31.initial stages of new service development

8/2/2019 31.Initial Stages of New Service Development

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Paullna PapastathopoulouOapartment of ManagementSclenoe and Marketing,Athens University 01Ecqromics "no Business. 76,Patlsalon Street. 104.34Athe~, Greece.Tal: +3018203177;Fax: + 301 6517704;a-malt [email protected]

The initial stages of new servicedevelopment: A case study fromthe Greek banking sectorRecelvecl (In revised 1Marketing from tne Depar tment 9f Managenlel11 Selenoe and Marketing of the Athens University ofEconomics and Business In Athans, Greece. He loll owed postgraduate studies in Britain and he recel~ed his MSc In Marketingtrarn the University of SII(lIng, Scotland, He is currently a PhD student at the Athens University of Business and Economics.

Abstract Despite the importance of developing new services by bank institutions, theempirical research that has been undertaken concerning the process of developing newservices is rather limited. This is even more obvious as tar as the initial stages of theprocedure are concerned, despite the fact that many authors have stressed theirimportance for the succese of the whole effort. This paper examines the initial stages ofnew service development in the case of a leading Greek bank. Nine in-depth interviewswere conducted with senior and middle executives. These revealed a different way :fordeveloping. new services in comparison with the main body of the existing literature. Itsmain diHerence is the fact that each business unit is almost exclusively responsible forthe development of new services, without collaborating extensively with otherdepartments within the bank,

Keywords Case study, formality, functional involvement, Greek banking sector, initialstages, new service development

INTRODUCTION a nd in te nsifie d c orn pc riric u ~11110ngdomestic and internationalfinancialinstitution. have tran formed the whole-i . t ~ M'me ustr y .':" 'OteOVC1', rustomcrs arcbecoming more sophisticated now adaj ' , ,a 'they have moved from the 'traditionalpassbook savings customer' to [be'investor, who 15 seeking appropriate rates

Over the last decade, tremendoustcchn I gical and organisational changeshave occurred in the banking se tor ofmany counrries. Changing informaticntechnol.ogy, new customers' needs,in rreascd concentration and dcregulari 11

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of return from . its financial produC tN ,.3All [he abo c rapidly changing

circumstances have posed a real challengefor bank management. This changingenvironment has led many bank to adopt1110rcsophi ti ated m arketing techniq ues,In this context new service developmentOuJ;d be charac te ri sed < 1 . a crucialmarketing activit), that Jll~ny bankundertake in. order to gain competitivead v antage. Da vis (1997/ has chi 1 1 1 cd charnowadays, the only 'sure-fire' wlIy f r Jbank to ensure long-term rabiliry andprofitability is to develop new services.Having rcali, ed the strategic importance ofnew services, bank executives are re-examining their organisations' approach ofdeveloping new services and cndca vour coimprove the success rate of new. ervicc .: >Despite the importance of developing

new services, limited rc: carch b,1S beenundertaken on thi topic ill comparisonwith the field of new productdevelopment." This L~intensified by thefact that mo. t of the existing literature 011LJ.CW service development (NSD) hasfocused 011 those factors that determine thesucce s of the whole effort,7-111 withoutpaying attention to particular componentso r t he p rocc :: ss i ts el f Tht is particularlyobvioui as far as the initial stages f theprocess arc concerned. Although severalauthors regard them ,1S the most irnportantstage. of the new service development

J 11-13 I . . 1 1proceuure, t1(~em.p:tnca researc 1 ontills topic is very limited. Mostimportantly, th e su cce s records ( f ncwservices ar c till at low levels.I.In an a[telnpt to increase knowledge of

the intricacies of effective new servicedevelopment, rhi: paper seeks toinvestigate a particular phase of theproccs namely the initial NSD activitiesin th e ca. c of a Ieading Greek bank. who t'name cannot be disclosed For reasons ofconfidentiality. More. pccifically, thispaper focuses on (i) the initial NSDprocess activities, (ii) the formality of the

NSD process and (iii) the functionalinvolvement dur.ing the initial NSD stages.

LITERATURE REVIEWNSD process activitiesAccording to Cooper (L994). IS the newproduct development process could bedefined as 'a formal blueprint, roadmap,template or though t process for driving anew J reduct project from the id 'a stagethrough to market lannch and beyond'.Ou the other hand, < l far as thedevelopment of new. crviccs ill financialin stitu tio ns an d other service bus in ess es isconcerned, mos. of the existing literatureon this topic has been. based large! y onmodels concerning the development ofphysical, manufactured products.A, fundamental 1110dd of new product

development wa formulated by theconsulting firm I300z Allen & Hamilton in1982. If. This model consists of thefollowing seven reps: New productstrategy development. Idea gcncraticn,Screening an d Evaluation, Businessanalysis. De eloprnent, Testing andCornruercialisation. Several authors ha vctried to adjust this lTlodcl to the ervicescall text by making smaller or larger

d .c. . I j ] 7" l h1110 U.Lcat)Ons.' -- MiWY o tle rS avesuggested that it could also be adopted by- . I' . . , 1,1-?K d Jfinancia msnrunons m generar'" - an t 1(;'1 : ki .. J '>


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The initial stages af new service development

F0:ruH~1a:tio~l@fnew $cvyilS tt d e e-l] ) pmer~ t s tr 1l,te grat et ~roblG:m~ and need!{ eNplgl1(u0on. . . ....lrlea g~el.'ll tiell.. '~p. liCliee1'l~;lij,g:1T

CGnae:p t d ;10P tJ;lCnt

Confept testing: t -:SllIJiJ;ll!aS ~l#llysis

igure 1 The iriltial slalBS of developing new servlcasSOlJ~ce: Boo z Alle n & Hamilton (1982), 16 Davis (1997),4 Scheuing and Johnson (1989)2:7

of different authors have demonstrated thesignificance and vitality of these .initialactivities.3il-:l2 Lievens ct J1 (1999)13 refer tothis significance of initial stages as the 'pathdependency effect' and Mocuart ct ; : 1 1 .(1995) 12 as the 'fussy-front end', meaningthat th e planning stage determines thesuccess of the whole process.Based 01.) the models proposed by .8002

Allen & Hamilton (1982),lf, Davis (1997)+an d Schelling and johnson (1


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Marke l prolJ/clf15 and need ' explorat ionThe fundamental aim C : J f this stage is touncover important needs within themarketplace that are currcncly not 111et .4There seems to be a general agreementthat qualitative research might be moreeffccti ve ths n quantitative re search in thisn-.35 TI C ': .. d i d Istage: IU " lOCUS g.rou pan m ,... ept 1interviews could bc conducted with. d . . d I ?(l J(, fi l'In .IVI ua ell torners, - , rout- tnccmployeer'l7 and industry expert"

:l . . . d . .J" 3819ac vertJsmg agencIes an mtcrrnemanes. .-This in-depth analysis of the bank's macro-and microenvironment could lead to amore marker-driven proces , which is ,critical clement for the uccess of thewhole procedure."i de a g e n er a ti onThe purpose of this rage is to generatehigh-potential new product ideas that arcbased on the market need identified in the

. 441) [1 ' .prevIOus stage,' . n rca ity, a m ajordistinction could be made bet-ween theinternal and external sources of new ideas. 1 ' . . . . 41 E ]It 1111 an orgal1lsatton. xrerna sourc sinclude the competitors, customers,r . I' d . d "7 3(,.11 TlegiS anon an ill u try experts." .-. aefunda mental internal sources seem to beth e m ark etin g department. topmanagement and other linemanagers.2LP.'lI.42Method of idea generation include

brainstorming, product checklists, scenarioanalysis a nd h is to ric al analysis. However,II 1 brai . ~.n-+4t e most popu ar one IS ramstornung.:"":At the end of this st:lge. S0-60 ideas mightbe formed in such a way as to containssential bencfits f r customer .. 4

1d ca s cr ee n illSThe objecti vc of this sti;l.gei~ to narrow the50-60 ideas of the previous stage to 25-30that could be moved to the next ~tage.The most common screening methods ateranking, checklists and scoring model .45Moreover, the most Common screeningcriteria that crvircs companies use could

be grouped in five main categoric;consumer set ens; opera tiona 1 screen;strategic screens; technological screen; andmarker scrcens.,",15.46

CONcep t dev l! /op l1 'lC ll lAccording to Edvardsson and Olsson(1 99 6) ,. 36 'th e term service concept refersto the de cription of the customer's needsand how they are to be atisficd in theform of [ 1 : 1 context of a service'. Manyauthors believe, however, that due to thenature of services, when developing a newserv ice em phasis should no c onl y beplaced on its core attributes, bu t attentionshould be paid to en ure that other'supplernentar service have also beenincorporated in the development of the

47 ., . . 1 bconcept. ,L1e1 services rrugnt e anappropriate level of support and technicaladvice or even some dements of theketi . ' 1ar etll1g mIX.-C on cept t('stin ;_ ~The fundamental objective of ch i stage isto test the concepts that were developed inthe previous one. Again in this stage, there.is a notion that qualitative research mightb fi d ., I - I I >e pre crrc to qu nntative rcscarc 1.which is m ain ly u nd ertak en with th ebank's customers and employees.However, uther stakeholders of the banksuch as industry experts. consultants .1 ndadvertising agencies could also beincorporated . i l l this. tage. At the end of it,five to even idea might remain forfurther examination,Br IJ inC5S analysisIn this stage [he business attractivene s ofth e remaining ideas have to be examined.After the completion of this seage one ortwa concepts will proceed to the nextstages for further ill vcsrigation. -1 Thoma-(1l)93)4~ ,uggest three types of foreca tingthat should be used in this stage: marketopportunity forecasting; sales forecastin g:an d financial forecasting.

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NSD process formaHtyA number of author have attempted toidentify the extent of formality during thedeveloprn nt of new crvice as well as theimpact that a formal N D pr -CdUfC emhave on new service performance, forin ran ee, A v lo niti s a nd P ap as ra rh op ou lo u(2000)49 reported that formality ipositively related to the performance ofnew retail financial services. This finding isconsistent with 3. number of differentstudie ._').311.5(JSIHowever, these finding. can be

challenged by tho C tudies that havefound limited u. c of formal procedureamong service com panies and financialorgani 'Hi ns.27_34.5- It should al 0 bementioned that m,J1Y authors have evendoubted the need for J formal proceduresine such an approach might cameexten ive bureaucracy Ll11l1' .cssary deb s

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- The director of domestic privatebanking department

- The director of the savings-investmentsdepartment

- The director of the consumer creditdepartment- The assistant director of the consumercredit department

- The director of the shippingdepartmentThe director of the investment bankingdepartmentThe director of the treasurydepartment

- The director of th e credit cardsdepartment

AU eight executives participate in thedevelopment of new services 1 1 1 their areasof responsibility. In addition, one in-depthinterview was conducted with a brancbmanager who has been extensivelyinvolved ill idea generation se sions {n thepast.

Data collection methodsSeveral authors have suggested that itmight be usefulto gather data frommultiple sources when conductingqualitative rese.arch.S'!-r:.l This phenomenon. 1'1 I' lati ,57 (P d i 15ca ec rnallgu ation" . - all rs a sonecessary when undertaking a casestlldy:o(,.57 In the present study threemethods were employed in order tocellect the appropriate data, In particular,nine in-depth interviews were conductedwith the bank' medium and seniorexecutives and secondary and visual dataconcerning general information about thebank's operations and organisationalstructure wen: gathered through pressarticles. the bank's leaflets, newsletters,monthly reports and she bank's Web page.The ill-depth interviews were based on

an interview guide that. was developedaround a Jist of topics regarding the newservice developrnen t (activities, formality,

fuuctional involvernen r). However, despitethe fact that it was focused on those issuesthat were central to the research questions,'the type of questioning and discussion11 d c a b'l' ,58a owe ~OF greater r re xi . J. iry .'Furthermore, the 'funnelling" process ofquestioning was used, where 'the initialquestions are designed simply to start theinformant thinking about the issue ingeneral terms'. Then, 'the interviewerguides the informants' view toward morespecific issues by using questions thatnarrow the area, while at the end theinterviewer begins to ask specific questionsdirectl b 'I b . , d,58rrect y a 'out t re Issue ell1g examine .-Moreover, during the interviews some'probing questions' were medin order toelicit inforrnarion more fully from therespondc.nt~,6J while an effort was made toavoid leading questions andcreate aninterpersonal and communicative climatewith all the respondents,The summation of responses 'was based

on the content analysis method, whichconsist of three stages: transcription,mechanical analysis and interpretativeI ' 56M TI . 1 : . . f tluana YSIS.-' . ae main a 1jcctlve 0 t us

analysis is to understand the meaning ofwhat each respondent says and try towork out the implications of thesemeanings. This goa] can be achieved byg()ing beyond what people say and notaccept their cornmeutsut face vallle,.5')

PRO:FILEO:F THE B.ANK UNDERSTUDYThe bank understudy which wasesta blished in 1993 is ultimately part of aGeneva-based f inancial grollp, wbile 10per cent of shares are held by the largestGerman Bank. and th e remaining 46 percent repte ent it 'free floar', which L~largely held by around 400,000 individualshareholders in Greece.During the last five years. the bank,

driven by Greece's progress 'towardsEuropean Monetary Union and the

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development of the Greek market, haspursued a strategy of rapid growth. As aresult, it 11:1S been one of the faste tgrowing banks and the second largestprivate bank in the highly competitiveGreek financial services market. A~ inman y European countries, major 'hiftshave occurred within the Greek bankingsenor over the la t decade (eg thederegulation of activities such as consumerand business credit). In addition, manytraditional state-owned fil1~n ialinstitutions are now privarised. Theincreased competition and concentrationthat have taken place thr rugh mergers andacquisitions have a l 0 transformed theindustry' structure. At the moment, morethan 25 domestic and foreign banksoperate illGreece with the largest four(among which is th e bank under study)controlling more than 80 per cent of themarket in terms of marker share.The bank has a strung position borh in

the B2C and private banking markets. It isconsidered one f the banks with the mostinnovative product ranges, includingsavingsjinvesrrnent accoun ts, [edit cards,mortgage and busine s loans. and mutualfunds, to, name just a few.In addition, there has been a dramaticincrease in the bank' branches. from fivein 1993 to 350 in 200,1, employingapproximately 7,500 people. This increasein the numbe:r of both the bank's branchesand employee has successfully beenachieved through a combination ofdynamic organic growth and selecti vcmergers and acquisitions (acquisition ofthree other banks, merger with two otherbanks). Th bank has also taken pioneeringstep in the development of alternativenetworks for the provision of products andervices, essentially through the Internet.Furthermore, the bank has an increasing

presence with multifaceted operations inthe neighbouring southea: tern Europeancountrie (Bulgaria, Romania), while itsshort-term plans include extending it

The initial stages of new service development

operations in other countries in the region.In terms of size and performance (he

bank under stud IS:the third large t banking groUp illGreecethe. eeond largest privately ownedbanking group (by total assets-'15bn)

- the third largest market cap on theA thens Stock Exchange

- rated A.3 by Moody' , financialstrength C - the highc t in Greece(raring i for the combined group)

Fin al l y. a fundamental characteristic of thebank under study 1 mat it. organisationalstructure is based 0.1' l ' the productmanagement system. By and large, thecompany's services are divided into fourlarge categories: the retail banking sector,the corporate banking sector. [heinvestment sector and the operationsector. Each of these sectors is furtherdivided into sub-unit.

PRESENTATION OF FINDINGSNSD process activitiesFOfll'lIl/,1tillfl o f ,1 I I e w s er vi c e deve lopmentstrategyThis tage begins with J 'kick-off meetingbetween two to five people within thebusiness unit that is going to develop a newservice (ie consumer credit unit, credit cardunit). As will be shown later, each businessunit i almost exclusively resp nsible for rhedcvel pmcnt of it~ own service, withoutcooperating extensively with the otherbusines units of the bank. The main ta ksand responsibilities of the team are dividedin this stage, while (here doe not exist anykind of review concerning the bank 'shistorical performance in devol ping newcrviccs, Furthermore, [he target groupsthat could benefit from the c new .ervicesarc also analysed.The most important part of this stage is

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the clarification of the traregic goals ofthe whole procedure. The bank alwaytries to be a market leader whendeveloping new services. all cquencly, itsmain aim is to develop a pro-activetrategy when de eloping Hew 'ervices andto reach the market first. At the end ofrhi srage a rep irr is given to the board ofdirectors, which hjghJight~ all the aboveand initially csrirnarcs the budget that willbe required for the effective execution fthe whole effort.

N cverthelcss. the finding that theparticular bank stJHS the whole procedureby s rr at eg ic al ly def in ing the appropriaterol .s and tasks. contrasts with the srudicof Drew (1995)2 and Edgett (1993),52 \. hohave found a lack of strategic planning bybanks in comparison t o manu fa ct ur ingCOl11.p;l'I'lICS.

Moree: pro{deflls a nd n ee ds e xp lo ra tio nThis stage seems to be an ongoing processthat never stops. During this itage, anyresearch that is conducted i. qualitative init. nature and is based main! y ondi cus ions with m,magcr' of other businessunits within the bank, its marketingdepartment, branch offi .crs, industryexperts, the bank's external advertising andmarket r search agencies < IS well asmanagers from their strategic ally (ie itleading Gerrnan bank). This i consistentwith prcviou studie such as the one'undertaken by 1 avis (1997)4 and Dover( 1 . 987) _ 3 - ' which have demonstrated thatqualitative rc: carch migh t be morepreferable to quantitative re: earch, As ca 1 1be seen, limited research is conducted withthe bank's ustorners ill thi stage.IdC/.1 gl!t! a m ionThe director of the bank's credit card. unitsuggested that' rhis stage t< kcs a bout onemonth to complete'. Furthcrm rc, 1110 t ofnbc ideas are generated within the businessunit where the new service is developed.These business units arc the rno tpopular

internal ources of ideas. There nrcbetween tw and ten idea-generationsessions whose (undam ntal objective is tcome up with new ideas. Only the peoplefrom the tel tive bu incss un it p ar ti ci pa tein these sessions. The number of ideas chatarc originally produced in this stagedepends largely on the nature of theservice.Howe er, bef re the b .ginning of the. e

, sions sam discussion are held withsonic of the bank's stakeholders whocould provide ideas for new service. Thesecond. m ost popular internal source 'ofidea is the other busincs units of thebank. Hox ever, the dire tor of th econsumer credit unit argued that 'even inthis case the idea for a new service willstart from another business unit only if ithas been realised that this idea fit; \ -ithanother unit s range of service '. Thus, therelative business unit will make the finaldeci .ion. The third most popular SOurce ofidea is the bank's branches and especiallythe branch officers who have a thoroughknowledge of the customer" needs.F inally, the rote o r th e functionaldepartments and il l particular the role ofthe marketing department i limited at thispoint. Thi last finding contradicts with. di ')13741 hi I dmost previous stu le.,- . W ic1 regal'the marketing department and the otherline managers as fundamonral internalsource. Furthermore, many respondentsclaimed that the bank encourages itst'111 ployccs in genera) to provide new ideas,although there is no organi ed procedurefor this.The most popular ext mal. source of

ideas i the bank' competitors. Thisincrca cd role of romperitors has also beend 1 d b . li r, "'7un er me y previous stuc H ::S. ,-

Purrherrnor , the corporate and investmentsectors al 0 1 - 1 . e their customers as a sourceof new ideas. Even in this ase though, anidea for a new service docs not originatedirectly from a customer. The businessunits in the retail 5C tor also use the

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The initial stages of new service development

Table 1 Idea generation techniques used by the bank under studyColleetion 01ideas In freewheeling discussion without ctltlGismGenerat ional a l ist of ne!1jatlve aurtbutes.ct the eXisting servicesC om W nirrg . o f a servlcs .e r proper!y .t o obtain ne w and mare complicatedeffee~sldel ilt ll ieat ion of the extept to which an already -existing service can serve'for neW tunctlons i , some of its attrlbutes-are rnodl f led

BrainstormingProblem invento~y analysisComblnatiim With Inl.er,actlonsThe' appl ies-l ion of a f leW servicefor new funclions

1 1 1 1 1 rket re carch agency with which thebank (:Doperate as a ourcc of new idea'.The most common idea generation

method ,IlTI()ng ,Ill the business units is thebrainstorming technique, but there arethree other m [hods used, which arcpresented ill Table 1.I d e a s r r c c 1 ' l i l l ; 1 !The bank's bu. incss unit: u c a variety ofcrcening criteria, the most frequently usedare rl c feasibility, technological, time,financial, compatibility, consumer andmarket criteria. The choice of whichcriteria to Ll e depends largely 011 theindividual businc s unit chat is rcsponsiblfor the de eloprncnt of a new SCTVicc. Themost common screcnmg methods used bythe bunk arc presented in T


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market research agency with \ hich thbank oollaborates, On the other hand, theresearch of the corporate and investmentsectors of the bank along with the privatebanking unit is based on in-depthinterviews that arc conducted with largeen tamers who have transactions with thebank of more than 295,O(JO.This stage requires approximately one to

two months co be completed and at theend of it two Or throe ideas will proceedto the business analysis stage,B u si ne s s a n a iy s isIn this stage apart frorn the main conceptand its supplementary erviccs, marketopportunity, ale. and financial forecastsare also made, The director of thedomestic private banking unit reported[hat 'most of the e forecasts refer to aperiod of rhrce to five years and they arereviewed ever six m nth', This St,1gClasts less than One month and after itscompletion not more that two ideas willmake it tr the next stages.

I t i : : 1 1 0 interesting to mention at thispoint that all the above sr


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Finally, centralisation refers to the'degree of dispersion of power b y the chief. If ' ( , r , TI I IeXCCJJtlve a. icer . nc wa y rna t t 'ieparticular bank develops new services wascharacterised as a totally decentraliscdprocedure since its business umt IS almostcompletely responsible for this task.Furthermore, it seems that the board ofdirectors is not participating actively in theinitial stages of the whole J)rocess. Its roleis limited to taking the final decisions andallocaringrhe required financial resourcesto those services that are finally going tobe launched, This finding differs from thestudies of Easingwood (,1986)37 and Johneand V e rrnaak ( 1 1 ) < ) 3 ) 4 - 2 which found amore active tole of the top managementof financial institurions concerning all thestages of the new service- developmentprocess.

Based 011 all the ahove, ir could beargued that it is difficult to characterise OJCbank's new service development procedurein terms of formality. It could be claimedthat the particular bank uses a semi-formalprocedure when developing new bankingservices. It is also interesting rhatm ost ofthe respondents felt that the initial stagesof the procedure necessitate mort formalprocedures than the later o nes. A dd itio nalanalysis revealed that there seems to be atighter structuring of activities in the initialstages in comparison with theimplementation stages. This finding is notconsistent with johnc and Harborne(1Sl85),6(0 who reported that UK financialinstitutions ha Vi: looser structuring ofartivities in the initial stages and tighterstructuring of activities duringiT1plementa cion"Functional involvement during NSDAs was made clear from all the above, across-functional tearn that is assigned thetask of carrying out the whole. process (letalone the initial stages) docs not exist inthe bank under study. Since each business

The in'Wal stages of new service development

unit is responsible [OJ) rhedcvelopmcnt ofnew services, a service committee iscreated mainly frQ1lJ people from thisbusiness unix. For instance, rh e consumercredit department will be almostexclusively responsible for thedevelopment of a new loan. Thus. i.t couldbe characterised as a single-functional tea IIIcontrary to the need for a 1.110re cross-functional effort as has been suggested by. t1 15'7 4] l ' . : l : . ' 1p reV lO l. 1& a ll . 1 . or s, < - . W 'nc 1 usuai yconsists of three tofive people.

In addition to this, the role of the otherfimotional departments is very Iirnitcd, Inparticular, rL'garding the marketingdepartment, the director of the bank'sshipping unit stated thar

'in reality, the only stages that themarketing department participate> fin Iarc the market preblcrns and needsexploration stage and the ideagener.ation s.tagl~. However, even in thiscase its duties are re tricted to somegeneral diseussicnswirh the businessunit's product committee, withouthaving the authority to take anydecisions. '

However, this finding contradicts previousstudies that have found that (he marketingmanagers in financial institutions pla y adecisive role in the development of news.er.vices.50.il') This proved to be the casewith the other flll1ctionil departments aswell (IT, financial, law and. operations).

DISCUSSION AND IMPU.C.ATIONSThe present case study provides newevidence regarding th e organisationalsetting that enhances thesuccessfuldevelopment of new services in innovativefinancial institucions aiming at leadingpositions in the market.

By studying the initial stages of newservice development in the ca e of aparticular leading Greek bank, the present

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The new wavTable 3 Developing new financial products and services: New vs. traditional way

The treditione! wayThe organisat ional structure based 01 1 the pfc;>duc'lmanagemenls.ystemEach business unl l 1s almost eX'clusivelyrespenslble for the development of new.servlces(especially in the il1itjal stFJ,gesjUmiled role Of the other departments (includingthe marketing department)Limited role of the top rnanaqement (decentral lsedresponsibilities)More 'lormalJsed structure c;)fa.c!ivlties In the i,nilialstages than the late ones

The organisational structure based on t,he funct ionals,ystemCfoss-"functfonal DO Ilabo ration

Increased role of the olher departments (especially themarketin,g department)increased role 0 :f Ihe top management (cenlnllisedresponsibilities)Mo~e formalised structure ef activities In the lalerstages than the initial ones

stud y identified a new way of developingnew services in contra t with theconventional theory 011 new serviced .vclopmcnt. It fundamental componentsare presented in Table 3. This 'new way'requires a l l organisational, structure that isbased on the product management .ystcminstead of the rraditional functionalstructure that the existing literature~uggests. The bank is divided into differentbusiness units, whose main responsibilitiesare the de clopment of HC:-W ser ices andthe management of the existing range ofservices. It i : J completely decentraliscdprocedure, where r i :1C$C busine s units takethe fundamental decisions concerning theactual development of J new service.The role of the top managcment is to

allocate adequate financial rCNOLHCCS andrake all the inal decisions that arc reb tedto the extent that each new service isconsistent with [he bank's overall strat gicgoals and objectives. The functionaldepartments of the bank have a supportingrole in the initial stages, without having.the aurhoriry to take any decisions 1101'increased responsibilities and tasks in theimplementation stages. The whole effortdemands ruore formalised structure ofactivities in the initial stage. than the laterones, while despite the short period inwhich each new service i, developed, noneof the initial stages is omitted ..However,

due to rhe unrertaint and compctiri vcpressures of the market most of the cstages are executed ill parallel.Although it is conrtary tc what is

ugge: ted ill the literature, the workmodel pre enred in thi paper has beentremendously ucccssful in the case' of thebank under study. The proof of this is (hefact that the bank has a strong innovativeprofile and increasing productperformance records (ieit pOlisessc ,1leading market position with ;j market'hare of more than 20 per ceur i , 1 J most of

it s products) in [he highly competitiveGreek financial market. The e wereamong, the main reasons why theparticular bank was voted 'Bank of theyear' for Greece by the internationallyacknowledged monthly business magazineThe Banher. a member of the Fuuuuia!Times international publishing group.In this respect, financial institutions thar

manage their offcring~ in markets withsimilar competitive .onditions should starrrethinking whether the wa y their newservice dCVC.J0Plll cnr efforts are structuredis [he most app.ropnatc one. The seconddecisive step is to accommodate their workmodel to their cornpetiti ve strategy ill themost efficient and cff ctivc way. It seemsthat fins neial companies that aim atleading positions should shift their NSDstructures towards decentralisation and

158 Journal of Financial Services Marketing Vol. 6, 2. 147-161 '~Henry Stewart Publications 1363'0539 ~20a1)


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formalisation durin g the initial stages. oftheir NSD cfforc .However, S011"1e of these findings need

to be treated with caution. In particular,the rapid changes that have occurredwithin the Grelck banking sector over the.last decade have led banks t.o developservices. that combine 1 110re than onecharacteristic for [heir customers ()(' acombination of a savings account and amutual fund). Nevertheless, thedevelopment of such services may requirea more collaborative effort between thedifferent business units within the batikthan the current single-functional one.Furbhcrrnore, despite the limitedresponsibilities and authority of themarketingdepartment, an increased role ofthis department inthe initial rages of thenew service development process mightimprove the whole procedure in terms ofcreativity and innovativeness.

REFERENCESCOQPcr. R.C-. E~~iJ1P;WQod.C J .. Edgcrr, !i..Klcinschutioc, EJ. and Storey, C (19'!4) 'WharDi~!il1guish~s tk. Top P~rf()r11l1)1~N~w l'roHuct;:; IIIHnancial Services', JOIITHIII v[l ' } ' od"cl /tUJOI'II(I(1JJ,IV1.m,.I,~''I!W(.ol. I I, FP, 2i~I-299.~ Drew, S .A .W (1 99 5) 'S tra te gic H cn {:'h 11 lo rk il ') ~:il'li;;'vntiull. P rn ctic es in l'innndal]l!,titlllj\ln,,li/Jl'l"Iwli"mllJ~'"I'J",1 i~'Bl!lIk Marke, ti l lg. Vel! . '13, NIJ . 1.P I' . 4 -' 1. 1) ,

J Bowers. M.R. (I'JR')) 'DC\'~klp'lJ1g New Sen.!!G""hnpHlving the Proocss Makl'\ i1 l~ct\l'r',_r"liniIJl ,1 )Svrtdns MmJmili;~.Vol. 3. N". l. I'p. 15-2().

4 - Davis, ~.M. :[1.1)')7.) 'Brill~,Il1~ lrmov.rtion ro l.Jft,,,_j'IHrlla/

15 Cooper. I~,G, (jl)1)4) 'Third Ccnnatillll N"w 1"rmiLirtPn),[,:ct.;~('~"'}"Nnlld o( Pm~/Jla fJl.H1llr(. llt i )n .\,fmlrJJ!f'Wt'/H,V"L J I, No r, Pl'. 3-1,t..

I ii Bl1QZ. A I l ~ ' 1 l & H . J 1 c I ' \ ; l t o n (1 ')82J ' N e w I 'mdp,[,Mll)1:1gCl1Wll( for rile [''JKOs', 13ooz.Allcn & - HuuiiltouIIl,C, New York.

17 OO\.\ 'CI1,.). nucl Bowen. M. 1! ' }Ht, ) A M,_,.kctmgContingency Appronrh t\l Service OJ'1?'I,,'!I


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Pepestethopoutou, Avlonitis and indounes

r'l:nou(( nc vclupm enr and M anag"l11 nr ill Financiallnscicutions', rllfirllmi!lrlil}.JL}llrn~d. < ' ! i " 1 3 m , 1 . . : . ~ ~ J ( J I , k C ' J i i ! g ,V ,, 1 . 7 , ,N(). 2 , pp, 1 7 - 2 J .

2f.! }\vlnniti., C , P apastathupnulou, P . anrl (im mnris. s .(lllOI} 'AIIE"'piriL";J!ly-B:m'd Ty:pl;)lqgy of Product111lllJ\':ltIY"-11U" ~or New Financial Services: SllCCChS ;!nilFailure 'ic('l'l~ri,,~',Jqi"il,1I < ! , t ' 1 - ' " , , 1 / 1 ' - " iJlIHlI"TI1

34 Langcard, E.. Refl~"ir, P, and I: .iglicr, P. ( 1 9 1 - : ( , )'Devc'oping N,'", Services' in V cnk atesan, M .,S ch alen sec , D .1 \1 \ nn d M ursh all. C .. rc.uivity InServices Markt'ring: WI.l:lr '< New. Whal Wc,rk"WIJ'l'e's Drvcloping', l'rncc~dilH; Series, Amer lcAIL .M~rk~tjn!;: Assor iar iou, 541 1 Francisco, pp. I :!n . . . .12J.

15 V rneon. I l. a n d Me V andon, W . (l'J7l\) 'Ouvcklpill! ; 0 1Market lor .l New -EFT. '. Bank Sc:.rvicc.JlllOlIlIl q(,\/IIril

I rw in , H (J ll l~ w l1 \J LI . I L.4 5 R .G >chf('r{ 1. L. ( :1 - ') 1 )1 ) "Ge ne ra ti ng a nd ' Sncclnillf!_ New

Pro~I'lct Icka~', / I I( " /$ / r ;" / . lI ta r k L 'l ;I I, f !. J\.f,lfhlgeilloflf, Vo l .In, N o. 'I, Pl'. 287-:!% .

'1M, Ambler, T. JIHI Styk~, C. (1997) 'Brand Dcvcloprncnrversus NI'"I I.lro.]u( '( De eluprncnrr Toward ,I Pmec"of Extended Dccisi r u ; ' , ) , " ' I ' 1 / , 1 1 oIPfL>C/l lct to , I l r l l / ' l J'\ /""'IQ"I11t'11I. Vol. 6. N o.4 . pp. """-.B-I..p JOhlii.', A , a ru l P av lid is , 1 : ' . (I H) -The Ad o p u o u


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Qunlicanvc Research'. 3rd cdn. , Palmer Prc,London.

(,3 Srcwart.C ..l. ;llld C ".h,J.W .Il. (1 '> 88 ) 'Inu-rvicwing:Principles .me l Pr,""lic~'.WIll.C. UW"'11 Publishers.!)UbUqlll', l < " l WII

M [{"llt, R.A. (199')) 'Marketing It,'~c:Jr


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Copyright 2002 EBSCO Publishing

31.initial stages of new service development

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