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New Service Development  and Process Design
Learning Objectives <ul><li>Discuss the new service development process. </li></ul><ul><li>Prepare a blueprint for a servi...
New Service Development Cycle <ul><li>Service design </li></ul><ul><li>and testing </li></ul><ul><li>Process and system </...
Levels of Service Innovation <ul><li>Radical Innovations </li></ul><ul><li>Major Innovation : new service driven by inform...
Technology Driven Service Innovation <ul><li>Power/energy  - International flights with jet aircraft </li></ul><ul><li>Phy...
Adoption of New Technology in Services <ul><li>Challenges of Adopting New Technology The Process is the Product Back Offic...
Service Blueprint of Luxury Hotel
Blending Blueprinting with Lean <ul><li>Womack and Jones, “Lean Consumption”, HBR March 2005. </li></ul><ul><li>Principles...
Strategic Positioning  Through Process Structure <ul><li>Degree of Complexity :   Measured by the number of steps in the s...
Structural Alternatives for a Restaurant   No Reservations Self-seating. Menu on Blackboard Eliminate Customer Fills Out F...
Taxonomy of Service Processes Degree of Customer Contact Low Divergence (Standardized Service) High Divergence (Customized...
Generic Approaches to Service Design <ul><li>Production-line </li></ul><ul><li>•  Limit Discretion of Personnel </li></ul>...
Discussion Questions <ul><li>What ethical issues are raised in the promotion of sales during a service transaction? </li><...
Commuter Cleaning - New Venture Proposal <ul><li>Prepare a service blueprint for Commuter Cleaning. </li></ul><ul><li>What...
100 Yen Sushi House Questions <ul><li>Prepare a service blueprint for the 100 Yen Sushi House </li></ul><ul><li>What featu...
100 Yen Sushi House Layout Miso and Tea Station CONVERSATION AREA CONVERSATION AREA Dishwashing Counter in Back ENTRANCE C...
100 Yen Sushi House Service Package <ul><li>Supporting Facility </li></ul><ul><li>Facilitating Goods </li></ul><ul><li>Inf...
INTERACTIVE CLASS EXERCISE <ul><li>The class breaks into small groups and prepares a service blueprint for Village Volvo. ...
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New Service Development & Process Design

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New Service Development & Process Design

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  1. 1. New Service Development and Process Design
  2. 2. Learning Objectives <ul><li>Discuss the new service development process. </li></ul><ul><li>Prepare a blueprint for a service operation. </li></ul><ul><li>Describe a service process using the dimensions of divergence and complexity. </li></ul><ul><li>Use the taxonomy of service processes to classify a service operation. </li></ul><ul><li>Compare and contrast the generic approaches to service system design. </li></ul><ul><li>Place an example of service automation in it proper category. </li></ul><ul><li>Discuss the managerial issues associated with the adoption of new technology. </li></ul>
  3. 3. New Service Development Cycle <ul><li>Service design </li></ul><ul><li>and testing </li></ul><ul><li>Process and system </li></ul><ul><li>design and testing </li></ul><ul><li>Marketing program </li></ul><ul><li>design and testing </li></ul><ul><li>Personnel training </li></ul><ul><li>Service testing and </li></ul><ul><li>pilot run </li></ul><ul><li>Test marketing </li></ul>People Technology Systems Product Full Launch Development Design Analysis Organizational Context Teams Tools Enablers <ul><li>Formulation </li></ul><ul><li>of new services </li></ul><ul><li>objective / strategy </li></ul><ul><li>Idea generation </li></ul><ul><li>and screening </li></ul><ul><li>Concept </li></ul><ul><li>development and </li></ul><ul><li>testing </li></ul><ul><li>Business analysis </li></ul><ul><li>Project authorization </li></ul><ul><li>Full-scale launch </li></ul><ul><li>Post-launch review </li></ul>
  4. 4. Levels of Service Innovation <ul><li>Radical Innovations </li></ul><ul><li>Major Innovation : new service driven by information and computer based technology </li></ul><ul><li>Start-up Business : new service for existing market </li></ul><ul><li>New Services for the Market Presently Served : new services to customers of an organization </li></ul><ul><li>Incremental Innovations </li></ul><ul><li>Service Line Extensions : augmentation of existing service line (e.g. new menu items) </li></ul><ul><li>Service Improvements : changes in features of currently offered service </li></ul><ul><li>Style Changes : modest visible changes in appearances </li></ul>
  5. 5. Technology Driven Service Innovation <ul><li>Power/energy - International flights with jet aircraft </li></ul><ul><li>Physical design - Enclosed sports stadiums </li></ul><ul><li>Materials - Astroturf </li></ul><ul><li>Methods - JIT and TQM </li></ul><ul><li>Information - E-commerce using the Internet </li></ul>
  6. 6. Adoption of New Technology in Services <ul><li>Challenges of Adopting New Technology The Process is the Product Back Office vs Front Office Changes Need for Standardization </li></ul><ul><li>Managing the New Technology Adoption Process Ten step process with concern for employees and customers </li></ul>
  7. 7. Service Blueprint of Luxury Hotel
  8. 8. Blending Blueprinting with Lean <ul><li>Womack and Jones, “Lean Consumption”, HBR March 2005. </li></ul><ul><li>Principles of Lean Consumption: </li></ul><ul><ul><li>Solve the customer’s problem completely by ensuring that all the goods and services work, and work together </li></ul></ul><ul><ul><ul><li>Home: search, find, purchase, maintain, repair, upgrade </li></ul></ul></ul><ul><ul><ul><li>Cell phone: calling, pda, pictures, music, hot synch., downloads, internet… </li></ul></ul></ul><ul><ul><li>Don’t waste the customer’s time </li></ul></ul><ul><ul><ul><li>Enhanced blueprint: add value-creating, and wasted time for customer and provider. Calculate total time and % value added. </li></ul></ul></ul><ul><ul><li>Provide exactly what the customer wants </li></ul></ul><ul><ul><ul><li>Prevent stockouts from long supply chains </li></ul></ul></ul><ul><ul><ul><li>Nike’s custom bags from NuSewCo in San Francisco </li></ul></ul></ul><ul><ul><li>Provide what’s wanted exactly where it’s wanted </li></ul></ul><ul><ul><ul><li>Offer services through all desired channels, on-line, local, big-box, phone… </li></ul></ul></ul><ul><ul><li>Provide what’s wanted where it’s wanted exactly when it’s wanted </li></ul></ul><ul><ul><ul><li>Sometimes this may be some time off. Could I get it customized merely by sharing plans? </li></ul></ul></ul><ul><ul><li>Continually aggregate solutions to reduce the customer’s time and hassle. </li></ul></ul><ul><ul><ul><li>One stop for the really big problems: mobility, communications, shelter, health care, financial management, shopping. </li></ul></ul></ul>
  9. 9. Strategic Positioning Through Process Structure <ul><li>Degree of Complexity : Measured by the number of steps in the service blueprint. For example a clinic is less complex than a general hospital. </li></ul><ul><li>Degree 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. </li></ul>
  10. 10. Structural Alternatives for a Restaurant 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 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 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 LOWER COMPLEXITY/DIVERGENCE CURRENT PROCESS HIGHER COMPLEXITY/DIVERGENCE
  11. 11. Taxonomy of Service Processes Degree of Customer Contact Low Divergence (Standardized Service) High Divergence (Customized Service) Processing of Goods Processing of Information or Images Processing of People Processing of Goods Processing of Information or Images Processing of People No Customer Contact Dry cleaning Restocking a vending machine Check processing Billing for a credit card Auto repair Tailoring a suit Computer programming Designing a building Indirect Customer Contact Ordering groceries from a home computer Phone-based account balance verification Supervision of a landing by an air controller Bidding at a TV auction Direct Customer Contact No customer-service worker interaction (self-service) Operating a vending machine Assembling pre-made furniture Withdrawing cash from an automatic bank teller Taking pictures in a photo booth Operating an elevator Riding an escalator Sampling food at a buffet dinner Bagging of groceries Documenting medical history at a clinic Searching for information in a library Driving a rental car Using a health club facility Customer-service worker interaction Food serving in a restaurant Car washing Giving a lecture Handling routine bank transactions Providing public transportation Providing mass vaccination Home carpet cleaning Landscaping service Portrait painting Counseling Haircutting Performing a surgical operation
  12. 12. Generic Approaches to Service Design <ul><li>Production-line </li></ul><ul><li>• Limit Discretion of Personnel </li></ul><ul><li>• Division of Labor </li></ul><ul><li>• Substitute Technology for People </li></ul><ul><li>• Standardize the Service </li></ul><ul><li>Customer as Coproducer • Substitution of Customer Labor for Provider • Smoothing Service Demand </li></ul><ul><li>Customer Contact • Degree of Customer Contact • Separation of High and Low Contact Operations </li></ul><ul><li>Information Empowerment • Employee and Customer </li></ul>
  13. 13. Discussion Questions <ul><li>What ethical issues are raised in the promotion of sales during a service transaction? </li></ul><ul><li>What are some drawbacks of customer participation in the service delivery process? </li></ul><ul><li>What are the limits in the production-line approach to service? </li></ul><ul><li>Give an example of a service in which isolation of the technical core would be inappropriate. </li></ul>
  14. 14. Commuter Cleaning - New Venture Proposal <ul><li>Prepare a service blueprint for Commuter Cleaning. </li></ul><ul><li>What generic approach to service design is illustrated by Commuter Cleaning, and what competitive advantage does this offer? </li></ul><ul><li>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. </li></ul><ul><li>Critique the business concept, and make recommendations for improvement. </li></ul>
  15. 15. 100 Yen Sushi House Questions <ul><li>Prepare a service blueprint for the 100 Yen Sushi House </li></ul><ul><li>What features differentiate 100 Yen Sushi House and how do they create a competitive advantage? </li></ul><ul><li>How has the 100 Yen Sushi House incorporated the just-in-time system into its operations? </li></ul><ul><li>Suggest other services that could adopt the 100 Yen Sushi House service delivery concept. </li></ul>
  16. 16. 100 Yen Sushi House Layout Miso and Tea Station CONVERSATION AREA CONVERSATION AREA Dishwashing Counter in Back ENTRANCE CONVEYOR BELT TAKE-OUT POSITION = CHEF
  17. 17. 100 Yen Sushi House Service Package <ul><li>Supporting Facility </li></ul><ul><li>Facilitating Goods </li></ul><ul><li>Information </li></ul><ul><li>Explicit Service </li></ul><ul><li>Implicit Service </li></ul>
  18. 18. INTERACTIVE CLASS EXERCISE <ul><li>The class breaks into small groups and prepares a service blueprint for Village Volvo. </li></ul>
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