strategic planning and design in the service sector

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Management Decision Strategic planning and design in the service sector Povl Larsen Richard Tonge Alan Lewis Article information: To cite this document: Povl Larsen Richard Tonge Alan Lewis, (2007),"Strategic planning and design in the service sector", Management Decision, Vol. 45 Iss 2 pp. 180 - 195 Permanent link to this document: http://dx.doi.org/10.1108/00251740710727232 Downloaded on: 09 May 2016, At: 07:53 (PT) References: this document contains references to 23 other documents. To copy this document: [email protected] The fulltext of this document has been downloaded 4486 times since 2007* Users who downloaded this article also downloaded: (2012),"Customer experience modeling: from customer experience to service design", Journal of Service Management, Vol. 23 Iss 3 pp. 362-376 http://dx.doi.org/10.1108/09564231211248453 (2009),"Service as value co-production: reframing the service design process", Journal of Manufacturing Technology Management, Vol. 20 Iss 5 pp. 568-590 http://dx.doi.org/10.1108/17410380910960993 (1996),"TQM in service design", Managing Service Quality: An International Journal, Vol. 6 Iss 1 pp. 40-44 http://dx.doi.org/10.1108/09604529610108135 Access to this document was granted through an Emerald subscription provided by emerald-srm:478379 [] For Authors If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.com Emerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services. Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. *Related content and download information correct at time of download. Downloaded by UFLA At 07:53 09 May 2016 (PT)

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Management DecisionStrategic planning and design in the service sectorPovl Larsen Richard Tonge Alan Lewis

Article information:To cite this document:Povl Larsen Richard Tonge Alan Lewis, (2007),"Strategic planning and design in the service sector",Management Decision, Vol. 45 Iss 2 pp. 180 - 195Permanent link to this document:http://dx.doi.org/10.1108/00251740710727232

Downloaded on: 09 May 2016, At: 07:53 (PT)References: this document contains references to 23 other documents.To copy this document: [email protected] fulltext of this document has been downloaded 4486 times since 2007*

Users who downloaded this article also downloaded:(2012),"Customer experience modeling: from customer experience to service design", Journal of ServiceManagement, Vol. 23 Iss 3 pp. 362-376 http://dx.doi.org/10.1108/09564231211248453(2009),"Service as value co-production: reframing the service design process", Journal of ManufacturingTechnology Management, Vol. 20 Iss 5 pp. 568-590 http://dx.doi.org/10.1108/17410380910960993(1996),"TQM in service design", Managing Service Quality: An International Journal, Vol. 6 Iss 1 pp. 40-44http://dx.doi.org/10.1108/09604529610108135

Access to this document was granted through an Emerald subscription provided by emerald-srm:478379 []

For AuthorsIf you would like to write for this, or any other Emerald publication, then please use our Emerald forAuthors service information about how to choose which publication to write for and submission guidelinesare available for all. Please visit www.emeraldinsight.com/authors for more information.

About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The companymanages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well asproviding an extensive range of online products and additional customer resources and services.

Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committeeon Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archivepreservation.

*Related content and download information correct at time of download.

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Strategic planning and design inthe service sector

Povl LarsenThe National Centre for Product Design and Development Research,

University of Wales Institute, Cardiff, UK

Richard TongeDepartment of Accounting and Law, Portsmouth Business School,

University of Portsmouth, Portsmouth, UK, and

Alan LewisThe National Centre for Product Design and Development Research,

University of Wales Institute, Cardiff, UK

Abstract

Purpose – The purpose of this paper is to report on the findings of a research project into strategicplanning and design in the service sector sponsored by the Chartered Institute of ManagementAccountants (CIMA) and supported by the Design Council into Design for Accounting.

Design/methodology/approach – The research used a mail survey questionnaire to gaininformation on design and strategic issues.

Findings – The findings are that the majority of medium-sized service enterprises do not have adesign function or use design. For those that do use design, the majority see design as very important:the benefits of design relate to the brand image of both the organisation and the services provided,closely followed by increased profits. Design has been used in the past to add value and improvequality, while innovation has been and will in the future be the main strategic area to concentrate on.Key strategic activities in the past have been adding new customers, whereas in the future the keystrategic activities will be to understand customer needs.

Originality/value – The findings of the paper are important because they shed light on theimportance of design and the benefits of design in the service sector, the service design strategiesresponsible for current performance, how the performance of service sector medium-sized enterprisesis assessed in terms of financial, market and service supply criteria, how service sector medium-sizedenterprises have reached their current status and how they intend to progress in the future, and theorganisational, service supply and market factors employed in the past and how these might change inthe future.

Keywords Strategic planning, Design, Service industries

Paper type Research paper

IntroductionThe importance attached to the benefits of design in manufacturing enterprises is wellreported, as is the analysis of the strategic planning process and strategies employed.A number of studies conducted over the last two decades have further researched theseareas in an attempt to identify the “secrets of success” of high-, super- andhyper-growth medium-sized enterprises. These studies have highlighted the strategicimportance that products make to the success, performance and growth of companies.

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0025-1747.htm

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Received 25 May 2006Revised 24 August 2006Accepted 19 October 2006

Management DecisionVol. 45 No. 2, 2007pp. 180-195q Emerald Group Publishing Limited0025-1747DOI 10.1108/00251740710727232

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However, research into the benefits of design and design related strategies in theservice sector have received less attention, this despite the fact that the service sector inthe UK accounts for 79.5 per cent of the labour force and contributes 75.8 per cent to theUK’s GDP (CIA, 2006). To address this apparent void, a survey of manufacturing andservice sector medium-sized enterprises was conducted during the period 2000 to 2001.The Chartered Institute of Management Accountants (CIMA), under the heading“Identifying Best Practice Integrated Design and Management Accounting Processes”sponsored the research, with additional non-financial support from the Design Council.This paper reports on the findings related to the strategic activities and benefits ofdesign in medium-sized service sector enterprises.

ObjectivesThe objectives of the paper are to review, in the context of medium-sized service sectorenterprises, which medium-sized enterprises are the users of design, how importantdesign is seen to be by the users of design, to identify the benefits for those who usedesign, and report on the past strategies employed and those intended for the future.

Implications for managementThe findings are important because they shed light on:

. the importance of design and the benefits of design in the service sector;

. the service design strategies responsible for current performance;

. how the performance of service sector medium-sized enterprises is assessed interms of financial, market and service supply criteria;

. how service sector medium-sized enterprises have reached their current statusand how they intend to progress in the future; and

. the organisational, service supply and market factors employed in the past andhow these might change in the future.

Literature reviewWhile much research has been conducted into the benefits and value design offers anda number of studies have looked at strategic factors and how they impact businessperformance, there has been scarce attention paid to the relationship of design tobusiness strategy and performance (Gemser and Leenders, 2001; Potter et al., 1991;Roy, 1994; Bloch, 1995; Ulrich and Pearson, 1998).

Why design is importantAccording to Cooper (2001), in his book Winning at New Products, the meteoric rise andcurrent fortunes of many corporations are due to the introduction of new products. Forexample, Glaxo, once a mid-sized British pharmaceutical company, rose to number twoin the pharmaceutical world on the coat tails of a single anti-ulcer drug; or Microsoft,virtually unknown in 1982, through its design of the “Windows” operating system, hasbecome a corporate giant.

In many industries, opportunities for mergers and acquisitions are drying up, whichleaves innovation, through the design of new services, as the main source for creatingcompany growth (von Stamm, 2006). It is now firmly established that those enterprisesthat use design effectively will be those who survive and prosper in increasingly

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demanding world markets (Design Council, 1998). In order to meet this challenge,businesses intent on growth need to encourage the use of design and in the processensure that design is a value adding activity. According to Fairhead (1988) thosecompanies that have a strong design focus that pervades their entire culture showimproved performance. Research by the Open University and Open University/UMISTResearch Team (1991) and by Aldersley-Williams (1996) suggests that successfulcompanies are likely to have a strong bias towards design. A study by Roy et al. (1999)found that high-growth firms were more likely to have managers with a positiveattitude to design and innovation, introduced products more frequently, and were morelikely to use state of the art technology in product development. While Trueman andJobber (1998) suggest that companies will only take design seriously if they can see atangible benefit showing where and how design is associated with improvedperformance.

Strategic factors related to service designThe literature on strategic factors related solely to service design is sparse. However,number of studies do exist that have reported on manufacturing businesses andbusinesses from both service and manufacturing sectors.

Mondiano and Ni-chionna (1986) found that successful companies concentrated onthe value of their products rather than low price, were highly customer-orientated, werefast and flexible in their responses to customer needs and new trends, avoided head-oncompetition and expanded into overseas markets early on in product development.Clifford and Cavanagh (1985) found that the key success factors in medium-sizedenterprises were paying attention to the needs of customers, having amarket-orientated strategy, focusing on innovative products, producing high-qualityand added-value products and employing motivated staff. Taylor et al. (1990) studiedsuccessful medium-sized enterprises in the UK and found that the role of nichemarkets, unique products, product diversification, flexibility and creating added valueproducts were the main characteristics of these businesses. Later research by Taylor(1997) identified four areas that companies’ intent on growth should concentrate on:

(1) find a niche market you can defend;

(2) compete in areas that require speed, flexibility and customer service;

(3) diversify into related products and adjacent markets; and

(4) leave the industry before the window of opportunity closes.

Successful companies satisfy the needs of the customer through the design of highquality services and products. As Tonge et al. (1998) found in their study of strategicleadership in super-growth companies, these companies place a greater emphasis onthe customer in that they look to add new customers, understand customer needs andseek to increase sales to existing customers. From Tonge et al.’s (1998) survey it wasfound that the following seven critical success factors, in order of importance,differentiated high- and super-growth companies:

(1) flexibility;

(2) product diversification;

(3) attracting and holding on to quality staff;

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(4) niche marketing;

(5) early entry into growth markets;

(6) quality; and

(7) frequent innovation.

MethodologyFrom the Hemmington Scott (2000) compact disc “Really Essential Financial Statistics”UK medium-sized service enterprises that were registered on the London StockExchange were identified. To be considered as medium-sized an enterprise had to havean annual sales revenue turnover of between £5 million and £250 million over afour-year period. Due to the limited size of the population (365) all the service sectorenterprises that met the criteria for medium-size over a four-year period were includedin the survey. The categories surveyed covered:

. distributors;

. general retailers;

. leisure, hotels and entertainment;

. media and photography;

. real estate;

. restaurants, pubs and breweries;

. software and PC services;

. support services; and

. transport.

A mail survey questionnaire was chosen as the appropriate mechanism to collect databecause it was deemed important to first identify a general consensus of opinion oroverview of the use of design in medium-sized service enterprises. There was also thedifficulty in identifying, which medium-sized enterprises would be willing to take partin interviews. From the authors’ own experiences using mail survey questionnaireshad been found to be an appropriate method for introducing a research topic and onethat enabled the would-be respondents to decide if they wanted to take part infollow-up interviews.

Prior to conducting the full survey, a pilot test of the questionnaires wasundertaken on a sample of 20 service sector enterprises that had an annual salesrevenue turnover of between £5 million and £250 million but over only athree-year period. That is, they were of a similar size but did not meet the criteriafor inclusion in the main survey. Seven completed questionnaires were receivedthat emphasised the need to add a section to the questions that enabled additionalcomments or suggestions to be added.

The questionnaires were posted to the Managing Director (MD) or Chief ExecutiveOfficer (CEO) of each of the UK service sector medium-sized enterprises in March 2000.In order to increase response rates, questionnaires were mailed out again one monthlater.

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Response ratesPrevious studies on strategic planning by other authors have produced response ratesof 23 percent (Glaister and Falshaw, 1999), 26 percent (Sohal et al., 1999), and 53 percent(Berry, 1998). Consequently, the decision to use a mail survey questionnaire to collectdata was expected to produce a similar response rate. Three hundred and sixty-fiveservice sector companies were surveyed, from which 75 responses, for the researchpresented in this paper, were received, representing a response rate of 21 percent.

t-Tests were carried out for the respondents and proved that the sample ofmedium-sized enterprises that responded to our questionnaire are not significantlydifferent from the population of all the medium-sized enterprises listed in the sector

FindingsUsers of designThe service sector medium-sized enterprises were asked to state if they did or did nothave a design function and whether they designed their organisation’s services (seeTable I) and, if so, who were the designers?

The largest response came from the “real estate” sub-sector, with a total of 17medium-sized enterprises, of which only two used design, two admitted they did notdesign their services, and 13 stated they had no design function. And yet, looking atreal estate agents’ “for sale” signs, these are noticeably different from one another andtherefore a higher number saying they did use design would be expected. “Softwareand PC services” had seven medium-sized enterprises stating they had no designfunction and just one saying they did use design. Even “media and photography”, as acreative industry, had five admitting to no design function and two not designing theirservices. Could it be that within these sub-sectors employees themselves “design” theservices, such as, estate agents “know” what sells a house and therefore do not need theservices of a professional designer? Likewise in the “software and PC services”sub-sector the programmers are creating the on-screen imagery and have no need forprofessional designers? And in the case of “media and photography”, takingphotographers as an example, again they would decide on what makes a good pictureand not require a designer.

Sub-sectors surveyedSample

sizeResponse per

sub-sectorNo designfunction

We do notdesign our

servicesWe do

use design

Distributors 33 6 3 2 1General retailers 43 4 3 0 1Leisure, hotels and entertainment 33 12 6 1 5Media and photography 43 8 5 2 1Real estate 56 17 13 2 2Restaurants, pubs and breweries 28 3 1 0 2Software and PC services 51 8 7 0 1Support services 58 9 5 2 2Transport 20 8 4 2 2Totals 365 75 47 11 17

Table I.Service sector users andnon-users of design

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Alternatively, it could be that those medium-sized enterprises that do not design theirservices or have no design function are using some kind of software that createspublicity material or sales literature in the style of a service’s brand image, but is notactually referred to as a design tool.

The highest level of support for design came from the “leisure, hotels andentertainment” sub-sector where interior design is well recognised as important increating the right mood to meet customer expectations, but even here the majorityeither had no design function or did not use design.

Looking at those medium-sized enterprises that do use design, who are thedesigners? To answer this question the survey population were asked to specify if thedesigners of services were internal, that is, in-house designers or external (e.g.consultants), or other. “Other” was included should any medium-sized enterprise nothave designers but use engineers, service planners, marketing, etc.

Thirteen respondents of the medium-sized service sector enterprises used internaldesigners. Five used external designers in addition to internal designers and three usedonly external designers, with one respondent refusing to complete this question.However, no medium-sized service sector enterprises suggested any alternatives tointernal or external designers.

Importance of designThe MDs/CEOs of the service sector medium-sized enterprises were asked to selecthow important they thought design was to their organisation based on 1 being veryimportant to 6 being not at all important. Eleven respondents saw design as veryimportant, four as important and two as not at all important.

One of the two who saw design as “not at all important” came from the “leisure,hotels and entertainment” sub-sector. The other came from the “transport” sub-sector.However, four respondents who saw design as “very important” also came from the“leisure, hotels and entertainment” sub-sector. Closer examination of these findingsshowed that the one respondent from the “leisure, hotels and entertainment” sub-sectorthat saw design as “not at all important” was involved in sports, while the four whosaw design as “very important” were involved in hotels. The 11 remaining respondentswere spread randomly over the other service sub-sectors and consequently offer littleinsight into the importance of design in relation to sub-sectors.

Benefits of designThe two greatest benefits of design for the service sector (see Figure 1) relate to “brandimage” either for the organisation or for the organisations’ service closely followed by“increases profits”. “Adds value” and “forges closer relationships with customers”were also well represented. The least benefit from design was seen to be in reducing theselling price of the services provided. These results offer a very positive response todesign and suggest that those medium-sized services that have recognised theimportance of design are now reaping the benefits of increased profitability as a resultof being highly customer orientated and concentrating on the value of their servicesrather than low price, which supports some of the findings of Mondiano andNi-chionna (1986) and to a lesser degree those of Clifford and Cavanagh (1985) andTaylor et al. (1990).

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Design factors responsible for current performanceFigure 2 provides an insight into the design factors the respondents saw as responsiblefor their current performance. The most important factor was “service value andquality” suggesting that the service sector are intent on using design to add value andimprove the quality of the services they provide (Mondiano and Ni-chionna, 1986;Clifford and Cavanagh, 1985) and the main method they have used to achieve this is toattract and hold onto quality staff, which further supports the work of Clifford andCavanagh (1985). “Flexibility” and “early entry into growth markets” were alsofavoured strategies found in previous research to be pivotal in developing successfulgrowth strategies (Taylor, 1997; Tonge et al., 1998). However, “service diversification”received the lowest ranking as a reason for current performance despite this being arecommended strategy by authors such as, Taylor et al. (1990), Taylor (1997) andTonge et al. (1998).

Primary focusThe primary focus (see Figure 3) seeks to identify the medium-sized service sectorenterprises criteria for assessing future performance. The results are based onrespondents specifying the importance attached to answers using a Likert scale that

Figure 1.MD/CEO viewpointregarding benefits ofdesign in the service sector

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ranged from one to six, where one was seen as very important and six not at allimportant.

“Financial results” was the most important primary focus for the future. “Long-termperformance” and “building and enhancing customer relationships” were the secondmost important primary focus for the future, followed in third by “short-termperformance”, “competitive position”, and “improve service brand image”. Theseprimary focuses for the future reflect the service sector medium-sized enterprisesselection of the benefits of design (see Figure 1), suggesting that in the future theservice sector recognise the short and long-term benefits that design can have onbusiness performance.

The low support for “market share” could be related to the high support for “earlyentry into growth markets” (see Figure 2). That is, enter new niche markets but exitbefore the window of opportunity closes, thereby avoiding the need to build marketshare.

Strategic areasFigure 4 shows the strategic areas concentrated on in the past and future with a view tounderstand whether growth was achieved from within, for example through serviceprovision and organic growth or externally through acquisitions and mergers.

From Figure 4 the most favoured strategic area concentrated on in the past was“service innovation”, followed by of equal importance “organisational control” and“acquisition”, suggesting that innovation was achieved through acquisition, which inturn required keeping a tight eye on organisational control. “Market development” and

Figure 2.MD/CEO opinions on the

priority ranking of designrelated factors responsible

for current performance(where 1 is most

important)

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“joint ventures” were past strategies supported by just over half of the respondents.For some of the service sector medium-sized enterprises, acquisition could have beenone strategy employed to increase market development, while others could have used“joint ventures” to achieve the same effect. Organic growth appears a less favouredstrategy, which is supported by the lack of interest in internal investment, clearlyindicating that in the past for the service sector mergers and acquisitions were notdrying up, as von Stamm (2006) suggests.

The future strategic areas to concentrate on show a marked support for “serviceinnovation”, which dominates all of the other areas. Innovation, which has overtones ofthe use of design as the favoured strategy, is a very encouraging response for thegreater use of design within the service sector. “Organisational control”, “acquisition”,“joint ventures” and “market development” also show increased support. Acquisitionin particular would again appear to dispute von Stamm’s (2006) suggestion thatmergers and acquisitions are drying up. The use of joint ventures is a recognisedmeans of reducing risks associated with innovation. While “organic growth” shows nochange from past strategic areas to concentrate on there are marked increases in“internal investment” and the “selection of suppliers”. The increase in “internal

Figure 3.MD/CEO opinions on theimportance of the primaryfocuses for the future(where 1 is mostimportant)

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investment” could be related to the substantial increased support for innovation. Theselection of suppliers can have a bearing on the ability of an organisation to innovateits services and therefore an increase in line with the increase in support for innovationis likely. Overall the strategic areas to concentrate on in the future depict a determinedmove towards an increase in innovation and therefore should herald an increase in theneed for the use of design.

Key strategic activitiesFor Figure 5 the higher the numbers of respondent service sector medium-sizedenterprises that selected an activity the higher the importance attributed to a factor.The MDs/CEOs were asked the question on past strategic areas to identify how themedium-sized enterprises had reached their current status and on future activities toidentify how they intended to reach their future status.

In the past the key strategic activity responsible for attaining past performance hasbeen the addition of new customers by improving the quality of services provided.This has been achieved through teamwork, changes to organisational structure andoffering best after sales service, achieved by seeking to understand customer needs. Interms of service supply activities the main thrust in the past has been on the need toimprove service quality, which reflects the findings of Clifford and Cavanagh (1985),Mondiano and Ni-chionna (1986), Taylor et al. (1990), Taylor (1997) and Tonge et al.(1998). However, the developments of new process technologies and improving supplyand distribution have not been necessary.

Figure 4.MD/CEO opinions on the

service sector strategicareas concentrated on in

the past and for the future

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For the future the service sector medium-sized enterprises show a distinct change instrategy with the key strategic activity geared towards understanding customer needs.Continuing support for this key activity in the future again reflects the benefits derivedfrom increasing teamwork in the past. New key strategic activities gaining popularityare “improving service quality”, “improving service functions and features”, and“offering best after sales service” – emphasising a very customer-centred focus. Theneed to add new customers is no longer a priority, as the increase in support for“increase sales to existing customers” shows. But this is partially offset by adetermined emphasis on exploiting niche markets. In order to meet these changes in

Figure 5.MD/CEO opinions on theservice sector keystrategic activities in thepast and for the future

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strategy the medium-sized services intend to improve their information and strategicplanning systems.

In comparing the past and future key strategic activities noticeable differences notalready discussed are apparent in the decision to increase organisational learning,developing new processes, reduce service lead-time, and benchmark competitors.Increasing organisational learning is in line with the continued decision to increaseteamwork: why reinvent the wheel if the knowledge is already within the organisation?Developing new processes shows an amazing change in emphasis, as in the past thiswas of very little importance, but this would be one method to assist in reducinglead-times, which also show improved support and could be explained by theever-growing demands of customers for services now. As markets become morecompetitive the need to be aware of the competition also increases, which would gosome way to explain the increased support for “benchmarking competitors”.

ConclusionThis paper has reviewed the benefits of design and strategic factors in medium-sizedservice sector industries. Medium-sized service sector enterprises were selected basedon an annual sales revenue turnover of between £5 million and £250 million over afour-year period. Industries covered:

. distributors;

. general retailers;

. leisure, hotels and entertainment;

. media and photography;

. real estate;

. restaurants, pubs and breweries;

. software and PC services;

. support services; and

. transport.

An unexpected finding from the research survey was that 58 of the 75 respondentsstated that they had no design function or did not design their services. If the sectorshad been limited to industries such as distributors or transport – as these might termdesign activities as more akin to planning – then this would have beenunderstandable. But this was not the case, with some of the respondents fromindustries such as leisure, hotels and entertainment, media and photography, andsoftware and PC services also stating that they did not use design. The authors suggestthat in some industries the employees may “design” certain services themselves andhave no need for the services of a professional designer. For example, in software & PCservices it is the computer programmers who write software and may decide how theend product looks. In hindsight it may have been beneficial to change the term “design”to “professional design” to differentiate the act of designing by anybody fromdesigning by those who have been trained and or gained a degree such as productdesign, industrial design, interior design, graphics, architecture, etc.

Among those who stated they did use design, 11 respondents saw design as veryimportant, four as important and two as not at all important. Of the two that did not see

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design as important, one came from the transport sector and the other from the leisure,hotels and entertainment sector, specifically sports.

The two greatest benefits of design for the service sector relate to “brand image”,either for the organisation or for the organisations’ service, closely followed by“increases profits”.

Looking at the design factors responsible for current performance, design had beenused to add value and improve quality by attracting and holding onto quality staff.Design also improved these enterprises’ ability to respond flexibly and enter intogrowth markets.

In determining the criteria used to assess future performance the medium-sizedenterprises selected “financial results” as the primary focus. Enterprises have in thepast been criticised for concentrating on the short-term at the expense of long-termstrategic issues; in this survey, the service sector clearly placed long-term performanceahead of short-term performance. The equal placing of “building and enhancingcustomer relations” with “long-term performance” highlights the service sectormedium-sized enterprises belief that future financial results will be dependent on thecreating a customer based strategy.

Recent research (von Stamm, 2006) has suggested that mergers and acquisitionswere drying-up and one method to overcome this was to use design as a competitivetool. This research survey found little to support such views. Although innovation,which includes the use of design, was paramount as the strategic areas to concentrateon in the past, acquisitions were still seen as beneficial and could also have assisted ingaining access to innovation and market development. For the future strategic areas toconcentrate on “innovation” showed even greater support, but although “acquisitions”rose slightly there was also an increase in support, compared with the past, for internalinvestment and joint ventures. Overall the strategic areas to concentrate on in thefuture depict a determined move towards an increase in innovation and thereforeshould herald an increase in the need for the use of design.

Analysing the key strategic activities for the past and in the future suggests that pastperformance has been dependent on adding new customers by improving the quality ofservices provided, through teamwork, changes to organisational structure and offeringbest after-sales service. For the future the medium-sized enterprises service sector showa distinct change in strategy with the key strategic activity geared towardsunderstanding customer needs. There is no longer the same emphasis on adding newcustomers, rather to increase sales to existing customers through improved servicequality and improved functionality and features of the services offered.

For those medium-sized service sector enterprises that recognise the importance ofdesign to business performance, this survey suggests that they will continue to buildon the value adding aspects design offers in order to improve performance. Thesituation facing those that do not use design or have no design function, as they failedto complete the survey questions, is unknown, but warrants further research.

To summarise the findings of this research into design in the service sectormedium-sized enterprises, the majority do not have a design function or use design. Forthose that do use design:

. the majority see design as very important;

. the benefits of design relate to brand image of both the organisation and theservices provided closely followed by increased profits;

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. design has been used in the past to add value and improve quality;

. future performance will be measured by financial results;

. innovation has been and, to an even greater extent, will in the future be the mainstrategic area to concentrate on; and

. key strategic activities in the past have been adding new customers by providingbetter quality services, whereas in the future key strategic activities will be tounderstand customer needs by offering better functionality, features and aquality service.

Study limitations and further research recommendationsIn hindsight it would have been prudent to include a question for those medium-sizedenterprises who selected “no design function” or “do not design their services”. Whythis was? This could have given an indication of whether the service sector sees designas more akin to planning or marketing or graphics. Or is design seen as something thatrelates only to physical products? Perhaps the term “design” should have been defined?This leads to the question “What is design?” – an entire research project in itself andone that the authors have begun assessing.

If the term “design” had been changed to cover “ad hoc design” and “professionaldesign” this would have more clearly differentiated the act of designing by anybodyfrom designing by those who have been trained and/or gained a degree, such asproduct designers, industrial designers, interior designers, graphic designers,architects, etc. Further research is required to find out who designs – if “design” isthe right term – the services of enterprises that state that they have no design functionor do not design their services. For example, distributors and transport servicesinevitably are adorn their vehicles with their names and contact details – does this notrequire the use of designers? General retailers and leisure, hotels and entertainmentservices, and restaurants, pubs and breweries need to encourage customers to entertheir properties: is this not a role for designers? Support services and real estateagencies need to compete in competitive markets: does design not play a vital role indistinguishing one company from another? In the media and photography andsoftware and PC services sectors maybe they already employ “creative personnel”, andtherefore the need for designers is less important, but as competition increases so doesthe need for design specialisms: designing packaging or promotional material requiresdifferent skills.

It would also have been useful if the order of questions had been changed so that thefirst question asked how important design was to the organisation. Such an actionwould have enabled identifying how those medium-sized enterprises that have nodesign function or do not design their services felt about the importance of design inthe context of their medium-sized service sector enterprise. The implication as it standsis that the vast majority of respondents from the service sector do not consider designto be at all important! Can this really be the case when so much publicity cites thebenefits design can bring to increased performance?

Application questions. Would your service sector organisation benefit from the use of “professional

designers”, that is those with a recognised qualification in a design discipline

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(product design, industrial design, graphics, interior design, architecture, etc.), orare there personnel within your organisation that can “design” adequately tomeet your organisation’s needs?

. If your organisation does not design its services or does not have a designfunction, how then does your organisation communicate its services and brandimage to customers?

. Is design fully integrated into the strategic planning process in your servicesector organisation?

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Corresponding authorPovl Larsen can be contacted at: [email protected]

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