New Service Development Shin Ming Guo NKFUST Service Innovation - PDF document

New Service Development Shin ‐ Ming Guo NKFUST Service Innovation  Service Blueprinting  Service System Design  Case Questions • What are order qualifiers and order winners of custom ‐ made wedding cakes? • What are key issues in developing such services? 1

I. Innovation in Services Idea Generation: Customers, Employees, Competitors, Technology Basic Research : Pursue a planned search for new knowledge regardless of possible application. (number theory) Applied Research : Apply existing knowledge to problems in creation of new service. (security coding) Development : Apply knowledge to problems to improve a current service. (on ‐ line shopping) 3 Technology-Driven Service Innovations Source of Service Example Service Industry Impact Technology Power/energy Jet aircraft International flight is feasible Facility design Hotel atrium Feeling of grandeur/spaciousness Enclosed stadium Year ‐ around use Photochromic glass Energy conservation Materials Synthetic engine oil Fewer oil changes Methods Just ‐ in ‐ time (JIT) Reduce supply ‐ chain inventories Six Sigma Institutionalize quality effort Information e ‐ commerce Increase market to world ‐ wide Internet Video on demand 4 2

Process Innovation Change where the process occurs relative to where the customer is. Electronic commerce:  Holds inventory in a warehouse far from customers and ship the inventory to customers upon order  Long tail effect : allows more variety – items with little demand for a local store can be profitably carried in an order fulfillment center  Customers order from home but have to wait and shipping costs must be incurred. 5 Case Study: Car Sharing Best suited to urban locations where there was a dense base of potential users, parking was https://www.youtube.com/watch?v=cX 2xJOo5LIs expensive, and the need to drive was limited. Big hole in the rental market: short ‐ term, on ‐ demand private car access. 3

Building Service Platform • Mobile technology enables vehicle reservation and usage. • Wireless transmission authorizes users, read odometer, mileages, and time stamps. Challenges for Service Innovation  Limited ability to protect intellectual properties.  Definition of the intangibles.  Incremental nature of innovations.  Limited ability to build prototypes or conduct tests 8 4

II. Service Design location,  Customer interior design  Supporting Facility Participation service blueprint,  Facilitating Goods service recovery  Simultaneity  Information revenue  Perishability  Explicit Services management  Intangibility  Implicit Services service encounter  Heterogeneity capacity planning, waiting line management Service Design Elements Design Elements Topics Structural Delivery system Process structure , service blueprint, strategic positioning Facility design Servicescapes, architecture, process flows, layout Location Geographic demand, site selection, location strategy Capacity planning Strategic role, queuing models, planning criteria Managerial Information Technology, scalability, use of Internet Quality Measurement, design quality, recovery, tools, six ‐ sigma Service encounter Encounter triad, culture, supply relationships, outsourcing Managing capacity Strategies, yield management, queue management & demand 10 5

Customer Value Equation ����� � Qualit� Cost Process quality � Results produced ����� � Cost of acquiring the service � Price to the customer Shouldice Hospital: Hernia Repair 6

Strategic Positioning via Process Structure  Degree of Complexity : Measured by the number of steps in the service blueprint, e.g., a clinic is less complex than a general hospital  Degree of Divergence : Amount of discretion permitted the server to customize the service, e.g., the activities of an attorney contrasted with those of a paralegal 13 Structural Alternatives for a Restaurant 14 7

Structural Alternatives for a Restaurant 15 Service Process Matrix: Divergence 16 8

Service Blueprinting: Complexity 17 Failsafing (pokayokes) Service failures are often caused by interruptions or negligence.  Task to be done  Treatment accorded to the customer  Tangible features of the service Service Encounter = moments of truth Every customer contact is an opportunity to satisfy the customer. To improve customers’ perception of service quality. 18 9

Generic Approaches to Service Design Production ‐ line • Low Divergence • Service Flow • Cost and Consistent Quality Customer as Co ‐ Producer • Low Complexity, High Divergence • Substitute Technology for People • Cost and Convenience Customer Contact • High Complexity, High Divergence • Service Encounter, Service Guarantee • High Performance Quality, Dependability 19 Service Design Example 1 Production Line  Treat the service as a manufacturing process  Focus on tangibles, not people  Standardization  uniform quality  Low contact  high efficiency  Technology  fool ‐ proofing equipment and process 20 10

Service Design Example 2 Customer as Co ‐ Producer  having customers taking a greater role enhances the service  Self service  cost, speed, convenience, customization  24  7 service  availability  Appointments and reservations  Customers generated content  Wiki, e ‐ markets 21 Service Design Example 3 Customer Contact  how to achieve efficiency with customer participation  Separation of high and low contact operations  Employee empowerment + Keep track of customers’ preferences  total customization of service   Sales opportunities via personal relationship 22 11

Guidelines for Successful Service Design 1. Define the service package in detail 2. Focus on customer’s perspective (expectation and perception) 3. Recognize that designer’s perspective is different from the customer’s perspective 4. Define quality for tangible and intangibles elements 5. Make sure that recruitment, training, and rewards are consistent with service expectations 6. Establish procedures to handle exceptions 7. Establish systems to monitor service 23 Conclusion • The process is the product. • Service ‐ system matrix ≈ product ‐ process matrix • Service blueprint ≈ process flow chart • Inventory and scheduling are often not available to service operations. • Expect and manage variability of service encounter • Parts of the service packages are defined by the training and treatment the workers receive. 24 12

Homework 1 • Study the operation of zipcar. Describe its strategic service vision and service package. • https://www.youtube.com/watch?v=cX2xJOo5LIs • Due 12:00 noon, 3/20 • smguo@nkfust.edu.tw 13