2 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.
3 Levels of Service Innovation Radical InnovationsMajor Innovation: new service driven by information and computer based technologyStart-up Business: new service for existing marketNew Services for the Market Presently Served: new services to customers of an organizationIncremental InnovationsService Line Extensions: augmentation of existing service line (e.g. new menu items)Service Improvements: changes in features of currently offered serviceStyle Changes: modest visible changes in appearances
4 Technology Driven Service Innovation Power/energy - International flights with jet aircraftPhysical design - Enclosed sports stadiumsMaterials - AstroturfMethods - JIT and TQMInformation - E-commerce using the Internet
5 Service Design Elements Structural - Delivery system - Facility design - Location - Capacity planningManagerial - Service encounter - Quality - Managing capacity and demand - Information
6 New Service Development Cycle Full-scale launchPost-launch reviewFull LaunchDevelopmentEnablersFormulationof new servicesobjective / strategyIdea generationand screeningConceptdevelopment andtestingOrganizationalContextPeopleService designand testingProcess and systemdesign and testingMarketing programPersonnel trainingService testing andpilot runTest marketingTeamsProductTechnologySystemsToolsAnalysisDesignBusiness analysisProject authorization
8 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 the server to customize the service. For example the activities of an attorney contrasted with those of a paralegal.
9 Structural Alternatives for a Restaurant LOWER COMPLEXITY/DIVERGENCE CURRENT PROCESS HIGHER COMPLEXITY/DIVERGENCETAKE RESERVATIONSEAT GUESTS, GIVE MENUSSERVE WATER AND BREADTAKE ORDERSPREPARE ORDERSSalad (4 choices)Entree (15 choices)Dessert (6 choices)Beverage (6 choices)SERVE ORDERSCOLLECT PAYMENTNo ReservationsSelf-seating. Menu on BlackboardEliminateCustomer Fills Out FormPre-prepared: No ChoiceLimit to Four ChoicesSundae Bar: Self-serviceCoffee, Tea, Milk onlyServe Salad & Entree Together:Bill and Beverage TogetherCash only: Pay when LeavingSpecific Table SelectionRecite Menu: Describe Entrees & SpecialsAssortment of Hot Breads and Hors D’oeuvresAt table. Taken Personally by Maltre d’Individually Prepared at tableExpand to 20 Choices: Add Flaming Dishes;Bone Fish at Table; Prepare Sauces at TableExpand to 12 ChoicesAdd Exotic Coffees; Sherbet betweenCourses; Hand Grind PepperChoice of Payment. Including House Accounts:Serve Mints
10 Taxonomy of Service Processes Low divergence High divergence(standardized service) (customized service)Processing Processing Processing Processing Processing Processingof goods Information of people of goods Information of peopleDry Check Auto repair ComputerNo Cleaning processing Tailoring a programmingCustomer Restocking Billing for a suit Designing aContact a vending credit card buildingmachineOrdering SupervisionIndirect groceries of a landingcustomer from a home by an aircontact computer controllerNo Operating Withdrawing Operating Sampling Documenting Driving acustomer a vending cash from an elevator food at a medical rental carservice machine an ATM Riding an buffet dinner history Using aworker Assembling escalator Bagging of health clubinteraction premade groceries Searching for facility(self furniture informationDirect service) in a libraryCustomer Customer Food Giving a Providing Home Portrait HaircuttingContact service service in a lecture public carpet painting Performingworker restaurant Handling transport cleaning Counseling a surgicalinteraction Hand car routine bank a tion Landscaping operationwashing transactions Providing servicemassvaccination
11 Generic Approaches to Service Design Production-line• Limit Discretion of Personnel• Division of Labor• Substitute Technology for People• Standardize the ServiceCustomer as Coproducer • Self Service • Smoothing Service DemandCustomer Contact • Degree of Customer Contact • Separation of High and Low Contact OperationsInformation Empowerment • Employee• Customer
13 Discussion QuestionsWhat are the limits in the production-line approach to service?Give an example of a service in which isolation of the technical core would be inappropriate.What are some drawbacks of customer participation in the service delivery process?What ethical issues are raised in the promotion of sales during a service transaction?
14 100 Yen Sushi HousePrepare a service blueprint for the 100 Yen Sushi House.What features differentiate 100 Yen Sushi House and how do they create a competitive advantage?How has the 100 Yen Sushi House incorporated the just-in-time system into its operations?Suggest other services that could adopt the 100 Yen Sushi House service delivery concept.
15 Dishwashing Counter in Back 100 Yen Sushi House LayoutDishwashing Counter in BackCONVERSATION AREAMiso and Tea StationCONVEYOR BELTCONVERSATION AREATAKE-OUT POSITIONENTRANCE= CHEF
16 Commuter Cleaning - New Venture Proposal Prepare a service blueprint for Commuter Cleaning.What generic approach to service design is illustrated by Commuter Cleaning, and what competitive advantage does this offer?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.Critique the business concept, and make recommendations for improvement.
17 Golfsmith Prepare a service blueprint for Golfsmith. What generic approach to service design does Golfsmith illustrate and what competitive advantages does this design offer?Why is Golfsmith a good candidate for Internet sales?
18 INTERACTIVE CLASS EXERCISE The class breaks into small groups and prepares a service blueprint for Village Volvo.