Service Management

Brief Service Operations

• The ritz hotels: “Ladies and gentleman serving ladies and gentleman”. This shows a quality factor.
• If you can predict the future you got control, if I cant predict the future I have a problem of control.
• The ritz case: They anticipate the needs of the customer
• Benefits of the 7 day countdown.
• “Service excellence” means many different things to many different people. A service has to be multifaceted to be able to provide the excellence needed.
• These world-renowned companies have achieved resounding financial success as a direct result of their service excellence strategies: Nordstrom, Shouldice Hospital, Scandinavian airlines services,AT&T, Federal Express,Ritz-Carlton, Walt Disney World.
• Quality service is what our company must provide, through careful management of our strategies, systems, and people to meet and often exceed the needs and expectations of our current and new external and internal customers. By creating a service-driven organization striving for excellence, we can capture more market share, offer more value than our competitors, and establish a workplace environment that is profitable, healthy, and beneficial to everyone who works with it and for it.
• This definition illustrates not only what it means to provide excellent service, but also emphasizes how service excellence is composed of internal as well as external considerations. Finally, Albrecht highlights the importance of providing great service as a competitive tool.
• The 4 components of service: Physical product, service product, service environment, service delivery
• Costumer focus: Costumer focus and employee empowerment.
• Moments of truth: Critical to providing service excellence and customer delight is carefully managing all moments of truth. Which is defined as any episode were a customer comes into contact with any aspect of your company.
• Factors in personal service: The personal touch, key employees who know them, better product knowledge, more responsiveness to the intangible critical factors are more important to the customers report card.
• The service triangle:

• The top position;the service strategy: Designing a service strategy gives focus to a company’s efforts. I tells “what the company is about”
• The left position;the service systems: “systems”  encompasses everything from training systems, incentive systems, and feedback evaluation systems to computer systems
• The right position; the service people: To succeed as a customer driven organization you need the “right” people at the “right” jobs, doing the “right” things at the “right” time. You can be the best at all as a company but it don't matter if you have the wrong people serving the customer.
• The center position; the customer: All the other elements revolve around the customer. Providing excellent service is a continuous process

• The psychology of customer satisfaction; Customer decisions take place in the customer’s mind, we must consider perceptions and not just reality. Customers have emotional responses as well, so we are not only interested in how customers perceive the service but also how they feel about it. Such feelings can range from mild (satisfaction) to extreme (delight).It depends on the customer expectations.Which in hierarchy are: Ideal, should expectation, will expectation, minimally acceptable and will expectation (low)
• The 2 stage expectancy model of motivation: A persons motivation to work harder at a task depends on the 2 stages of task completion which are; the belief that one can do the job, and the belief that doing the job will cause success.
• Stages of employee empowerment: 5 stages. In the first stages managers must identify and then tackle the factors that lead to feelings of powerlessness among employees. In the third step, feedback programs should be developed to inform employees of there self efficiency. Ideally the final 2 steps in the process are achievement of strengthened feelings of self sufficiency among employees. following by heightened levels of effort and persistence.
• How success build High contact Services: Internal strategic service vision, quality control, and success are connected, especially for providers of high encounter services who must face judgement in delivery. This is shown in the quality wheel in the article.
• Both the book and the article talk about leadership, even though the book mentions it in just one paragraph, the article is all about leadership and the author outlines 6 different leadership styles which are coercive, authoritative, affiliate , democratic, pacesetting, and coaching leaders.
• The intro of the book sets leadership as a very important part of a good service design. Which defines it as the ability to create conditions for employees and customers to perform and sustain such conditions even when you're note in presence.
• Service Excellence = Design x Culture
• Every company has its own set of attributes and qualities that makes them differ from one another. Either on prices , type of service, time saving, convenience, etc etc. theres a lot of attributes a company can have.
• We use attribute charts to rank these attributes from the most important to the least important for the company.
• Zara clothing will fall apart after wearing it 4 times. Its designed for it.
• Anything that man touches, cant be perfect.
• Kanban; It is the operating method of the TPS and its most common form is a piece of paper contained in a rectangular vinyl envelop.

Brief 2

• Competitiveness in the 80’s brought quality into a new meaning.
• 3 leading “quality gurus” were W. Edwards Deming, Joseph Juran, and Philip Crosby. They all were active consultants, lecturers, and authors with years of experience.
• Deming and Juran, in their 80s very influential in Japan; Crosby in his 60s worked previously at ITT as VP of quality. They all have a distinctive approach to management.
• Deming led the Japanese quality revolution, started in 1950 with statistical process control (SPC), but it was till 30 years later the Americans businesses began to respond . What he expected from his clients was summarized in a 14- point program. (Exhibit 1)
• He stated that the problem was that top management didn't know how to manage, and they were responsible for 85% of all quality problems. . If they committed to this program Deming argued, productivity as well as quality would improve. The key tool that Deming advocated to distinguish systematic and special causes was Statistical Process Control (SPC) where data is collected and plotted on control charts kept by operators themselves.
• Companies care more about for the short run because of the quarterly periods along with competitiveness of the industry. Strictest part of public trade; biro koro
• Juran defined quality as “fitness for use” meaning that the users of a product or service should be able to count on it for what they needed or wanted to do with it.
•  “Fitness for use” had five major dimensions: quality of design, quality of conformance, availability, safety, and field use. To achieve it he developed a comprehensive approach to quality that spanned a products entire life from design through vendor relations, process development, manufacturing control, inspection and test, distribution, customer relations and field service.
• Even though these worked; it was floor language and not attractive to top management so he created a cost of quality accounting system( top management language = money) assuring that quality costs were costs associated solely with defective product, providing top management with a dollar cost for defective products.
• Crosby started in the industry as an inspector. Then he became vice president of ITT. Then he founded Philip Crosby Associates, along with the Crosby Quality College.
• Crosby directed his message to top managers, he spoke of quality as “conformance to requirements” and believed that any product that consistently reproduced its design specifications was of high quality.
• He also believed that if quality improved, total costs would inevitably fall, allowing companies to increase profitability. “Quality is free” he claimed. To help managers understand the seriousness of quality problems, Crosby provided them with 2 tools: cost of quality measures and the management maturity grid SEE exhibit 5.
• Cost of quality measures were useful for showing top managers the size of its quality problem and the opportunities for profitable improvement. The management maturity grid was used for self assessment that identified 5 states of quality awareness which are uncertainty, awakening, enlightenment, wisdom, and certainty.
• As these gentleman described their way of increasing quality to become a sustainable   and achieve service excellence , everything must be funded one way or another.
• This requires either finding a palatable way to charge more, reduce costs in low-value dimensions, make service enhancements to also reduce costs or to get the customers to do some of the work for you.
• Choosing which of these four options will work for you is a matter of understanding your company’s relationship with the customers and the industry’s dynamics.
• There are four generic funding sources for excellence:

1. You have customers who are willing to pay more; This sounds very reasonable but the premium which customers find palatable varies widely from one industry to another. For example Starbucks charging a premium for its coffee but allows customers to linger in the store for as long as they like. Another example, banks pay less interest on deposits rather than charging a teller fee which customers object to. If you can charge more and you make it clear you're doing so for a good reason, then customers night not feel like you're violating their trust on your business.
2. You make cost reductions which also improve service; Progressive insurance has immediate response vans which show up at the scene of an accident , assess the damage and the cut a check for repairs on the spot. In addition to providing better service for customers, the fact that assessors observe the damage firsthand means the company has less disputed claims. Great example of how to reduce cost and improve service at the same time.
3. You make service improvements which also reduce costs; Lets take Intuit as an example. They asked its product development team to provide phone support to users of its small business software. That way the software engineers learned first-hand where users had problems and they used that knowledge to develop better future versions of that software. This way , by improving service in the call centers, they not only provide better service but Intuit also cut tech support costs further ahead.
4. You get customers to do some of the work for you; When self-service grocery stores came along in 1916, customers didn’t need to rely on clerks behind a counter to fetch goods for them. Asking customers to do that not only saved money but it also meant customers had freedom to read labels, compare prices and examine objects before they bought. Airlines today are finding customers like the self-service check-in kiosks because it gives them more information about flight seating, etc. Customers love doing things like that for themselves because it creates real value from their perspective.

• So how do you go about creating a funding mechanism for better service in your industry? As mentioned, charging extra is easiest to implement but the reality is most markets won’t tolerate a price premium.
• Therefore, you need to get creative: Examine your cost structures – starting with the biggest costs because that’s where your potential for savings will be largest. Analyze your largest costs are and see whether it is feasible to come up with ideas and strategies which will reduce these.

CH3

• Don't blame the employee, blame the system and the lack of training for that mistake.
• To build an elite group of service providers you have to follow a selection process by testing them by aptitude and attitude . Testing for these is key.
• After the selection process you can now start to develop their aptitudes and perfect their attitudes by proper training.
• Another option to rigorous training is to make a job design that is so intuitive that employees can do it on one day.
• We have to use an IT tool to enhance the customer experience.This means new technology or client interfaces
•  Can you introduce some systems using new technology which will have a direct impact on these ongoing costs? Online access allowing customers to help themselves might be an option.
• Figure out some new and better ways to monetize your strengths to generate revenue by utilizing what you’re already doing well. Think about a value-added service which uses what you already do operationally which you could offer.
• As this was something the local company was delivering anyway, allowing customers to pay more for what they were already receiving was a winning idea. Unleash your customers – see how you can make the move to self-service. Paradoxically, if you offer a vastly improved customer experience by letting your customers do more themselves, you can charge extra. Self-service options can play a significant role in delivering service excellence.
• A successful user focused client interface can provide a help toward customers doing some work for you and not direct failure.
• Delivering superb customer service isn’t just a matter of getting your people to try harder. The key to success is really to set up a service model which will allow competent real-world employees to succeed.
• You need to recruit great frontline service specialists and treat them like your organization’s privileged class. Have the backroom and management teams work together to their cultural imprinting. Be prepared to invest time, energy and money in training.
• Simplify the job so your people can focus on delivering great service to customers. If you can automate as much as possible and make clear what you expect your people to be doing, then you create an environment where excellence is an everyday occurrence.
• You have to embark on periodic simplification exercises as well because complexity has a habit of creeping back into job descriptions over time. And don’t forget you need to provide IT tools and solutions which help rather than hinder your people.
• Finally, you need to build in incentives for people to do a great job and disincentives if they perform poorly. Incentives can take many forms but financial incentives and profit sharing or performance bonuses have a proven track record in promoting a sense of ownership.
• The opportunity to have greater autonomy also ranks highly as an incentive. When people can work their own hours and work unsupervised, they usually respond well. Good performance management needs to be flexible and dynamic so you can respond to changes in the internal and external environments rapidly.

Article; Zero defections. quality comes to services.

• To achieving service quality doesn’t mean slavishly keeping all customers at any cost. There are some customers the company should not try to serve. If particular types of customers don’t stay and become profitable, companies should not invest in attracting them.
• Having everyone in the company work toward keeping customers and basing rewards on how well they do creates a positive company atmosphere.
• Encouraging employees to solve customer problems and eliminate the source of complaints allows them to be “nice,” and customers treat them better in return.
• The overall exchange is more rewarding, and people enjoy their work more. Not just customers but also employees will want to continue their relationship with the business
• Trying to retain all of your profitable customers is elementary. Managing toward zero defections is revolutionary. It requires careful definition of defection, information systems that can measure results over time in comparison with competitors, and a clear understanding of the microeconomics of defection.
• Ultimately, defections should be a key performance measure for senior management and a fundamental component of incentive systems. Managers should know the company’s defection rate, what hap- pens to profits when the rate moves up or down, and why defections occur.
• They should make sure the entire organization understands the importance of keeping customers and encourage employees to pursue zero defections by tying incentives, planning, and budgeting to defection targets.
• Most important, managers should use defections as a vehicle for continuously improving the quality and value of the services they provide to customers.
• Just as the quality revolution in manufacturing had a big impact on the competitiveness of companies, the quality revolution in services will create a new set of winners and losers. The winners will be those who lead the way in managing toward zero defections.

Denial of service attack

• This  cause is about crisis management/system management . General management issues on the IT system.
• The company went into an IPO and the stock price doubled before the attacked happened.
• What where they doing before to avoid the crisis in the first place?. “If you can predict the future then you have control , if you cant you got a problem of control.
• The company didn't have deep knowledge on their IT systems and incredible limited system.
• First thing I noted is that the people kinda look like jokesters and don't take things seriously, they didn't have respects for themselves or the company.
• No organization has to deal with that dumb and undisciplined behavior and undisciplined practices.
• The values stated very early in the reading regarding professionalism and discipline were absolutely not being followed by those inside the company.
• Security measures where out of date, obviously there was not deep knowledge. They need to put security as their TOP priority because a lot of customer personal information is being stored and managed without the needed security measures.
• They had the tools but they lacked the organization and discipline needed to use those tools correctly.
• “Lo barato sale caro” The company outsourced to save money but they actually ended up having a DDOs attack.
• The employees were more worried about the world of warcraft than about the company’s future.
• Bob Turley had a hard lesson to learn about the idea of taking security for granted. He didn't have deep knowledge about the company’s security.
• A DoS attack keeps you from accessing your information and in contrast an intrusion is when someone actually breaks into your network.
• When you have one attack like this is very difficult to know the depth of the attack. You cant know that.
• iPremier had planned on moving their computing services to another location; however, they had not ranked that as their top priority.
• In fact, iPremier had even turned off their logging capabilities because running it would result in a 20% drop in performance.
• iPremier needs to realize the importance of security, especially in the e-commerce world where there is unlimited access through the Internet to valuable customer information. Security needs to be a top priority.
• Without executive support, it is unlikely the security problem will be solved. Some changes need to be undertaken to effectively solve their security problem. Their existing contract with Qdata needs to be renegotiated.
• This will allow employees at iPremier to act as consultants for Qdata and help them upgrade their existing system. The consulting time will be an added cost, however it is far less expensive to consult rather than hiring another outsourcing client.
• Another key recommendation is for iPremier to separate its webserver from its critical system, this will help to eliminate access to Dyrud, Davidson, Neal, Paterson important information by a hacker. No system is totally safe from an attack but the segregation of systems will help to deter amateur hackers.
• iPremier needs to develop a plan of attack if they under go a DoS again. By doing so, they can have a strategy to implement before, during, and after a denial-of-service.
• If  their plan is effective system down time will be decreased, and vital information will be secure again in a timely manner. Also when an attack occurs iPremier needs to have an expert to call to effectively top-level executives through the process of getting their  system up and running.
• They need to communicate each other, establish a contingency plan for before, during and after an attack like this. They also  need to find out what data was actually stolen and also find the root of the case.
• After the crisis; to manage it you have to analyze and decide carefully what measures are you going to do.
• Another measure they can do before another attack like this happens you can emulate an attack like this to see how prepared and identify your security system flaws.Good management is effective prediction.
• You need a series of backup systems ready to back up any intrusion to give you the time to detect it and act.This, along with the proper training, not just for the IT department but for all the company as a whole.
• This is a case of crisis management and system and tools management. The company had the tools but having the tools is not enough, you need to have and follow a system in order to achieve that.

Chapter 4 Book

• If you can find ways to involve your customers in creating an exceptional service experience, they will love you for it. This does, however, present some special challenges you should be aware of. To contribute, customers will need training and tools. To help them use these, you will need to provide guidance and help, in other words , management.
• Customers play an integral role in the quality of the service experience your organization delivers.

For example:

• If someone standing in a line takes five minutes to make a menu choice, that makes the fast food experience of everyone else waiting in line less fast and more frustrating.
• If your consulting client describes what they’re trying to achieve in vague terms, then it’s little wonder the advice they end up getting is less precise than it could be.
• If restaurant patrons linger excessively over their after-meal espresso, it can have a flow-on effect on the experience of the next people who have reserved that table.

• Customers don’t just consume services but they also play an active role in creating them as well.
• One way to describe this is to classify customers as “customer operators.” If you’re smart, you can even figure out ways to get your customers working to enhance their service experience as a whole.
• This is a challenge because customers are erratic, unskilled and have an entitlement mentality ,but on the other hand they require no salary or retirement benefits.
• Customers are variable in every dimension you can name and the only ways to manage that variability are to reduce it (by limiting their options) or accommodate it (by actively catering to all those variations and individual preferences.)
• Reduction favors the efficiency of your business whereas accommodation favors service and is usually more expensive to deliver. There is a constant tension between these two ideals which is a fact of life for service businesses. Many firms deal with this by using self-service approaches which allow customers to accommodate their own preferences and their own time lines.
• So how exactly can you put this into practice and start managing your customers?
• Start by getting control – figure out how your existing customers are influencing the level of service you currently deliver and identify what you can do to nudge them in the right direction. Fortunately, your best source of data is right at hand. Start talking with your customers and get to know how they think. Don’t assume anything but let your customers tell you what they think. You may find your most basic assumptions about what they believe are completely wrong and need to be changed. Surface all your assumptions and put them to a real-world test.
• Next, start actively involving your customers – invite them to make suggestions which will help you improve your existing processes. You might add customers to your design teams or find other ways to do this but bring customers inside your organization. Go through and analyze what customers complain about for patterns that may highlight what needs to change for the better.
• Next, start actively involving your customers – invite them to make suggestions which will help you improve your existing processes. You might add customers to your design teams or find other ways to do this but bring customers inside your organization. Go through and analyze what customers complain about for patterns that may highlight what needs to change for the better.

What makes a leader

• According to Daniel Goleman , what distinguishes great leaders from merely good ones isn't IQ or technical skills
• He says it's emotional intelligence. A group of five skills that enable the best leaders to maximize their own and their followers' performance.
• When senior managers at one company had a critical mass of EI capabilities, their divisions outperformed yearly earnings goals by 20%.
• The EI skills are:

        • Self-awareness; knowing one's strengths, weaknesses, drives, values, and impact on others

        • Self-regulation; controlling or redirect- ing disruptive impulses and moods

        • Motivation;relishing achievement for its own sake

        • Empathy; understanding other people's emotional makeup

        • Social skill; building rapport with others to move them in desired directions

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