Service Blueprinting

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Types of New Services

  • Radical Innovations:
    • Definition: These are entirely new to the world and represent a significant leap forward in technology or service delivery.
    • Example: Federal Express introduced overnight courier delivery, which was a new concept at the time.
    • Impact: Can create entirely new markets and redefine industry standards.
  • New Service Offerings:
    • Definition: Services that a company begins offering which it did not previously provide.
    • Example: Barnes & Noble, originally a bookseller, added coffee services to enhance the customer experience.
    • Impact: Expands the company's service portfolio and potentially increases customer loyalty.
  • Service-Line Extensions:
    • Definition: Adding new services to an existing line or expanding the scope of services within the company’s current offerings.
    • Example: An airline introducing new routes or destinations.
    • Impact: Allows companies to leverage existing infrastructure and customer base for growth.
  • Service Improvements:
    • Definition: Enhancements made to existing services to increase their value or quality.
    • Example: Adding internet facilities to hotel rooms.
    • Impact: Improves customer satisfaction and competitiveness by keeping up with industry standards.
  • Style Changes:
    • Definition: Modifications in the presentation or appearance of a service.
    • Example: Redesigning a company’s website or changing the color scheme of a restaurant’s decor.
    • Impact: Refreshes the brand image and can attract new customers or re-engage existing ones.

Reasons for Failure and Success

  • Reasons for Failure:
    • No Unique Benefits: The service does not offer any distinct advantages over existing options.
    • Insufficient Demand: The market size is too small or the service doesn’t address a significant need.
    • Unrealistic Goals: Overly ambitious targets that are not achievable.
    • Poor Fit: The new service does not align well with the company’s existing services or brand.
    • Poor Location: The service is offered in a location that does not have sufficient demand.
    • Insufficient Financial Backing: Lack of funding to support development and marketing.
    • Rushed Development: Inadequate time spent on planning and execution.
  • Reasons for Success:
    • Customer Needs: The service addresses a clear customer need and offers significant benefits.
    • Competitive Advantage: Provides a unique edge over competitors.
    • Technological Sophistication: Utilizes advanced technology to enhance the service.
    • Dedicated Resources: Investment in R&D, human resources, and marketing expertise.
    • Market Absorption: There is a proven potential for market acceptance and growth.

Service Development System Characteristics (Shostack)

  • Objective:
    • Meaning: Based on factual and measurable data rather than personal opinions or assumptions.
    • Importance: Ensures that decisions are grounded in reality and that the service meets actual market needs.
  • Precise:
    • Meaning: Specific and detailed, avoiding ambiguity.
    • Importance: Provides clear guidelines and expectations, reducing confusion during development.
  • Fact-Driven:
    • Meaning: Decisions are made based on concrete evidence rather than speculation.
    • Importance: Minimizes risk and increases the likelihood of successful outcomes.
  • Methodological:
    • Meaning: Systematic and structured approach to service development.
    • Importance: Ensures a thorough and consistent process, leading to better planning and execution.

Change in Customer Behavior and New Benefits

  • High New Benefits, Few Behavior Changes:
    • Definition: Services that offer significant improvements but do not require customers to change their behavior.
    • Example: Google’s search engine provided powerful functionality without altering how users searched the Internet.
    • Outcome: Easier for customers to adopt and integrate into their routines.
  • High New Benefits, Large Behavior Changes:
    • Definition: Services that offer substantial benefits but require significant changes in customer behavior.
    • Example: Satellite radio, which required changes in how customers accessed radio content.
    • Outcome: Can be challenging to implement but can lead to substantial customer value if successful.
  • Low New Benefits, Few Behavior Changes:
    • Definition: Services that offer minimal new benefits and do not require behavioral changes.
    • Example: McDonald’s offering a vegetarian menu.
    • Outcome: Easier to implement and may attract a niche customer segment.
  • Low New Benefits, Large Behavior Changes:
    • Definition: Services that offer minimal new benefits and require significant changes in customer behavior.
    • Example: DVORAK keyboard, which offered little new benefit compared to existing keyboards but required significant behavior change.
    • Outcome: Often leads to poor adoption and potential failure.

Stages in New Service Development

  • Business Strategy Review:
    • Objective: Align new service development with the company’s overall vision, mission, and strategic goals.
    • Components:
      • Value Disciplines: Operational excellence, product leadership, or customer intimacy.
      • Generic Strategies: Cost leadership, differentiation, or focus.
  • Developing New Service Strategy:
    • Objective: Define the strategic approach for growth and service development.
    • Strategies:
      • Intensive Growth: Increase market share, develop new services in existing markets, or enter new markets.
      • Integrative Growth: Form alliances, joint ventures, or acquisitions to complement services.
      • Diversification: Enter new markets with new services, which is riskier but necessary for long-term growth.
  • Idea Generation:
    • Objective: Generate and collect ideas for new services.
    • Methods: Brainstorming, focus groups, customer observations, competitor analysis, and employee suggestions.
    • Screening: Evaluate ideas for alignment with strategy and feasibility.
  • Service Concept Development:
    • Objective: Develop a detailed description of the service, including value, form, function, and customer experience.
    • Process: Involve customers, employees, and other stakeholders in developing and testing the concept. Use a service blueprint to map the process.
  • Developing the Business Case:
    • Objective: Assess profitability and feasibility.
    • Components: Ensure the service can be delivered effectively, meets customer needs, and generates a satisfactory return on investment.
  • Service Development and Testing:
    • Objective: Develop and test the service prototype.
    • Process: Implement the service in a controlled environment, gather feedback from customers, and make necessary adjustments.
  • Market Testing:
    • Objective: Conduct pilot tests of the service and marketing mix elements.
    • Process: Offer the service to a limited audience, gather feedback, and refine the service based on responses.
  • Commercialization:
    • Objective: Roll out the service to the broader market.
    • Process: Launch in phases, starting with less risky markets, and monitor performance. Engage employees and gather customer feedback for continuous improvement.
  • Post-Launch Evaluation:
    • Objective: Assess service performance and make adjustments.
    • Process: Review performance against goals, adapt to changes in the market, and implement improvements based on ongoing feedback.

Summary

The new service development process involves a structured approach from strategy formulation to market introduction and evaluation. Each stage is critical for ensuring that the service meets customer needs, aligns with business objectives, and achieves market success.