1. ©2013 Dr. Scott E. Sampson http://services.byu.edu Instructor in-class use only. Please do not distribute. Provided by Dr. Scott Sampson Brigham Young University Provo, Utah, USA ©2013 BYU Instructor slides to accompany Essentials of Service Design, 2 nd Edition Essentials of Service Design 2/E 1 rev1/13

2. ©2013 Dr. Scott E. Sampson http://services.byu.edu Chapter 1: Services Designed to Disappoint? Essentials of Service Design 2/E 2 rev1/13

3. ©2013 Dr. Scott E. Sampson http://services.byu.edu Call centers Essentials of Service Design 2/E 3 Thank you for calling Comcast. I hope you have not been waiting long. Do you mind if I put you on hold again while I talk with my supervisor? …or… What do you experience?... rev1/13

4. ©2013 Dr. Scott E. Sampson http://services.byu.edu Financial institutions Essentials of Service Design 2/E 4 I love coming to this bank. It makes me feel more confident in my life. That is too bad that your credit card number was stolen. If you will just fill out these affidavit forms and bring them back in we can process them at our home office and re-issue the card and then you can go on with your life. This process sucks. Did you know that? Do you even care? …or… What do you experience?... rev1/13

5. ©2013 Dr. Scott E. Sampson http://services.byu.edu Financial institutions prone to disappoint Essentials of Service Design 2/E 5 “A [2010] Harris survey reveals that more and more Americans say they don’t believe a word of what banks and credit card companies are telling them.” 2,755 U.S. adults surveyed… “completely believable” “somewhat believable”??? Banks4%57%39% Mortgage companies2%47%51% Credit card companies2%34%64% From http://www.mainstreet.com/article/moneyinvesting/savings/americans-don-t-trust-banks-credit-card-firms rev1/13

6. ©2013 Dr. Scott E. Sampson http://services.byu.edu Airlines Essentials of Service Design 2/E 6 It looks like your flight has been canceled. We can put you on the flight tomorrow, so make yourself comfortable. This airline really sucks. rev1/13

7. ©2013 Dr. Scott E. Sampson http://services.byu.edu Other services of varying quality… Healthcare Government services Education Hospitality services Insurance claim services Legal services Remodeling services Technical support Retail services Repair services Real estate services Services… some are standouts many are floundering often confusing often arduous often untrustworthy Essentials of Service Design 2/E 7 rev1/13

8. ©2013 Dr. Scott E. Sampson http://services.byu.edu American Customer Satisfaction Index Essentials of Service Design 2/E 8 source: http://www.theacsi.org/ rev1/13

9. ©2013 Dr. Scott E. Sampson http://services.byu.edu Chapter 2: Understanding Services Essentials of Service Design 2/E 9 rev1/13

10. ©2013 Dr. Scott E. Sampson http://services.byu.edu What are services? Essentials of Service Design 2/E 10 rev1/13

11. ©2013 Dr. Scott E. Sampson http://services.byu.edu Dictionary definitions of “service” 1. “the occupation or function of serving” 2. “the work performed by one that serves” 3. “a form followed in worship or in a religious ceremony” 4. “the act of serving” Essentials of Service Design 2/E 11 rev1/13

12. ©2013 Dr. Scott E. Sampson http://services.byu.edu Two perspectives on service Intangible product “A ‘service’ is an intangible product vs. a ‘good’ which is a tangible product.” Interactive process “A ‘service’ is a co-productive process that involves provider and customer interactions.” Essentials of Service Design 2/E 12 rev1/13

13. ©2013 Dr. Scott E. Sampson http://services.byu.edu Making food – service or not? processing food (for future customers) processing customer orders Service! Essentials of Service Design 2/E 13 rev1/13

14. ©2013 Dr. Scott E. Sampson http://services.byu.edu Assembly – service or not? assembling plastic people (for future customers) assembling real people (customers) Service! Essentials of Service Design 2/E 14 rev1/13

15. ©2013 Dr. Scott E. Sampson http://services.byu.edu Auto painting – service or not? painting autos on an assembly line (for future customers) painting customer’s autos Service! Essentials of Service Design 2/E 15 rev1/13

16. ©2013 Dr. Scott E. Sampson http://services.byu.edu Playing music – service or not? producing musical recordings (for future customers) producing crazed teenagers Service! Essentials of Service Design 2/E 16 rev1/13

17. ©2013 Dr. Scott E. Sampson http://services.byu.edu What are services? “Services are production processes that act on or with customer resources.” (from The Unified Service Theory*) Suppliers Provider Customers inputsoutputs SuppliersCustomers inputs outputs Service provider self, belongings, or information * see Sampson, S. E.; Froehle, C. M., 2006, “Foundations and Implications of a Proposed Unified Services Theory,” Production and Operations Management, Vol. 15, No. 2 (Summer), pp. 329-343. Essentials of Service Design 2/E 17 rev1/13

18. ©2013 Dr. Scott E. Sampson http://services.byu.edu In a nutshell… “Services process customer resources” customers’ selves or effort, customers’ belongings, and/or customers’ information Essentials of Service Design 2/E 18 rev1/13

19. ©2013 Dr. Scott E. Sampson http://services.byu.edu Essentials of Service Design 2/E19 Customer inputs financial records selves and baggage broken car business problems patient’s teeth student’s mind legal problems illness and injuries “Services process customer resources.” Service provider Customer Service process accounting air transportation auto repair consulting dentistry education legal services healthcare Service provider outputs financial statements transported passengers repaired car business solutions mended teeth educated mind legal remedies healthier patients Customer provides resourcesService provider adds value rev1/13

20. ©2013 Dr. Scott E. Sampson http://services.byu.edu Summary: What are services? “intangible goods” “an operation that processes customer resources” “a customer-provider co- productive process” 20 Essentials of Service Design 2/E see: Sampson & Snow, 2011, “What are services? An empirical assessment” rev1/13

21. ©2013 Dr. Scott E. Sampson http://services.byu.edu Chapter 3: Creating PCN Diagrams Essentials of Service Design 2/E 21 rev1/13

22. ©2013 Dr. Scott E. Sampson http://services.byu.edu “Services are co-productive processes.” Essentials of Service Design 2/E 22 rev1/13

23. ©2013 Dr. Scott E. Sampson http://services.byu.edu Sequence of dependent steps What is a process? Essentials of Service Design 2/E 23 rev1/13

24. ©2013 Dr. Scott E. Sampson http://services.byu.edu Sequence of dependent steps What is a process? forecast supply needs order supplies online identify ingredients receive supplies cook pizza maintain supplies serve pizza preheat ovens take order negotiate supply contract develop recipes Essentials of Service Design 2/E 24 rev1/13

25. ©2013 Dr. Scott E. Sampson http://services.byu.edu Sequence of dependent steps What is a process? forecast supply needs order supplies online identify ingredients receive supplies cook pizza maintain supplies serve pizza preheat ovens take order negotiate supply contract develop recipes Process Step (action verb and object noun) Precedence relationship (implies a required resource state) Essentials of Service Design 2/E 25 rev1/13

26. ©2013 Dr. Scott E. Sampson http://services.byu.edu Process Entity Entity Entity’s Process Domain An entity’s Process Domain includes all processes that are directly performed by the entity. Essentials of Service Design 2/E 26 rev1/13

27. ©2013 Dr. Scott E. Sampson http://services.byu.edu Process Entity example Pizza Restaurant Restaurant’s Process Domain Essentials of Service Design 2/E 27 rev1/13

28. ©2013 Dr. Scott E. Sampson http://services.byu.edu Process Entity example Pizza Restaurant Restaurant’s Process Domain forecast supply needs order supplies online identify ingredients receive supplies cook pizza maintain supplies serve pizza preheat ovens take order negotiate supply contract develop recipes Essentials of Service Design 2/E 28 rev1/13

29. ©2013 Dr. Scott E. Sampson http://services.byu.edu Three regions of a Process Domain Pizza Restaurant Restaurant’s Process Domain Direct interaction (e.g. with supplier) Surrogate interaction (e.g. acting on supplier resources) Independent processing (entity acting on entity’s owned/controlled resources) Surrogate interaction (e.g. acting on customer resources) Direct interaction (e.g. with customer) forecast supply needs order supplies online identify ingredients receive supplies cook pizza maintain supplies serve pizza preheat ovens take order negotiate supply contract develop recipes Essentials of Service Design 2/E 29 rev1/13

30. ©2013 Dr. Scott E. Sampson http://services.byu.edu Three regions of a Process Domain Pizza Restaurant Restaurant’s Process Domain Direct interaction Surrogate interaction Independent processingSurrogate interaction Direct interaction degree of process control forecast supply needs order supplies online identify ingredients receive supplies cook pizza maintain supplies serve pizza preheat ovens take order negotiate supply contract develop recipes Essentials of Service Design 2/E 30 rev1/13

31. ©2013 Dr. Scott E. Sampson http://services.byu.edu Three regions of a Process Domain 1. Direct Interaction Entity person acting in conjunction with another entity person. People with people. 2. Surrogate Interaction Entity person acting on/with resource(s) of another entity. People with things (belongings, information). 3. Independent Processing Entity acting only on/with entity’s own resources. Essentials of Service Design 2/E 31 rev1/13

32. ©2013 Dr. Scott E. Sampson http://services.byu.edu Process Chain Networks (“PCN”) Essentials of Service Design 2/E 32 rev1/13

33. ©2013 Dr. Scott E. Sampson http://services.byu.edu What is a Process Chain Network (PCN)? a network of interdependent process chains that span multiple process entities. entity processes entity process domain entity processes entity process domain entity processes entity process domain entity processes entity process domain entity processes entity process domain entity processes entity process domain Essentials of Service Design 2/E 33 rev1/13

34. ©2013 Dr. Scott E. Sampson http://services.byu.edu Pizza Consumer Consumer’s Process Domain Direct interaction Surrogate interaction Independent processingSurrogate interaction Direct interaction Interdependent Process Entities Pizza Restaurant Restaurant’s Process Domain Direct interaction Surrogate interaction Independent processingSurrogate interaction Direct interaction Restaurant Supplier Supplier’s Process Domain Direct interaction Surrogate interaction Independent processingSurrogate interaction Direct interaction forecast supply needs order supplies online identify ingredients receive supplies cook pizza maintain supplies serve pizza preheat ovens create order negotiate supply contract develop recipes develop appetite eat pizza return home wait to be seated seat customer review menu present check prepare check pay check eat leftovers wait for pizza fill order Does this matter to the restaurant? Essentials of Service Design 2/E 34 rev1/13

35. ©2013 Dr. Scott E. Sampson http://services.byu.edu Healthcare PCN Diagram Essentials of Service Design 2/E 35 1 Health Clinic Dir.Sur.Ind.Sur.Dir. 2 Patient Dir.Sur.Ind.Sur.Dir. 3 Insurance Company Dir.Sur.Ind.Sur.Dir. 4 Pharmacy Dir.Sur.Ind.Sur.Dir. rev1/13

36. ©2013 Dr. Scott E. Sampson http://services.byu.edu Healthcare PCN Diagram PCN Diagrams can span any number of entities. Essentials of Service Design 2/E36 1 Health Clinic Dir.Sur.Ind.Sur.Dir. 2 Patient Dir.Sur.Ind.Sur.Dir. 3 Insurance Company Dir.Sur.Ind.Sur.Dir. 4 Pharmacy Dir.Sur.Ind.Sur.Dir. train staff on tools take medication clean lab tools take blood procure lab tools submit payment claim pay covered amount review claim drive to pharmacy check coverage establish medication coverage agreement submit payment claim process payment fill pre- scription analyze blood prescribe mediction develop payment schedule tell copay amount give payment call in pre- scription B/4 B/1 A/3 A/1 feel better show ID check ID feel weak check-in at kiosk discuss symptoms drive to clinic wait C/4 D/4 C/2 D/2 rev1/13

37. ©2013 Dr. Scott E. Sampson http://services.byu.edu Provider (Provider’s Process Domain) Direct interaction Surrogate interaction Independent processingSurrogate interaction Direct interaction Customer (Customer’s Process Domain) Direct interaction Surrogate interaction Independent processingSurrogate interaction Direct interaction Service on a PCN Diagram Interactive, co-productive actions. “Service” The provider’s actions The customer’s actions 37 Essentials of Service Design 2/Erev1/13

38. ©2013 Dr. Scott E. Sampson http://services.byu.edu Chapter 4: Identifying the Value Proposition Essentials of Service Design 2/E 38 rev1/13

39. ©2013 Dr. Scott E. Sampson http://services.byu.edu Where is customer value? Essentials of Service Design 2/E 39 rev1/13

40. ©2013 Dr. Scott E. Sampson http://services.byu.edu Driver process domain interactionIndependent processingDirect interaction Toyota process domain Direct interaction Independent processinginteraction Automobile PCN Diagram produce car sell cardrive car Essentials of Service Design 2/E 40 rev1/13

41. ©2013 Dr. Scott E. Sampson http://services.byu.edu Patient process domain interactionsurrogate interaction Independent processingsurrogate interaction Direct interaction Healthcare provider process domain Direct interaction surrogate interaction Independent processingsurrogate interaction Knee surgery PCN Diagram damage knee procure artificial knee replace knee use knee Essentials of Service Design 2/E 41 rev1/13

42. ©2013 Dr. Scott E. Sampson http://services.byu.edu Client process domain interactionsurrogate interaction Independent processingsurrogate interaction Direct interaction Consultant process domain Direct interaction surrogate interaction Independent processingsurrogate interaction Consulting PCN Diagram develop expertise analyze data identify problem act on analysis collect data present analysis Essentials of Service Design 2/E 42 rev1/13

43. ©2013 Dr. Scott E. Sampson http://services.byu.edu Ethan Allen (Ethan Allen’s Process Domain) Direct interaction Surrogate interaction Independent processingSurrogate interaction Direct interaction Customer (Customer’s Process Domain) Direct interaction Surrogate interaction Independent processingSurrogate interaction Direct interaction Co-productive Process? trash old furniture browse showroom source furniture stock retail stores make selection purchase item use item in stock? backorder item fill backorder give advice decide on furniture offerings no yes forecast demand ask questions deliver item 43 Essentials of Service Design 2/Erev1/13

44. ©2013 Dr. Scott E. Sampson http://services.byu.edu Value proposition? Ethan Allen (Ethan Allen’s Process Domain) Direct interaction Surrogate interaction Independent processingSurrogate interaction Direct interaction Customer (Customer’s Process Domain) Direct interaction Surrogate interaction Independent processingSurrogate interaction Direct interaction “You’ve got questions, we’ve got answers.” “We do it all for you.” trash old furniture browse showroom source furniture stock retail stores make selection purchase item use item in stock? backorder item fill backorder give advice decide on furniture offerings no yes forecast demand ask questions deliver item 44 Essentials of Service Design 2/Erev1/13

45. ©2013 Dr. Scott E. Sampson http://services.byu.edu Value representation? Ethan Allen (Ethan Allen’s Process Domain) Direct interaction Surrogate interaction Independent processingSurrogate interaction Direct interaction Customer (Customer’s Process Domain) Direct interaction Surrogate interaction Independent processingSurrogate interaction Direct interaction trash old furniture browse showroom source furniture stock retail stores make selection purchase item use item in stock? backorder item fill backorder give advice decide on furniture offerings no yes forecast demand ask questions deliver item 45 Essentials of Service Design 2/Erev1/13

46. ©2013 Dr. Scott E. Sampson http://services.byu.edu IKEA (IKEA’s Process Domain) Direct interaction Surrogate interaction Independent processingSurrogate interaction Direct interaction Customer (Customer’s Process Domain) Direct interaction Surrogate interaction Independent processingSurrogate interaction Direct interaction transport item to register transport item home use item assemble item fabricate furniture kits ship to retail stores design furniture offerings forecast demand trash old furniture browse showroom make selection purchase item Co-productive Process? 46 Essentials of Service Design 2/Erev1/13

47. ©2013 Dr. Scott E. Sampson http://services.byu.edu IKEA (IKEA’s Process Domain) Direct interaction Surrogate interaction Independent processingSurrogate interaction Direct interaction Customer (Customer’s Process Domain) Direct interaction Surrogate interaction Independent processingSurrogate interaction Direct interaction Value proposition? fabricate furniture kits ship to retail stores transport item to register transport item home use item assemble item design furniture offerings forecast demand trash old furniture browse showroom make selection purchase item “We will enable you to do it yourself.” “You’ve got questions, we’ve got answers.” “We do it all for you.” 47 Essentials of Service Design 2/Erev1/13

48. ©2013 Dr. Scott E. Sampson http://services.byu.edu IKEA (IKEA’s Process Domain) Direct interaction Surrogate interaction Independent processingSurrogate interaction Direct interaction Customer (Customer’s Process Domain) Direct interaction Surrogate interaction Independent processingSurrogate interaction Direct interaction Value representation? fabricate furniture kits ship to retail stores transport item to register transport item home use item assemble item design furniture offerings forecast demand trash old furniture browse showroom make selection purchase item 48 Essentials of Service Design 2/Erev1/13

49. ©2013 Dr. Scott E. Sampson http://services.byu.edu Difference? Ethan AllenCustomer Independent processing Surrogate interaction Direct interaction Surrogate interaction Independent processing trash old furniture browse showroom source furniture ship to retail stores make selection purchase item transport home use item in stock? backorder item fill backorder get/give advice design furniture offerings IKEACustomer Independent processing Surrogate interaction Direct interaction Surrogate interaction Independent processing trash old furniture browse store fabricate furniture kits ship to retail stores make selection transport item to register purchase item transport home use item assemble item design furniture offerings versus 49 Essentials of Service Design 2/Erev1/13

50. ©2013 Dr. Scott E. Sampson http://services.byu.edu Principles of PCN Analysis Customer value is usually realized in the customers’ process domain. Therefore, it is important to understand what goes on in customers’ process domain. The primary purpose of service interaction is to facilitate value realization. 50 Essentials of Service Design 2/Erev1/13

51. ©2013 Dr. Scott E. Sampson http://services.byu.edu Chapter 5: Strategic Process Positioning Essentials of Service Design 2/E 51 rev1/13

52. ©2013 Dr. Scott E. Sampson http://services.byu.edu Process positioning Provider's Process DomainInvestor's Process Domain Independent processing Surrogate interaction Direct interaction Surrogate interaction Independent processing analyze investments What process positioning is best? What does it depend on? 52 Essentials of Service Design 2/E ????? rev1/13

53. ©2013 Dr. Scott E. Sampson http://services.byu.edu Process positioning Provider's Process DomainInvestor's Process Domain Independent processing Surrogate interaction Direct interaction Surrogate interaction Independent processing Option 1: analyze investments for printing in a newsletter Option 2: centrally analyze client investor’s investment portfolio Option 3: discuss client investor's financial needs and help client analyze investment alternatives Option 4: analyze own investments using provider's online tools Option 5: analyze own investments using a spreadsheet 53 Essentials of Service Design 2/E analyze investments rev1/13

54. ©2013 Dr. Scott E. Sampson http://services.byu.edu Process positioning Provider's Process DomainInvestor's Process Domain Independent processing Surrogate interaction Direct interaction Surrogate interaction Independent processing Option 1: analyze investments for printing in a newsletter Option 2: centrally analyze client investor’s investment portfolio Option 3: discuss client investor's financial needs and help client analyze investment alternatives Option 4: analyze own investments using provider's online tools Option 5: analyze own investments using a spreadsheet greater scale and expertisegreater customization potential lowest provider efficiency 54 Essentials of Service Design 2/E process requires specialized skills process requires customized attention process requires both Process positioning decision… analyze investments rev1/13

55. ©2013 Dr. Scott E. Sampson http://services.byu.edu Essentials of Service Design 2/E55 Sandwich Consumer Consumer’s Process Domain Direct interaction Surrogate interaction Independent processingSurrogate interaction Direct interaction Sandwich Supplier Supplier’s Process Domain Direct interaction Surrogate interaction Independent processingSurrogate interaction Direct interaction Sandwich example assemble prepackaged sandwich in a factory for sale at grocery store assemble sandwich to order in restaurant kitchen assemble sandwich at a Subway sandwich as customer selects orders assemble sandwich at a buffet restaurant assemble sandwich at home using ingredients from the refrigerator assemble sandwich rev1/13

56. ©2013 Dr. Scott E. Sampson http://services.byu.edu Essentials of Service Design 2/E56 Sandwich Consumer Consumer’s Process Domain Direct interaction Surrogate interaction Independent processingSurrogate interaction Direct interaction Sandwich Supplier Supplier’s Process Domain Direct interaction Surrogate interaction Independent processingSurrogate interaction Direct interaction Principles of process positioning assemble prepackaged sandwich in a factory for sale at grocery store assemble sandwich to order in restaurant kitchen assemble sandwich at a Subway sandwich as customer selects orders assemble sandwich at a buffet restaurant assemble sandwich at home using ingredients from the refrigerator assemble sandwich Principle #2: Customization Principle #1: Process inefficiency Principle #3: Economies of scale Principle #4 Surrogate rev1/13

57. ©2013 Dr. Scott E. Sampson http://services.byu.edu Principles of PCN Analysis Process positioning has strategic implications. Process positioning defines your value proposition. You can change and improve your value proposition by repositioning your process. 57 Essentials of Service Design 2/Erev1/13