New Service Development and Process Design

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New Service Development and Process Design
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Levels of Service Innovation

• Radical 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 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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Technology 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

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New Service Development Cycle

• Full-scale launch
• Post-launch review

Enablers
Development
Full Launch

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

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

Organizational Context
People
Teams
Product
Technology
Systems
Tools
Analysis
Design

• Business analysis
• Project authorization

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The Service Package

• Supporting 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.

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Service Design
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Service 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

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Service Blueprint Components
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Express Mail Delivery Service
Truck Packaging Forms Hand-held Computer Uniform
Truck Packaging Forms Hand-held Computer Uniform
CUSTOMER PHYSICAL EVIDENCE
Customer Calls
Customer Gives Package
Receive Package
Line of Interaction
Driver Picks Up Pkg.
Deliver Package
(On Stage)
Line of Visibility
CONTACT PERSON
(Back Stage)
Customer Service Order
Line of Internal Interaction
Airport Receives Loads
Fly to Sort Center
Load On Truck
Dispatch Driver
Unload Sort
Fly to Destination
SUPPORT PROCESS
Load on Airplane
Sort Packages
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Overnight Hotel Stay
Bill Desk Lobby Hotel Exterior Parking
Hotel Exterior Parking
Cart for Bags Uniform
Desk Registration Papers Lobby Key
Elevators Hallways Room
Cart for Bags
Room Amenities Bath
Menu
Delivery Tray Food Appearance
Food
CUSTOMER PHYSICAL EVIDENCE
Arrive at Hotel
Give Bags to Bellperson
Call Room Service
Check out and Leave
Receive Bags
Sleep Shower
Go to Room
Receive Food
Eat
Check in
Greet and Take Bags
(On Stage)
Deliver Bags
Deliver Food
Process Registration
Process Check Out
CONTACT PERSON
Take Food Order
(Back Stage)
Take Bags to Room
SUPPORT PROCESS
Registration System
Registration System
Prepare Food
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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

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Strategic Positioning Through Process Structure

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

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Goods-service spectrum
Steel productionAutomobile fabrication
House buildingRoad construction
Low service content High goods content
Dressmaking Farming
Auto Repair Appliance repair
Increasing goods content
Maid Service Manual car wash
Teaching Lawn mowing
Increasing service content
High service content Low goods content
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Taxonomy of Service Processes
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A Well-designed Service System Is

• Consistent with firms strategic focus
• User friendly
• Robust
• Easy to sustain
• Effectively linked between front back office
• Cost effective
• Visible to customer

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Risk Management in New Product Development
New product development is linked with very
limited historical or preliminary data. Hence,
risky
Why research and analysis before new product
development
Risk can be in form of market, technical, or
organizational issues. Risk analysis solves the
problem through flexible modeling, primary and
secondary research.

• 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.

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.