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New Service Development
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.
Levels of Service InnovationRadical Innovations
Major Innovation: new service driven by information and computer based technology, eg. E-ticketing, ATMs
Start-up Business: new service for existing market, eg. Internet Book shops
New Services for the Market Presently Served: new services to customers of an organization, e-
ticketing, e-hotel booking
Incremental Innovations Service Line Extensions: augmentation of existing service
line (e.g. new menu items) Service Improvements: changes in features of currently
offered service, eg. Introducing shampooing of hair before cutting, introducing electric shavers
Style Changes: modest visible changes in appearances (changing interior paints and keeping potted plants)
Technology Driven Service Innovation
Power/energy - International flights with jet aircraft, solar and wind energy farms
Physical design - Enclosed sports stadiums, maglev trains speeding up inter-city travel
Materials - Astroturf , teflon-tough, heat resistant sealant developed by DuPont
Methods - JIT and TQM Information - E-commerce using the Internet,
Internet as a means of communication.
Service Design Elements Structural
- Delivery system – front and back office, automation, customer participation
- Facility design – size, aesthetics, layout- Location – customer demography, single or multiple sites,
competition, site characteristics- Capacity planning – managing queues, servers, managing
average and peak demand Managerial
- Service encounter – service culture, motivation, selection training, employe empowerment
- Quality – measurement, monitoring methods, expectations vs perceptions, service guarantee
- Managing capacity and demand – strategies for managing demand, queue management
- Information – competitive resource, data collection Discuss how each of the above service design elements have
been incorporated in the case of Ramakrishna Hospital in Elec city Phase I.
• Structural Elements
– Delivery system : front office is comfortable, well kept, pleasing staff, well mannered
– Facility Design : Not so big, yet functional for the small working population, IT staff and families, one floor, private rooms, shared rooms, in-house pharmacy
– Location : Heart of Electronic City, proximity to bus-stand and messing facilities
– Capacity Planning : 2 consultation rooms, waiting space for ten people, car parking area
• Managerial Elements
– Service Encounter : Employees serve with a smile, trained nurses
– Quality : No feedback system to evaluate service quality, good housekeeping, security
– Managing Capacity and Demand :
• Pricing caters to middle class segment, helps control demand
• diff specialists visit during diff times, spread out the existing demand
• group plans + discounts for students, detection and health check-up camps
• RMO looks after emergencies and less complicated cases
– Information : Maintains database of patients and medical history, easy to trace back ailments of patients, computerisation helps easy disposal of patients and settlement of bills.
New Service Development Cycle
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
• Service design and testing• Process and system design and testing• Marketing program design and testing• Personnel training• Service testing and pilot run• Test marketing
What is a Service Blueprint ?
Just like buildings require architectural drawings called blueprints which show what the final building will look like and the specs needed for its construction, service delivery systems also require roadmaps , tangible visual documents which show where and how customers and companies interact.
Elements of a Service Blueprint
Customer actions : all the steps customers take as part of the service delivery process
onstage/visible contact employee actions : the actions of the frontline contact employees that occur as part of the face-to-face encounter with customers.
backstage/invisible contact employee actions : non-visible interactions with customers in order to prepare to serve the customer or part of roe responsibilities.
Support processes : all acitivities caried out by employees who are not contact employees but whose actions are crucial.
Physical evidence : represents all the tangibles that the customers are exposed to or collect during their contact with the company.
Service Blueprint of a medical clinic
Customer actions : – visiting the premises early / telephoning for
appointment– Reporting to the clerk / nurse at counter– Getting seated– Bringing earlier prescriptions/ history
Onstage visible contact employee actions :– Noting details and issuing slip– Do a weight check– Do a blood pressure checkup– Offer newspapers and magazines to read
Backstage invisible contact employee actions– Sterilising surgical equipments– Making beds– arranging illumination in consulting room– Arranging enough privacy for patients
Support Processes– Housekeeping / sanitation / proper sewage
systems– Buying medicines / equipments / – Paying bills, rent etc..
Physical evidence– Waiting room décor / wall hangings / medical
advices / seating / personal comforts / conveniences
– Newspapers / magazines to while away time during waiting
– Consulting room decor / ambience / space / consulting tables
Service Blueprint ComponentsPhysical Evidence
Customer Actions
----------------------Line of interaction--------------------
Onstage visible contact employee action
------------------------Line of visibility-------------------------
Backstage Invisible contact employee actions
----------------------Line of internal interaction----------------------
Support Processes
Preparing service blueprints – group activity Divide yourself into four groups and discuss on the service
blueprint for each of the following service delivery systems.
List clearly
– the customer actions /
– onstage visible contact employee actions /
– backstage invisible contact employee actions /
– support processes and
– physical evidence. a. the bakery round the corner b. A hair cutting saloon near to XIME c. A beauty parlour near to XIME d. MacDonald's outlet in Forum Mall.
Service Blueprint of Luxury Hotel
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 to 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 Reservations
Self-seating. Menu on BlackboardEliminate
Customer 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 Processes Low divergence High divergence (standardized service) (customized service) Processing Processing Processing Processing Processing Processing of goods Information of people of goods Information of people Dry Check Auto repair Computer No Cleaning processing Tailoring a programming Customer Restocking Billing for a suit Designing a Contact a vending credit card building machine Ordering Supervision Indirect groceries of a landing customer from a home by an air contact computer controller No Operating Withdrawing Operating Sampling Documenting Driving a customer- a vending cash from an elevator food at a medical rental car service machine an ATM Riding an buffet dinner history Using a worker Assembling escalator Bagging of health club interaction premade groceries Searching for facility (self- furniture informationDirect service) in a library
Customer Customer Food Giving a Providing Home Portrait HaircuttingContact service service in a lecture public carpet painting Performing worker restaurant Handling transport- cleaning Counseling a surgical interaction Hand car routine bank a tion Landscaping operation washing transactions Providing service mass vaccination
Generic Approaches to Service Design
Production-line• Limit Discretion of Personnel – well defined tasks with the
needed tools provided, customers value consistency in service performance
• Division of Labor – job broken into small tasks, specialisaton of skills possible.
• Substitute Technology for People – helps in improving efficiency of manufacturing, eg ATMs.
• Standardize the Service – improves speed and ensures uniform service quality
Customer as Co-producer• Self Service – an approach to reduce operating costs• Smoothing Service Demand – customers must choose time of service by appointments, reservations or waiting for service. Training the customer, for eg. to book air-ticket, take up a diagnostic role in tele-servicing
Generic Approaches on Service System Design (contd..)
Customer Contact• Degree of Customer Contact ( % age of time customer is in
system relative to total service time) High contact service: customer role is important, deciding the timing
of service, nature etc.. Low contact service: customers have no contact on the timing of the
service • Separation of High and Low Contact Operations, eg. BMTC,
Running the buses on time, differentiated from the maintenance operations on buses
Information Empowerment• Employee empowerment : use of computers and databases gave
enough flexibility to employes and (travel) agents to book customers on other comparable services (flights)
• Customer empowerment : use of internet to make customer more powerful. FedEx makes it possible for customer to track the
path of a parcel.
100 Yen Sushi House
1. Prepare a service blueprint for the 100 Yen Sushi House.
2. What features differentiate 100 Yen Sushi House and how do they create a competitive advantage?
3. How has the 100 Yen Sushi House incorporated the just-in-time system into its operations?
4. 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
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.
Golfsmith
1. Prepare a service blueprint for Golfsmith.
2. What generic approach to service design does Golfsmith illustrate and what competitive advantages does this design offer?
3. Why is Golfsmith a good candidate for Internet sales?
INTERACTIVE CLASS EXERCISE
The class breaks into small groups and prepares a service blueprint for Village Volvo.