1. New Service Development

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 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)

4. 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.

5. 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.

6. 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.

7. New Service Development Cycle
Full-scale launch
Post-launch review
Full Launch
Development
Enablers
Formulation
of new services
objective / strategy
Idea generation
and screening
Concept
development and
testing
Organizational
Context
People
Service design
and testing
Process and system
design and testing
Marketing program
Personnel training
Service testing and
pilot run
Test marketing
Teams
Product
Technology
Systems
Tools
Analysis
Design
Business analysis
Project authorization

8. 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.

9. 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.

10. 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

11. 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

12. Backstage invisible contact employee actions
Sterilising surgical equipments
Making beds
arranging illumination in consulting room
Arranging enough privacy for patients

13. Support Processes Housekeeping / sanitation / proper sewage systems
Buying medicines / equipments /
Paying bills, rent etc..

14. 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

15. Service Blueprint Components
Physical 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

16. 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.

17. Service Blueprint of Luxury Hotel

18. 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.

19. Structural Alternatives for a Restaurant
LOWER COMPLEXITY/DIVERGENCE CURRENT PROCESS HIGHER COMPLEXITY/DIVERGENCE
TAKE RESERVATION
SEAT GUESTS, GIVE MENUS
SERVE WATER AND BREAD
TAKE ORDERS
PREPARE ORDERS
Salad (4 choices)
Entree (15 choices)
Dessert (6 choices)
Beverage (6 choices)
SERVE ORDERS
COLLECT PAYMENT
No Reservations
Self-seating. Menu on Blackboard
Eliminate
Customer Fills Out Form
Pre-prepared: No Choice
Limit to Four Choices
Sundae Bar: Self-service
Coffee, Tea, Milk only
Serve Salad & Entree Together:
Bill and Beverage Together
Cash only: Pay when Leaving
Specific Table Selection
Recite Menu: Describe Entrees & Specials
Assortment of Hot Breads and Hors D’oeuvres
At table. Taken Personally by Maltre d’
Individually Prepared at table
Expand to 20 Choices: Add Flaming Dishes;
Bone Fish at Table; Prepare Sauces at Table
Expand to 12 Choices
Add Exotic Coffees; Sherbet between
Courses; Hand Grind Pepper
Choice of Payment. Including House Accounts:
Serve Mints

20. 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 information
Direct service) in a library
Customer Customer Food Giving a Providing Home Portrait Haircutting
Contact 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

21. 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

22. 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.

23. 100 Yen Sushi House
Prepare 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.

24. Dishwashing Counter in Back
100 Yen Sushi House Layout
Dishwashing Counter in Back
CONVERSATION AREA
Miso and Tea Station
CONVEYOR BELT
CONVERSATION AREA
TAKE-OUT POSITION
ENTRANCE
= CHEF

25. 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.

26. 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?

27. INTERACTIVE CLASS EXERCISE
The class breaks into small groups and prepares a service blueprint for Village Volvo.