Summary Managing Service Innovation

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This is the summary of the book "Managing Service Innovation". The author(s) of the book is/are Flikkema. This summary is written by students who study efficient with the Study Tool of Study Smart With Chris.

Summary - Managing Service Innovation

  • 1 Shostack: Designing Services That Deliver

  • Even though services fail because of human incompetence, it's not the true underlying cause. What is this cause according to Shostack?
    The lack of systematic method for design and control. 
  • The development of a new service is usually characterized by trial and error. Developers translate a subjective description of a need into an operational concept that may bear only a remote resemblance to the original idea (operationele concept slechts een op afstand gelijkenis met het originele idee). (Shostack)
  • According to Shostack, there are several reasons for the lack of analytical service systems designs. Name and explain 3:
    1 People confuse services with products and with good manners
    2 Outstanding service companies instill (bijbrengen) in their managers a fanatical attachment to the original service idea (but good and lasting service management requires much more: better service design provides the key to market success and growth)
    3 The operation side of service management procedures (f.e. time-motion engineering), provide managers a way to visualize a process and to define/manipulate it. They miss the consumer's relationship to, and interactions with, services. 
  • What can Shostack provide and what's the use of it?
    A blueprint for service design that is nonsubjective and quantifiable, on which will allow developers to work out details ahead of time. It give managers a context within which to deal with the management and control of the process.
  • What does a service blueprint do for a company according to Shostack?
    It allows a company to explore all issues inherent in creating or managing a service.
  • The process of designing a blueprint involves the consideration of 4 issues? Which four? (Shostack)
    1 Identifying process
    2 Isolating fail point
    3 Establishing time frame
    4 Analyzing profitability
  • What is meant with the first (of four) issue of designing a blue print? (Shostack)
    Identifying processes = creating a blueprint is mapping the processes that constitute the service. It is important to watch out for parts of the service that the consumer does not see (f.e. purchasing supplies). Though invisable, these processes are important because changing them may alter the way consumers perceive the service.
  • What is meant with the second (of four) issue of designing a blue print? (Shostack)
    Isolating fail point = having diagrammed the processes invovled, the designer can now see where the system might go awry (scheef). So the designer must build in a subprocess to correct this possible error. When designers and managers think through potential problems together in advance, the quality of service execution is invariably higher.
  • What is meant with the third (of four) issue of designing a blue print? (Shostack)
    Establishing time frame. After building in fail-safe measures, the designers must consider the execution. Since all services depend on time, which is usually the major cost determinant, the designer should establish a standard execution time. 
  • What is meant with the fourth (of four) issue of designing a blue print? (Shostack)
    Analyzing profitability. Whatever its source, a delay can affect profits dramatically. A service designer must establish a time-of-service-execution standard that precludes (uitsluiten) unprofitable business and maintains productivity.
  • Recruiting, training, and general management are important considerations in services rendered (gemaakt) by people, and for complex professional occupations (f.e. consulting) these factors are of paramount importance. (Shostack)
  • A service designer must weigh alternate means for execution (Shostack)
  • What does a blueprint facilitate and how can a blueprint help according to Shostack?
    1 A blueprint facilitates the analysis of cost-benefit trade-offs and can be used to test the appeal (aantrekkingskracht) of different designs to prospective customers.
    2 A blueprint can help the service developer with other problems (f.e. a thorough cost analysis or for promotion tangible evidence it can manage and control)
  • To maintain credibility the service must select and manage products with care. How is this possible according to Shostack?
    The design of service should therefore incorporate the orchestration of tangible evidence - everything the consumers uses to verify the service's effectiveness. 
  • What should the developer do at the design stage? (Shostack)
    The developer must plan and consider every encounter between consumer and provider. The good manners and attentiveness customers associate with good personal service must be made part of hiring, training, and performance standards of the company. Indifferent or surly (onverschillig) execution can devalue the service. 
  • Shostack: it goes without saying that market research throughout the design cycle is the best control mechanism to ensure that the service meets the goal. What does market research do?
    Market research during a service's operating life enables managers to measure quality and identify needs for design. A designer can use a blueprint to engineer new market products or services.
  • With a blueprint companies can create better service. Name the 4 advantages according to Shostack:
    1 A Blueprint is more precise than verbal definitions and less subejct to misinterpretations (workers are never to blame for flaws in a process. Process design is management's responsibility).
    2 A service blueprint allows a company to test its assumptions on paper and thoroughly work out the bugs
    3 A blueprint encourages creativity, preemptive problem solving, and controlled implementation (it can reduce potentials for failure and enhance management's ability to think effectively about new services)
    4 The blueprint principle helps cut down the time and inefficiency of random service development and gives a higher level view of service management prerogatives (voorrechten)
  • What is the alternative of a blueprint and explain the disadvantage according to Shostack?
    The alternative is; leaving services to individual talent and managing the pieces rather than the whole. It makes a company more vulnerable and creates a service that reacts slowly to market need and opportunities.
  • What is service innovation according to Flikkema?
    Service innovation is the deliberate search, development and branding of new configurations of products, places, channels and processes, which enable the creation of new (experienced as new by the market) service experiences that fulfill (latent) customer needs.
  • When does a new service deliver in terms of value? (Flikkema)
    1 Value as price
    2 Value as what I get for what I give
    3 Value as tradeoff between price and quality (= Flikkema's favorite)
    4 Value as an overall assessment of subjective worth
    > Service deliver when it provides value to customers. Value is dependable of the customer.

    Value is a perception of perceived quality (intrinsic attribute). An extrinsic attribute is f.e. the brand or when you go somewhere, because there are celebrities.
  • What is a blueprint according to Flikkema?
    Another design tool that can be used to describe the delivery of new services in a systemic way
    The Blueprint of Shostack = good for delivering services with low customer involvement
  • What should a service design have according to Flikkema?
    Just enough detail to reveal its value to all stakeholders and to achieve the aimed (im)balance between efficiency and self management
  • Knowledge asymmetry = producer/consultant knows more than the customer
  • Hoe can new services be branded?
    1 New brand (signals innovation/newness, no transfer of negative brand associations, triggers customers to re-evaluate suppliers)
    2 Brand extension (transfer of positive brand associations, lower introduction/marketing costs, but if there is no fit between the brand and the new service it results in brand dilution (verdunning)> the brand fails)
  • Prescriptive = prescribe how to do things/how to approach innovations
    Descriptive = based on single case studies, not sure if it can be generalized (Flikkema)
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Another difference between strategy and business models that has been less discussed to date is that strategy includes execution and implementation, while the business model is more about how a business works as a system. According to Osterwalder it's wrong that the business model implementation or execution is a widely neglected (verwaarloosde) issue.
See image 8 about implementing business models.
Once a business is doing a good job, the organization wants to replicate that success. But, getting it right the second time is extremely difficult. managers who want to leverage knowledge (using what others already have learned) typically start by doing one of two things. What is this according to Szulanski?
1 Sometimes they go straight to an expert source and pick their brain.
2 Managers consult documentation put together by one or more expert sources.
> They can be used to gain rough understanding of a systems, but you can't get a deep, rich understanding. When it comes to complex systems, expert and documents don't fully captures the subtle ways in which individual components are interwoven with one another.
Defining the activity itself as the authoritative source of knowledge, and then copying it closely, works best with the following 5 guidelines of Szulanski:
1 Make sure you've got something that can be copied (some processes can't be copied, f.e. humans. So is this something you can copy and is it important enough to copy?
2 Work from a single active template (it gives performance measurements)
3 Copy as closely as you can (demonstrate that you can obtain decent results before introduce changes)
4 Adapt only after you achieve acceptable results (once a new product meets performance standards, people are allowed to make improvements)
5 Keep the template in mind even after you create the replica (prevent communication gaps between the original process and its replica)
Customer interaction has a positive impact on the performance of new services. Also is the importance of the fuzzy front-end stages of new service development (NSD) recognized. How does Alam combines this to his research?
He suggest that the fuzzy front-end can be much less 'fuzzy' if customers are involved in the frond-end stages of NSD.
A service manager can make the fuzzy front-end a lot less fuzzy by interacting with customers. What is Alams contribution to this managers?
He provides several guidelines for obtaining customer input for NSD process that may help improve the success. These guidelines are summarized into 4 overarching customer interaction themes as shown in image 16: process, benefits, strategies and problems of customers interaction in the fuzzy front-end of NSD.
In the paper of Teece a framework is offered. What kind of framework?
It identifies the factors which determine who wins from innovation: the firm which is first to market, follower firms, or firms that have related capabilities that the innovator needs. The framework explains the share of the profits from innovation accruing (toekomende) the innovator or the followers and suppliers. It also explains a variety of interfirm activities (f.e. joint ventures)
Explain the first property/structure of Teece: contractual modes?
The advantage of a contractual solution (innovator sign a contract, f.e. license, with independent suppliers/manufacturers/distributors) is that the innovator will not have to have to build/by assets. Contracting is an optimal strategy when the innovators appropability regime is tight and the complementary assets are available in competitive supply. But there is the risk the partner doesn't perform well.
According to Teece the existence of a dominant design is of great significance to the distribution of profits between innovator and follower. Why?
Because the innovator may have been responsible for the breakthroughs as well as the basic design. However, if imitation is easy, imitators may enter the fray (strijd), modifying the product in important ways, yet relying on the fundamental designs pioneered by the innovator.
McDonough invest which factors are mentioned as leading to project success. He suggest a model of these factors and divides them into 3 categories that help achieve success. Show and explain the categories and factors:
-Stage setters: goals (most important), empowerment, HR, climate
-Enablers: team leaders (most imp.), senior managers, champions
-Team behavior: cooperation (most imp.), commitment, ownership, respect
See image 13
What are the 10 dimensions of SERVQUAL?
Access, communication, competence, courtesy, credibility, reliability, responsiveness, security, understanding/knowing the customer/tangibles