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Service operationsmanagement: return to roots

Robert JohnstonWarwick Business School, University of Warwick, Coventry, UK

Keywords Management theory, Operations management, Service operations

Abstract Over the last 20 years we have witnessed the emergence of a large-scale, world-wideacademic movement concerned with the management of services. This paper charts the role andimpact of operations management on this movement and proposes that the current key focus forservice academics should be with the application of frameworks and techniques. Also suggests thatas the service movement has grown, with increasing overlap between the subjects of operations,marketing and HRM for example, there is a need to “return to roots”. Contends that serviceacademics, in their bid to develop cross-functional service management material, may have lost, orinadvertently ignored, the strength of their core disciplines. Re-focusing on the traditional strengthsof operations management, such as performance quality, design, and operational improvement,might help provide a greater rigour to the developing subject of service management. Discusses nineareas for service operations research and suggests specific research questions. The topics includelinking operational performance to business drivers, performance measurement and operationsimprovement, service design, service technology, the design of internal networks and managingservice capacity.

Introduction“Service” captured the interest and imagination of operations management (OM)academics in the 1980s. The service movement was driven, in part, by arealisation that classes were filled with students who would be, or were, involvedin non-manufacturing tasks. There was some disillusion felt with the existingoperations management material, by both the students and by academics.Economic batch quantities, line balancing and stock control are just a few of thetopics widely taught then which bore little relation to the key issues faced bymanagers running service operations. That is not to say that these tools andtechniques were of no value, but customer service, service quality and servicedesign were central issues facing many service operations managers, yet therewere no tools or techniques to help them in these matters.

The need for service-based material was also timely. It matched the emergingrealisation of the importance of the customer and a more customer-oriented viewof operations. This was a significant shift away from the more internally-focusedefficiency view of operations management. It also fitted with a growing“strategic” trend in operations. This questioned the traditional reactive role ofoperations and attempted to make the subject more market-oriented byunderstanding how operations could not only support but also help develop astrategic advantage (see for example Hayes and Wheelwright, 1984; Hill, 1985,1989; Skinner, 1974, 1985).

Service operations have great appeal, and they are all around us. There is aplethora of examples and experiences and, indeed, research data that can be

International Journal of Operations& Production Management, Vol. 19 No. 2, 1999, pp. 104-124,© MCB University Press, 0144-3577

Received February 1998Revised July 1998

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gleaned from everyday life: service operations are all-pervasive. They aretherefore a normal part of our students’ lives. They can easily relate to theproblems of scheduling hospital beds, the layout of a multiplex cinema or thequality of a retail encounter. Although undoubtedly important, car factories,paper mills and plastic coating lines can seem remote from many people’s lives.Furthermore, each one of us is almost constantly playing out some role or otherwithin a service operation. As students sit in a lecture they are playing a part ina service experience, just as we are delivering, or rather orchestrating, thatservice. As they go to the library, or to eat, or to socialise, they are havinginteractive service experiences. Service “factories” are everywhere; “The mall ismy factory” is the title of a reflective piece on service operations by Chase (1996).

Operations academics, just like operations practitioners, tend to beenthusiasts. On plant tours, students experience their teacher’s fascination andinsights into the processes and the systems and procedures that support them.Student feedback lays testimony to their enthusiasm, understanding andfascination with all things operational. Service operations are even morecompelling. The full title of Chase’s paper is “The mall is my factory: reflectionsof a service junkie”. In it he provides some tell-tale signs of the service operations“junkie” which might sound uncomfortably familiar to many service operationsacademics:

• You ask the resort hotel manager if you could peek at the reservationsystem while you are on vacation rather than spending an afternoon onthe beach.

• You go out of your way to visit theme parks in Korea just to benchmarkthem against Disneyland.

• You are more interested in the planes and taxis you took to get to thefactory tour than you are in the factory.

• You provide unsolicited feedback to your dentist on how the schedulingand appointments system could be improved.

I would like to add a couple more:• Your partner is reluctant to be taken to a restaurant to celebrate your

wedding anniversary in case something goes wrong.• Your children will only go with you to the theme park if you promise not

to debrief them on the way home.This growing and compelling interest in service was happening in many parts ofthe world and in different functional areas (Brown et al., 1994; Grönroos, 1994;Johnston, 1994; Schneider, 1994). In marketing, accounting and HRM forexample, academics were waking up to their service-based students. There wasgrowing concern about the product-based nature of their material. Marketingseemed preoccupied with the marketing of white goods. Accountancy academicsused examples which were based around an imaginary product, the “widget”.Ironically, this has become the accepted name for a beer can insert which forces

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gas into the beer when the can is opened, in order to provide a creamy head. (Nodoubt the majority of OM academics will have opened up a can to have a look!)Thus the service management movement was born in many different disciplinesby people united by a shared enthusiasm and interest for all things intangible.

From these early beginnings, a large-scale, world-wide movement gained paceand membership. Over the last ten to 20 years this has had a profound effect onresearch and teaching. The service operations movement, like the servicemarketing movement, has been characterised by a number of stages; an initialrealisation of the difference between goods and service, the development ofconceptual frameworks and the empirical testing of these frameworks (seeBrown et al., 1994). I would contend that we are now entering a fourth stageconcerned with the application of the tools and frameworks to improve servicemanagement. I would also contend that as the service movement has grown,with increasing overlap between the subjects of operations, marketing and HRMfor example, this fourth stage is also characterised by a “return to roots”, arealisation that we might have lost, or inadvertently ignored, the strength of ourcore disciplines and the need to bring a sense of academic rigour and depth to thedeveloping subject of service management.

The next sections briefly chart the development of operations through thefirst three stages and lay out the challenges as we enter this fourth stage in thedevelopment of service operations management. Several areas for futureresearch are discussed.

Stage one – service awakeningBefore 1980, business academics were primarily concerned with the production,marketing and management of physical goods. By 1955 the service sectoraccounted for just over 50 per cent of the UK’s gross domestic product,overtaking the product-based sectors. Yet it took another 20 years before theoperations management academics of the day started to apply their knowledgeand skills to service operations. Operations management in 1970 was known asproduction management (see for example Chase and Aquilano, 1973). It haddeveloped out of an even more focused view of operations, factory management(see for example Lockyer, 1962). Factory management was the name given to thesearch for efficiency in the post-industrial revolution era based upon FrederickTaylor’s philosophy of scientific management (1911). Production managementwas concerned with applying method study techniques, production planningand control, capacity management and materials management, for example inproduction settings, with examples coming from a wider base than “pure”manufacturing and including examples such as distribution, transportation,hospitals, libraries and publishers (see for example Adam and Ebert, 1982;Evans et al., 1984; Stevenson, 1982; Wild, 1980).

In the 1970s there was an emerging recognition of service operations and thefirst two texts to place some emphasis on the service sector were Johnson et al.(1972) and Buffa (1976). Both books were entitled Operations Management “toreflect the growing emphasis on the breadth of application of production

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management concepts and techniques...(in) non-manufacturing and serviceindustries as well as manufacturing” (Buffa, 1976).

The authors’ good intentions are not borne out by the content of their books.Johnson et al. used the word “service” just once in chapter 1 and then reverted todiscussion of the traditional production management techniques inmanufacturing settings, with the exception of some discussion of mathematicalprogramming applied to distribution systems and the scheduling of service andtransportation systems. Buffa, likewise, recognised the existence and indeedimportance of service and dedicated two chapters to the application of queuingtheory, aggregate planning and scheduling in hospitals. One may argue thatthey were simply paying lip service. I would argue that they began thetransformation of the subject.

The service movement appears to have gathered greater momentum in thefield of marketing. Johnson’s dissertation (1969) was the first to ask the question“Are goods and services really different?” (quoted in Brown et al., 1994). Judd(1964) proposed a typology of service and Rathmell (1966) encouraged marketersto devote more attention to the service sector. The first two service books werewritten by Johnson (1964) (a monograph) and Rathmell (1974). Shostack (1977)wrote “a landmark article” (Brown et al., 1994) “which was to alter the course ofour thinking” (Kotler quoted in Grönroos, 1990) which challenged marketers toprovide concepts, guidance, terminology and rules from the service sector.Europeans, Keith Blois, John Bateson, Pierre Eiglier and Eric Langeard, joinedthe American-led initiative with service contributions of their own (see forexample Bateson, 1977; Blois, 1974; Eiglier and Langeard, 1977).

Service operations was a little slower off the mark, as service operationsmanagement was “essentially operations research (OR) applied to servicesettings” (Chase, 1996). A major breakthrough came in 1976 with the publicationof Earl Sasser’s article “Match supply and demand in service industries” in theHarvard Business Review, followed two years later by the pioneering textbookManagement of Service Operations (Sasser et al., 1978) containing what are nowregarded as classic cases and issues. Dick Chase also wrote a service article forthe HBR “Where does the customer fit in a service operation?” (1978). Hechallenged the operations management community to consider two types ofoperations; the traditional back office factory and the customer-facing, customer-contact front office. Chase and Sasser et al. provided academic credibility andauthority to the study of customer-based operations. Other papers with distinctoperations themes included “Production-line approach to service” (Levitt, 1972),“Quality control in a service business” (Hostage, 1975), “The new back officefocuses on customer service” (Matteis, 1979) and “Marketing’s potential forimproving productivity in service industries” (Lovelock and Young, 1979).Levitt’s paper is still proving a rich source of inspiration for recent papers (see,for example, Bowen and Youngdahl, 1998).

In essence, stage one (referred to by Brown et al. (1994) using the analogy ofthe development of the human species) was the “crawling out” stage and wascharacterised by recognition of the existence of service. The nature of academic

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work was primarily descriptive and focused on the difference between goods andservices (Brown et al., 1994). Chase (1996) described this as the “classificationera”. Although Levitt et al. and colleagues had started the service operationsrevolution, service operations was still very wedded to its factory roots.Furthermore, whilst there was awareness of some of the efforts in otherfunctions (Chase, 1996), the concept of a cross-functional subject of servicemanagement was some way off. Research was undertaken in subject areas withlittle or no cross-fertilisation. Figure 1 summarises the characteristics of thisstage in the development of service operations management.

Stage two – breaking free from product-based rootsThe period between 1980 and 1985 was a time of “high interest and enthusiasm”in services (Brown et al., 1994). It was accepted that services were different fromgoods (though that debate rumbled on (see, for example, Lockyer (1986) andMorris and Johnston (1987)). During this “scurrying about” period (Brown et al.,1994), many substantive issues were debated. The work was principallyconceptual in nature and was characterised by the development of frameworksto help understand the characteristics of service and service management (see,for example, Bowen and Schneider, 1985; Grönroos, 1984; Parasuraman et al.,1985). Service operations academics continued their work on “customeroperations” (for example, Chase, 1981; Maister and Lovelock, 1982). This focuson the customer and the service encounter was growing apace in the otherfunctions. Publications on this topic included “The critical incident as atechnique for analysing the service encounter” (Bitner et al., 1985), “Boundaryspanning role employees and the service encounter: some guidelines formanagement research” (Bowen and Schneider, 1985) and “Perceived control andthe service encounter” (Bateson, 1985).

Operations academics were also breaking ground with new perspectives ontraditional themes. Wyckoff (1984), for example, wrote what might be consideredan early TQM paper “New tools for achieving service quality”. In this period thefirst two service operations management texts were written (Fitzsimmons and

Figure 1.Stage one – serviceawakening

STAGE

ONE

NATUREOF

RESEARCH

descriptive

FOCUS OFRESEARCH

goods vservices

OUTCOMES

servicesare different

OPERATIONSMANAGEMENT

ISSUES

growingawareness of theimportance ofservice, customeroperations andcustomer contact

RELATIONSHIPBETWEEN

FUNCTIONS

OM MKT

HRM

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Sullivan, 1982; Voss et al., 1985). We also witnessed the first “challenge” paperson service operations research; “The service sector: challenges and imperativesfor research in operations management” (Sullivan, 1982) and “Service operationsmanagement: research and application” (Mabbert, 1982).

The main characteristic of stage two was that the study of service appeared tohave broken free from its product-based roots. There was also recognition of, andreference to, the research undertaken in the other disciplines undertaking serviceresearch.

The epitome of this era was the well-regarded paper by Parasuraman et al., “Aconceptual model of service quality and its implications for future research”(1985). This was a major step in the development of the cross-functional subjectof service management. Service quality was a topic which was seen as importantby all of the different functional areas and where they could all make acontribution. This landmark article (and subsequent studies by the authors) notonly stimulated a huge amount of activity in the marketing area but threw downthe gauntlet to the operations area, as it was realised that other functional areashad important things to say about a topic which had traditionally been seen as“operations”. It was also a different approach to quality, in stark contrast to thestatistical process control (SPC) approach. This was also the case whenShostack’s article “Designing services that deliver” (1984) was seized upon bymarketers as they moved into process mapping, previously a cornerstone ofoperations management.

Interest in internally-focused service operations did not cease, however (see,for example, Blois, 1984; Johnston and Morris, 1985).

There was also recognition of cross-functional issues in papers such as “Theemployee as customer” (Berry, 1981) and in a text by Eiglier and LangeardServuction (1987) which combined aspects of marketing and production, thoughthe text is subtitled “Le marketing des services”. We also witnessed theproduction of what might be regarded as the first service management text(Normann, 1984). The service management area was also gaining some degree ofrespectability with the publication of two journals; The Service IndustriesJournal in 1980 and the Journal of Professional Services Marketing in 1985.

For operations this was a period when the nature of service and serviceoperations was classified as a prelude to the development of tools and concepts.The dimensions included customer contact time (Chase, 1981), degree ofcustomisation (Maister and Lovelock, 1982 and Johnston and Morris, 1985), theamount of judgement exercised by front office staff (Lovelock, 1983), whether thevalue was added in the front or back office (Maister, 1983), the operation’sproduct or process focus (Johnston and Morris, 1985). These discussions resultedin the now widely-accepted categorisation of service operations; mass,professional and service shop (see, for example, Schmenner, 1986; Silvestro et al.,1992).

The key characteristics of stage two are summarised in Figure 2.

Stage three – the service management eraThe third stage in the development of the service movement, which Browndescribed as the “walking erect” stage, has been characterised by the cross-disciplinary nature of service research; a coming together of disciplines.Marketing, operations and HRM, in particular, brought together their variousstrengths and perspectives to issues of common concern. This period, fromaround 1985 to 1995, was the era of service management (as distinct from servicemarketing or service operations); a subject whose strength lies in its cross-disciplinary nature and approaches. Three interdisciplinary conferences began,the International Research Seminar, hosted by Eric Langeard and Pierre Eiglierfrom the Université Aix-Marseilles; the Quality in Services (QUIS), alternatingbetween Sweden and USA; and the Frontiers in Service Conference at Vanderbilt,USA.

The research undertaken in this stage was predominantly concerned with theempirical testing of ideas and frameworks resulting in underpinned and testedmodels (see, for example, Bitner et al., 1990; Collier, 1991; Fitzgerald et al., 1991;Parasuraman et al., 1988; Rust and Oliver, 1994). Conceptual frameworks andideas continued to emerge to form the basis for fresh empirical work. This periodwas certainly an important milestone in the development of the subject. Chase (1996) referred to this stage as the “theory testing/empirical era” where we “have been moving from developing conceptual frameworks to refining their dimensions and validating them empirically”. Industry-focused studies,survey research and case studies seem to have dominated this stage ofdevelopment.

Figure 2.Stage two – breakingfrom product-basedroots

STAGE

ONE

NATUREOF

RESEARCH

descriptive

FOCUS OFRESEARCH

goods vservices

OUTCOMES

servicesare different

OPERATIONSMANAGEMENT

ISSUES

growingawareness of theimportance ofservice, customeroperations andcustomer contact

RELATIONSHIPBETWEEN

FUNCTIONS

OM MKT

HRM

TWO conceptual characteristicsof service andservicemanagement

conceptualframeworks

challenge toexistingoperationsparadigms and thedevelopment of“customeroperations”

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Some of the main operations-oriented issues that were being researched arecontained in Table I (this list is not meant to be complete or comprehensive butsimply indicative of the wide range and depth of issues being researched).

There was also a realisation that service management and service operationsin particular might be able to make some new contributions to the coreproduction-oriented operations management field. The benefits of a customer-based approach, the role of service in the product mix and the development ofservice-based strategies were all contributions that were offered to themanufacturing community (see, for example, Booms and Bitner, 1981; Bowen etal., 1989; Fry et al., 1994; Quinn et al., 1990). Figure 3 illustrates the pointsrelating to stage three.

Topic Selected references

Customer relationships Storbacka, 1995; Storbacka et al., 1994Failure prevention in services Chase and Stewart, 1994; Kelley et al., 1993; Stauss, 1993 Internal services Gremler et al., 1994; Mattsson, 1992; Vandermerwe and

Gilbert, 1991JIT in service Duclos et al., 1995Managing the customer Bowen, 1986; Johnston, 1989; Mills and Morris, 1986Performance measurement Brignall et al., 1992; Fitzgerald et al., 1991Process control Haynes and DuVall, 1992Quality measurement Babakus and Boller, 1992; Cronin and Taylor, 1992, 1994;

Finn and Lamb, 1991; Parasuraman et al., 1988Satisfying the customer Anderson and Fornell, 1994; Bitner and Hubbert, 1994;

Danaher and Mattsson, 1994; Johnston, 1995aService capacity Armistead and Clark, 1994a; Lovelock, 1992Service design Behara and Chase, 1993; Fitzsimmons and Maurer, 1991;

Gouillart and Sturdivant, 1994; Katz et al., 1991; Shapiro et al., 1992

Service encounter Bitner et al., 1990; Bowen and Schneider, 1985; Czepiel et al., 1985; Lewis and Entwistle, 1990

Service environment Bitner, 1992; Wakefield and Blodgett, 1994Service focus Davidow and Uttal, 1989a; Kimes and Johnston, 1990;

Van Dierdonck and Brandt, 1988Service guarantees Hart, 1988, 1990, 1995Service operations strategy Armistead, 1990Service process Collier, 1991; Johnston, 1995b; Kingman-Brundage, 1989Service productivity Armistead et al., 1988Service quality Andersson, 1991; Rust and Oliver, 1994; Zeithaml et al.,

1990Service recovery Armistead and Clark, 1994b; Bell and Zemke, 1987;

Edvardsson, 1992; Hart et al., 1990; Johnston, 1995c; Kelley and Davis, 1994

Service technology Collier, 1985; Faulhaber et al., 1986TQM in services Davidow and Uttal, 1989b; Desler and Farrow, 1990Yield management Kimes, 1989Zero defections Reichheld, 1996; Reichheld and Sasser, 1990

Table I.Some OM research issues

1985-1995

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Stage four – return to roots?My belief is that we have now entered a fourth stage: one that could beconsidered the final step in the creation of a “mature” subject which has been inevidence since 1995: the intention and ability to be prescriptive (Johnston, 1996).A stage when much (but not necessarily all) of the material can be taken andapplied, and where the outcome of its application can be predicted (see, forexample, Berry, 1995; Heskett et al., 1997; Rust and Oliver, 1994). Collier (1994),for example, has been developing models to show the relationship betweenperceived service quality and operational performance. Heskett et al. (1997), Rustand Oliver (1994) and Voss and Johnston (1995) have been undertaking empiricalwork to understand the links between operations drivers, for example, quality,staff satisfaction, internal quality, and outcomes such as profit and customersatisfaction. It is this type of work that seems set to continue for some years tocome.

However, a new significant wind of change is that the previous trend towardscross-functional work seems in reverse. I believe we are witnessing sometensions between the functions. Indeed I would venture to suggest that ratherthan seeing a continuance of the overlapping of the areas of marketing,

Figure 3.Stage three – the servicemanagement era

OM MKT

HRM

OM MKT

HRM

STAGE

ONE

NATUREOF

RESEARCH

descriptive

FOCUS OFRESEARCH

goods vservices

OUTCOMES

servicesare different

OPERATIONSMANAGEMENT

ISSUES

growingawareness of theimportance ofservice, customeroperations andcustomer contact

RELATIONSHIPBETWEEN

FUNCTIONS

TWO conceptual characteristicsof service andservicemanagement

conceptualframeworks

challenge toexistingoperationsparadigms and thedevelopment of“customeroperations”

THREE empirical developmentand testing offrameworks

large amountof servicematerial basedon new cross-functionallyderivedmodels

development ofservice processes,quality, failure,design andtechnology with aview that servicecould contributeto manufacturing

OM MKT

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operations and HRM for example, we are witnessing their moving apart fromeach other. This change is driven by a basic desire to re-establish the servicematerial within the core disciplines. It appears that we have forgotten, or mislaid,our established roots and academics have focused on material and approachesdepicted in the circles in the last column of Figure 4. We seem to have been sweptalong on the tide of interest in service focused predominantly from a customerperspective. Whilst there is nothing unhealthy, or indeed inappropriate, in this,we seem to have ignored the strength that our core discipline has to offer. Inservice quality, for example, we have focused on customer-based notions ofservice quality but appear to have ignored quality of conformance and thedelivery of customer-based quality, surely key issues for operations managers

Figure 4.Stage four – return to

roots?

OM MKT

HRM

OM MKT

HRM

OM MKT

HRM

STAGE

ONE

NATUREOF

RESEARCH

descriptive

FOCUS OFRESEARCH

goods vservices

OUTCOMES

servicesare different

OPERATIONSMANAGEMENT

ISSUES

growingawareness of theimportance ofservice, customeroperations andcustomer contact

RELATIONSHIPBETWEEN

FUNCTIONS

TWO conceptual characteristicsof service andservicemanagement

conceptualframeworks

challenge toexistingoperationsparadigms and thedevelopment of“customeroperations”

THREE empirical developmentand testing offrameworks

large amountof servicematerial basedon new cross-functionallyderivedmodels

development ofservice processes,quality, failure,design andtechnology with aview that servicecould contributeto manufacturing

FOUR applied prescription linkingoperationsdrivers tooutcomes

the return to roots– the need to re-focus serviceoperationstowardstraditionaloperational issuesand approaches

OM MKT

HRM

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and academics. In service design, we seem to have followed the blueprintingmovement but we appear to have ignored the process of design in favour of thisdescriptive activity and the relationship between important, and often ignored,back-office activities in favour of customer-facing processes.

A service operations management agendaThis growing awareness of the need to re-operationalise service managementmaterial has led to an attempt to develop an agenda[1]. This section identifiessome possible research issues and questions emphasising the core operationalissues.

1. Linking operational performance to business driversDeveloping the work of Voss and Johnston (1995), Roth et al. (1997) and thepioneering work on the service profit chain by Heskett et al. (1997), there isgrowing awareness of the importance of linking business drivers such asleadership, customer orientation and more operational issues such asbenchmarking, quality control and service design, with their impact on businessperformance. Although the work cited above has made significant inroads intothis area, there is much more work to do. Indeed there is significant practitionerinterest in this area, witnessed by the growing interest in the use of the Baldrigecriteria and the UK/European Foundation for Quality Awards on this side of theAtlantic. Chase points out the important roles that operations can play in thismovement: “service operations is the appropriate discipline to begin to movebusiness from its current emphasis on reengineering to the next step – revenueenhancement” (Chase, 1996). Two key research questions are:

(1) What are the most efficient operational profit levers and under whatcircumstances?

(2) Can we map the relationships between the controllable and the outcomevariables?

2. Performance measurement and operations improvementDespite some major work in the performance measurement area (Fitzgerald etal., 1991; Kaplan and Norton, 1996; Lynch and Cross, 1991), many organisationsseem reluctant to critically review and develop their performance measurementsystems. The balanced scorecard, although a major step forward for manyorganisations, has led to a degree of complacency once an organisation, and itsSBUs, have found measures to fit all four boxes. (One organisation was pleasedto have developed new measures including “number of staff training days” and“number of processes benchmarked” without any concern as to whether anyimprovements resulted from these activities.):

• How can we develop frameworks to help organisations review the natureand effect of the performance measures used?

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• In what situations are historical measures and targets appropriate and inwhat situations are externally based targets more appropriate?

• Do radical step change improvement programmes yield better or fasterresults than TQM type continuous change programmes?

• Does benchmarking yield the desired results or does it get caught up ininterminable and unfruitful discussions about “apples and pears” ordegenerate into “industrial tourism”?

3. Guarantees, complaints and service recovery – tools for performanceimprovementI believe that much organisational practice in the area of complaints andrecovery has regressed into mere marketing ploys. Complaints procedures insome organisations have become mechanisms to pass on tokens or small pay-outs to disgruntled customers. Guarantees often seem little more than yourstatutory rights, or an “opportunity” to purchase insurance so that, if theproduct or service fails, the vendor is not troubled with the problem (and so isunaware of the in-built problems of their products or services). Service recoveryappears to have become reactive, with staff carefully listening to, sympathisingwith, and then paying off the customer but never sorting out the root problem.(At a recent visit to a hotel, I informed the manager about a whole series ofproblems I had encountered during a ten-hour stay. Without making notes of anyof them, she kindly offered me another breakfast free of charge.):

• How can we link complaints and failures to organisational improvement?• How can organisational learning develop from mistakes?• How can organisations be proactive in finding and dealing with mistakes

before their customers tell them (or more often don’t tell them)?• What are good service guarantees and how can they be operationalised?• What evidence is there that complaints, guarantees or service recovery

drive improvements within an organisation?• How is learning best captured and applied?

4. People managementDespite some excellent additions to the literature in the HRM area (such as Berry,1995; Schneider and Bowen, 1995), operations academics need to retrace theirroots and focus on the design of jobs. The problem is not knowing thatcustomers expect empathy, reliability, assurance etc., but delivering it time aftertime, month after month, week after week, day after day, hour after hour. (Arecent BBC documentary portrays a heterosexual male prostitute in Australiaproviding service to his clients, hour after hour, sometimes for a week at a time.)We need to understand how all employees can deliver constant and consistenthigh levels of service and how we can design jobs and motivate employees to dothis:

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• What are the key service operational competencies?• How do we develop those competencies?• How do operations managers go about maintaining the energy and

commitment of front-line workers?• How does one ensure that a constant level of service is provided?

5. Service designThe service design models used in the literature are strongly based upon productdesign processes, yet there is some evidence that product design processes arenot used, or indeed applicable, in service situations (Shulver and Slack, 1997). Dowe understand how services are designed from conception to consumption andhow existing product-based models can be applied?:

• What is a service design?• How is a service concept developed into a service?• What is a service concept?• What are the most effective methods of developing a service?• What are good design tools and techniques?• Seamless service is a great idea for a customer but how does one achieve

this in most “silo-based” organisations?• How can the World Wide Web be utilised to create new services, even

virtual services and the use of virtual reality simulations in service (no, Idon’t have the prostitute in mind)?

• How do we capture the technological dimensions of the next century?

6. Service technologyThere are a few documented examples of technological disasters, yet there aremany more but less well-known, or documented, examples of technologicalsuccesses. One reason for failure is that technology is often superimposed oninefficient, outdated operational systems, in the expectation that it will overcomeinherent problems (Lewis and Chambers, 1997). Unfortunately there is onlylimited material in the service literature about the difficulties of implementingnew technology, or indeed any categorisation of the various types oftechnologies in use. It would also appear that managers seem to have a difficultyin assessing the “true” impact of new technology (Lewis and Chambers, 1997).Furthermore, investment in service technology does not appear to havesignificantly reduced costs for the provision of services. Brunsdon and Walley(1997) refer to this as the “productivity paradox”:

• What are the categories of service technologies and their relative impact?• What are the inherent difficulties in implementing new technology? • What are the success factors?

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• What is the relationship between investment in technology and costreduction?

7. The design of internal networksGremler et al. (1994) define internal service encounters as the didacticinterrelation between an internal customer and an internal service provider. Thesupply chain literature, however, has moved away from such simplisticrelationships to the idea of networks of relationships (see, for example, Harland,1996). This network approach needs to underpin future research in the internalcustomer chain. Can notions of external quality and customer satisfaction beused with internal supply chains? Slack et al. (1995) stated that internalcustomers cannot be treated in exactly the same way as external customers.External customers usually, though not always, operate in a free market. Theinternal customer is often a captive customer and so many of the currentconcepts of service quality and performance measurement from an externalcustomer perspective (e.g. customer satisfaction) have found little credence ininternal customer-supplier relationships. This seems to be changing asorganisations are looking increasingly at contracting-out internal services:

• Can supply chain networks be implemented within organisations?• How well does service quality translate to internal supply networks?• What is the relationship between internal service quality and staff

satisfaction and external quality and customer satisfaction?• How can organisations cost and value internal services?

8. The service encounterThe service encounter is the crux of service delivery, yet how much do we knowabout which are the right scripts, attitudes, behaviours to achieve the desiredeffect? How do we ensure that each encounter in a service process has the rightcumulative effect on customers’ overall perceived service quality?:

• What are the “right” scripts for different types of service?• Do we know how to design and control the series of encounters that

comprise the service process?

9. Managing service capacitySome work exists in the management of service capacity in terms of staffscheduling (see, for example, Goodale and Tunc, 1998; Thompson, 1996).Strategies for managing demand and supply in service operations have alsobeen documented; however, there has been little advancement since the firstpaper by Sasser in 1976. Yet this is an area which is fundamental to the planningand control of service. Another issue, the subject of a preliminary investigation,is the relationship between capacity levels and the level of service qualitydelivered. Clark and James (1997) provide some conceptual models of intuitively-derived relationships between resource utilisation and service quality. Is it now

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possible to derive empirically these functions and assess strategies for effectiveresource utilisation linked to required quality levels?:

• What are appropriate capacity strategies? How does customer contactrelate to types of strategies?

• What is the relationship of capacity levels and capacity strategies to thelevel of service quality delivered, for example?

• How can organisations best manage their quality-capacity relationships?

ConclusionMy view is that in stage four we are seeing a return to roots, which is no badthing. This will add new depth and grounding to the literature on servicemanagement. In operations it will allow us and encourage us to undertakeresearch and make strong statements about things which we understand(quality, design and improvement, for example). But somehow we need to addthis depth and focus without losing the richness that has developed as differentfunctional areas have come together to share areas of common interest. I thinkthat holding these areas together will be a greater challenge to service academicsover the next few years than the research agendas to which we are compellinglyand enthusiastically drawn.

Note1. This agenda is partly based upon discussions with Dick Chase, Peter Docherty,

Christopher Easingwood, Ulf Karlsson, Jos Lemmink, Jan Mattsson, David Tansik andChris Voss at the Service Operations Research Workshop, Chalmers University,Gothenburg, 19-21 September 1997.

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