Improving service

operation through
innovation
In service operations,
value = ‘worth of something’

🠶 How do we measure this value?

🠶 Who gets this value?
🠶 Ideally, an improvement will bring benefits to all
stakeholders.

🠶 In reality, improvement is about balancing its value across the range

of stakeholders.
Railway example
A railway company might upgrade the facilities in its passenger carriages with
more comfortable seats, better entertainment and
connectivity, etc.

But, has this increased value for the stakeholder?

Customer:
🠶 Value has increased: Passengers are getting a better service and price remains same
🠶 Value hasn’t increased: Passengers are getting a better service and price also have
increased.

Company:
🠶 Value has increased: in the long or short term, revenues increase sufficiently to warrant the
original investment.
value is a comparison between the time, effort, cost and investment of making the
improvement against the benefits received by stakeholders

Objective of service improvement

🠶 Increase the benefits to stakeholders, without an unacceptable increase in the effort, cost and
investment required by them;

🠶 Reduce the effort, cost and investment required without reducing the benefits to stakeholders.
Types of improvement

There is an essential difference between

🠶 An organization operates in broadly the same way as competitors, but does it

better

🠶 An organization operates in a fundamentally different way.

Four Season
case

ZARA
 Continuous and radical(step)
improvement
Continuous change Step change

PROCESS Little change Redesigned

IMPROVEMENT Modest Substantial

BENEFITS Long term Short term

CHANGE DRIVER Employees Senior management

MANAGEMENT time/effort Small Substantial

RISK Small High

EXPENDITURE Small Substantial

Use of IT Little Significant

Organizational ambidexterity

🠶 Ability to address two organizationally incompatible objectives equally well.

🠶 Ability of an organization to exploit existing processes in a continuous manner

while exploring more radical innovative solutions as it seeks to improve.

EXAMPLE: A service may want to compete

🠶 In mature markets where continuously paring away at costs by improving
existing resources and processes is important.

🠶 In new markets where novelty, innovation and experimentation are valued.

Characteristics of an ambidextrous
organization
🠶 A shared growth ambition for the overall enterprise, owned by the senior team.

🠶 An autonomous business unit responsible for exploring new market areas.

🠶 Mechanisms that enable the explore unit to access the assets of the core business to help
it
scale faster than a startup.
 How ambidextrousity can be achieved
Increasing difficulty

Structurally Sequentially “Contextually”

Different parts of the Different times, different Simultaneously adopt both
operations, different types of improvement types of improvement
types of improvement within the same business
unit
Time Time Time

Organisational
area 1
Radical
Radical and
Continuous Radical continuous
Organisational
area 2
Continuous
Examples
Organization: Microsoft
Product: Office Suite
Leader: Qui Lu
The process of
becoming ambidextrous
🠶 An independent team was dedicated to the legacy Office for Desktop (The crown Jewel
of Microsoft)
🠶 Another independent team was dedicated to SaaS product Office 365
🠶 The legacy team was able to exploit the license regime and existing customer segment
for improvements
🠶 The SaaS team was able to experiment on the subscription model without disturbing and
affecting the license regime and the customer existing customer segment. New ventures
were highly encouraged in the form of startups.
How does an ambidextrous leader
think?
Core and explore business units operate on a different logic.

The core business aims to eliminate error and drive for the highest possible levels
of operational efficiency and effectiveness.

An explore business aims to learn through experimentation, placing many small

bets to
discover how the market will evolve and what it will take to satisfy customer needs
 Repositioning on the value
frontier
Change in value
for customers

Ideal improvement –
increase in value for both
the operation and customers
Change in value for
the organisation

The value frontier

Value to organisation

Change in value for

the organisation

Value to customers
Single large step improvement and
incremental small step
improvements Single, radical
improvement

Several small incremental

improvements
Value to organisation

The new value

frontier

The original value

frontier

Value to
customers