Tuesday, October 30, 2007

Innovations Driving Service Excellence



INTRODUCTION:

Do not go where the path may lead, go instead where there is no path and leave a trail.” - Ralph Waldo Emerson

Gaining & sustaining competitive advantage in a knowledge intensive industry means that the enterprises need to focus on new ways to innovate & differentiate.
[12]
The services sector dominates the economic activity in most advanced industrial economies today. Services have matured as a business & there is a science underlying these services that must be explored!

SERVICE SECTOR:

The ‘Innovative Service Concept’ has opened up opportunities for new services & revenue streams for services firms, as outlined below:

1)       Banking:
1.      ATMs, SMS alerts, electronic transactions have pioneered universal banking.
2.      Character recognition has enabled enhanced security.
3.      Online insurance sales have provided greater geographic reach.
4.      Multi-functional smart cards have been used for nonfinancial functions.
5.      Back office automation & branch networking has lowered the costs of information processing.
6.      Centralized call-centre has enabled to fulfill customer requests from various channels in real-time.
7.  New concepts like retail banking, bancassurance, derivatives instruments, customized financial products & micro-insurance for the poor have been introduced.
8.    Green banking products covering various stages in life e.g. starters mortgage/estate planning have been launched.
Innovative Brands: BoA (Bank of America), Lehman Brothers, JP Morgan, HSBC

2)      Real estate:
1.      Databases for property sale/purchase have reduced search costs for the customer.
2.      Electronic land records have improved transparency in taxation.
3.      Easier refinancing & mortgage payments options have been introduced.
4.      Architectural innovations have provided modern luxury homes & state-of-the-art offices.
5.      Renovation/remodeling of old buildings has increased the life.
Innovative Brands: Zillow, Redfin, Trulia, Propsmart

3)      Wholesale, retail, FMCG, trade &commerce:
1.      Scanning registers & stock replenishment systems have improved store operations.
2.      Green/organic products are being accepted as modern ways of living.
3.      Customer-centric initiatives like home delivery etc. are growing.
4.      Online trade/e-Commerce has provided information & greater geographic reach.
5.      Bar coding has helped reduce errors. 
Innovative Brands: E-bay, Unilever, Barnes & Nobles, Subiksha, Westside

4)      Travel, Transportation & Tourism:
1.     RFID tracking & tracing systems have enabled transport service providers to monitor the progress of their fleet.
2.   Satellite directed navigation systems (GPS) in automobiles have helped provide directions to a locality & report accidents.  
3.   Low cost airlines have provided affordable & speedy means of travel to the urban middle class.
4.   Improved containerization at ports has reduced damage during transit.
5.  Online hotel booking, checkout scanning, wireless communication to kitchen etc. have improved service delivery.
Innovative Brands: Fedex, Ritz-Carlton, SouthWest Airlines, www.tirumala.org

5)      Healthcare:
1.   HIS (Hospital Information System) has enabled to automate work-flow.
2.   EMR (Electronic Medical Record) has facilitated retrieval of patient's medical history.
3.   Bioinformatics has improved clinical research, gene mapping etc
4.   Telemedicine has increased the scope for- self-care & online diagnostics of rural people by specialists.
5.   Medical Tourism is providing access to treatments at low-cost destinations.
6.  Healthcare KPO (Knowledge process outsourcing) is an emerging market viz. medical transcription, coding & billing.
7. CME (Continuing Medical Education) has been provided through online libraries & virtual classrooms for physician training.
8. Medical Imaging has helped capture digital images (tele-radiology, 3D reconstruction, virtual endoscopy, CTA Computed Tomographic Angiography).
Innovative Brands: Apollo, Ranbaxy Laboratories, Wockhardt, Voxiva

6)      Media & Entertainment:
1.    Distribution through CD’s, online downloads etc. have increased viewership.
2.    Complex gaming platforms have been simulated using animation software.
3.   Multiplexes are growing which act as recreational centers for complete family entertainment.
4.    Technological innovation has improved the quality of film, printing etc.
5.    Online newspapers have provided information at the doorsteps of the people.
Innovative Brands: Disney, Sony, Nokia, PVR Cinema

7)      IT/Electronics & Telecommunications:
1.    Cellular services have brought the world closer.
2.    New services like electronic publishing, voice mail have changed the communication landscape.
3.    Miniaturization has enabled enormous information storage.
4.    Enterprise software (ERP) has enabled centralized management of large organizations.
5.    Business Process Outsourcing (BPO) has enabled cost-cutting.
Innovative Brands: IBM, Infosys, I-flex, Reliance Telecom, Vodafone

8)      Public Services:
1.     E-Governance has provided transparency & improved grievance redressal system.
2.  ICT has enabled faster processing of transactions e.g. filing electricity bills; improved security & helped fight terrorism etc.
3.     Wireless & satellite networks (GIS) help provide early warning signals for disaster management.
4.     Cultural web portal have boosted the livelihood of local & tribal artisans.
5.   Comprehensive data-banks cover a wide variety of information/future plans on government initiatives (RTI Right to Information Act, India).
Innovative Brands: www.esevaonline.com (Andhra Pradesh), www.rits.org.br (Brazil)

9)      Education:
1. E-Learning & educational CD’s have opened the scope of quality education reaching the remote corners.
2.   Video-conferencing has enabled exchange of leading-edge expertise with expert professors around the globe.
3. Multimedia presentations (audio-video) have enabled easier understanding of concepts for school going children.
4.    Internet kiosks/e-Kendra have provided connectivity & IT education to the rural households.
5. Computer based repository/network compiling has helped in conserving & utilizing traditional knowledge.
Innovative Brands: NIIT, Direcway, Google

10)  KIBS knowledge-intensive business services (professional services)
: including consulting, R&D services, legal, advertising, labour recruitment services etc.)
1.      ICTs have helped bridge the information gap.
2.      BI Business Intelligence provides analytical support for decision-making.
3.      Strategic outsourcing is increasingly sought to leverage the experience of the consultants.
4.      Digital media (tele & video conference) has boosted the global delivery model.
5.      Strategies for creating new markets, improved process etc. are the focus of innovation.
Innovative Brands: McKinsey, KPMG, Ogilvy, Ma-Foi

SERVICE INNOVATION:

Incremental innovation:
“…offer patients a choice of drugs within the same class, since not every patient responds to every drug in the same manner." - Janet Woodcock, M.D. (CDER) [2]
Breakthrough, disruptive / radical innovation:
"Shun the incremental, and look for the quantum leap," - Jack Welch (GE)                
The figure depicts the four-dimensional model of service innovation proposed by Den Hertog (1999) [8]

TECHNOLOGICAL:

1.      Internet as a service (or delivery) channel:
Internet has come a long way, from spreading global presence of the firm, to enabling online transactions & finally for devising strategies needed to derive maximum benefit from the channel. [9]
2.      Self Service Technologies (SST):
Online help, ATM cards & telephone-driven interactive voice response (IVR) systems have reduced operational costs & employee involvement, so that they can focus on strategic goals.
3.      Enterprise Content Management (ECM):
“…ECM are technologies used to Capture, Manage, Store, Preserve, & Deliver content and documents related to organizational processes”. - (AIIM). [4]
Records management (RM) (archive & filing management systems on long-term storage media), Web content management (WCM) (including web portals), Workflow/Business process management (BPM) have improved service operations.
4.      Service Oriented Architectures (SOA)
“SOA is a paradigm for organizing & utilizing distributed capabilities that may be under the control of different ownership domains.” – OASIS
This architecture links new business system, built entirely from existing software services. Also ‘open source’ provides the source code of the software with relaxed or non-existent intellectual property restrictions.
5.      Decision Support System (DSS):
Interactive computerized systems gather & present data from a wide range of sources to support business decision making.
6.      Social media:
RSS & ATOM feeds have allowed sharing of the same content to several web services. Wiki technology is providing the peers the option to develop others’ content further.
“…new mode of peer production will displace traditional corporation hierarchies as the key engine of wealth creation in the economy.” - Tapscott & Williams (www.wikinomics.com)   
7.      Nanotechnology:
Technology has radically improved formulation of drugs, diagnostics & organ replacement; delivered nutritionally enhanced foods; provided greater information storage & communication capacities etc. benefitting diverse service applications. 
8.      Telematics:
Integrated use of telecommunications and informatics has helped design intelligent transportation systems, tracking fleet vehicle locations, recovering stolen vehicles, providing automatic collision notification, early warning for accident prevention etc. 
9.      Biometrics:
Potential to be the next frontier in service excellence, productivity & security in the service sector through diverse applications e.g. controlling physical access to facilities, enabling voice recognition at call-centers, controlling time and attendance of employees, providing self-service access to safe deposit vaults at banks, cashing checks in supermarkets etc . [15]
10.  Semantic Web (Web 2.0):
The second generation of web-based communities & hosted services e.g. social-networking, wiki, folksonomy (collaborative tagging) etc. facilitate collaboration & sharing between users. The figure depicts a mind-map of the memes of Web 2.0 with example sites:

NON-TECHNOLOGICAL:

1.      Business model innovation:
Pioneered a new generation of Strategic Offshore Outsourcing.
Revived private rights to create public goods by defining a new spectrum of “some rights reserved” copyright.

2.      Marketing innovation:
Pioneered marketing innovations e.g. per-second billing & package deals.
Changing the title from “product marketing” to “service marketing” helped employees see their jobs as more customer-centric & the firm moved from Fortune’s ‘least-admired companies’ in 1997 to the ‘most admired companies’ in 2007 for 5th year in a row. [11]

3.      Organizational innovation:
A well-known brand in Europe, it developed the call centre as an idea hunting ground, than just resolving customer complaints, through intellectual capital management approach. [5]
The non-profit health organization is renowned for clinical excellence & works with local church to bring compassion & spirituality to its endeavors.

4.      Service innovation:
A leader in Europe in online digital photo finishing, it introduced Fastlab to personalize gift items, greeting cards etc. with customer’s photograph.
Eli-Lilly launched a subsidiary to connect the ‘Seeker’ organizations i.e. companies, academic institutions & NPO for breakthrough innovations by drawing upon a global network of ‘Solvers’.

5.      Process Innovation:
The global IT learning solutions corporation pioneered the instructional design methodologies & curricula
Converts mobile phone into a mobile EFTPOS machine to process credit card payments on the spot eliminating the need to accept cheques. 

6.      Financial innovation:
Innovated IT solutions for financial services industry worldwide.
Pitches people who have developed an original idea of an innovative product/service not available in the marketplace & the companies who could finance them.

7.      Hybrid Innovation:
Provided an innovation comprising iPod (a good) & iTunes (a service).
Business software along with on demand consulting.

8.      Product Innovation:
Innovative body-sizing & visualisation solutions to clothing retailers.

9.      Physicals Innovation:
Innovative environment for leisure appealing to the entire family.

10.  Service Employess:
www.disneyworld.disney.go.com
Renowned example of great customer service provided by their cast members.

11.  Cutomer Interface Innovation:
Harley Owners Group (H.O.G.) united the people with a common passion.

12.  Client driven innovation:
Acceded to clients' requests by providing their computers without pre-installed software.

PROMOTE INNOVATIONS THROUGH REWARDS!
To reward the positive contributions of companies, American Business Awards ‘Stevies’ known as ‘the business world's own Oscar Awards’ honours the ‘Most Innovative Firms’ & ‘Best New Product/Service.’ [Appendix]

INNOVATIONS IN SERVICE DELIVERY MODEL:

1.      Focused Distributors: Provide products & services related to a specific industry or market niche.
Retailer: ToysRus.com, Staples.com
Marketplace: Eloan.com, InsWeb.com
Aggregator: Autoweb.com
Exchange: eBay.com, Freemarkets.com
2.      Portals:  Provide access to both content & service.
Horizontal Portals: AOL.com, Yahoo.com, Quicken.com
Vertical Portals: WebMD.com, Covisint.com
Affinity Portals: Realtor.com, iVillage.com [14]

A LOOK INTO THE FUTURE:

Innovations for the 21st Century:
Imagine a man driving a ‘self propelled vehicle’ to a pharmacy for purchasing a ‘psychotropic’ drug. The pharmacy’s authentication system through the ‘near-field communication’ (NFC) technology embedded in his mobile device keeps the drug ready for delivery. Next he visits a retail store which from his ‘buying patterns’, knows that he likes which brand. A quick call home to his ‘RFID’ enabled refrigerator confirms that his daughters have finished the last of the milk & he buys one. Finally the total is automatically tabulated & sent to his mobile device for verification. He reviews the tally and taps OK to confirm ‘payment’. [16]   

DRIVERS OF INNOVATION:

The Nine Drivers of Successful Service Innovations:
1. A scalable business model: Hertz #1 Club Gold members, Enterprise Rent-A-Car
2. Comprehensive customer experience management: Starbucks’ success depends on an excellent product (functional clues), a pleasing physical environment (mechanical clues) & service-minded employees (human clues).
3. Investment in employee performance: Cirque du Soleil
4. Continuous operational innovation: Fedex, Starbucks
5. Brand differentiation: FedEx
6. An innovation champion: Edwin Land at Polaroid Corp., Ted Turner at CNN, Ray Kroc at McDonald’s Corp.
7. A superior customer benefit: ATM, the online bookstore, Internet search engine
8. Affordability: Southwest Airlines
9. Continuous strategic innovation: Google (Googlettes & Ideas List). [10]

SWOT ANALYSIS OF SERVICE INNOVATIONS:

 It is crucial to uncover the opportunities to take advantage of the organization’s strengths & discover the threats before they catch the firm unawares!
STRENGTHS
Improved quality
Improved total cost of ownership TCO
Improved processes 
Specialized expertise
Optimize workload
Knowledge creation
Economic return
Support compliance
Increase responsiveness
WEAKENESSES
Complexity
Intangibility
Lack of access to information
Lack of empowerment
Non-alignment of actions to goals
Non- participation in teams
Lack of monitoring
Poor leadership
Weak information system & networking
OPPORTUNITIES
Service Differentiation
Cost Savings
Creation of new markets
Replacement/extension of services
Reduced environmental damage
Outsourcing
Collaboration
Combining different technologies
Risk management

THREATS
“Creative destruction”/Disruptive technologies
Mobile & pervasive computing
Conformance to regulations
Copyright/patent of new services & processes
High rate of change of technology
Price competition
Difficulty in obtaining finances
Lack of skilled personnel
Changes in consumer demand
Social acceptance

TOOL FOR SERVICE INNOVATION:
1 SERVICE BLUEPRINTING: It allows the firm to visualize their services from their customers’ perspective. [11]
Service Blueprint Components
Physical Evidence

Customer Actions

Onstage Contact Employee Actions
Line of interaction
Backstage Contact Employee Actions
Line of visibility
Support Processes
Line of internal visibility



2 BRAND TOUCHPOINT WHEEL: In experiential services each customer touch-point has the potential for innovation. [13]

STRATEGY:

The concept of Value Shop:
Stabell & Fjeldstad proposed that service provisioning has a different value creation, as there are no sequential activities; rather each problem is treated uniquely as in management consultancies. [1]
Strategic Innovation:
1.      Managed Innovation Process: to facilitate the interplay between external perspectives & the organization's internal capabilities/practices.
2.      Strategic Alignment- support among key stakeholders required to galvanize an organization around shared visions, goals and actions.
3.      Industry Foresight: "top-down" perspective to understand the emerging & converging trends, new technologies, competitive dynamics, potential dislocations & alternative scenarios.
4.      Consumer/Customer Insight: "bottom-up" perspective to understand the articulated (explicitly stated) & unarticulated (latent/unrecognized) needs of existing & potential customers.
5.      Core Technologies & Competencies: internal capabilities, intellectual property, brand equity, strategic relationships & assets to deliver value to customers.
6.      Organizational Readiness: to act upon the new operational, political, cultural & financial demands.
7.      Disciplined Implementation: to align actions with the goals.
Repeatable sustainable innovation becomes a foundation for ongoing competitive advantage. [3]

CONCLUSION:

Change is inevitable as they say & so service innovations have the opportunity to enable firms to be at the right place, at the right time, with the right end-to-end solutions, at the right price point, as a market takes off.
Convergence of nano-bio-info-comm technologies can be a panacea for developing diverse service applications & collaborative relationships to strengthen the service industry.
The potential for change in the coming years is mammoth; as the service industry seeks solutions to our society's problems - solutions that must involve enormous cost savings, increase the efficiency, improve the availability of vital information, provide healthier lives, better governance & faster time-to-market for new services.
“Never before in history has innovation offered promise of so much to so many in so short a time.” Bill gates

 APPENDIX:

American Business Awards: Monday, June 11, 2007 [7]
Most Innovative Company Up to 100 Employees
Most Innovative Company Up to 2500 Employees
Most Innovative Company More Than 2500 Employees
Agistix Inc.
Crossroads Systems
Wingstop
Articulate
Donlen Corporation

Bit9, Inc.
Farbman Group

Calvert Foundation
Image Solutions

Catalis Inc.
Imagination International Corporation

CleverSet
Jerith Mfg. Co.

Fieldglass, Inc.
Kintera

Habeas
Mergermarket Ltd

Integrated Mobile
Michael C Fina

Intelius, Inc.
MontaVista Software

Jury Impact
PayCycle Inc.

Mazu Networks
RealtyTrac

Namco Networks Inc.
Salesforce.com

Ravenflow
Spot Runner

SecurityCoverage
SuccessFactors

SimpleTuition, Inc.
TechExcel

SkillSurvey Inc.
VistaPrint

SupplyScape Corporation


Terra Technology


Two Little Hands Productions


Welcomemat Services Inc.


 
 BIBLIOGRAPHY & FURTHER READINGS:
[1] An ontology for e-business models’ - Alexander Osterwalder & Yves Pigneur, University of Lausanne
7 Dimensions of Strategic Innovation
Enterprise Content Management
[5] Deriving Value from a Commodity Process: A Case Study of the Strategic Planning And Management of a Call Center - Huang, Jimmy, Nottingham University Business School.
Open Innovation
The American Business Awards
[8] Knowledge Intensive Business Services as Co-Producers Of Innovation - Pim den Hertog, Dialogic, Utrecht, The Netherlands
[9] eInsurance - Novel Services in the Electronic Environment - Aki Ahonen, Jarno Salonen, Jouni Kivistö-Rahnasto, Raija Järvinen, Kirsi Silius
[10] Creating New Markets through Service Innovation - Leonard L. Berry, Venkatesh Shankar, Janet Turner Parish, Susan Cadwallader & Thomas Dotzel
[11] Service Blueprinting: A Practical Tool for Service Innovation - Mary Jo Bitner & Amy L. Ostrom, W. P. Carey School of Business, Arizona State University
[12] Service Innovations References 2004 - Dr. James C. Spohrer, Director, Almaden Services Research, IBM Research
[13] Innovation in Services - DTI Occasional Paper No. 9, June 2007
[14] Topic 5: Networked Business Models and Businesses built on the Internet (Management Information System) - R. Subramanian IIT (M)
[15] Biometrics: the next frontier in service excellence, productivity & security in the service sector - Loizos Heracleous (Templeton College, Oxford University, Oxford, UK) & Jochen Wirtz (NUS Business School, National University of Singapore, Singapore)
[16] The Next Wave of Innovation in Retail - A Microsoft Perspective

(Published in - Infocom Future Leadership Awards 2007)