXERCISE
The class breaks into small groups and prepares a service blueprint for Village Volvo.