ServRisk Service Management without innovation risks

Transcription

1 ServRisk Service Management without innovation risks Robert Schmitt 1, Sven Schumacher 2, Jacqueline Wiertz 3 1,2,3 Fraunhofer Institute for Production Technology IPT, Aachen, Germany, 1 Laboratory for Machine Tools and Production Engineering WZL of RWTH Aachen, Germany Innovative industrial services are among the most important corporate success factors, yet the innovation process in many companies is underdeveloped organisationally. A profound knowledge about a holistic and sustained risk management for innovations in the field of services and hybrid services is still not generated. As a result, a significant number of industrial service innovations fail and the required level of service quality and productivity can not be assured constantly. Therefore the aim is to develop an analytical approach and procedure model that enables KMU to identify, review and control possible service risks constantly, in order to systematically create and implement successful service innovations. 1. Introduction Innovation is a key driver of economic development. In the view of increasing market dynamism and the rising complexity in the corporate environment the targeted management of innovation becomes more and more important (Grundmann, 2008). Companies are forced to differentiate themselves from competitors with products of comparable quality. A successful, innovative company is characterized by the fact that its services, products and internal processes at least as rapidly evolve as market and competitive requirements change (Granig, 2007). Innovations not only hold for opportunities but are also fraught with risks. Therefore, companies must keep chances and risks at the different levels of the business environment in view. Unidentified risks can cause serious consequences. Beside warranty and goodwill costs, a huge loss of image can occur (Klinski, 2005), which can effect intensive costs for the company. A decisive factor for the competitiveness of service providing companies is the concatenation of innovation and service quality (Wittmann, 2006; Bruhn, 1998). Recent studies show, however, that depending on the branch 30-50% of all newly introduced services on the market prove as a "flop" (Bullinger; Scheer, 2006). This high failure rate is caused by the absence of a methodical and holistic procedure model that provides companies a conceptual framework for the development and implementation of new service innovations. As the first step, the potential innovations have to be identified and generated. Hereon follows a first examination regarding the service innovation s potential success chances. Of significant importance are the subsequent detailed search, identification and analysis of possible risks and chances that are created by the new service inno- 1

2 vation. The potential risks, including latent risks, financial risks and in particular strategic service risks and service risks, which arise along the service delivery process must be identified and analysed carefully. Their detection and containment decides about the innovation s success or failure. But exactly this highly relevant step, the service risk identification, exposes itself to be one of the greatest challenges, as wellestablished risk management systems for services are still not existent. The risk identification is the fundament for the analysis, assessment and control of risks (Romeike; Hager 2009) and consequently the key factor for the realisation of successful service innovations. Moreover, by the use of a holistic service risk management wrong decisions can be avoided and an increase of service quality and service productivity is generated. The aim is the development of an analytical approach and procedure model that enables KMU to identify, review and control possible service risks constantly, in order to systematically create and implement successful service innovations. 2. The ServRisk Approach In order to support companies with the systematic generation and implementation of innovations, a holistic model is developed in the scope of the research project ServRisk (figure 1), which contains the whole service innovation process, starting with the generation of innovations, followed by the identification and assessment of risks and chances, ending up with the implementation and evaluation of the performance of the new created service. The approach consists of ten steps, which are divided into three phases. Innovation idea Service delivery + monitoring Idea-Quick- Check Serviceengineering Serviceimplemenation Rough service concept design Identification of risks / chances Decision of realisation Assessment of risks / chances Analysis of risks / chances Fig. 1: The ServRisk approach 2

3 2.1. Phase 1 Examination of innovations The first phase is about the generation and examination of new service innovations. The phase consists of three steps. It starts with the service innovation idea, which can derive from customer requirements, feedback of customer contact personnel, competitors, etc. Innovations are not only new products and services, but also new operations, processes or markets. During the first step service innovation ideas are generated, collected, developed and derived. The second step is called Idea-Quick-Check and serves to check whether an idea for a new service generally has the potential to become a service innovation. Hereby a first selection can be done. Therefore the following seven questions have to be answered: 1. Does the innovation contributes to customer loyality? 2. Is the innovation suitable to generate its own income? 3. Allows the innovation for collecting information about the customer? 4. Does the innovation influence the image of the company positively? 5. Does the innovation contribute to offset fluctuations in capacity? 6. Allows the innovation for creating more comfort and security for customer-facing employees and their workplace? 7. Does the innovation have a differentiating effect with regard to other companies? For passing the filtering of the ideas at least one question should be answered with yes, otherwise there seems no benefit to be given for the company and the service idea can already be discarded at this early stage. Step three is the design of a rough concept for the service ideas which have passed the Idea-Quick-Check. That first concept includes first calculations of the required resources, personnel capacity, a rough process design and an appraisal of the expected sales figures Phase 2 Identification and assessment of risks and chances During this phase the innovation idea is analysed in detail with regard to its potential risks and chances. The risks and chances are identified, analysed and assessed. On that base the decision whether the new service idea should be implemented or discarded can be derived. Because of that fundamental decision, phase 2 is of significant importance. In addition, the identified and assessed risks (phase 2) have to be considered and controlled during the whole process of the service implementation and performance (phase 3) The identification of service risks The first step of phase 2 is the risk identification. Innovations are fraught with different types of risks. The occurring risks can be divided into service specific risks and 3

4 service unspecific risks. The service unspecific risks come along with every kind of product or service, like latent and also financial risks, for example a change of laws or the general economic situation. These risks have to be identified and controlled. But since these risks are not service specific and apply for products as well as for services, substantiated methods do already exist. So these methods can be adopted and are not object of the project ServRisk. The focus point lies on the examination of the service specific risks. According to our industry partners, the identification of the potential service risks is the main challenge. Yet an established risk management system, adapted to the characteristics of service innovation is not existent. Services are defined by their constitutive characteristics, as the immateriality, the simultaneity of accruement and consumption, the high individuality, the process character and above all the high level of customer integration (Meffert; Bruhn, 2006; Freiling; Weißenfels, 2003). Because of those service characteristics the service development and delivery are fraught with additional risks compared to products. The high individuality of services in combination with the strong interaction between service producer and customer makes the implementation of a standardised process almost impossible. Furthermore prior function controls are not realisable because of the immateriality and the simultaneity of accruement and consumption of services. These circumstances create a multitude of service specific risks, which have to be identified, analysed and controlled. In the ServRisk procedure model, the service specific risks are divided once more, into strategic risks and risks which come into existence during the service development and delivery process. Strategic service risks The strategic risks include factors such as deficient personnel calculation, inadequate trainings for the personnel, too many hierarchy levels, etc. They are not related to the service delivery process but are, anyhow, affected by the service character of the innovation. The company s location for example could be of greater strategic relevance for a service company, as the physical proximity to the customer is a more significant factor in the field of service delivery than for the product industry. The identification and collection of those strategic risks is supported by checklists. In addition, different creative techniques for instance brainstorming and brain writing can be used (Schnorrenberg, 1997). Risks along the service development and delivery The service quality and by that also the success of a service innovation depends on the perceived service quality of the customer (Bruhn, 2008). The main risk in fact is that the new implemented service does not comply with the customers wishes and expectations, which causes a rejection of the service innovation by the customers. Services show a certain process character and in addition to that, the accruement and consumption of services occur simultaneously. Due to that fact, the whole process, including service development and service delivery need to be characterised by high quality, as the customer is involved in every step of the process and by that also perceives the quality of every single phase. The process of service development and providing includes the identification of the customer s wishes and expectations, the transmission into high quality services and the service delivery. A positive customer perception is the main factor of success for 4

5 a service innovation. Since this perception considers the entire service process, a demand for a concept can be derived, which enables the companies to identify service risks along the entire service process and at the same time considers the special role of the customer. These requirements are achieved by the GAP-Model. The GAP-Model The GAP-Model (figure 2) is a conceptual framework, which supports the determination of service quality from two perspectives, the perspective of the customer and the company perspective (Meffert, 2006; Bruhn, 2008). The GAP-Model offers an important approach for the identification of interruptions and gaps during the flow of information and as well for potential risks. The gaps describe the sources of quality defects along the service process. A set of key discrepancies or gaps exist regarding executive perceptions of service quality and the task associated with service delivery to the consumer. These gaps can be major hurdles in attempting to deliver a service which consumers would perceive as being of high quality. (Parasuraman; Zeithaml, 1985) Word of Mouth Communication Personal Needs Past Experiences Consumer Gap 5 Expected Service Perceived Service Service provider Gap 1 Service Delivery Gap 3 Translation of Perceptions into Service Quality Specifications Gap 2 Management Perceptions of Consumers Expectations Gap 4 External Communications to Consumers Fig. 2: The GAP-Model (Parasuraman; Zeithaml, 1985) GAP 1 describes the discrepancies between the service expected by the customer and the service that the service provider assumes to be the customer s expectations. The service provider often does not know or understand which characteristics are significant for the customers perception of quality. Absent advisory skills and deficient customer research are examples for service risks, which are attached to GAP 1. (Parasuraman; Zeithaml, 1985) 5

6 GAP 2 covers the discrepancies between the perceived customer s expectations and the service quality specifications. The absence of a structured service process, as well as missing resources are risks, which are attached to GAP 2. (Parasuraman; Zeithaml, 1985) GAP 3 arises because of the differences between the service quality specifications and the actual service delivery. Examples for risks in GAP 3 are insufficient employee trainings (soft skills), absent infrastructure and lacks of communication. (Parasuraman; Zeithaml, 1985) GAP 4 describes discrepancies between the actual service delivery and the before communicated service. GAP 4 includes risks like no adequate manners, lacks of expert knowledge and wrong way of communication. (Parasuraman; Zeithaml, 1985) GAP 5 contains the summation of the four gaps and represents the entire discrepancy between the expected service and the perceived service by the customer. In this gap, the main risk is that the customer s contact is not assessed objectively. (Parasuraman; Zeithaml, 1985) So the GAP- Model offers a conceptual framework which supports the identification of service risks along the entire service process, as it supports the detection of risks along the five gaps. Thereby a holistic risk examination is guaranteed. Also the important aspect of the customer s perception is considered. That is why the GAP- Model is applicable to be used as a concept for service risk identification, on its basis a substantiated risk checklist can be developed Analysis and assessment of service risks In the next step, risk analysis the identified risks are analysed regarding their sources and consequences. Therefore different methods can be used, for example the Ishikawa diagram. On the base of this analysis, the identified risks are evaluated and illustrated in a portfolio diagram, see Figure 3. In this portfolio diagram all identified risks are applied. The axes Severity and Occurrence probability are ordinally scaled. By defining an acceptance line the diagram can be directly used for the subsequent step of comparing the risks with the defined acceptance limits. Thereby it will be immediately apparent, which risks exceed a predetermined value and therefore are considered unacceptable or which risks are still in the acceptable range. Catastrophe Risk 5 1 High Risk 4 Severity Middle Risk Low Risk Bagatelle Risk Improbably Rare Possible Often Occurrence probability No need for action Urgent need for action Immediate need for action... Risk Fig. 3: Portfolio Analysis 6

7 Decision of realisation The last step of phase 2 includes the decision whether the innovation should be implemented or discarded. The decision is based on the risk assessment on the one hand and on the other hand on the assessment of possible chances. In order to come to a substantiated decision, an identification, analysis and assessment for the chances has to be performed, as it has been done with the potential risks. These examinations can be done parallel. Innovations, which have a high potential considering their possible chances and are fraught with calculable risks should be pursued and implemented Implementing service innovations The third phase starts with the step service engineering. In this step a detailed concept for the service idea is developed, in which the earlier identified risks are considered constantly. The next step is the service implementation. The developed concepts and processes are implemented whereat the identified risks are constantly monitored. Moreover, applicable methods are used to control the potential risks along the entire process. The final step of the approach is called Service delivery and monitoring. In this step, the developed service is delivered by specific trained personnel. The delivered service is evaluated and the identified risks are monitored and handed back to the risk management. Based on the detailed evaluation of the delivered services, ideas for new service innovations can be generated by the customer contact personnel. As a result, the circle starts again. 3. Conclusion The systematically developed approach for minimizing the risk of service development was validated with the three project partners. It supports the companies considerably within the quality-oriented service development. It enables the identification of risks and the subsequent analysis and evaluation of innovation ideas in the service sector. On that base, companies are enabled to make a well-funded decision for or against an innovation idea. Furthermore, the ServRisk approach supports the control of service risks during the process of service implementation and delivery. That leads to an increase of the service quality and productivity. 4. Acknowledgements The support of the Ministry of Economy, Energy, Construction, Housing and Transport of North Rhine-Westphalia, Germany is greatly acknowledged. 7

8 5. References Bruhn, M., (1998): Wirtschaftlichkeit des Qualitätsmanagement. Grundlagen, Konzepte, Methoden. Heidelberg: Springer Bruhn, M., (2008): Qualitätsmanagement für Dienstleistungen. Qualitätscontrolling für Dienstleistungen. Heidelberg: Springer Bullinger, H.-J.; Scheer, A.-W. (2006): Service Engineering. Entwicklung und Gestaltung innovativer Dienstleistungen. Heidelberg, Spronger Freiling, J.; Weißenfels,S., (2003): Innovationsorientierte industrielle Dienstleistungsnetzwerke: Aufbau, Steuerung und Wettbewerbsvorteilspotenziale, in: Bruhn, M.; Strauss, B. (ed.): Dienstleistungsnetzwerke. Dienstleistungsmanagement Jahrbuch 2003, Wiesbaden: Gabler, pp Granig, P., (2007): Innovationsbewertung. Potenzialprognose und -Steuerung durch Ertrags- und Risikosimulation. Wiesbaden: Gabler Grundmann, T., (2008): Ein anwendungsorientiertes System für das Management von Produkt- und Prozessrisiken. Diss. RWTH Aachen Klinski, S.; Haller, S., (2005): Die unsichtbare Hand im Unternehmen. Mit serviceorientierten Unternehmensstrukturen die Performance steigern und wettbewerbsfähig bleiben. Wiesbaden: Gabler Meffert, H.; Bruhn, M., (2006): Dienstleistungsmarketing. Grundlagen, Konzepte, Methoden. Wiesbaden: Gabler Parasuraman, A.; Zeithaml V. A.; Berry, L. L., (1985): A conceptual model of service quality and its implications for future research. The Journal of Marketing 49, pp Romeike, F.; Hager, P., (2009): Erfolgsfaktor Risiko-Management 2.0. Methoden, Beispiele, Checklisten, Praxishandbuch für Industrie und Handel. 2. Aufl. Wiesbaden: Gabler Schnorrenberg, U.; Goebels, G.; Rassenberg, S., (1997): Risikomanagement in Projekten. Methoden und ihre praktische Anwendung. 1. Aufl. Braunschweig: Vieweg Wittmann, R. G.; Leimbeck, A.; Tomp, E., (2006): Innovation erfolgreich steuern. Heidelberg: Süddeutscher Verlag 8

9 6. Author address Prof. Dr.-Ing. Robert Schmitt Laboratory for Machine Tools and Production Engineering WZL of RWTH Aachen, Fraunhofer Institute for Production Technology IPT Steinbachstraße Aachen Dipl.-Ing. M.Eng. Sven Schumacher Fraunhofer Institute for Production Technology IPT Steinbachstraße Aachen Jacqueline Wiertz Fraunhofer Institute for Production Technology IPT Steinbachstraße Aachen 9