iss service innovation leadership seminar, 28 march - jochen wirtz

Slide © by Dr. Jochen Wirtz, 2013 Service Excellence Symposium 2013

Can we have it all – Service Excellence, Productivity & Profitability?

ISS Service Innovation Series:Transformation Services through Service Innovation

Professor Jochen WirtzDirector, UCLA – NUS EMBA

NUS Business SchoolNational University of Singapore

Singapore, 28 March 2014


In Service Organizations Management Functions Must Be Tightly Integrated With Each Other

Customers

Operations Management

Marketing Management

Human Resources Management

ProductProduct

PricePrice

PlacePlace

PromotionPromotion

PeoplePeople

Processes / ITProcesses / IT

Physical EnvironmentPhysical Environment


What is the Relationship Between Service Quality, Productivity and Profitability?

ServiceQuality

Productivity

Profitability

+ +

+ / 0 / -

4) SST2) Dual Culture

5) Focused Service Factory

3) Systems &Technology

1) Generic Strategies


Cost control, reduce wastage

Train & motivate employees to do things faster, better & more efficient

Better capacity utilization (better matching of supply & demand

Customer service process redesign (CSPR); (Lean) Six Sigma

Use of machines, technology & data

Outsourcing of non-core activities, back-office activities

Tiering of service to allocate resources better to more important customers; Hard product/service level choices

Increasing Productivity without (much) Impacting the Customer Interface:

1. Generic Strategies to Enhance Productivity


Flying High in a Competitive Industry:

Cost-effectiveService Excellence at

Singapore Airlines

Flying High in a Competitive Industry:

Cost-effectiveService Excellence at

Singapore Airlines

Source: Loizos Heracleous and Jochen Wirtz,“Singapore Airlines’ Balancing Act - Asia’s Premier Carrier SuccessfullyExecutes a Dual Strategy: It Offers World-class Service and is a Cost Leader,” Harvard Business Review, 2010, Vol. 88, No. 7/8, 145-149

2. Dual Culture Strategy


3. Systems & Technology


4. Self-service Technology (SST)


UCLA – NUS EMBA participants visiting Narayana Hrudayalaya Hospital in Bangalore

5. The Focused Service Factory


(2) Isolate Technical Core & Shift Activities to Back-Office

(3) Reduce Customer Contact & Choice

(4) Production Lining/ Industrialized Service Model

(1) Full-service model

Reducing Uncertainty, Process Flexibility, Custom

er Choice

Standardization of Input, Process & O

utput

• Cost control, reduce wastage• Train & motivate employees to

do things faster, better, more efficient

• Better capacity utilization (better matching of supply & demand)

• Customer service process redesign (CSPR); (Lean) Six Sigma

• Use of technology (e.g., biometrics)

• Outsourcing on non-core activities, back-office activities

• Tiering of service to allocate resources better to more important customers; Hard product/service level choices

Increasing Productivity without (much) Impacting the Customer Interface

Possible Avenues to Cost-effective Service Excellence

4) SST

5) Focused Service Factory

3) Systems &Technology

1) Generic Strategies

2) Dual Culture


(1) No/Little Change in Customer Interface

Change in Business Model / Value Proposition to Customers

(2) Isolate Technical Core & Shift Activities to Back-Office

(3) Reduce Customer Contact

(4) Production Lining/ Industrialization of Service

> Same output with less input:• Cost control• Train & motivate employees to

do things faster, better, more efficient

• Better capacity utilization (better matching of supply & demand)

• Customer service process redesign (CSPR); (Lean) Six Sigma

• Use of technology (e.g., biometrics)

• Outsourcing on non-core activities, back-office activities

• Tiering of service to allocate resources better to more important customers;

Dual Culture Strategy

Example: Singapore Airlines

Same Business Model

Front-office Minus Modularization of Service, SST

Reduced Uncertainty, Process Flexibility & Customer Choice Allows Increased Use of Technology & Systems Standardization of Input, Processes & Output

Examples: Taco Bell’s K-Minus Program; Banks’ cheque processing plants

Examples: Google’s AdWords; ING Direct, ATMs, Ikea; Biometric-enabled immigration

Examples: Shouldice Hospital, Narayana Hrudayalaya Hospital; TranscribeMe; many Web- & App-based services

> Separate & buffer activities in the front-office and back-office.> Shift activities from the inefficient front-office to the back-office. > Then, industrialize the back-office.

• PWP + buffering• Two focused factories (front-

office: sales, customer satisfaction; back-office: productivity and low error rate)

• Use systems and technology to industrialize the back-office

> Reduce customer input into the process to reduce uncertainty> Reduce customer contact with the servuction system

• Modularization of products and their features;

• Hard product/service level choices

• Tight customer scripts• Use systems and technology

to industrialize the front -office

• Replace customer interactions with SST

> Standardize customer input into the process> Minimize customer contact with the servuction system> Standardize/ industrialize the entire servuction process

• One/few standard products with few standard features

• Tight selection of customer who fit the service model

• Extremely tight customer scripts; little flexibility & customization possible

• Standard process with much SST

Need for Dual Culture

Focused Service FactoryGeneric Strategies


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