Operations Analytics/ Service Management

in Key Sectors

LECTURE 29-30
Service Development
Service Development
Service Development involves creating, improving, and
innovating services to meet customers' evolving needs.
It's about making our interactions with services
smoother, more enjoyable, and more efficient.

For example, Disney's FastPass system. It's a service

innovation that allows visitors to reserve access to
attractions, entertainment, and character meet and
greets, reducing wait times and enhancing the overall
experience.

New Service Development (NSD)

New Service Development refers to creating and introducing innovative services to meet
customers' changing needs and preferences.

Stages of New Service Development:

1. Idea Generation: The initial phase involves brainstorming and collecting ideas for new services.
These ideas can come from customer feedback, market trends, or internal creativity sessions.
2. Concept Development and Screening: Selected ideas are then developed into concepts. These
concepts are screened based on feasibility, market potential, and alignment with organizational
goals.
3. Business Analysis: This stage involves a detailed analysis of the potential profitability, costs,
and risks of implementing the new service.
4. Service Development: Once the concept is approved, the actual development of the service
takes place, including designing the service features, processes, and technology requirements.
5. Testing and Launch: The service undergoes testing to identify and resolve any issues. After
successful testing, the service is launched in the market.

For example, Tata Consultancy Services (TCS) developed the TCS iON platform, a cloud-based
solution offering various services like assessment, learning, and recruitment. This platform was a
new service development addressing the growing demand for digital education and human
resources solutions.

Service Innovation
Service Innovation refers to creating and applying new ideas, methods, processes, or technologies
to enhance or improve existing services or introduce entirely new ones. It's about finding novel ways
to deliver value to customers.

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For example, Uber disrupted the traditional taxi service by introducing a convenient, app-based
ride-hailing service. This innovation transformed the way people think about transportation
services.

Types of Innovation:
1. Technological Innovation: Involves the application of new technologies to improve or create
services.
2. Process Innovation: Focuses on improving the efficiency and effectiveness of service delivery
processes.
3. Business Model Innovation: Involves changes in how services are structured, priced, or
delivered.
4. Organizational Innovation: Pertains to changes in the organizational structure, culture, or
management practices to support service innovation.

For example, Flipkart showcased service innovation through its ‘Cash-on-Delivery’ (CoD) payment
option. This innovation addressed the challenge of online payments in a country where many
consumers were initially hesitant to make digital transactions, contributing to the widespread
adoption of e-commerce in India.

Service System Design

Service System Design is the process of conceptualizing, planning, and organizing the components
of a service system to ensure efficient and effective delivery of services. It encompasses the design
of people, processes, technology, and physical evidence.

For example, Amazon Prime is about more than just fast shipping. It's a service system designed
with benefits like streaming, reading, and more. The whole package is designed to enhance the
overall customer experience.

Components:
§ People: Involves designing the roles, skills, and interactions of employees and customers within
the service system.
§ Processes: Focuses on defining and optimizing the various steps and activities involved in
delivering the service.
§ Technology: Includes the selection and integration of technology to support and enhance
service delivery.
§ Physical Evidence: Refers to the tangible elements that customers encounter during the
service experience, such as facilities, brochures, or digital interfaces.

For example, IndiGo is known for its efficient and streamlined service system design. From online
booking to boarding and in-flight services, IndiGo has designed its entire service system to provide
a seamless and customer-friendly experience, contributing to its success in the aviation industry.

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Service System Design and Innovation
§ Integration: Service System Design and Innovation involve integrating the principles of both
design and innovation to create a service system that is well-structured and efficient, adaptive
to changes, and open to continuous improvement.
§ Iterative Process: It emphasizes the iterative nature of service system design, where feedback
from customers and other stakeholders is continuously gathered and used to refine and
enhance the service system.

For example, Reliance Jio exemplifies service system design and innovation. Jio not only designed
its network and services for efficiency but also introduced disruptive pricing models and innovative
offerings, such as affordable data plans and digital content services, transforming the
telecommunications landscape in India.

Question: You are part of a team revitalizing a traditional Indian manufacturing business. How
would you integrate service system design and innovation to transform the business model,
ensuring it remains competitive in today's dynamic market?

Reference:

§ Blindenbach-Driessen, F. (2023, May 30). Innovation, new service development, research; what is the difference?
Organizing for Innovation. https://www.organizing4innovation.com/innovation-new-service-development-
research-what-is-the-
difference/#:~:text=New%20service%20development%20are%20the,or%20problems%20are%20developed%20
proactively.