MD254: e-Service Operations

1. MD254: e-Service Operations New Service Development and Process Design

2. Agenda Background New Service Development Service Blueprinting Strategic Positioning Generic Approaches to Designing the Service Process

3. Background

4. Background New Service Design involves many issues Location Facility design Facility layout for effective workflow Service quality monitoring Equipment selection Adequate service capacity

5. Background New service design & development is never finished “Honeymoon Period” customers initially like (and buy) the service over time, customers become bored, and stop buying the service Once the service becomes operational, modifications are introduced as conditions warrant service product enhancements operational efficiencies

6. A Thought Exercise

7. A Thought Exercise If you wanted to become a “Rock Star” … how would you design your rock n’ roll service? What is your strategic service concept? Who are your customers? What is your service product? What is your service process? Will you need to redesign your service in the future? Do you need to design a service facility?

8. New Service Development

9. New Service Development New Service Development (NSD) Research development that takes place in service firms A creative process … but often very technical as well NSD deliverable is a description of the “service product” or “service package”

10. New Service Development NSD Process Cycle

11. New Service DevelopmentLevels of Service Innovation Radical Innovations Major Innovation: new service driven by information and computer based technology Start-up Business: new service for existing market New Services for the Market Presently Served: new services to customers of an organization 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

12. New Service DevelopmentDynamics

13. Service Blueprinting

14. Service Blueprinting Developing a new service based on the subjective ideas contained in the service concept can lead to costly trial-and-error efforts to translate the concept into reality In many design activities, architectural drawings are created to lay out a design Building blueprints Engineering diagrams

15. Service Blueprinting Service Blueprinting Precise definition of the service delivery system that allows management to test the service concept on paper prior to implementing the real system Map or flowchart of all transactions constituting the service delivery process Information processing activities Interactions with customers Decision points

16. Service Blueprinting Front Office Design of customer experiences Design of customer co-production/scripts Design of employee activities, scripts Line of Visibility What can the customer interact with? What can’t the customer interact with? Back Office Design of processes that the customer does not interact with Efficiency oriented May require development of industry standards Faster check clearing (universal check processing codes) Inventory management (UPC symbols)

17. Service BlueprintingEx: Bank Lending Process

18. Service Blueprinting Service Blueprinting Studying the blueprint could suggest opportunities for improvement the need for further definition of certain processes potential failure points within the system steps that need to be “fool-proofed”

19. Strategic Positioning of the Service Process

20. Strategic Positioning Strategic Positioning Through Process Structure Degree of Complexity: Measured by the number of steps in the service blueprint. Example: a clinic is less complex than a general hospital. Degree of Divergence: Amount of discretion permitted the server to customize the service. Example: the activities of an attorney contrasted with those of a paralegal.

21. Strategic Positioning Strategic Positioning Through Process Structure Degree of Customer Contact: Where/how customer touches the service system. Direct Customer Contact – personal interaction with the system at the service location Indirect Customer Contact – via electronic media No Customer Contact – back office activities that the customer doesn’t come into contact with Object of the Service: What is transformed during the service? Processing goods Processing information Processing people

22. Strategic PositioningStructural Alternatives for a Restaurant

23. Generic Approaches to Service System Design

24. Generic Design Approaches Production Line Approach to Service Design Standardize the service product Limit discretionary actions of personnel Division of labor Substitute technology (one programmed way of delivering service) for people (ability to field multiple service requests)

25. Generic Design Approaches Customer Participation as a Co-Producer Encourage co-production by customer Free air miles for Internet ticketing/check-in Lower price for self-service gas Promote demand smoothing Matinee movies cheaper Half-price drinks before 6:00 p.m.

26. Generic Design Approaches Customer Contact Approaches Degree of Customer Contact Influences Potential Efficiency of Service Separate High- and Low-Contact Operations Consider Sales Opportunity and Production Efficiency Tradeoff

27. Generic Design Approaches Empowering with Information Empowering Employees Intranet site connecting employees to databases, knowledge-bases, etc. expert systems policy manuals Customers Internet web site databases decision tools expert systems

28. Summary NSD process never ends Important to conceptualize a process for undertaking design and re-design Several models available for understanding the tradeoffs in NSD Several generic approaches for designing services