Service Design Process

Arshinder Kaur
Assistant Professor
DoMS, IIT Madras

New Service Development

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New Service Development

New service development process
(Technology, people and process)
Representation of service delivery process:
Service Blueprint
Service system design

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New Service Development

(NSD)Process

Conversion of novel ideas into viable and

marketable products
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New Service and Why NSD?

New Service: An offering not previously
available to the customers- An Innovation
To accommodate dynamic requirements of
customers/ market
Service innovations that achieve Competitive
advantage
Speed of Technological developments
Do service firms have R & D departments?
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Why Innovation?
Face commoditization of services due to
Easier to copy
Fewer patent protection
Lower front end capital investment
Shorter product cycles

Compete in the market place or market space

Innovation
Creativity and implementation
Novel and useful ideas that improve
effectiveness
New ideas delivered to customers to create
commercial value

Levels of Service Innovation

Radical Innovations
Major Innovation
New service for markets as yet undefined, driven by information and
computer based technology (eBay)

Start-up Business
New service in a market that is already served by existing services

New Services for the Market Presently Served

New service offerings to existing customers of an organization

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Levels of Service Innovation

Incremental 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

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Ideas for New Service Innovation

Customers
Frontline employees
Mining databases
Advances in Technology

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 IITB-IBM

Examples

Development of new designs for mobile device interfaces

that can easily be used by people who are semiliterate or
illiterate, as well as individuals who have limited or no
access to information technology

Global Logistics System (GLS); An open-source

software platform for Global logistics companies that
will offer consumers aggregated rates across logistics
firms to allow them to choose the best deals. Savings
of $9.1 billion
- The concept is being promoted by the Global Coalition for
Efficient Logistics (GCEL), a Swiss-based non-profit public-private
partnership

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NSD
NSD Cycle
Ideas for new
service innovation

Design

Analyze

Development

Planning activities
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Full Launch

Execution activities
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New Service Development Cycle

Full Launch

Design
Full-scale launch
Post-launch review

Formulation
of new services
objective / strategy
Idea generation
and screening
Concept
development and
testing

Service design and testing

Process and system design and testing
Marketing program design and testing
Personnel training
Service testing and pilot run
Test marketing

Development

Analysis
Business analysis
Project authorization

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New Service Development Cycle

Service Delivery
System

Full-scale launch
Post-launch review

Full Launch

Enablers

Formulation
of new services
objective / strategy
Idea generation
and screening
Concept
development and
testing

People
Service design
and testing
Process and system
design and testing
Marketing program
design and testing
Personnel training
Service testing and
pilot run
Test marketing

Technology

Development

Systems
Tools

Analysis

Design

Business analysis
Project authorization
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Service Concept and Service

Design Elements
Managerial

Structural

Service encounter
Quality
Managing capacity and
demand
Information

Delivery system
Facility design
Location
Capacity planning

Strategic Service Vision

Consistent service offering

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Service Design Elements: Structural

Delivery system
How to manage front office and back office?
To what extent automation has been implemented?
What is the role and extent of participation of customer

Facility design
Size, Layout

Location
Customer demographics, no. of sites, competition

Capacity planning
Managing queues, number of servers, capability to
accommodate peak demand
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Service Design Elements: Managerial

Service encounter
What matters when customer is actually being
served?

Quality
Gap between perception and expectation

Managing capacity and demand

Can we alter the demand or control supply

Information
Competitive resource, data collection
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Service Blueprinting (G. Lynn Shostack)

How to translate the new service developed
based on subjective ideas into reality?
Capture service delivery system in a visual
diagram
Flowchart of all transactions constituting
service delivery process
First step in developing a service process
structure Positioning into competitive
market
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Service Blueprint of Luxury Hotel

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Blueprint- Testing of the service concept

Physical Evidence
Customer will see and experience
Customer initiated steps, choices and interactions during the process of
purchasing consuming and evaluating service
Line of Interaction
On stage contact person
Actions in the full view of customer
Line of Visibility
Back stage contact person
Actions not seen by customer
Line of Internal Interaction
Support process
Capacity requirement of the back office system
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Strategic Positioning through Process

Structure
Degree of Complexity:
Measured by the number and intricacy of steps in
the service blueprint. For example a clinic is less
complex than a general hospital.

Degree of Divergence:
Amount of discretion and freedom permitted to
the server to customize the service. For example
the activities of an attorney contrasted with those
of a paralegal.

Structural Alternatives for a Restaurant

LOWER COMPLEXITY/DIVERGENCE

CURRENT PROCESS

No Reservations
Self-seating. Menu on Blackboard
Eliminate
Customer Fills Out Form

TAKE RESERVATION
SEAT GUESTS, GIVE MENUS
SERVE WATER AND BREAD
TAKE ORDERS
PREPARE ORDERS

Pre-prepared: No Choice

Salad (4 choices)

Limit to Four Choices

Entree (15 choices)

Sundae Bar: Self-service

Dessert (6 choices)

Coffee, Tea, Milk only

Serve Salad & Entree Together:
Bill and Beverage Together
Cash only: Pay when Leaving

Beverage (6 choices)
SERVE ORDERS

COLLECT PAYMENT

HIGHER COMPLEXITY/DIVERGENCE
Specific Table Selection
Recite Menu: Describe Entrees & Specials
Assortment of Hot Breads and Hors Doeuvres
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

Degree of Divergence
Degree of Divergence
Low

High

Standardized service
High volumes/narrowly defined
and focused study
Routine/Repetitive in nature

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Customized service
More information exchange
High levels of technical and
analytical skills
More flexibility, JudgmentEmpowerment

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Degree of Divergence

Object of service process

Distinguish between which goods belong to customer

and which to service firm
Information processed by back office/electronic
media/direct interaction
Processing people involving physical changes- Service
providers with interpersonal and technical skills

Type of customer contact

Direct
Indirect
No contact
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Generic Approaches to Service Design

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

Production line approach

Routine services, controlled environment and
consistent quality
Limit Discretion of Personnel
Standardized routine services
Consistency in service performance

Division of Labor

Divide job into group of simple tasks

Substitute Technology for People

Standardize the Service

Limited service options

Opportunities for predictability and preplanning

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Customer as Coproducer
Shifting some of service activities onto the
customer
Self Service
Increase degree of customization (Pizza Hut)
Customer brings extra capacity

Smoothing Service Demand

Uniform utilization of capacity (reservations)

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Customer contact approach

Production process can be decoupled using

inventory. How to achieve manufacturing
efficiency?
Customer contact: Physical presence of the
customer in the system
Degree of customer contact: The percentage of
time that the customer is in the system relative
to the total service time.
Separation of high and low contact operations
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