Service CHP 7 Mine

Chapter 7
Service Design and Development

New service development
For their survival, service companies must develop new services continuously. New service is
defined as an offering not previously available to the customers using Innovation process
New service development process is required to accommodate dynamic requirements of
customers/ market, to bring service innovations that achieve Competitive advantage leveraging
the speed of technological developments New service development process faces challenges in
terms that service cannot have extensive R & D departments like manufacturing or processing
industry? It is very difficult to imitate or make prototype of new service and test it in some
laboratory.
New Service Development (NSD) can be demonstrated as a cycle shown in Figure 3.2, which
takes service innovation as inputs to the NSD cycle.
New Service Development: Innovation

Innovation can be defined as successful exploitation of new ideas. Innovation is must to face the
challenges or competition in service due to
 Low entry barriers in service
 Few patent protection
 Lower capital investments
 Shorter service product cycles
Innovation can also be perceived as novel, useful and creative ideas that improve effectiveness &
delivered to the customers to create commercial value.
Challenges in Service Innovation
Services are mainly thought of consumers of innovations (mostly developed in manufacturing
sector) and Imitators of or facilitators to innovation of manufacturing firms
Difficulties in realizing innovation in services because
 Services may or may not use specific resources in the form of R&D departments like
other goods
 Service innovations may be are not result of deliberate activity at all
 Innovations are recognized only a posteriori as they emerge in the process of service
provision on the basis of customer’s specific needs
 Service is both a product and a process and because of nature and characteristics of
services it is difficult to change or improve service.
 Service organization or employees may innovate while providing good quality service or
while meeting extra ordinary client’s request, but they may think that it is to satisfy
customer and never realized that they have actually innovated something.
Types of new services
Service innovation can be classified as radical innovation and incremental innovation as shown
in Figure 3.3
Drivers of Innovation
 Financial pressures or increased competition to decrease costs, increase efficiency
 The changing economy
 Stricter government regulations
 Need for sustainable development
 Shorter product life cycles
 Community and social expectations and pressures
 Demographic, social, and market changes
 Rising customer expectations regarding service and quality
 Greater availability of potentially useful and inexpensive new technologies
 New ideas from customers, strategic partners, and employees
Radical Innovations
In radical innovation new service system with final service product, technical and competence
characteristics replaces the old service system. It can visualize as step change in some measure of
growth like sales and efficiency. This innovation can take following forms.
 Major Innovation
 New service for markets as yet undefined mostly driven by information and computer
based technology such as eBay
 Start-up Business
 New services in a market that is already served by existing services such as make-my-
trip, clear trip
 New Services for the Market Presently Served
 New service offerings to existing customers of an organization such as ATMs at Airport
Incremental Innovations
Incremental innovation results due to modest changes in the existing services. It can take
different forms.
• Service Line Extensions
– Augmentation of existing service line such as new menu items in some restaurants
• Service Improvements
– Changes in features of currently offered service such as web based check-in services offered by
airlines
• Style Changes
– Modest visible changes in appearances such as changes in aesthetics
Stages in new service development

After considering innovations as input to NSD cycle, the cycle as shown in Figure 3.4 enters
into planning stage, which is comprised of
 Design : Formulation of new services, objective / strategy, Idea generation and screening
and Concept development and testing
 Analysis: Business analysis and Project authorization After planning stage, cycle enters
into execution stage.
 Development: Service design and testing, Process and system design and testing,
Marketing program design and testing, Personnel training, Service testing and pilot run
and Test marketing
 Full launch: Full-scale launch and Post-launch review
The steps involved in all the stages; design, analysis, development and full launch
are described the following figures
Service Delivery System Design: Service Blueprinting
Service blueprinting is a technique to design service delivery system as shown in figure 3.10.
 A customer focused approach for service innovation and service improvement
 Helps in visualizing the service processes and hence provide a bird’s-eye view of the
service system
 Identifying points of customer contact with service system
 Physical evidence associated with services from customer’s perspective Quality function
development
Figure : Blueprint - Testing Of The Service Concept
In place of costly implementation of pilot studies, blueprints allow the creation, study and
testing of services conceptually on a paper. See one example of hotel blueprint in the Figure.
Service Blueprint Advantages
In the service blueprint we can visually see the activities which need direct customer contact and
which activities are back-office activities. This information can be utilized to provide appropriate
training to employees and to develop good communication skills.
Service blueprint can also enhance the quality and efficiency. It gives a good scope to determine
potential areas where service failure may occur, hence failure mode analysis can be performed.
Service Blueprint facilitates problem solving and creative thinking and hence a good tool to
innovate in services.
Considering quality issues right at the design stage will help in avoiding quality losses or service
failure later.
It provides a service process structure which can help in devising different approaches for service
system design appropriate for different types of service organizations.
Blueprint provides a common platform for all stakeholders to participate in the process where
everybody gain insights into how their roles fit into the integrated whole, which facilitate
innovation.

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Chapter 7

Service Design and Development

New Service Development: Innovation

Stages in new service development

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