new service development and process design. levels of service innovation radical innovations major...
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New Service Development and Process Design
Levels of Service InnovationLevels of Service InnovationRadical InnovationsRadical 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 InnovationsIncremental 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
Technology Driven Service InnovationTechnology Driven Service Innovation
Power/energy - International flights with jet aircraft
Physical design - Enclosed sports stadiums
Materials - Astroturf
Methods - JIT and TQM
Information - E-commerce using the Internet
New Service Development CycleNew Service Development Cycle
• Formulation of new services objective / strategy• Idea generation and screening• Concept development and testing
• Business analysis• Project authorization
• Full-scale launch• Post-launch review
• Service design and testing• Process and system design and testing• Marketing program design and testing• Personnel training• Service testing and pilot run• Test marketing
People
Technology Systems
Product
Orga
niza
tiona
lCo
ntex
t Teams
Tools
EnablersDevelopmentFull Launch
Design Analysis
The Service PackageSupporting Facility: The physical resources that must be in place before a service can be sold. Examples are golf course, ski lift, hospital, airplane.Facilitating Goods: The material purchased or consumed by the buyer or items provided by the consumer. Examples are food items, auto parts, legal documents, golf clubs.Information: Data of information that is provided by the customer to enable efficient and customized service. Examples patient medical records, customer preferences from prior visit.Explicit Services: Benefits readily observable by the senses. The essential or intrinsic features. Examples are quality of meal, attitude of the waiter, on-time departure.Implicit Services: Psychological benefits or extrinsic features which the consumer may sense only vaguely. Examples are privacy of loan office, security of a well lighted parking lot.
Service DesignService Design
Design SpecificationsDesign SpecificationsDesign SpecificationsDesign Specifications
Delivery SpecificationsDelivery SpecificationsDelivery SpecificationsDelivery Specifications
Performance SpecificationsPerformance SpecificationsPerformance SpecificationsPerformance Specifications
Serv
ice
Des
ign
Serv
ice
Des
ign
Serv
ice
Des
ign
Serv
ice
Des
ign
Service System Design ToolsService System Design Tools
• Service Blueprinting– Design tool based on the process flow
diagram• Delineate front office from back office
operations• Determine standard or maximum execution
times, materials and the exact process for each step
• Identify potential failure points and generate mitigation plans to prevent or recover from a failure
Service Blueprint ComponentsService Blueprint Components
DriverPicks
Up Pkg.
DispatchDriver
AirportReceives& Loads
SortPackages
Load onAirplane
Fly toDestination
Unload&
Sort
LoadOn
Truck
Express Mail Delivery ServiceExpress Mail Delivery ServiceS
UP
PO
RT
PR
OC
ES
SC
ON
TA
CT
PER
SO
N(B
ack S
tag
e)
(On
S
tag
e)
CU
STO
MER
P
HY
SIC
AL
EV
IDEN
CE
CustomerCalls
CustomerGives
Package
TruckPackagingFormsHand-held ComputerUniform
ReceivePackage
TruckPackagingFormsHand-held ComputerUniform
DeliverPackage
CustomerServiceOrder
Fly toSort
Center
Line of InteractionLine of Interaction
Line of VisibilityLine of Visibility
Line of Internal InteractionLine of Internal Interaction
Overnight Hotel StayOvernight Hotel Stay
HotelExteriorParking
Cart for BagsUniform
DeskRegistrationPapersLobbyKey
ElevatorsHallwaysRoom
Cart for Bags
RoomAmenitiesBath
Menu DeliveryTrayFoodAppearance
FoodBillDeskLobbyHotelExteriorParking
Arriveat
Hotel
Give Bagsto
BellpersonCheck in Go to
RoomReceive
BagsSleep
Shower
CallRoom
ServiceReceive
FoodEat
Check outand
Leave
Greet andTakeBags
ProcessRegistration
DeliverBags
DeliverFood
ProcessCheck Out
Take Bagsto Room
TakeFoodOrder
RegistrationSystem
PrepareFood
RegistrationSystem
SUPP
OR
T PR
OC
ESS
CO
NTA
CT
PER
SON
(Bac
k St
age)
(On
Stag
e)
CU
STO
MER
PH
YSIC
AL
EVID
ENC
E
• Production-line• Limit Discretion of Personnel• Division of Labor• Substitute Technology for People• Standardize the Service
• Customer as Coproducer• Self Service• Smoothing Service Demand
• Customer Contact• Degree of Customer Contact• Separation of High and Low Contact
Operations• Information Empowerment
• Employee• Customer
Generic Approaches to Service DesignGeneric Approaches to Service Design
Strategic Positioning Through Process Structure
Degree of ComplexityDegree 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 DivergenceDegree 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.
Steel productionAutomobile fabrication
House buildingRoad construction
DressmakingFarming
Auto RepairAppliance repair
Maid ServiceManual car wash
TeachingLawn mowing
Low service contentHigh goods content
High service contentLow goods content
Increasinggoods content
Increasingservice content
Goods-service spectrum
Taxonomy of Service ProcessesTaxonomy of Service Processes
Processing of goods
Processing Information
Processing of people
Processing of goods
Processing Information
Processing of people
Restocking a vending machine
Billing for a credit card
Tailoring a suitDesigning a building
Assembling premade furniture
Giving a lecture
Riding an escalator
Bagging of groceries
Searching for information in a library
Using a health club facility
Hand car washing
Providing mass vaccination
Landscaping service
CounselingPerforming a surgical operation
Providing public transportation
Home carpet cleaning
Portrait painting Haircutting
Operating an elevator
Sampling food at a buffet dinner
Documenting medical history
Driving a rental car
Direct Customer Contact
Operating a vending machine
Withdrawing cash from an ATM
Food service in a restaurant
Handling routine bank transactions
Customer service worker interaction
No customer service worker interaction(self- service)
Contact
Ordering groceries from a home computer
Computer programming
Indirect
CustomerSupervision of a landing by an air controller
Dry CleaningCheck processing
Auto repairNoCustomerContact
Low divergence(standardized service)
High divergence(customized service)
A Well-designed Service System Is
Consistent with firm’s strategic focusUser friendlyRobustEasy to sustainEffectively linked between front & back officeCost effectiveVisible to customer
Risk Management in New Product Risk Management in New Product DevelopmentDevelopment
Why research and analysis before new
product development
New product development is linked with very limited historical or preliminary data. Hence, risky
Risk can be in form of market, technical, or organizational issues. Risk analysis solves the problem through flexible modeling, primary and secondary research.
A good strategy is a must for evaluating and dealing with the associated and unavoidable risks.
Research conducted to understand customer needs and develop a new product is different from research required to launch a new product.
Product development research is focused on needs of customers while launch research focuses on understanding the motivation and attitudes of early adopters. Successful targeting of early adopters builds the fountain for new product success.
New product have a very high failure rates.
Products fail, not because of technical shortcomings, but due to absence of market.
Over 60% of new product fail before entering the market, and out of the remaining 40% that do see the ray of light, 40% fail to yield profit and are withdrawn from the market.
Timely and reliable knowledge about customer preferences is most important. Such data is obtained from business research.