9- New Service Development and Process Design

Introduction:

New product development is one of the primary issues the business sector has faced in recent years. Companies with a faster offer have more opportunities to compete and attract clients. In these conditions, the organisations must build a tight and cooperative framework to help them continue developing new products. According to research, products designed and launched using the processes in a structured planning framework have a higher chance of success in the long run than those that do not. In the face of new product offerings, service organisations frequently face considerable competition. The reasons are that services are intangible, flexible, and impossible to precisely standardise without causing significant financial and time constraints. In the face of fierce competition, any service offer cannot have a longer life period for the above reasons. As a result, service organisations’ ability to innovate becomes critical to their success. Those companies that can introduce new or enhanced products or services well ahead of their competitors and much before their customers expect it can lead the market.

New Service Development:

New service development is a relatively new field of study compared to new product development. As a result, managing new service development has become more difficult. A well-structured service development model is a crucial component in achieving a successful service launch.

Process of New Service Development

1. Idea Generation:

The initial step in developing a new service is generating ideas. Predicting when and how a fresh idea will emerge is quite impossible. It is undeniable that in today’s competitive market, the most rare product is a good idea. The application of ideas to an organisation or a circumstance. Service businesses are increasingly requiring more ideas. As a result, mechanisms for the constant development of new must be devised, as they are in direct touch with customers and physically involved, as well as the primary source of ideas. Customers are generally more expressive when it comes to services than when it comes to goods since they have direct contact with the service provider. Relationship marketing makes a significant contribution in this direction. Support employees, rivals, professional organisations, researchers, and social organisations are among the additional sources. Service businesses should create channels for receiving ideas from a variety of sources. In addition, appropriate incentive and reward programmes must be devised for the purpose. While gathering ideas, the managers involved should keep an open mind and refrain from evaluating them at this time. They should seek out as many ideas as possible from various sources, with the sole goal of combining them. The only goal should be to gather ideas from various sources and combine them. Ideas do not have to be completely novel; they can be for slight enhancements to the current service offering.

2. Screening Ideas:

A basic minimal criterion must be devised to assess each idea’s acceptability for the organisation. The firm will assemble an expert team to evaluate the suggestions. At this point, two types of faults can occur. There are two types of errors: “go” and “drop.” If a bad concept is sent on for further consideration, the effort will be wasted, and the opportunity cost will be higher. However, if an excellent concept is discarded as a waste, the opportunity cost is higher. Conversely, the company may lose out if a good idea is discarded. As a result, rigorous evaluation is required while screening concepts.

3. Concept Development and Testing:

Concept development is the process of transforming an abstract concept into a concrete description. At this point, service qualities like intangibility and simultaneous production and consumption cause many issues. Specific aspects and qualities of service, customer-employee interactions, and the service design document are all part of a well-defined service concept. The service design document explains the problem the service solves, discusses the reasons for launching a new service, lists the service process and its benefits, and explains why you should buy it. Customer service The process of blueprinting is often utilised to create service concepts.

Service Blueprint: A service blueprint is a diagram or map that accurately depicts the service system. The goal is to give different persons involved in giving service a clear image so that they can comprehend and act appropriately without any ambiguity or uncertainty. The service process, customer and employee roles, and the line of visibility are all depicted visually in the blueprint. It also displays the methodical organisation of numerous service points, how services are delivered, and proof of customer service expectations. Decision theory is quite important when creating a blueprint. The decision theory is an analytical framework for describing processes that necessitate judgement and decisions to provide personalised or customised services.

If we take a bank as an example, the counters opened by the branch office are where customers interact—cash receipts, payments, draughts, clearance, receiving counters for withdrawal forms, and so on. Employees assigned to interacting with diverse clients and supporting employees for processing are on-stage contact employees above the line of visibility. Employees in charge of backstage interactions are not visible. They are in charge of accounting and other operational systems that support front-line workers.

They will only interact with employees. The support procedures cover internal services such as research, document preparation, and meeting and other activity scheduling. Zeithaml and Bitner devised an eight-step process for creating a service plan.

They are:

• Identify the process to be blueprinted
• Basic Business Concept
• A service (within a family of services
• A specific service component
• Map the process from the customer’s point of view
• Draw the line of interaction
• Draw the line of visibility
• Map the process from the customer contract person’s point of view distinguishing on-stage from backstage
• Draw the line of internal interaction
• Link customer and contract person activities to need support functions
• Add evidence of service at each customer action step

The new service concept thus developed would be tested by studying the views and opinions of the customers and employees on understandability, suitability, convenience, comfort and a feeling of satisfaction to both parties.

4. Marketing Strategy Development:

Market segmentation, target segment identification and priority, market positioning, and judgments on marketing mix elements are all part of developing a marketing strategy.

5. Business Analysis:

This step of the new service development process includes demand analysis, cost involvement, revenue projections, an anticipated profit and loss account, a payback period, and the expected life of the new service.

6. Service Development:

According to the service plan, the service environment will be developed with infrastructure, facilities, contact employees, systems, and tangibles. This is an action-oriented level with a substantial financial investment. The focus has shifted from more or less desk work to actual implementation. The success of this phase measures management’s ability to turn a theoretical design into a practical reality.

7. Market Testing:

The services are now available for purchase. It is vital to test the service offer among various groups of clients to determine how it can truly create satisfying experiences. Based on early feedback, relevant changes can be made to improve the offer’s quality. In general, service companies engage employees’ families and a select group of consumers to provide feedback on the service. At this level, a thorough examination of the logical process of operational functions is critical.

8. Commercialization:

The newly designed service is now available for purchase on the market. The main goal is to make the target clients aware of and comprehend the service concept. A thorough examination of the process should be conducted on a regular basis to make modifications as needed to provide high-quality services to clients.

Process Design:

The creation of innovative services includes everything from creating a fully new service to enhancing an existing service by modifying some of its features. The service delivery process should be built to fulfil the individual needs of its consumers, regardless of how big or small the service design concerns are. The right method to service design would then determine what the service should include. This would include the following:

1. where customers should be served
2. when they should be served
3. who should serve them, and
4. how they should be served

By including all of these customer-related issues in the design of both the service delivery process and the overall service system, all of the required elements are appropriately integrated and focused on the customer’s satisfaction.

The Customer’s Perspective:

Consider the last time you dined at your favourite eatery. Are you able to recall all of the stages that were involved? Were you unable to locate a parking spot? Do you have a reservation, or must you wait for a table? Was there a spot where I could wait? Was it spacious or crowded? Did you need to feed yourself while you were there (for example, by going to the salad bar)? Was the wait staff pleasant or obnoxious? Did they know what was on the menu and whether there were any specials that night? Was your food adequately prepared, and was your order correct when you received it? Is the bill accurate? Did you appear to be hustled through your lunch to accommodate another group of customers? What aspects of the encounter did you enjoy the most? What could have been done better?

These inquiries concern the restaurant’s service delivery method involving direct contact with customers. The restaurant’s success depends on how it is planned and aligned to meet consumer needs. The same is true for any service, whether it’s a typical brick-and-mortar establishment we visit in person, such as a restaurant or a beauty salon, or a digital service we access over the Internet, such as Expedia, Amazon, or eBay.

Innovation:

The service system includes the service delivery process as well as other supporting procedures that are required in the co-creation of client value. Frequently, the service system is the service organisation. On the other hand, the service system can be expanded to include providers to whom a portion of the service delivery process has been outsourced and who, as a result, can influence the customer’s experience (business process outsourcing or BPO).

1. Service Delivery Process:

This is the end-to-end procedure in which the client is directly involved. It encompasses all of the actions a consumer takes in co-creating value. The service delivery process begins when a customer first engages with a service organisation or system. It concludes when the intended service is delivered and the consumer departs the process.

2. Supporting Processes:

These are all the additional procedures that make up the service system and the service delivery process. Each supporting procedure impacts the customer’s experience throughout service delivery. The human resource management and information technology processes are two examples of supporting processes.

3. Need for Alignment:

Every service system or organization’s effectiveness depends on its ability to align goals and resources. To begin, the company must develop a service strategy that outlines how value is created for customers. The company must then establish the service idea, which outlines the customer’s needs and how they will be met in detail. The design of the service delivery process is the third component in the alignment. In this case, the company uses service blueprinting to define the specific stages that occur throughout the contact between the company and the client. Finally, the company must ensure that the supporting procedures are in sync with the delivery process to provide the greatest possible client experience while conserving resources. The figure shows the priority sequence for aligning these elements.

Design and Tools:

Because services are intangible, describing them can be difficult, which challenges service designers. Lynn Shostack identified four dangers associated with service descriptions:

• Oversimplification: According to Shostack, “to suggest that “portfolio management” means “buying and selling equities” is “akin to describing the space shuttle as “something that flies.” All too frequently, some of the most critical elements in the service delivery process are ignored during the initial design phase, only to be discovered later when clients express dissatisfaction with the process.
• Incompleteness: Customers can only describe the components of the service that they are familiar with and have direct interaction with. Designers must recognise that unexpected scenarios may arise frequently, thus the process must be designed to accommodate them.
• Subjectivity: People’s opinions are skewed by their experiences with services or personal circumstances unrelated to the provider. If you had a horrible day at work, your meal that night, even at your favourite restaurant, is unlikely to make you feel better.
• Biased interpretation: When people describe services to others, they add prejudice to how they use words, subject to the listener’s interpretation. For example, one person’s interpretation of “nice and responsive” may differ significantly from others think when they hear the exact words.

Like any other process, the service design process can be improved by employing a structured approach that systematically gathers information from both customers and service providers to design a service process that meets customer needs rather than a process that appears to be good to the manager.

1. Service Strategy:

The first stage in creating an effective service delivery process is to create a specialised service strategy by identifying and comprehending the customer’s specific requirements. The target market can be identified, and its needs can be understood through thorough market research. The next stage is determining what these clients genuinely want from a specific type of service. Even within a single industry, consumer expectations vary greatly depending on the type of service and the consumer’s specific demands. For example, customers eating at a Wendy’s or Panera Bread will not have the exact expectations as they would at a steakhouse like Bugaboo Creek or a Michelin three-star restaurant in Paris like L’Ambroisie.

Regarding new services, the burden of learning about customer wants is greatly increased. In the literature, there has been much discussion on whether customers can accurately define what they genuinely want in a new service. Customers may be unable to express a new service concept precisely, but they can surely describe their basic wants and expectations from the service delivery process. For example, a service like Chuck E. Cheese’s caters to the demands of parents who wish to take their small children out for a pleasant lunch away from home. Chuck E. Cheese offers family-friendly games and activities, including tiny prizes for “winners” (every child wins something) and animatronic music and entertainment. While their parents enjoy an afternoon or evening away from home, children are allowed – and even encouraged – to run around the facility and have fun. Prospective consumers may not have recognised the prizes and animatronics as part of a desired service. Still, most parents know that children enjoy moving about and playing games, winning and being rewarded, and being drawn to animals, music, and movement. This chain’s service approach incorporates consumer needs and the service designer’s inventiveness.

Similarly, with the design of its retail locations, Apple has adjusted imaginatively to fulfil customers’ wants. Some of its clients know exactly what they want and want to be able to find it right away and pay for it right away. Others, on the other hand, prefer to walk, shop, and play with things before deciding. Apple stores have successfully addressed the needs of both groups of customers through their service design: a well-organized and well-labelled floor plan; a “genius bar” where customers can get product advice and assistance; an efficient checkout system for customers who want efficiency and speed of service; and an airy, open layout design with products displayed o The retail layout demonstrates a direct relation to various customer preferences, and its inventiveness and original flair distinguishes Apple stores from those of competitors.

2. Service Concept:

The service idea, which connects the service strategy and the service delivery process, is where the actual design of the service delivery process begins. The service concept specifies in detail the customers’ needs regarding how they perceive value and how they should be met. The “what” focuses on determining the target customers’ unique wants; the “how” focuses on creating the organization’s competitive priorities that will allow it to achieve those customer criteria in service delivery. There are four components to the service concept:

• the service operation – how the service is supplied specifically
• the service experience – the customer’s direct interaction with the service
• the service outcome – the advantages and outcomes for the service recipient
• the service’s value – the advantage that customers perceive from the service about the service’s cost

When creating the service concept, management must be aware of the workforce’s talents, credentials, and interests. Nurse practitioners, for example, can undertake physical examinations and address medical conditions that previously required a physician. Using nurse practitioners to administer treatment achieves two primary goals: providing high-quality patient care and allowing physicians to focus on more challenging situations that may be more fascinating to them and better utilise their skill set. Using nurse practitioners to offer treatment previously only offered by physicians can help lower the overall cost of care.

3. Service Blueprints:

More inputs were added to the service delivery to facilitate optimal client satisfaction. As the service evolved from simple to complicated procedures, the marketer needed a “bird’s eye view” of the entire process. The flowcharting of a service operation is known as blueprinting. Lyn Shostack developed this methodology in 1984 to assist new service firms in mapping sequences before service delivery or any encounter. This would assist the service manager in identifying potential failure sites and weak service delivery sites and determining methods to address them.

This would avoid management having to learn through costly trial and error. It (blueprinting) also allows marketing managers to comprehend the portions of the operating system that are visible to the user and the portions of the service system.

Identifying a single organisation’s components in the service system is difficult. Worse, companies undervalue the sensitivity of interaction points. For example, many banks, colleges, and travel firms overlook the significance of the initial inquiry phone call. If the phone rings for an extended period without receiving a response, the potential consumer has already formed the impression that the company is careless.

If the first experience was unpleasant, the customer is unlikely to return. Service companies are beginning to recognise the value of the initial call and its revenue potential. They’re putting together ’24/7/365′ call centres with efficient and alert call handlers. All query data access and customer and product details are appropriately supported by training and computer facilities. Service providers are trained to pick up the phone on the first ring.

Managers can better understand service processes by using service flowcharts. The key to product design is to design the process. The visible aspect of operations is backed by invisible processes throughout the design stage. Flowcharts are used to figure out the following:

• The amount of time it takes to transition from one process to the next;
• The costs associated with each phase of the process;
• The amount of inventory that accumulates at each stage of the process;
• Identifying the system’s bottlenecks

There are three main components to a client blueprint:

• Determination of all functions required to provide a service and the relevant employees with the necessary responsibility, authority, and accountability.
• Graphics and charts explain the relationships between different functionalities of service components. The relationship is based on the passage of time and the order in which events occur. The housekeeping sequence about reception and registration in a hotel must be planned with a specified time interval in mind.
• Establishing standards for each function, including tolerance levels and deviations from those standards. These fluctuation tolerances should not negatively impact service quality.

Benefits of Blueprinting:

The blueprinting aims to demonstrate how data, assets, and customers are processed. Including them in a plan implies that they are all components of risk.

The following are some of the advantages of designing a service process:

• Through blueprinting, marketing and operational personnel can communicate with one another on paper before doing so in real-time.
• It ensures that the entire process follows a logical path.
• A bottleneck is a point in a system where the customer has to wait the longest. This information would assist the service manager in determining the cause of the delay and developing solutions.
• Balanced Production Line: All process times and inventories are the same in a balanced production line. If this is not the case, the customer will never wait for the next process. For the service manager, the service experience will be incomplete.
• It is a useful tool for managers to see the advantages of modifying systems to process customers better.
• It enables the marketer to set goal times depending on the degree of service that customers expect.

4. Supporting Processes:

The numerous parts in the service delivery system that affect the service delivery process are referred to as supporting processes. These are some of them:

1. Technology (which are the right ones, and how does the customer interact with them?),
2. Human resources (how many employees do we need and what are the skill levels required?),
3. Inventories (how much inventory do we need and where do we need it?),
4. Equipment (what types of equipment are needed and how does the customer interact with it?),
5. Facilities (how big should they be and what décor package should they have?), and

Marketing (who is our target market, and how do we create value for them?)