New Service Development ShinMing Guo NKUST Service Innovation - - PDF document

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New Service Development

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Service Innovation



Service Design and Service Package

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Service Design Examples Shin‐Ming Guo NKUST

Review: Service Package

 Supporting Facility: The physical resources that must be in

place before a service can be sold.

 Facilitating Goods: The material consumed by the buyer or

items provided by the consumer.

 Information: Operations data or information that is provided

to enable efficient and customized service.

 Explicit Services: Benefits readily observable by the senses.

The essential or intrinsic features.

 Implicit Services: Psychological benefits or extrinsic features

which the consumer may sense only vaguely.

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• I. Innovation in Services

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Idea Generation: Customers, Employees, Competitors, Technology Basic Research: Pursue a planned search for new knowledge regardless of possible application. (number theory) Applied Research: Apply existing knowledge to problems in creation of new service. (security coding) Development: Apply knowledge to problems to improve a current service. (on‐line shopping)

Technology-Driven Service Innovations

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Source of Technology Service Example Service Industry Impact Power/energy

Jet aircraft Electric vehicles International flight is feasible Battery charging/exchange

Facility design

Hotel atrium Enclosed stadium Feeling of grandeur/spaciousness Year‐around use

Materials

Digital camera Synthetic engine oil Photo printing/Tourism Fewer oil changes

Methods

Just‐in‐time (JIT) Da Vinci surgery Reduce supply‐chain inventories Surgeons and quality improvement

Information

e‐commerce Internet Increase market to world‐wide Video on demand

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Case Study: Car Sharing

Best suited to urban locations where there was a dense base

• f potential users, parking was

expensive, and the need to drive was limited. Big hole in the rental market: short‐term, on‐demand private car access.

https://www.youtube.com/watch?v=cX 2xJOo5LIs

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Information Technology for Car Sharing

• Mobile technology enables

vehicle reservation and usage.

• Wireless transmission authorizes

users, read odometer, mileages, and time stamps.

Challenges for Service Innovation

8  Limited ability to protect

intellectual properties.

 Definition of the intangibles.  Incremental nature of

innovations.

 Limited ability to build

prototypes or conduct tests

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• II. Service Design

 Customer

Participation

 Simultaneity  Perishability  Intangibility  Heterogeneity  Supporting Facility  Facilitating Goods  Information  Explicit Services  Implicit Services

location, interior design capacity planning, waiting line management service encounter revenue management service blueprint, service recovery

Service Design Elements

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Design Elements Topics Structural Delivery system Process structure, service blueprint, strategic positioning Facility design Servicescapes, architecture, process flows, layout Location Geographic demand, site selection, location strategy Capacity planning Strategic role, queuing models, planning criteria Managerial Information Technology, scalability, use of Internet Quality Measurement, design quality, recovery, tools, six‐sigma Service encounter Encounter triad, culture, supply relationships,

• utsourcing

Managing capacity & demand Strategies, yield management, queue management

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Facility Design: Shouldice Hospital Service Package for Car Sharing

 Supporting Facility: office, parking space,

maintenance center.

 Facilitating Goods: membership card, cars,

recorder, gasoline.

 Information: web site, reservation system,

driving records.

 Explicit Services: cleanliness, convenience.  Implicit Services: 247 availability,

environmental friendly service.

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Managerial Decisions

• How to select and reserve a car?
• How to get access to the car?
• What about refueling?
• How to return the car?
• How to charge?
• What about maintenance?

Maintenance and Support for Car Sharing

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Increasing Customer Value

𝑊𝑏𝑚𝑣𝑓 Process quality Results produced Cost of acquiring the service Price to the customer 𝑊𝑏𝑚𝑣𝑓 Qualit𝑧 Cost

Business Collaboration for Car Sharing

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Strategic Positioning via Process Structure

17  Degree of Complexity: Measured by the number of steps

in the service blueprint, e.g., a clinic is less complex than a general hospital

 Degree of Divergence: Amount of discretion permitted

the server to customize the service, e.g., the activities of an attorney contrasted with those of a paralegal

Structural Alternatives for a Restaurant

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No Reservation Take Reservation Table Selection Self-seating Seat guests Seat guests Recite menu

Fills out

• rder

Take orders Take orders Personal service

Call number Serve dinner sets Separate-course service

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Service Process Matrix: Divergence

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Service Blueprinting: Complexity

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Failsafing (pokayokes)

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Service Encounter = moments of truth Every customer contact is an opportunity to satisfy the customer. To improve customers’ perception of service quality. Service failures are often caused by interruptions or negligence.

 Task to be done  Treatment accorded to the customer  Tangible features of the service

• III. Generic Approaches to Service Design

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Production‐line

• Low Divergence
• Service Flow
• Cost and Consistent Quality

Customer as Co‐Producer

• Low Complexity, High Divergence
• Substitute Technology for People
• Cost and Convenience

Customer Contact

• High Complexity, High Divergence
• Service Encounter, Service Guarantee
• High Performance Quality, Dependability

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Service Design Example 1

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Production Line  Treat the service as a manufacturing process

 Focus on tangibles, not people  Standardization  uniform

quality

 Low contact  high efficiency  Technology  fool‐proofing

equipment and process

Service Design Example 2

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Customer as Co‐Producer  having customers taking a greater role enhances the service

 Self service  cost, speed,

convenience, customization

 247 service  availability  Appointments and reservations  Customers generated content

 Wiki, e‐markets

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Service Design Example 3

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Customer Contact  how to achieve efficiency with customer participation

 Separation of high and low contact

• perations

 Employee empowerment + Keep track

• f customers’ preferences



 total customization of service

 Sales opportunities via personal

relationship

Guidelines for Successful Service Design

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1. Define the service package in detail 2. Focus on customer’s perspective (expectation and perception) 3. Recognize that designer’s perspective is different from the customer’s perspective 4. Define quality for tangible and intangibles elements 5. Make sure that recruitment, training, and rewards are consistent with service expectations 6. Establish procedures to handle exceptions 7. Establish systems to monitor service

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Conclusion

• The process is the product.
• Service‐system matrix ≈ product‐process matrix
• Service blueprint ≈ process flow chart
• Inventory and scheduling are often not available to service
• perations.
• Expect and manage variability of service encounter
• Parts of the service packages are defined by the training

and treatment the workers receive.

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