Designingservices

that deliver

G. Lynn Shostack

Even thoughthey are intangible,

services can be subjected tothe same rigorousanalysisas other managementoperations

Considering the extent towhicb the service industrycontributes to our GNP.very little has been said orwritten about the applica-tion of rational manage-ment techniques to thedevelopment of new ser-'vices. Many believe thatgood service results fromthe style of an individualentrepreneur or companyand is therefore highlyidiosyncratic.

Asa result of her years ofexperience with serviceorganizations, Ms. Shos-tack thinks it's time thatmanagers subiect servicedevelopment to more rigor-ous analysis and control.This very pragmatic articledescribes how the use of ablueprint can belp a ser-vice developer not only toidentify problems beforetbey happen but also tosee the potential for othermarket opportunities.While the blueprint is mostuseful to managers devel-oping new services, otherscan apply the same princi-ples to test the quality ofservices for which theycontract.

Ms. Shostack is senior vicepresident in charge of thePrivate Clients Group atBankers TYust Company. Aformer vice president atCitibank and chief of staffof that institution's Invest-ment Management Group,she has headed the mar-keting committee of theAmerican Bankers Associ-ation 7>ust Division andchaired the American Mar-keting Association 's spe-cial task force on servicemarketing. Author of amarketing managementcolumn for The AmericanBanker, she also serves onthe editorial advisoryboard of the In_ternationalJournal of Bank Marketingand the Service IndustriesJournal.

We're all familiar with the symptoms ofservice failure. Your shirt comes back from the laundrywith a broken button. Within a week of paying an out-rageous repair bill, that ominous rattle reappears inyour car's engine. A customer service representativesays he'll get back to you and doesn't. An automaticteller swallows your card.

Examples of ^oor service are wide-spread; in survey after survey, services top the list interms of consumer dissatisfaction. Ideas like H&RBlock's approach to tax preparation, the McDonald'sformula for fast-food service, and Walt Disney's con-cept of entertainment are so few and far between thatthey seem to be the product of genius-a brilliant flashthat can never be duplicated.

Faced with service problems, we tend tobecome somewhat paranoid. Customers are convincedthat someone is treating them badlyj managers thinkthat recalcitrant individual employees are the sourceof the malfunction. Thinly veiled threats by customersand managers are often first attempts to remedy theproblem; if they fail, confrontation may result.

But these remedies obscure the basis fora lasting "cure." Even though services fail because ofhuman incompetence, drawing a bead on this targetobscures the underlying cause: the lack of systematicmethod for design and control.

The development of a new service isusually characterized by trial and error. Developerstranslate a subjective description of a need into anoperational concept that may bear only a rempteresemblance to the original idea. No one systemati-cally quantifies the process or devises tests to ensurethat the service is complete, rational, and fulfills theoriginal need objectively No R&D departments, labo-ratories, or service engineers define and oversee thedesign. There is no way to ensure quality or uniformityin the absence of a detailed design. What piecemealquality controls exist address only parts of the service.

134 Harvard Business Review January-February 1984

Exhibit I

StarKlardexecution time2 minutes

Totalacceptableexecution time5 minutes

Blueprint for a comer shoeshine

Brushshoes

Faciiitating servicesand productsUne of

vialblllty

Not seenby customerbut necessarytoperfonnance

Selectand purchasesupplies

There are several reasons for the lack ofanalytical service systems designs. Services areunusual in that they have impact, but no form. Likelight, they can't he physically stored or possessed andtheir consumption is often simultaneous with theirproduction.

People confuse services with productsand with good manners. But a service is not a physicalobject and cannot he possessed. When we buy the useof a hotel room, we take nothing away with us hut theexperience of the night's stay When we fly, we aretransported by an airplane hut we don't own it.Although a consultant's product may appear as abound report, what the consumer bought was mentalcapahility and knowledge, not paper and ink. A serviceis not a servant; it need not be rendered by a person.Even when people are the chosen means of execution,they are only part of the process.

Outstanding service companies instillin their managers a fanatical attachment to the origi-nal service idea. Believing that this product of genius isthe only thing they have going for them, they try tomaintain it with considerable precision. They bring inmethods engineers to quantify and make existing com-ponents more efficient. They codify the process in vol-umes of policies and procedures. While the outline of agreat service concept may he reflected in these tools,the procedures are only fragmented views of a morecomprehensive, largely undocumented phenomenon.

Good and lasting service management requires muchmore. Better service design provides the key to marketsuccess, and more important, to growth.

The operations side of service manage-ment often uses work flow design and control methodssuch as time-motion engineering, PERT/GANTTcharting, and quality-control methods derived fromthe work of W. Edwards Deming. These procedures pro-vide managers with a way to visualize a process and todefine and manipulate it at arm's length. What theymiss is the consumer's relationship to, and interactionwith, services. They make no provision for people-rendered services that require judgment and a lessmechanical approach. They don't account for the ser-vice's products that must be managed simultaneouslywith the process. And they don't allow for special prob-lems of market position, advertising, pricing, ordistribution.

We can build on the strength of theseoperational systems, however, to come up with a morecomprehensive and workable framework for address-ing most issues of service development. We can devisea blueprint for service design that is nonsubjective andquantifiable, one which will allow developers to workout details ahead of time. Such a blueprint gives man-agers a context within which to deal with the manage-ment and control of the process.

Designing services 135

Designing a blueprint

A service blueprint allows a company toexplore all the issues inherent in creating or managinga service. The process of designing a blueprint involvesthe consideration of several issues:

Identifying processes. The first step increating such a hlueprint is mapping the processes thatconstitute the service. Exhibit I maps a shoeshineparlor. As the service is simple and clear-cut, the map isstraightforward. For more complex services, identify-ing and defining the processes involved may be diffi-cult and result in a large, complicated diagram.Tax-retum preparation or health care, for example,involves many decision points, alternative courses ofaction, and variable methodologies. Portfolio manage-ment, car repair, and even tailoring require contempla-tion and observation before diagramming.

Even within the simplest process, fur-ther definition is beneficial; in shoeshining it might beuseful to specify how the proprietor will perform thestep called "buff." Definition doesn't mean you mustmechanize all procedures. But identifying the compo-nents of a step or action reveals the inputs needed andsteps covered, and permits analysis, control, andimprovement. For example, a doctor or a lawyer woulddo well to break down the "problem diagnosis" step.

It is important to watch out for parts ofthe service that the consumer does not see, like pur-chasing of supplies. Though invisible, these process-es are important because changing them may alter theway consumers perceive the service. If, for example, abank redesigns a computer program so that it producesa different account statement for customers, the bankmay affect its image or other consumer perceptions ofvalue. These subprocesses are integral to the success ofthe service.

Isolating fail points. Having dia-grammed the processes involved, the designer can nowsee where the system might go awry. The shoeshinermay pick up and apply the wrong color wax. So thedesigner must build in a subprocess to correct thispossible error. The identification of fail points and thedesign of fail-safe processes are critical. The conse-quences of service failures can be greatly reduced byanalyzing fail points at the design stage. When design-ers and managers think through potential problemstogether in advance, the quality of service execution isinvariably higher.

Establishing time frame. After diagram-ming a service profile, identifying processes andvulnerabilities, and building in fail-safe measures, thedesigner must consider the execution.

fexhibit II Shoeshine profitability analysis

Kecution time

2 minutes 3 minutes 4 minutes

Price $ .50 $ ,50 $ ,50

Costs Timefti $,10per minute ,20 ,30 ,40

Wax ,03 .03 .03

Otheroperatingexpenses .09 .09 ,09

Tbtal costs $ .32 S .42 S .52

Pretax profit $ ,18 S ,08 ($ ,02)

Since all services depend on time,which is usually the major cost determinant, thedesigner should establish a standard execution time.As a blueprint is a model, the design should also allowfor deviation from standard execution time underworking conditions. The amount of latitude necessaryin the time frame will depend on the complexity ofthe delivery.

In the shoeshine example, the standardexecution time is two minutes. Research showed thatthe customer would tolerate up to five minutes ofperformance before lowering his or her assessment ofquality. Acceptable execution time for a shoeshine isthen five minutes.

Analyzing profitability. The customercan spend the three minutes between standard andacceptable execution time at the comer parlor waitingin line or during service, if an error occurs or if theshoeshiner does certain things too slowly. Whatever itssource, a delay can affect profits dramatically ExhibitII quantifies the cost of delay; after four minutes theproprietor loses money.

A service designer must establish atime-of-service-execution standard that precludesunprofitable business and maintains productivity. Sucha standard not only helps measure performance andcontrol uniformity and quality, it also serves as amodel for distribution of the service to far-flunglocations.

Delivering the service

Recruiting, training, and general man-agement are important considerations in services ren-dered by people, and for complex professionaloccupations such as legal, consulting, or medical ser-

Harvard Business Review January-February 1984

Exhibit Modified shoeshine biueprint

standardexecution time3 minutes15 seconds

Totalacceptableexecution time6 minutes15 seconds

Collectpayment

ReceiptFail Wrongpoint co\ot

wax

Sample ofshoe polish

vices these factors are of paramount importance. Butsome services can be rendered mechanically, as bankshave demonstrated with automatic tellers, and somecan be performed by customers themselves, as atsalad bars.

Implementation constantly evolves.Schools, for example, once depended entirely on teach-ers to render the service of education; today computersand television have an important function in the class-room. A service designer must weigh altemate meansof execution, for example, by considering the merits ofusing a buffing machine in the process of shoeshining.The productivity and profit margin increases must beweired against a customer's perception of lower qual-ity. A blueprint facihtates the analysis of cost-benefittrade-offs and can be used to test the appeal of differentdesigns to prospective customers.

A blueprint can help the service devel-oper with other problems. For the pricing department,it provides a basis for a thorough cost analysis; for dis-tribution, a map to be duplicated; for promotion,tangible evidence it can manage and control.

Highlighting tangible evidence

To maintain credibility, the servicemust select and manage products with care. In some

cases, products are optional-a consultant may nothave to present a written report for instance. Consum-ers, however, often deduce the nature of the servicefrom this type of circumstantial evidence. The designof a service should therefore incorporate the orchestra-tion of tangible evidence-everything the consumeruses to verify the service's effectiveness. The setting,including color schemes, advertising, printed orgraphic materials, and stationery, all proclaim a ser-vice's style. The design should not be carelessly dele-gated to outsiders or left to chance.

Airlines have learned this lesson. Theinterior and exterior decor of the plane, flight atten-dants' uniforms, the appearance of the reservationdesk, ticket folders, baggage tags, and advertisinggraphics all tell the customer what kind of service toexpect. They either reinforce or contradict personalexperience with the airline.

Making people special

To the customer, people are inseparableparts of many services. The presence of people, how-ever, brings a higher risk that service quality will vary.At the design stage, the developer must plan and con-sider every encounter(between consumer and provider.The good manners and attentiveness customers associ-

Designing services 137

Exhibit iV Blueprint for more complex shoeproducts and services

ate with good personal service must be made part ofthe hiring, training, and performance standards of thecompany. Indifferent or surly execution can devaluethe service.

Both the Disney organization and IBMoffer outstanding examples of superior people manage-ment to provide uniform service. Airlines and fast-foodchains "package" service personnel in clothes that pro-claim and reinforce an overall service identity. Thesecompanies invest heavily in training and retraining atall levels.

At the beginning and end of the designcycle lies the marketing goal to which all serviceorganizations aspire: benefiting customers. For thecustomer, a good shoeshine is "shiny shoes," "cleanshoes," or "preservation." It goes without saying thatmarket research throughout the design cycle is thebest control mechanism to ensure that the servicemeets the goal.

of good care. Such service reminders (the shoeshinercould print his or her name and address on the shoe-polish sample) could lead to a premium price for a pre-mium service.

A designer can use a blueprint to engi-neer new market products or services (see Exhibit IV).A designer can do much at the drawing board, wellbefore expensive formal market introduction of the

service.

Modifying a service

Market research during a service's oper-ating life enables managers to measure quality andidentify needs for redesign.

Exhibit III shows how the designer mayadd a repeat of steps 2 and 3 in the shoeshine service tocreate a two-coat shine, and justify a 20-cent priceincrease, thus increasing the profit margin by nearly30%. Moreover, the shoeshiner might decide to add areceipt or a sample of shoepolish as tangible evidence

Applying the principles

Service blueprint methods can beapplied in the development of a discount brokerage ser-vice in a large money-center bank (see Exhibit V). Verylittle of this service is visible to customers. In fact, cus-tomers have virtually no conception of the processesthat underlie most services.

Discount brokerage is not particularlycomplex, but the blueprint condenses and simphfiesthe service and omits many minor steps. For example,the step "prepare and mail statements" includes morethan 12 activities, such as printing statements andstuffing and sealing envelopes.

The important fail points (F) showwhere the service may experience quality or consis-tency problems. Telephone communication, for exam-ple, is a component that is not only critical anddifficult to control but also one of the most powerfulinfluences of customer perception, since it providesthe only personal contact. To deal with this potential

138 Harvard Business Review (anuary-Febniary 1984

Exhibit V Blueprint for discount brokerage

If marginaccount,checkcreditreferencesand set limits

If marginloan purchase,execute loan

Designing services 139

fail point, management decided to script dialoguesfor various situations, to train staff thoroughly in com-munication and response techniques, to establishprocedures making certain that calls never wentunanswered, and to ensure accuracy by logging, record-ing, and confirming all customer instructions. Whilethe blueprint doesn't show these processes, the systemdesigner has diagrammed and controlled each one.

The design shows execution time stan-dards that can be easily monitored and quantified.They allow the measurement of capacity and produc-tivity through volume and throughput relationships. Intelephone communication, for example, the brokerageset a broad time limit for opening accounts (one-half toone hour). Execution standards can be tightened asoperating experience increases.

Although the superficial aspects ofservices may seem the same, the design particularsinvolve so many alternatives and choices that no twoservices will have exactly the same design. Servicesdiffer from competitor to competitor in the sum of par-ticulars. Individual aspects allow consumers to dis-criminate between companies qffering the sameproduct.

In its complete form. Exhibit V permitsthe analysis of competitive differences. The designercan then respond to unfavorable comparisons withappropriate changes. As new processes or products areadded, or enhancements made, they can be mapped onthe blueprint and analyzed for their impact on opera-tions, profitability, and reliability

Creating better service

A blueprint is more precise than verbaldefinitions and less subject to misinterpretation. Itillustrates the dictum of W. Edwards Deming thatworkers are never to blame for flaws in a process. Pro-cess design is management's responsibility.

A service blueprint allows a company totest its assumptions on paper and thoroughly work outthe bugs. A service manager can test a prototype deliv-ery on potential customers and use the feedback tomodify the blueprint before testing the procedureagain.

A blueprint encourages creativity pre-emptive problem solving, and controlled implementa-tion. It can reduce the potential for failure and enhancemanagement's ability to think effectively about newservices.

The blueprint principle helps cut downthe time and inefficiency of random service develop-ment and gives a higher level view of service manage-

ment prerogatives. The altemative-leaving services toindividual talent and managing the pieces rather thanthe whole-makes a company more vulnerable andcreates a service that reacts slowly to market needsand opportunities. As the United States moves to a ser-vice economy companies that gain control of thedesign and management process will be the companiesthat survive and prosper. ^

Verses Written at Bath,in the Year 1748, onFinding the Heelof a Shoe

. This pondrous heel of perforated hideCompact, with pegs indented many a row,Manly, (for sucti its mass form bespeaks,)The weighty tread of some rude peasant clownUpbore: on this supported oft, he stretch'd.With uncouth strides, along the furrow'd glebe,Ratt ning the stubborn clod, till cruel time,(What will not, cruel time!) on a wry step,Sever'd the strict cohesion; when, alas!He, who could erst, with even, equal pace.Pursue his destined way with symmetry,And some proportion form'd, now, on one side,Curtail'd and maim d, the sport of vagrant boys.Cursing his frail supporter, treach rous prop!With toilsome steps, and difficult, moves on.

Thus fares it oft with other than the feetOf humble villager;-the statesman thus.Up the steep road, where proud ambition treads,Aspiring, first uninterrupted windsHis prosp rous way: nor fears miscarriage foul.While policy prevails, and friends prove true:But that support soon failing, by him left,Betray'd, deserted; from his airy heightHead-long he falls; and through the rest of life.Drags the dull load of disappointment on.

William Cowper

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