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    9 views23 pages

    Example 3 Assignment

    Uploaded by

    mani10ray

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
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Var Ly ts 6a) drain yw (va!) wuebo.g —__NMOa_ INAV 39pm ‘SeuuesBo1g axenpein 40) yeqpae4 41omasino} passassy quawiaBeuew Jo Jooyrs pioypeg 1. Executive Summary 1 2. Introduction And Objectives 2 24 H.B.0.S. ple 2 22 H.B.0.S. and New Service Development 2 23 Objectives Of This Assignment 3 3. Analysis And Discussion 4 34 ‘The Need For Service Development 4 32 Dissatisfaction With The New Service 5 33 ‘The Service Development Process 6 34 Concept Generation 7 35 Screening 8 36 Preliminary Design 10 37 Evaluation And Improvement 12 38 Prototyping And Final Design 2 39 Implementation 13 4 Conclusions And Recommendations 16 44 Conclusions 15 42 Recommendations 7 5 References 19 6 Appendices 2 Appendix 1 — Beneficiary Service Flowchart 24 Appendix 2 - Beneficiary Service Checklist 25 34 Structural Positioning Of Services 5 32 ‘The Service Development Process 6 33 The Design Funnel 9 This assignment set out to critically evaluate a service development process recently used at H.B.0.S. pic, ascertain possible reasons for the failure of the service development process, and to make proposals to improve service developments in the future, The stages of productservice design (Slack et al, 2001) was used to the analyse the development process and it was found that ideas were not created collaboratively; there were no set criteria for screening; there was inadequate identification of fail points and the level of testing was insufficient, On 4th May 2001, the Bank of Scotland and Halifax merged to create what they hoped would be a new force in financial services ~ Halifax Bank Of Scotland PLC (H.8.0.S.) The merger arguably created a unique competitor in the UK financial services market. The new company had the scale to challenge the ‘Big 4’ banks of LioydsTSB, Barclays, HSBC and the Royal Bank Of Scotland, yet it acted like a new entrant with aggressive advertising and innovative new products H.B.0.S. currently has 20 million customers and through shrewd Customer Relationship Management it has the means of unlocking significant opportunities by increasing the number of products each customer holds. _ 2:2H.B.0.S. and New Service Development = In December 2002, H.8.0.S. recognised that it had a customer attrition problem. The company’s main strategy was customer acquisition, as this rapidly increased their ‘customer base whilst eroding their competitors, however whilst they were breaking sales records, the net customer increase was much less and significant numbers of customers. were leaving The senior management team considered that poor service was the cause of the customer attrition and diagnosed that this was due to service development not progressing at the same speed as product development. Very quickly they identified 10 areas to immediately implement new services or improve existing ones and these were distributed throughout the company as individual projects. In the central marketing department @ team was created to implement one of the new services. They were asked to design and implement a beneficiary's service a service to deal with the beneficiaries of deceased customers. However, once implemented the new service had limited success and many complaints were levelled at it. The service had to be revised and reimplemented a short time ‘ater. The aim of this assignment is to: 41) Critically evaluate a service development process recently used at H.B..S. pic 2) Ascertain possible reasons for the failure of the service development process 3) Make proposals to improve service developments in the future. / Slack et al (2001) argued that a well designed product or service would satisfy customer needs and increase competitiveness, yet new product development in the Ui cd Kingdom (U.K.) financial services industry has traditionally been weak. Edgett (1996) illustrated that product development in the sector drastically lagged behind most other industries and that financial service providers were the weakest at the most important aspects, Despite this, at a time when analysts were looking closely at H.8.0.S. to judge. its performance, the organisation was attempting to demonstrate its innovativeness through the implementation of a number of new concepts. One of these, a service to assist beneficiaries, was identified for several reasons: 1) There was no official procedure for the handling of estates and much autonomy was given to each branch. The collection of data was disparate and if a customer had an extensive relationship required beneficiaries to make many enquiries. 2) Beneficiaries are nearly always the customers next of kin or someone who would have been personally close to the customer. It was recognised that the interaction was a ‘moment of truth (Carizon, 1987) and as such needed to be professional and efficient. / 3) The negative flow of savings (monies withdrawn by the beneficiaries) was staggering. Close to £500M had been withdrawn in 2002 and a service which offered advice on how H.B.0.S. could help the beneficiaries with their money was therefore desirable. ‘The proposed service was en incremental innovation (Johnson et al, 2000) which was aimed at increasing the consistency of service quality (Fitzsimmons and Fitzsimmons, 2000). AS can be seen from Figure 3.1, the idea was to move from a highly customised and complex service positioning to one which lowered complexity and increased standardisation. Figure 3.1 Structural Positioning Of Services ‘Complexity High current postoning of how @ seratcirioe wore services. High (Customisec) Antieaptes portioning of newBeneficlary’s Service. Low ‘Source: Fitzsimmons and Fitzsimmons (2001) Following the implementation of the service a great deal of dissatisfaction was ‘expressed. Branch Managers complained of the impact on other parts of the operation. staff members complained that they were uneasy with what they were being asked o do, whilst market research showed indifference from the beneficiaries towards the new service, Heskett et al (1990) argued that many operational problems can be attributed to a failure of the service development process and this assignment's first objective is to critically evaluate the service development process used ‘A multitude of product/service development processes exist all of which tend to have similar essential stages (Johnson et al, 2000; Hill, 2000; Siack et al, 2001; Fitzsimmons and Fitzsimmons, 2001). Whilst there are clear differences, such as a model being iterative or linear, they all feature stages of idea generation, screening, design, evaluation and prototyping and final design. _ Jf Slack at el (2001) proposed a 5 stage linear process which comprises all the above stages, and this is shown in Figure 3.2. This will be used as the main framework to analyse the service design of the beneficiary service, whilst the other models will be drawn upon at relevant stages. Figure 3.2 The Stages Of Product/Service Design Concept Generation V Screening q | Preliminary Design ¥ Evaluation And Improvement q Prototyping And Final Design The The Package| ‘Source: Slack et al (2001) ‘Waller (1999) proposed a number of sources to obtain new product or service ideas, including customers’ ideas, competitors’ product and services, staff suggestions or a Research and Development (R&D) department. The source for the H.B.0.S. service ideas was a senior management meeting. A prompt brainstorm considered and identified the services thought to be needed and the output was the 10 service ideas. The senior management team used their own experiences and ideas to identify customers needs and generate the concepts, They did not take any counsel or use any data or market research to base their ideation on. Wheelright and Clark (1992) argued that this approach ie. ideas that are not generated systematically but are ‘produced and prescribed’, are typical of the product/service development in many businesses, At this stage the H.B.0.S. senior management team could have solicited opinions from customers; industry specialists; staff; and management. Instead, and arguably in an act of hubris, they generated the ideas using their own experiences and knowledge. It is notable that there was little information sought to corroborate if customer needs would be met by the new service. Mitchell (1991) argued that products must start with a customer need if they are to be a success and that developments without it are almost immediate failures, yhilst Fitzsimmons and Fitzsimmons (2001) maintained that the customer must see observable benefits in a new service. However, without the full understanding and consideration of customer needs in the ideation of a service development, arguably-there is arguably litle chance of this being futfilled. Not all concepts created are capable of full development. Screening eliminates ideas with low potential and prevents unnecessary costs being incurred Slack et all (2001) contend that ideas should be evaluated for feasibility, acceptability and vulnerability and different functions should provide views on the ideas. The service ideas at H.B.O.S. were not evaluated against established criteria and were not passed to different departments for their views. Instead, the senior management team created 10 concepts and moved to organise their implementation immediately. Whilst quick movement in business can be the difference between success and failure (Hamel and Prahalad, 1994), action without evidence can be disastrous (Hill and Jones, 1999). ‘The probability of creating a top idea in such an isolated and narrow manner is very low. It has been proposed that in some industries literally thousands of concepts are needed before one good idea is created (Cooper and Edgett, 1999). As can be seen in Figure 3.3, to ensure only truly valuable ideas reach implementation (and increase the certainty of the final design), each idea should be screened several times (Slack et al, 2001) However, the H.8.0.S. service ideas were not screened at all and moved directly from ideation to design without being checked for viability or suitability, 3.3 The Design Funnel | Choice And. & | Evaluation Screens e | One idea ‘Source: Slack etal 2001) Hill (2000) maintains that following the soreening successful ideas should undergo a feasibility study and that this should cover: ‘+ Productiservice development e.g. lead times ‘+ Markets e.g, demand patterns * Operations e.g. degree of match with existing capabifies = + Financial e.g. return on investment. Had such an activity been undertaken by 1.6.0. it may have illustrated the related order winners and qualifiers or highlighted the possible customer view of the service. In addition, it may have revealed the capacity level of branches and their capal absorb a new service, Johnson et al (2000) contend that following the screening a full business analysis should bbe undertaken which should include a full financial projection. Such a projection at this stage of the beneficiary service development would have created a more realistic picture ofthe potentiat payback, Le an DMG sina Once an idea has been agreed, the next step is to create a design. At this stage the implications for the operation should be examined, whilst whether a product or service can be produced competitively should also be considered. Slack et al (2001) suggests that at this stage component products of the service package should be proposed and the processes to create the package should be created. At this juncture the 16 service ideas were distributed through the organisation for design and implementation. The introduction of a beneficiaries service was given to the central Marketing department and they were asked to implement within 6 weeks. They were only given a vague description of what the service should look like and a makeshift team was cteated to oversee the assignment. The team had to complete the project in addition to their normal duties, To discover what the component parts of the package could be, visits were made to local H.B.0.8. branches. It was discemed that the service had to be a single appointment that would essentially be a discussion between a member of staff and the beneficiary. This would aifow all a customer's accounts to be handled at the same time and create a conversation in which the beneficiary could be encouraged to keep the monies within H.B.0.S.. Fitzsimmons and Fitzsimmons (2000) maintain that implicit services are an often overlooked part of the service package, however H.8.0.S. 10 recognised that ‘peace of mind’ could be the main benefit from the beneficiary's / perception, and they were keen to exploit this, The next step for H.B.0.S. was to propose how the components could be brought together to make a service and this was done using a flow diagram. Shostack (1987) argued that a service delivery system could be captured in a service blueprint, whilst Slack et al (2001) proposed that flowcharts or routing sheets were a good way to visualise a service. Using this format H.8.0.S. devised a flowchart for the beneficiary service and this can be found in Appendix 1. Through application of the flowchart it was, Possible to discern three things: 1) Key decisions that were needed - illustrating the discretion staff would need to display 2) Types information to be exchanged — emphasising the legal need for security 3) Standard execution times to complete tasks — showing the interview length, ‘Shostack (1987) contended that by illustrating services in the form of a blueprint, fall points could be established, however the flowchart used for the beneficiary service did not include this. Had fail points been recognised at this point prevailing factors such as variation in demand may have be identified ‘The information obtained from the branch visits also illustrated that even though most of the service could be standardised, there were important parts which contained substantial variety. For example, there were legal differences between England and Scotland or certain money laundering procedures had to be invoked if balances exceeded a certain level. Additionally, many beneficiaries were often not in a state of mind that would allow extensive discussion. Hill (2000) claimed that because of the 1" linkage between provider and customer in a service, the “interpretation of what is meant by ‘service’ is at the point of provision’ "ah ultimately these variations were designated as key decisions for the interviewer to make, However, it has been pointed out that variety such as this can lead to a host of negative issues including complexity, training needs and considerably higher costs (Hayes and Wheelright, 1984), The marketing team were compelled to implement the service as soon as possible. Consequently no further improvements were made to the design at this stage, however there are several methods that could have been employed that would have highlighted issues. Behara and Chase (1993) proposed that quality function deployment can be used to determine whether a development will actually meet the needs of a customer. As this process captures exactly what customers require and details how the requirements will be fulfiled, this it would have highlighted whether the beneficiary service was customer orientated or not. Another approach is the Taguchi method where products and services are placed under extreme conditions to test the robustness of design (Taguchi and Ciausing, 1990). For the beneficiary service, H.8.0.S, could have included things such as variation in demand throughout a day or the beneficiary's state of mind, This would then have illustrated the ability of branches to cope with the service it addition to the other duties. v ‘The final stage in the process to turn an improved design into a prototype (Slack et a, 2001). It is possible to consider the performance and functionality of a new service by piloting in a small number of outlets. 12 H.B.0.S. did operate a small pilot for the service and it was tested at 3 local branches. The branch manager and selected staff taking part in the process were briefed using the flowchart in Appendix 1. Waller (1999) claims that prototyping provides the ability to see whether a product or service performs as expected and whether it can be commercialised,/However, because implementation was scheduled to take place regardless, the testing was constructed to provide limited anecdotal feedback only, Little negative feedback was received, and any downbeat comments which were received had no impact on the design. Hill (2000) argues that services are “intrinsically less defined than products” and that itis necessary for organisations to “create a service specification” however this was not created. A service specification would have allowed the marketing team to have considered in greater detail exactly what they had to create and implement. Fitzsimmons and Fitzsimmons (2000); Johnson et al (2000) and Cooper and Edgett (1999) all add a further stage to the development process which is implementation. Johnson et 3! (2000) argued that this stage is one of the most important points in the process and the success or failure of a new service often depends on how well it is implemented. They maintained that for a successful implementation several things should be completed here. These include the development of user-friendly documentation and the provision of training. _/ Whilst an attempt was made to introduce user-friendly documentation it is arguable whether the document produced was easy to use, as its lay out was crowded and a 13 large number of items were covered in haste. Documentation which was not as clear as anticipated would mean the standard execution times on the flow chart were incorrect, ‘The document can be found in Appendix 2 There was some provision of training, although this was possibly inadequate. The flow chart and documentation were distributed and a rule change was issued to ensure that the new service was undertaken. Additionally, branch managers used a weekly 30 minute training period to go over the documentation with their staff. This allowed some familiarisation with the new procedures and as Hesket et al (1990) points out, preparedness is the key to service implementation. Upon implementation, almost immediate feedback was received on a number of vital issues. Branch managers complained that the interview took too long and didn’t fit it to the allocated time slots. It was also pointed out that following the termination of the interview, there was substantial administration work that had to be completed, and this ‘was impacting other parts of the operation. in addition, many beneficiaries did not want to make appointments to go through things, they simply wanted to be dealt with immediately and these customers were being deait with on case to case basis. Finally, ‘many staff communicated that they were uncomfortable in the beneficiary interview. Firstly, they often found it hard to empathise and to ‘know what to say’ and secondly, they were often embarrassed to try and sell H.B.0.S. services to people who were arieving. 14 This assignment’s second objective was to escertain possible reasons for the failure of the service development process. The Analysis And Discussion has ilustrated that whilst H.B.0.S. did several things correctly, such as analysing the proposed service through a ‘blueprint or testing in pilot locations, there were some significant failures in the service development process. The initial ideas were created in isolation by the senior management team. Whilst they may have significant experience, it is arguably a mistake to create new services without asking the opinion of those who are to serve and those who will be served. The ideas were not based on research and consequently whether they fuffled a customer need was conjecture Afuhleman et al (1992) contended that product development should be an interactive process involving the customer, marketing and operations, and this was the only way in which @ product could be created that met customer expectations, jris also notable that no concems were raised about this at any subsequent stage, and arguably this reflects an authoritarian management style that may not be receptive to

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