Strategic Service Vision

WARSAW SCHOOL OF ECONOMICS
DEPARTMENT OF MANAGEMENT THEORY
STRATEGIC
SERVICE
VISION
MIM 1 - Service Quality in the New Economy
Strategic Service Vision

SERVICE CONCEPT MODEL

Customer Value
Performance Measurement
Operations & Technology

Service Concept
Facilities &
Location
Process
Design &
Management
Customer
Information
Relationships &
Loyalty
Technology
Communication
Customer
& Promotion
Satisfaction
Pricing
Empowerment
Job & Role
Design
Collaboration
Service Strategy
Internationalisation
Capacity
Management
Competencies
Innovation

FIVE KEY COMPONENTS OF A STRATEGY

Corporate
objectives
Operations
potential and
capability
Parameters for
change
Environment
Operation
Opportunities
Operations
task
Performance
objectives
Service
concept
Value

STRATEGY DRIVERS
Corporate
objectives
Needs of
stakeholders
Environment
Operation
New services,
skills, etc.
Visionary
leadership
Performance
objectives
Service
concept
Repositioning
of competitors
Activities of
competitors
Needs of
customers
4

THE FIELD OF STRATEGY MAKING

Setting objectives
desirable future
WANT
CAN
SHOULD
Allocating
resources
Managing the
firm-environment fit
ALLOWED
Defining ethical
standards

STRATEGIC SERVICE VISION
The need of most service organizations to

plan as well as direct marketing and
operations as one function has led to the
formation in leading companies, so called
Strategic Service Vision (SSV).
(Heskett, 1987)

EXTERNALY ORIENTED SSV (1)

Target Market Segments
Positioning
What are common

characteristics of important
market segments?
How does the service

concept propose to meet
customer needs?
What dimensions can be

used to segment market?
demographic?
psychographic?
How do competitors meet

these needs?
How important are various

segments?
What needs does each
have?
How well are these needs
being served?
In what manner?
By whom?
ValueValue-Cost leveraging
What are important

elements of the service to be
provided, stated in terms of
results produced for
customers?
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:
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 is the proposed service

differentiated from
competitors?
How important are these
differences?
What is good service?
Does the proposed service
concept provide it?
How do customers perceive

the service concept?
What efforts are required to

bring customer expectations
and service capabilities into
allignment?
Service concept
What efforts does this

suggest in terms of the
manner in which the service
is:
designed?
delivered?
marketed?
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

EXTERNALY ORIENTED SSV (2)

Operating 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?
Strategy System Integration

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?
Service 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?
Basic SSV
elements
Integrative SSV
elements
To what extent does it:

Help ensure quality
standards?
Differentiate service
from competition?
Provide barriers to entry
by competition?
To what extent does this

integration provide barriers to
entry by competition?
(Heskett, 1991)

ELEMENTS OF AN EXTERNALLY ORIENTED SERVICE STRATEGY
Identification of Target Market Segments

Positioning (Customer focus)
Development of a Service Concept to address tageted customer
needs
Maximising value
Development of Operating Strategy, to support the service
concept
Transformation of strategy into system
Design of a Service Delivery System to support the Operating
Strategy
Final Output (Quality)
(Na podstawie Heskett, 1991, de Matta 1995)

TARGET MARKET SEGMENTS
Common characteristics
Dimensions to segment the market
Demographics
Psychographics
Need of each segment
By whom and in what capacity are the needs being
served
10

SERVICE CONCEPT
Results produced for customers

Service perception by each target segment,
employee, market in general
Individual customers service perception
Service design, delivery and marketing requirements
11

OPERATING STRATEGY
Operations, financing, marketing, organisation,

human resources
Controlling quality and cost
Incentives and rewards
Comparing service quality, cost, productivity, morale
and loyalty of servers with competition
12

SERVICE DELIVERY SYSTEM
Workers, technology, layout, systems and procedures

Normal and peak service capacity
Quality standards
Service differentiation
Risk of copy cats
13

TASKS AT THE STAGE OF SERVICE CONCEPT

INTEGRATION WITH OPERATING STRATEGIES
Maximise the difference between service value and

service cost by:
standardisation or customisation
supply and demand management
service quality control
creating barriers to entry by competition
14

SSV EXAMPLE: INSURANCE COMPANY

HARTFORD STEAM BOILER INSPECTION & INSURANCE COMPANY
Target Market
Companies using boilers and related equipment with high operating
risk
Service Concept
Emphasise cost reduction in addition to risk reduction
Operating Strategy
Concentrate on a few types of equipment, hire more engineers than
competition, maintain close contact with customers
Maintain a large database on equipments operating and
performance characteristics. Inspect equipment before and after it is
insured.
15

ELEMENTS OF AN INTERNALLY ORIENTED SERVICE STRATEGY
Directing the vision inward by targeting

employees as well as customers
Elements are the same as the
externally- oriented SSV
(Na podstawie Heskett, 1991, de Matta 1995)
16

INTERNALY ORIENTED SSV (1)

Target employee group
Positioning
Service concept
ValueValue-cost leveraging
What are common

characteristics of important
employee group?
How does the service

concept propose to meet
employee needs?
What dimensions can be

used to describe these
employee groups?
demographic?
psychographic?
How do competitors meet

these needs?
What are important

elements of the service to be
provided, stated in terms of
results produced for
employees and the company?
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:
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?

supposed to be perceived by
the targeted employee
groups?
How relationships with

employees differentiated from
those between competitors
and their employees?

perceived?
How important are these

differences?
What further efforts does this

suggest in terms of the
manner in which the service
is:
designed?
delivered?
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?
Rewards?
Appeal to pride?
Visibility and supervision?
Peer group control?
Involving the customer in the
delivery of the service?
Effective use of data?
17

INTERNALY ORIENTED SSV (2)

Operating 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 ?
Strategy -systems
integration
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?
How does the strategy address

employee needs for ?
Selection ?
Assignment ?
Development ?
Evaluation ?
Compensation ?
Association?
Service 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?
Basic SSV
elements
Integrative SSV
elements
To what extent does it help

employees:
Meet quality standards?
Differentiate their service
from competition?
Achieve expectations
about the quality of their
work life?
(Heskett, 1991)
18

SSV EXAMPLE: INSURANCE COMPANY (1)

SERVICEMASTER CO., ILLINOIS, USA
Business:
Manages support services for hospitals, schools
and industrial companies
Target employee group
Functionally illiterate employee
Service Concept
Provide educational and motivational programme to
help these employees to be something
19

SSV EXAMPLE: INSURANCE COMPANY (2)

SERVICEMASTER CO., ILLINOIS, USA
Operating Strategy
Invest in training and laboratory for developing new
equipment and materials.
Target a 20% growth per year from expansion of existing
operations rather than acquisitions.
Redesign jobs and develop equipment and pictorial, colour
coded instruction materials.
Hold weekly training programmes
Help people grow.
20

OTHER SERVICE STRATEGIES (1)
Stressing service quality control that is based on:

enhanced visibility of service deliverer
team building
generous incentives
customer feedback
peer group control (professional standards)
21

OTHER SERVICE STRATEGIES (2)
Appraising the effects of scale on service efficiency

and effectiveness (e.g., Visa, Hyatt, Marriott, SAS,
power plants)
Substituting information for other assets the use of
forecasting and inventory control techniques (e.g., car
& appliance repair shops, credit card company)
22

TODAY STRATEGIES?
From mass customisation to individualisation

From forecasting to quick response
From delivering service to delivering experience
From inventory control to pull strategies
From quality control to total quality
From cost orientation into revenue and value orientation
From procedures into flexibility
From best practices into new practices
23

Strategic Service Vision

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WARSAW SCHOOL OF ECONOMICS

DEPARTMENT OF MANAGEMENT THEORY