Som Session 4-Service Design Process

Service Design Process

Arshinder KaurAssistant ProfessorDoMS, IIT Madras

IIT MADRAS Arshinder 2

New Service Development

New Service Development

New service development process (Technology, people and process)

Representation of service delivery process: Service Blueprint

Service system design


New Service Development (NSD)Process

Conversion of novel ideas into viable and marketable products


New Service and Why NSD? New Service: An offering not previously

available to the customers- An Innovation To accommodate dynamic requirements of

customers/ market Service innovations that achieve Competitive

advantage Speed of Technological developments

Do service firms have R & D departments?


Why Innovation?

Face commoditization of services due to Easier to copy Fewer patent protection Lower front end capital investment Shorter product cycles

Compete in the market place or market space

Innovation

Creativity and implementation Novel and useful ideas that improve

effectiveness New ideas delivered to customers to create

commercial value

PresenterPresentation NotesWhy innovation has been neglected in services?

Services are mainly thought of consumers of innovations (mostly developed in manufacturing sector) Imitators of or facilitators to innovation of manufacturing firms

What are the reasons? Services may or may not use specific resources in the form of R&D departments like other goods Service innovations may be are not result of deliberate activity at all Innovations are recognized only a posteriori as they emerge in the process of service provision on the basis of customers specific needs Service is both a product and a process and because of nature and characteristics of services it is difficult to change or improvement in serviceWhy difficult?They may innovate while providing good quality service or while meeting extra ordinary clients request, but they may think that it is to satisfy customer ( and never realized that they have actually innovated something).


Levels of Service Innovation

Radical Innovations Major Innovation

New service for markets as yet undefined, driven by information and computer based technology (eBay)

Start-up Business New service in a market that is already served by existing services

New Services for the Market Presently Served New service offerings to existing customers of an organization


Levels of Service Innovation

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

PresenterPresentation NotesWeb based checking

Change of logo, colour


Ideas for New Service Innovation Customers Frontline employees Mining databases Advances in Technology

Examples IITB-IBM

Development of new designs for mobile device interfaces that can easily be used by people who are semiliterate or illiterate, as well as individuals who have limited or no access to information technology

Global Logistics System (GLS); An open-source software platform for Global logistics companies that will offer consumers aggregated rates across logistics firms to allow them to choose the best deals. Savings of $9.1 billion

- The concept is being promoted by the Global Coalition for Efficient Logistics (GCEL), a Swiss-based non-profit public-private partnership


NSD NSD Cycle


Ideas for new service innovation

Design Analyze Development Full Launch

Planning activities Execution activities


New Service Development Cycle

Full Launch Design

Development Analysis

Formulationof new servicesobjective / strategy

Idea generationand screening

Conceptdevelopment andtesting

Business analysis Project authorization

Full-scale launch Post-launch review

Service design and testing Process and system design and testing Marketing program design and testing Personnel training Service testing and pilot run Test marketing


New Service Development Cycle

People

Technology Systems

Full Launch Development

Design AnalysisTools

Enablers

Formulationof new servicesobjective / strategy

Idea generationand screening

Conceptdevelopment andtesting

Business analysis Project authorization

Full-scale launch Post-launch review

Service designand testing

Process and systemdesign and testing

Marketing programdesign and testing

Personnel training Service testing and

pilot run Test marketing

Service Delivery System

PresenterPresentation NotesPlanning StageAssess market viability and capabilityExecution stageService delivery designCross functional development efforts


Service Concept and Service Design Elements

Strategic Service VisionConsistent service offering

StructuralDelivery systemFacility designLocationCapacity planning

ManagerialService encounterQualityManaging capacity and demandInformation

PresenterPresentation NotesDelivery system: front and back office, automation, customer participation

Capacity planning: managing queues or waiting time, accommodating average or peak demand, Number of servers

Service Design Elements: Structural Delivery system

How to manage front office and back office? To what extent automation has been implemented? What is the role and extent of participation of customer

Facility design Size, Layout

Location Customer demographics, no. of sites, competition

Capacity planning Managing queues, number of servers, capability to

accommodate peak demand


Service Design Elements: Managerial Service encounter

What matters when customer is actually being served?

Quality Gap between perception and expectation

Managing capacity and demand Can we alter the demand or control supply

Information Competitive resource, data collection



Service Blueprinting (G. Lynn Shostack) How to translate the new service developed

based on subjective ideas into reality? Capture service delivery system in a visual

diagram Flowchart of all transactions constituting

service delivery process First step in developing a service process

structure Positioning into competitive market


Service Blueprint of Luxury Hotel


Physical EvidenceCustomer will see and experience

Customer initiated steps, choices and interactions during the process of purchasing consuming and evaluating service

Line of Interaction

On stage contact personActions in the full view of customer

Line of Visibility

Back stage contact personActions not seen by customer

Line of Internal Interaction

Support processCapacity requirement of the back office system

Blueprint- Testing of the service concept

PresenterPresentation NotesPrecise definition of service delivery system.Allows management to test the service concept on paper before any final commitments are made.

Strategic Positioning through Process Structure

Degree of Complexity: Measured by the number and intricacy of steps in

the service blueprint. For example a clinic is lesscomplex than a general hospital.

Degree of Divergence: Amount of discretion and freedom permitted to

the server to customize the service. For examplethe activities of an attorney contrasted with thoseof a paralegal.

PresenterPresentation NotesHow to take decisions regarding degree of complexity and divergence in service?

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 DoeuvresAt 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

Degree of Divergence


Degree of Divergence

Low High

Standardized service High volumes/narrowly defined

and focused study Routine/Repetitive in nature

Customized service More information exchange High levels of technical and

analytical skills More flexibility, Judgment-

Empowerment

PresenterPresentation NotesLow divergence: Use of vending machines

Degree of Divergence Object of service process

Distinguish between which goods belong to customer and which to service firm

Information processed by back office/electronic media/direct interaction

Processing people involving physical changes- Service providers with interpersonal and technical skills

Type of customer contact Direct Indirect No contact


Generic Approaches to Service Design

Production-line Limit Discretion of Personnel Division of Labor Substitute Technology for People Standardize the Service

Customer as Coproducer Self Service Smoothing Service Demand

Customer Contact Degree of Customer Contact Separation of High and Low Contact Operations

Information Empowerment Employee Customer


Production line approachRoutine services, controlled environment and

consistent quality Limit Discretion of Personnel

Standardized routine services Consistency in service performance

Division of Labor Divide job into group of simple tasks

Substitute Technology for People Standardize the Service

Limited service options Opportunities for predictability and preplanning


Customer as Coproducer

Shifting some of service activities onto the customer

Self Service Increase degree of customization (Pizza Hut) Customer brings extra capacity

Smoothing Service Demand Uniform utilization of capacity (reservations)

Customer contact approachProduction process can be decoupled using

inventory. How to achieve manufacturing efficiency?

Customer contact: Physical presence of the customer in the system

Degree of customer contact: The percentage of time that the customer is in the system relative to the total service time.

Separation of high and low contact operations


Service Design ProcessNew Service DevelopmentNew Service DevelopmentNew Service Development (NSD)ProcessNew Service and Why NSD?Why Innovation?InnovationLevels of Service InnovationLevels of Service InnovationIdeas for New Service InnovationExamplesNSDNew Service Development CycleNew Service Development CycleService Concept and Service Design ElementsService Design Elements: StructuralService Design Elements: ManagerialService Blueprinting (G. Lynn Shostack)Service Blueprint of Luxury HotelSlide Number 20Strategic Positioning through Process StructureStructural Alternatives for a Restaurant Degree of DivergenceDegree of DivergenceGeneric Approaches to Service DesignProduction line approachCustomer as CoproducerCustomer contact approach

Documents

Som Session 4-Service Design Process