Strategic Service Vision

MIM 1 MIM 1 -- ServiceService QualityQuality inin thethe New New EconomyEconomy 1

WWARSAW ARSAW SSCHOOL OF CHOOL OF EECONOMICSCONOMICSDEPARTMENT OF MANAGEMENT THEORYDEPARTMENT OF MANAGEMENT THEORY

Strategic Service VisionStrategic Service Vision

SSTRATEGICTRATEGICSSEERVICERVICEVVIISSIONION




SERVICE CONCEPT MODELSERVICE CONCEPT MODEL

Customer Relationships &

Loyalty

Pricing

Customer Satisfaction

Communication & Promotion

Capacity Management

Facilities & Location

Information Technology

Process Design &

Management

Empowerment

Job & Role Design

Competencies

Collaboration

Performance Measurement

Service Strategy

Innovation

Inte

rnat

iona

lisat

ion

Customer Value

Operations & Technology

Service Concept




FIVE KEY COMPONENTS OF A SFIVE KEY COMPONENTS OF A STRATEGTRATEGYY

Corporateobjectives

Environment

Serviceconcept

Operation

Performanceobjectives

Operations potential and

capabilityParameters for

change

Opportunities

Value

Operations task




STRATEGY DRIVERSSTRATEGY DRIVERS

Corporateobjectives

Environment

Serviceconcept

Operation

Performanceobjectives

Needs of stakeholders Activities of

competitors

Visionary leadershipNew services,

skills, etc.

Repositioning of competitors Needs of

customers




THE FIELD OF STRATEGY MAKINGTHE FIELD OF STRATEGY MAKING

WANTWANT

ALLOWEDALLOWED

SHOULDSHOULD CANCAN

Defining ethical standards

Allocating resources

Managing thefirm-environment fit

Setting objectives desirable future




STRATEGIC SERVICE VISIONSTRATEGIC SERVICE VISION

The need of most service organizations to The need of most service organizations to plan as well as direct marketing and plan as well as direct marketing and operations as one function has led to the operations as one function has led to the formation in leading companies, so called formation in leading companies, so called Strategic Service Vision (SSV)Strategic Service Vision (SSV)..

(Heskett, 1987)




EXTERNALY ORIENTED SSV (1)EXTERNALY ORIENTED SSV (1)Target Market SegmentsTarget Market Segments

•What are common characteristics of important market segments?•What dimensions can be used to segment market?

−demographic?−psychographic?

•How important are various segments?•What needs does each have?•How well are these needs being served?

− In what manner?−By whom?

Service conceptService concept

•What are important elements of the service to be provided, stated in terms of results produced for customers?•How are these elements supposed to be perceived by the target market segment?

−By the market in general?−By employees as a whole?−By others?

• How do customers perceive the service concept?•What efforts does this suggest in terms of the manner in which the service is:

−designed?−delivered?−marketed?

PositioningPositioning

•How does the service concept propose to meet customer needs?•How do competitors meet these needs?•How is the proposed servidifferentiated from competitors?•How important are these differences?•What is good service?•Does the proposed servicconcept provide it?•What efforts are required to bring customer expectations and service capabilities intoallignment?

ValueValue--Cost leveragingCost leveraging

•To what extent are differences between perceived value and cost of service maximized by:

−Standardization of certain elements? −Customization of certain elements?−Emphasizing easily leveraged services?−Management of supply and demand?−Control of quality through:

•Rewards?•Appeal to pride?•Visibility and supervision?•Peer group control?•Involving the customer?•Effective use of data?• To what extent does this effort create barriers to entry by potential competition

ce

e




EXTERNALY ORIENTED SSV (2)EXTERNALY ORIENTED SSV (2)

•To what extent are the strategy and delivery system internally consistent?•Can need of the strategy be met by delivery system?•If not, what changes must be made in:

−The operating strategy?−The service delivery system?

•To what extent does the coordination of operating strategy and service delivery system ensure:

−High quality?−High productivity?−Low cost?−High morale and loyalty of servers?

•To what extent does this integration provide barriers to entry by competition?

Strategy System IntegrationStrategy System Integration Service Delivery SystemService Delivery System

•What are important features of the service delivery system including:

−The role of people?−Technology?−Equipment?−Layout?−Procedures?

•What capacity does it provide?

−Normally?−At peak levels?

•To what extent does it:−Help ensure quality standards?−Differentiate service from competition?−Provide barriers to entry by competition?

Basic SSV elements

Integrative SSV elements

(Heskett, 1991)

Operating strategyOperating strategy

•What are important elements of the strategy/?

−Operations?−Financing?−Marketing?−Organization?−Human resources?−Control?

•On which will the most effort be concentrated?•Where will investment will be?•How will quality and cost be controlled?

−Measurement?− Incentives?−Rewards?

•What results will be expected versus competition in terms of:

−Quality of service?−Cost profile?−Productivity?−Morale and loyalty of servers?




ELEMENTS OF AN EXTERNALLY ORIENTED SERVICE STRATEGYELEMENTS OF AN EXTERNALLY ORIENTED SERVICE STRATEGY

•• Identification of Identification of Target Market SegmentsTarget Market Segments•• Positioning (Customer focus)Positioning (Customer focus)•• Development of a Development of a Service ConceptService Concept to addressto address tagetedtageted customer customer

needsneeds•• Maximising valueMaximising value•• Development of Development of Operating StrategyOperating Strategy, to support the service , to support the service

conceptconcept•• Transformation of strategy into systemTransformation of strategy into system•• Design of aDesign of a Service Delivery SystemService Delivery System to support the Operating to support the Operating

StrategyStrategy•• Final Output (Quality)Final Output (Quality)

(Na podstawie Heskett, 1991, de Matta 1995)




TARGET MARKET SEGMENTSTARGET MARKET SEGMENTS

•• Common characteristicsCommon characteristics

•• Dimensions to segment the marketDimensions to segment the market

•• DemographicsDemographics

•• PsychographicsPsychographics

•• Need of each segmentNeed of each segment

•• By whom and in what capacity are the needs being By whom and in what capacity are the needs being servedserved




SERVICE CONCEPTSERVICE CONCEPT

•• Results produced for customersResults produced for customers

•• Service perception by each target segment, Service perception by each target segment, employee, market in generalemployee, market in general

•• Individual customer’s service perceptionIndividual customer’s service perception

•• Service design, delivery and marketing requirementsService design, delivery and marketing requirements




OPERATING STRATEGYOPERATING STRATEGY

•• Operations, financing, marketing, organisation, Operations, financing, marketing, organisation, human resourceshuman resources

•• Controlling quality and costControlling quality and cost

•• Incentives and rewardsIncentives and rewards

•• Comparing service quality, cost, productivity, morale Comparing service quality, cost, productivity, morale and loyalty of servers with competitionand loyalty of servers with competition




SERVICE DELIVERY SYSTEMSERVICE DELIVERY SYSTEM

•• Workers, technology, layout, systems and proceduresWorkers, technology, layout, systems and procedures

•• Normal and peak service capacityNormal and peak service capacity

•• Quality standardsQuality standards

•• Service differentiationService differentiation

•• Risk of copy catsRisk of copy cats




TASKS AT THE STAGE OF SERVICE CONCEPTTASKS AT THE STAGE OF SERVICE CONCEPTINTEGRATION WITH OPERATING STRATEGIESINTEGRATION WITH OPERATING STRATEGIES

Maximise the difference between service value and Maximise the difference between service value and service cost by:service cost by:

•• standardisation or customisationstandardisation or customisation

•• supply and demand managementsupply and demand management

•• service quality controlservice quality control

•• creating barriers to entry by competitioncreating barriers to entry by competition




SSV EXAMPLE: INSURANCE COMPANYSSV EXAMPLE: INSURANCE COMPANYHARTFORD STEAM BOILER INSPECTION & INSURANCE COMPANYHARTFORD STEAM BOILER INSPECTION & INSURANCE COMPANY

•• Target MarketTarget Market•• Companies using boilers and related equipment with high operatinCompanies using boilers and related equipment with high operating g

riskrisk•• Service Concept Service Concept •• Emphasise cost reduction in addition to risk reduction Emphasise cost reduction in addition to risk reduction •• Operating StrategyOperating Strategy•• Concentrate on a few types of equipment, hire more engineers thaConcentrate on a few types of equipment, hire more engineers than n

competition, maintain close contact with customerscompetition, maintain close contact with customers•• Service Delivery SystemService Delivery System•• Maintain a large database on equipment’s operating and Maintain a large database on equipment’s operating and

performance characteristics. Inspect equipment before and after performance characteristics. Inspect equipment before and after it is it is insured.insured.




ELEMENTS OF AN INTERNALLY ORIENTED SERVICE STRATEGYELEMENTS OF AN INTERNALLY ORIENTED SERVICE STRATEGY

•• Directing the vision inward by targeting Directing the vision inward by targeting employees as well as customersemployees as well as customers

•• Elements are the same as the Elements are the same as the externallyexternally-- oriented SSVoriented SSV

(Na podstawie Heskett, 1991, de Matta 1995)




INTERNALY ORIENTED SSV (1)INTERNALY ORIENTED SSV (1)Target employee groupTarget employee group

•What are common characteristics of important employee group?•What dimensions can be used to describe these employee groups?

−demographic?−psychographic?

•How important are each of these groups to the delivery of the service?•What needs does each group have?•How well are these needs being served?

− In what manner?−By whom?

Service conceptService concept

•What are important elements of the service to be provided, stated in terms of results produced for employees and the company?•How are these elements supposed to be perceived by the targeted employee groups?•How are these elements perceived?•What further efforts does this suggest in terms of the manner in which the service is:

−designed?−delivered?

PositioningPositioning

•How does the service concept propose to meet employee needs?•How do competitors meet these needs?•How relationships with employees differentiated from those between competitors and their employees?•How important are these differences?•What is „good service” to employees?•Does the proposed service concept provide it?•What efforts are required to bring employee expectations and service capabilities into alignment?

ValueValue--cost leveragingcost leveraging

•To what extent are differences between returns to employees and the level of effort they put forth maximized by:

−The design of service concept?−The design of the elements of the operating strategy?−Job design?−The leveraging of scarce skills with a support system?−The management of supply and demand?−Control of quality through:

•Rewards?•Appeal to pride?•Visibility and supervision?•Peer group control?•Involving the customer in the delivery of the service?• Effective use of data?




INTERNALY ORIENTED SSV (2)INTERNALY ORIENTED SSV (2)

Operating strategyOperating strategy

•How important is direct human contact in the provision of the service?•To what extent have employees been involved in the design of the service concept and operating strategy?•How desirable is it to:

− Increase employee satisfaction?− Improve employee productivity?

•What incentives are provided for:

−Quality ?−Productivity ?−Cost ?

•How does the strategy address employee needs for ?

−Selection ?−Assignment ?−Development ?−Evaluation ?−Compensation ? −Association?

•To what extent are the strategy and delivery system for serving important employee groups internally consistent?•To what extent does the integration of operating strategy and service delivery system ensure:

−High quality?−High productivity?−Low cost?−High morale and „bonding” of the target employee group?

Strategy Strategy --systems systems integrationintegration

Service delivery systemService delivery system

•What are important features of the service delivery system including:

−The role of people?−Technology?−Equipment?−Layout?−Procedures?

•What does it require of target employee groups?

−Normally?−At peak periods of activity?

•To what extent does it help employees:

−Meet quality standards?−Differentiate their service from competition?−Achieve expectations about the quality of their work life?

Basic SSV elements

Integrative SSV elements

(Heskett, 1991)




SSV EXAMPLE: INSURANCE SSV EXAMPLE: INSURANCE COMPANY (1)COMPANY (1)SERVICEMASTERSERVICEMASTER CO., ILLINOIS, USACO., ILLINOIS, USA

•• BusinessBusiness::•• Manages support services for hospitals, schools Manages support services for hospitals, schools

and industrial companiesand industrial companies•• Target employee group Target employee group •• FuFunnctionally illiterate employeectionally illiterate employee•• Service ConceptService Concept•• Provide educational and motivational programme to Provide educational and motivational programme to

help these employees to „be something”help these employees to „be something”




SSV EXAMPLE: INSURANCE SSV EXAMPLE: INSURANCE COMPANY (2)COMPANY (2)SERVICEMASTERSERVICEMASTER CO., ILLINOIS, USACO., ILLINOIS, USA

•• Operating StrategyOperating Strategy•• Invest in training and laboratory for developing new Invest in training and laboratory for developing new

equipment and materials.equipment and materials.•• Target a 20% growth per year from expansion of existing Target a 20% growth per year from expansion of existing

operations rather than acquisitions.operations rather than acquisitions.•• Service Delivery SystemService Delivery System•• Redesign jobs and develop equipment and pictorial, colour Redesign jobs and develop equipment and pictorial, colour

coded instruction materials.coded instruction materials.•• Hold weekly training programmesHold weekly training programmes•• Help people grow.Help people grow.




OTHER SERVICEOTHER SERVICE STRATEGIES (1)STRATEGIES (1)

Stressing service quality control that is based on:Stressing service quality control that is based on:

•• enhanced visibility of service delivererenhanced visibility of service deliverer

•• team buildingteam building

•• generous incentivesgenerous incentives

•• customer feedbackcustomer feedback

•• peer group control (professional standards)peer group control (professional standards)




OTHER SERVICE STRATEGIES (2)OTHER SERVICE STRATEGIES (2)

•• Appraising the effects of scale on service efficiency Appraising the effects of scale on service efficiency and effectiveness (e.g., Visa, Hyatt, Marriott, SAS, and effectiveness (e.g., Visa, Hyatt, Marriott, SAS, power plants)power plants)

•• Substituting information for other assets Substituting information for other assets –– the use of the use of forecasting and inventory control techniques (e.g., car forecasting and inventory control techniques (e.g., car & appliance repair shops, credit card company)& appliance repair shops, credit card company)




TODAY STRATEGIES?TODAY STRATEGIES?

•• From mass customisation to individualisationFrom mass customisation to individualisation

•• From forecasting to quick responseFrom forecasting to quick response

•• From delivering service to delivering experienceFrom delivering service to delivering experience

•• From inventory control to pull strategiesFrom inventory control to pull strategies

•• From quality control to total qualityFrom quality control to total quality

•• From cost orientation into revenue and value orientationFrom cost orientation into revenue and value orientation

•• From procedures into flexibilityFrom procedures into flexibility

•• From best practices into new practicesFrom best practices into new practices

Documents

Strategic Service Vision