Service Design Process
Arshinder KaurAssistant ProfessorDoMS, IIT Madras
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New Service Development
New Service Development
New service development process (Technology, people and process)
Representation of service delivery process: Service Blueprint
Service system design
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New Service Development (NSD)Process
Conversion of novel ideas into viable and marketable products
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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?
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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).
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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
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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
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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
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NSD NSD Cycle
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Ideas for new service innovation
Design Analyze Development Full Launch
Planning activities Execution activities
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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
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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
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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
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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
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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
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Service Blueprint of Luxury Hotel
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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
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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
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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
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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
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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
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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
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