Service Innovation

SERVICE INNOVATIONHow To Go From Customer Needs to Breakthrough

AUTHOR: Lance A. BettencourtPUBLISHER: McGraw-HillDATE OF PUBLICATION: 2009221 pages

Service Innovation By Lance A. Bettencourt

FEATURES OF THE BOOK

In Service Innovation, innovation strategist Lance Bettencourt shows marketers what they need to do to uncover customer service needs and ensure that these needs are met. Although the book’s focus is on services, its model for innovation applies to products as well.


THE BIG IDEA

Service Innovation shows readers how they can go beyond making incremental changes in the way their

companies provide services to providing breakthrough innovations.


INTRODUCTION

Because of the intangible nature of services, marketers often find it difficult to know whether they are providing what customers want. With goods, marketers can research and test market a prototype. In contrast, without a tangible product, marketers of services are often at a loss as to how to innovate. As IBM’s director of Service Research notes, “People have a good idea what technological innovation is. But service innovation is more hidden.” This lack of understanding partly accounts for the fact that more than four out of ten new services fail.


WHAT IS SERVICE INNOVATION AND WHY IS IT SO IMPORTANT?

Services account for more than 80 percent of gross domestic product in the United States, and more than 80 percent of the U.S. labor force works in service industries. Despite the dominance of the sector, however—and the importance of innovation in any sector—the process of service innovation is not well understood.



True service innovation depends on shifting the focus away from the service solution and back to the customer. It demands that companies expand their horizon beyond existing services and service capability, and focus tightly on the jobs customers are trying to get done. Instead of asking “How are we doing?” companies should ask “How is the customer doing?” They will be able to do this by talking to customers to uncover unmet needs, and then devising innovative strategies to meet them.



How Service Customers Define Value

The key to delivering core services more efficiently or to developing new services is to recognize that services are a means by which customers achieve a “customer job,” and are not an end in themselves. People “hire” service providers to help them get jobs done. No one goes to a bank to have a good experience at the bank (although providing pleasant service may be important).


CREATING AND USING A UNIVERSAL JOB MAP

Marketers seeking to innovate services can benefit from using a “universal job map,” a tool that shows all of the steps required to get a job done. Unlike traditional process mapping, which documents what customers are doing, universal job mapping focuses on what customers are trying to get done. The goal of the exercise is to capture significant service encounters and interactions for distinct customer segments.

Working through the nine steps in the process (defining, locating, preparing, confirming, executing, monitoring, resolving, modifying, and concluding) helps ensure that marketers do not view the service they are trying to innovate too narrowly or overlook some important needs.



Service Innovation helps marketers complete a job map by identifying the specific questions they need to ask at each step. These questions include the following:

Define: What must be defined up front to ensure success in getting the overall job done?Locate: What inputs must be located to ensure success in getting the overall job done?Prepare: What must be prepared to ensure success in getting the overall job done?Confirm: What must be confirmed to proceed with core job execution and to ensure overall success?



Execute: What must a customer do to execute the core purpose of the job successfully?Monitor: What must be monitored to ensure that the job gets done successfully?Modify: What modifications are necessary to ensure success in getting the overall job done?Conclude: What must the customer do to successfully conclude the job?Resolve: What problems relate to getting the overall job done must be resolved on occasion?


DEVELOPING A SUCCESSFUL SERVICE STRATEGY

Bettencourt identifies a four-step process which provides a road map for developing a successful service strategy. These steps are:

Select the innovation process. In this step, marketers •select the discovery option to pursue•decide who the customer is•decide upon a job or job area to investigate

Uncover customer needs. In this step, marketers•talk to customers•ask the right questions•ensure quality job and outcome statements.


FOUR APPROACHES TO SERVICE INNOVATION

New Service Innovation

New service innovation is the discovery of new or related jobs that a current or new service can help the customer get done.

Core Service Innovation

Core service innovation is the discovery of ways to help the customer get a core job done better with new or improved services. The focus is on improving the outcomes for customers of a core job.


FOUR APPROACHES TO SERVICE INNOVATION

Service Delivery Innovation

Service delivery innovation is the discovery of ways to improve how the benefits of a service are obtained. The focus here is on improving how a service is delivered to customers by identifying the outcomes customers use to judge success.

Supplementary Service Innovation

Many opportunities for innovation may be uncovered by examining the jobs related to product ownership and usage, or ‘supplementary services.’ The focus here is on specific tasks in the job chain that define how a product is consumed.


DEFINING INNOVATIVE SERVICE CONCEPTS

Four principles should guide marketers in innovating a company’s service concept:

1.Focus creative energies on specific job and outcome opportunities. Creating a well-defined customer need statement prevents marketers from wasting time innovating features of a service that customers do not care about.

2.Identify where key problems lie in satisfying high-opportunity jobs and outcomes. Looking at all of the factors that determine the outcome (systems, employees, inputs, offerings, methods, suppliers, partners, and so forth) can help marketers determine why the job or outcome is not being satisfied.


DEFINING INNOVATIVE SERVICE CONCEPTS

3. Systematically consider a diverse set of new service ideas to satisfy the opportunities. Drawing ideas from a diverse group of creative people will help ensure that ideas come from a variety of perspectives.

4. Build a detailed concept with service strategy and deliver in mind. A service blueprint identifies the services, shows how it is delivered, identifies points of customer contact, and spells out the roles of customers and providers. It can identify potential fail points.


CONCLUSION

One of the biggest mistakes marketers make is to define customer satisfaction in terms of expectations about service quality—that is, the means by which value is delivered. Instead, markets should focus tightly on customer needs and how well they are being met. As Bettencourt concludes, “As long as the definitions of customer needs, satisfaction, and value are linked to solutions, then approaches to innovation will be as well.” Astute marketers will focus not on existing service options but on helping customers get their jobs done. Developing a service-dominant logic of innovation is key to success.


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