Lecture Eleven
Organizing for Change
Management and
Service Leadership (Chapter 15)
Service Quality MKTG 1268
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JAN 2013 Semester
Overview of Chapter 15
The Service Profit Chain
Integrating Marketing, Operations, and Human
Resources
Creating a Leading Service Organization
Leadership, Organizational Culture and Climate
Leadership in the Future
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Opening Case Study : Reinvention and Leadership at
American Express
EFFECTIVE MARKETING
LIES AT THE HEART OF
VALUE CREATION
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The Service Profit Chain (Fig. 15.2)
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Links in the Service Profit Chain (Table 15.1)
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INTEGRATING MARKETING,
OPERATIONS, AND
HUMAN RESOURCES
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Interdependence Between Functions (Fig. 15.3)
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Service Leaders Integrate Functions
Implementation of Service Profit Chain requires
complete understanding of how marketing,
operations and human resource functions relate to a
firm’s strategy
Integrated functions create value for the firm
Strategies are defined and driven by a strong,
effective leadership team
Has a coherent vision of what it takes to succeed
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Defining the Three Functions
Marketing Function Target “right” customers and build relationships
Offer solutions that meet their needs
Define quality package with competitive advantage
Operations Function Create, deliver specified service to target customers
Adhere to consistent quality standards
Achieve high productivity to ensure acceptable costs
Human Resource Function Recruit and retain the best employees for each job
Train and motivate them to work well together
Achieve both productivity & customer satisfaction
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Reducing Inter-functional Conflict
One challenge is to avoid creating ―functional silos‖
High-value creating enterprises should be thinking in terms of activities, not
functions
Top management needs to establish clear imperatives for each function that
defines how a specific function contributes to the overall mission
Inter-functional transfers will
provide a holistic
perspective for individuals
Establishing integrated
project teams
Having inter-functional
service delivery teams
Appointing formally
designated individuals to
integrate objectives
Internal marketing and
training
Commitment of top
management
HOW ?
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Integrating Service Operations
CREATING A LEADING
SERVICE ORGANIZATION
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From Losers to Leaders: Four Levels of Service
Performance (1)
Service Losers
Bottom of the barrel from both customer and managerial
perspectives
Customers patronize them because there is no viable
alternative
New technology introduced only under duress; uncaring
workforce
Service Nonentities
Dominated by a traditional operations mindset
Unsophisticated marketing strategies
Consumers neither seek out nor avoid them
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Lack of leadership will lead to employee
confusion and poor service performance
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From Losers to Leaders: Four Levels of Service
Performance (2)
Service Professionals
Clear market positioning strategy
Customers within target segment(s) seek them out
Research used to measure customer satisfaction
Operations and marketing work together
Proactive, investment-oriented approach to HRM
Service Leaders
The crème da la crème of their respective industries
Names synonymous with outstanding service, customer delight
Service delivery is seamless process organized around customers
Employees empowered and committed to firm’s values and goals
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Companies that exhibit
service leadership
qualities
Moving to a Higher Level of Performance
Firms can move either up or down the performance ladder
Organizations that are devoted to satisfying their current
customers may miss important shifts in the marketplace
As a result, they may face difficulties
attracting demanding new consumers with
different expectations
Companies defending their control of their competitive edge may
have encouraged competitors to find higher-performing
alternatives
Organizations with a service-oriented culture may turn otherwise
as a result of a merger or acquisition that brings in new leaders
who emphasize short-term profits
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Effective HRM Practices Enhances Service
Performance
Leading Change in a Service Organization
Involves 8 Stages
Source: John Kotter
1. Creating a sense of urgency to develop the
impetus for change
2. Putting together a strong enough team to
direct the process
3. Creating an appropriate vision of
where the organization needs to go
4. Communicating that new vision broadly
5. Empowering employees to act on
that vision
6. Producing sufficient short-term results to
create credibility and counter cynicism
7. Building momentum and using that to
tackle tougher change problems
8. Anchoring new behaviors in
organizational culture
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IN SEARCH OF
HUMAN LEADERSHIP
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Leadership vs. Management
Leadership
Concerned with development of vision and strategies, and empowerment of people to overcome obstacles, make vision happen
Emphasis on emotional and spiritual resources
Works through people and culture
Produces useful change, especially non-incremental change
Management
Involves keeping current situation operating through planning, budgeting, organizing, staffing, controlling, and problem solving
Emphasizes physical resources—raw materials, technology, capital
Works through hierarchy and systems
Keeps current system functioning
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Setting Direction vs. Planning
Planning
a management process, designed to produce orderly results, not change
Setting direction
involves creating visions and strategies that describe a business, technology, or corporate culture in terms of what it should become over long term and articulating feasible way of achieving goal
Many of best visions and strategies combine basic insights and translate them into realistic competitive strategy
―Stretch‖ – a challenge to attain new levels of performance and competitive advantage that might as first seem to be beyond the organization’s reach
Planning follows and complements direction setting, serving as useful reality check and road map for strategic execution
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Individual Leadership Qualities
Love for the business
See service quality as foundation for
competing
Recognize key role of employees
Driven by a set of core values they pass
on
Make communication a priority
Work with a team on decision-making
Know when to change when necessary
Walk the talk
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Qualities Associated with Service Leaders
Understands mutual dependency among
marketing, operations, and human resource
functions of the firm
Has a coherent vision of what it takes to
succeed
Strategies are defined and driven by a
strong, effective leadership team
Responsive to various stakeholders
Value created through customer satisfaction
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Leadership, Culture and Climate (1)
Leadership traits are needed of everyone in supervisory or managerial positions, including those heading teams
Effective communication is essential for a leader
Organizational culture:
Shares understanding regarding what is important in the
organization
Shares values about what is right or wrong
Shares understanding about what works and what doesn’t
work
Shares beliefs, and assumptions about why things are
important
Shares styles of working and relating to others
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Leadership, Culture and Climate (2)
Organizational climate
The tangible surface layer on top of the organization’s underlying culture
Factors of influence:
Flexibility, Responsibility, Standards that people set, Perceived aptness of rewards, Clarity people have about mission and values, Level of commitment to a common purpose
Creating a new climate for service, based on understanding of what is needed for market success, may require
radical rethinking of HRM activities, operational procedures, and the firm’s reward and recognition policies
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Creating a
dynamic
organization
culture through
strong
leadership and
management
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Service Insight 15.2
Reversing Course at
the Museum of Fine
Arts (MFA)
© Pearson Education South Asia Pte Ltd 2013. All rights reserved 32
Leadership in the Future
• Leadership is more collaborative, using team
approach with process of collective genius
• Leadership is from behind, by a leader not afraid of
sharing power with others
• Innovation will remain key for organizations to
succeed
• Collective efforts will yield results far superior to
individual efforts
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Service Leadership in a Global Context
Summary of Chapter 15: Change Management and
Service Leadership (1)
Service profit chain provides useful summary of behaviors required of
service leaders to manage effectively
Marketing, operations, and human resource management functions need to
be closely coordinated and integrated in service businesses
Four levels of service performance
Service losers
Service non-entitites
Service professionals
Service leaders
Service leadership is not based on outstanding performance within a single
dimension, but must cut across marketing, operations and human resources
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Summary of Chapter 15: Change Management and
Service Leadership (2)
Leaders play a big part in nurturing an effective organizational culture that transforms an organization into a successful one
Leadership in the future does not just lie in one person. It relies on collective genius. Leaders of the future are not afraid of sharing power with others
Innovation will remain key for organizations to succeed
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