Defining an alteration to the service blueprinting model by incorporating performance measures and service I/O characteristics in order to improve the process of co-creation in

Pavel Roudman Department of Technology, Policy and Management Delft University of Technology Jaffalaan 5, 2628 BX Delft, The Netherlands [email protected] Student number: 4056396; word count: 3544

Abstract — Services are becoming a dominant part of the at the same time, increasing product adaptation and economy for many western countries. Although services have strengthening customers confidence and suppliers credibility many benefits, due to their specific properties, different (Salonen 2011). Although service provisioning has its strategies and methods are needed to successfully develop, advantages, changing from selling products towards selling position and sell services. The method of service blueprinting is services is not a simple transition process. Due to the specifically developed to introduce co-creation and networked collaboration into the design process. However, currently only specific properties of services, different strategies and a default and standardized approach for designing a service methods are needed to successfully develop, position and blueprint is documented with limited service theory coverage. sell services (Blankson and Kalafatis 1999; Vargo and This research is focused on improving service blueprinting by Lusch 2004; Jaw, Lo et al. 2010). Specifically, a gap is incorporating performance measuring systems and the noticed when dealing with the development of services adaptation of Unified Service Theory, by conducting a (Hertog 2010). In contrast to the development of goods, literature study and by accessing the gained knowledge of the service requires co-creation with the customer and research conducted by Roudman (2013). The result of the networked collaboration with the value chain in order to research yielded two additional process steps which include develop a competitive service. One specific service KPI measures and the I/O variables. However, to fully acknowledge the benefit of the designed process, additional modeling technique aims at incorporating co-creation and process validation is required. networked collaboration in the process of designing services. The technique of “service blueprinting” has been Keywords: Service Blueprint, Key Performance Indicators, developed to cope with service innovation by incorporating Unified Service Theory, Co-creation, Networked Collaboration, different stakeholders within the design process. Although Service Design already in use by some firms ranging from different sectors such as transportation (Yellow Transport), information I. INTRODUCTION technology (IBM) and even major league baseball (San Since the second half of the twentieth century, an Francisco Giants), there is still room for improvement economical shift has taken place which has gradually (Bitner, Ostrom et al. 2008). For instance, only a basic transformed the fibers of the economy into a service representation of the technique is currently documented, economy (Ma, Tseng et al. 2002; Menor, Tatikonda et al. while the theoretical perspective is not fully included into 2002; Piccoli, Brohman et al. 2009; Chae 2012; Kindström, the service blueprint model, nor in the process of creating Kowalkowski et al. 2012). This transformation is a concept one. Based on the research conducted by Roudman (2013), which has been hypothesized by different researchers who argued that specific improvements should be made to throughout different eras, and has come to be known as improve the technique, the aim of this research is to improve “Petty’s law” (Murata 2008). The hypothesis states that the current service blueprinting technique in order to when fueled by public and private demand, a transformation develop a more comprehensive methodology which can be occurs which changes the primary source of economy from used by practitioners and researchers alike. The main agricultural based activities, noted as the primary sector, research question is stated as: towards production, and ultimately towards services, noted as the secondary - and tertiary sector. The reasons for the How should the service blueprinting technique be improved current shift from manufacturing towards services can be by further utilizing co-creation and networked collaboration partially explained by the decrease in the price of goods during the design process? while at the same time the demand for services with higher income elasticity is growing. The benefit for firms to engage To answer the question, a literature study is performed which in service provisioning is that services provide a more stable defines and analyzes current blue printing techniques and source of income and are categorized by being less sensitive observes possible improvements as stated by theoretical to economic fluctuations. In addition, services increase the sources. general sales of goods by creating a customer lock-in, while

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The structure of this paper is as follows. First the The service blueprint as visualization of the service design methodology is presented, which defines different methods A service blueprint consists out of five different layers for gathering the required data for analyzing the service where different service processes are organized in a blueprinting technique. Afterwards, the findings of the chronological manner (Bitner, Ostrom et al. 2008). Since the literature research are provided by stating the service needs of the customer are at the heart of a service, first the blueprint, the process of creating such blueprints, performance measurements which can be measured for a “customer actions” layer is constructed. The layer consists service and by incorporating the I/O characteristics of the of actions and processes that the customer undertakes when unified service theory. The final chapter will address the being a part of the service. Other layers have to be seen as conclusions and points for further discussion. supporting processes in order for the customer to achieve satisfaction through value creation. The second layer is the Methodology “onstage actions” layer wherein the service provider has The research is conducted by means of a literature review face-to-face contact with the customer. The previous layers of the methodology of service blueprinting and service are divided by the “line of interaction”. Whenever the line is theory. Various different research articles were gathered by crossed, a window of opportunity is created which enables using the online search databases of Scopus, Web of the service provider or the customer to redefine the service. knowledge, JSTOR, CSA and OvidSP. Search terms that The third layer is the “backstage actions” layer. This layer were used were based on subject orientated search describes the processes which are not visible by the parameters, relating to the combination of the following customer, but are needed in order to support the onstage keywords; Service Blueprint, Key Performance Indicators, process. Since these actions are categorized as back office Unified Service Theory, Co-creation, Networked processes, a line of visibility divides this layer with the Collaboration and Service design. Criteria for selecting previous layers. The next layer is the “support process” proper articles out of the search query results were based on layer which defines the systems that are needed in order to the specific relevance to the subject. In addition, the support the service provisioning process. This layer is research conducted by Roudman will also be used as separated by the line of interaction. The final layer needed reference, see Roudman (2013). Although the research to complete the service blueprint is the “physical evidence” involved service blueprinting for the container cranes layer. This layer depicts different physical elements, which industry, in order to provide a different perspective on the the customer is exposed to by being in the service issue at hand, the examples used in this paper were based on provisioning process. It has been stated that physical the package delivery industry. This was instigated in order systems determine the quality perception of the service to broaden the scope of the article and to demonstrate the (Bitner, Ostrom et al. 2008). This layer is put on top of the level of applicability of the theory and technique. service blueprint. Figure 1 depicts a simplified example of a service blueprint of a package delivery service. II. LITERATURE REVIEW Designing services which are competitive in the market Track & Physical Receive relies on the way the design process is governed. For Front desk trace web receipt instance, teamwork, user collaboration and understanding evidence site the need of the customer are important success factors for service provisioning (Alam 2002). Designing services Customer Hand in Track Accept therefore requires methods which enable co-creation and package package package networked collaboration. Service blueprinting focuses on action either the development of new services or on improving Line of Interaction existing service through cross-functional communication which allows the process to be centered around the customer Onstage Accept Hand over and other stakeholders within the value chain (Bitner, actions package package Ostrom et al. 2008). Service blueprinting consists of steps that are taken which enable the creation of a service Line of Visibility blueprint. First we will elaborate more on the end goal of the design process, the service blueprint, and afterwards Backstage Scan Transport Scan actions package package package continue by stating the default process for creating a service blueprint. When the concept of service blueprinting is Line of Internal Interaction elaborated, additional concepts in the form of performance Track and measuring systems and unified service theory will be Support Package ID trace system defined and assessed. As will be made evident in this Processes system chapter, resolving these concepts in a collaborative manner will be a benefit during the design process and ultimately in Figure 1: Simplified version of a service blueprint. Source: service provisioning. adapted from Bitner, Ostrom et al. (2008)

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The default process of designing a service blueprint measurements of a

m Result of the transport

completed process, L

e The default process Figure 2: The default service a activity

a

g

s blueprinting process. Source: adapted specified accomplished g

u to design a service i

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g from Bitner, Ostrom et al. (2008) performance and the final e · Total costs of fuel

blueprint consists of s consumed approximately 6 steps, Service blueprinting process outcome. Usually lagging Prep 1 Service Blueprint goal indicators are formulated including 2 preparatory Prep 2 Service Blueprint involvement steps, see Figure 2 Step 1 Service Blueprint fundamentals as an attribute which is

Step 2 Service Blueprint familiarization part of the “iron triangle” m Delivery truck performance (Bitner, Ostrom et al. L

e

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a Step 3 Service Blueprinting of service of project management a

s 2008). First the service d

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n · Step 4 Service Blueprinting modification r Multiple KPIs for the

e where time, costs and g

s firm has to decide on a important elements of goal for the service blueprinting session. The goal could be quality are of high the delivery process importance. In the for instance, to design a new service or to improve an Figure 3: Relationship between existing service. Afterwards, the initiating service provider example of the package leading and lagging measures. will elaborate on which stakeholder should be invited to delivery service, a lagging Source: adapted from Smith and participate in the service blueprinting session. Based on the indicator could be the total Mobley (2008) stated goal, the initiator can involve internal customers in cost of fuel consumed by the session, or customers and partners from the value chain. the package delivery truck. The difference between the two When the initial preparatory steps are completed, the actual specified indicators is that leading indicators are intended to service blueprinting session can commence. When all manage service processes, while lagging indicators measure invitees are present, the facilitator will first introduce the how well they have been managed, see Figure 3 (Smith and fundamentals of service blueprinting. Important questions Mobley 2008). However, in many cases, firms do not make which should be answered during this step are for instance, the distinction between these indicators or simply focus on why service blueprinting will improve the service design lagging indicators since these measurements are more process and what the general ideas behind co-creation and accessible to the management. For an example on the network collaboration are. Next, the invitees will have to consequences of such policies, see Example 1. Finally, there familiarize themselves with the technique. This is done by, are perceptive measures which report the perception of a for instance, designing a service blueprint of an existing and stakeholder in the project. Typical perceptive measures are, simple service. After mastering the technique, the actual for instance, client or employee satisfaction rates. From the service blueprinting will commence. Based on the stated perspective of a service design process, it is in both interest goal, the invitees will engage in interaction through which a A package delivery firm aims to optimize their cost structure by reducing the service blueprint will emerge that is based on the input of total cost of operations, since costs have been increasing for the past years. The stakeholders. The last step is to adjust the process or management analyze their KPI, consisting of only lagging indicators and realize technique for when additional blueprinting sessions are that the fuel cost spending of trucks behave erratic. Some trucks have a stable fuel consumption while others consume more with the same distance travelled. needed in order to design a definitive service blueprint. After inspection of the delivery trucks, it is concluded that no technical abnormalities could be found. Thus the drivers are seen as the primary cause of Performance measuring systems the predicament and subjugated to additional training, while policies are With the introduction of benchmarking tools such as the created which reduce the rates of employment by introducing stricter employment rules. After some time, the planners realize that although almost balance score card in the 90’s, firms were able to answer the same distances is traveled to various post offices, the amount of traffic pending questions such as ”How are we performing? Are we lights, roundabouts and other traffic infrastructure which influence fuel investing in the right projects? What do our customers think consumption are unproportionately distributed along various roads. Although the measures were available in various databases, they were not included into of us?” (Sharif 2002 p. 62). Concerning benchmarking the the KPI measurement system. success of a process, Key Performance Indicators (KPI) play an important role in measuring different input and output In this example, using lagging indicators to manage and govern processes resulted in policies being implemented which did not solve the dilemma of the variables based on the stated service goal. KPI are therefore transport firm. In fact, costs were incurred which could have been avoided if deemed to be an important element of managing and correct leading indicators such as the amount of traffic infrastructure were measuring the performance of a firm. KPI are defined as added to the KPI system. Although it may seem that this is an isolated incident, in complex and high tech industries, such as container transport, leading KPI are “the measure of performance of an activity that is critical to not always fully augmented into the KPI system. Even when data is made the success of an organization”(Vukomanović, Radujković available for analysis by an automated system of sensors (Roudman 2013). et al. 2010 p. 104). In general, three types of KPI’s can be Example 1: The consequence of using lagging indicators to manage a distinguished. Leading indicators are KPI’s which assess an process unfinished process. They are seen as incremental of service provider and customer to share the perspectives of measurements rather than an outcome of a finished process. how certain service processes are measures rather than In the previous example of the package delivery service, a invoking unilateral decisions on what a KPI for a new leading indicator could be the amount of traffic lights a service should be. Providing services without knowing the package delivery truck has to pass during a typical ride to immediate implication on the KPI of the service processes and from the post office. Lagging indicators are the actual can have a direct result on other business activities

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(Roudman 2013). For instance, in the research of Roudman, The package delivery firm has acquired a new corporate customer, which in the initially, the service provider did not include co-creation and future, will be responsible for 40% of all transported packages. Due to the scope networked collaboration within the design process. After an of the rendered service, the delivery firm has designed a delivery service with the corporate customer and the internal customers, such as the transport -, effort was undertaken to include the customer into a finance - and planning departments, in mind. During the service process, the redesign process, it was concluded that some initial service departments have to provide information concerning the route which should be processes negatively impacted the KPI of the customers’ taken, the schedules in order to deliver the appropriate Service Level Agreement (SLA) with the corporate customer and the financial performance in service organization. order to provide the service. On the other hand the corporate customer has to input different datasheets with addresses for the packages, relay forecasting Unified service theory information and the expected amount of packages for the near future and provide accessibility to the warehouse. Based on the input provided, the The Unified Traditional I/O model of operations package delivery firm can provide the service. However, is the quality of the Inputs Production Outputs Service Theory (UST) Supplier Customer provided input is not up to par, the service quality will be reduced. is a concept that is an process evolution of the Service I/O model If the input from the internal customer is inadequate, the service provider can Inputs reprimand the department or the individual employee in order to improve paradigm of the Inputs Service Outputs service performance, decide to train existing personnel, chose better suited Supplier Customer input/output (I/O) process personnel or eventually dismiss personnel. However, when the quality of the model of operations, Figure 4: Service I/O model as described input from an important corporate customer is inadequate, the alternatives are less evident and less decision space is present. Although reprimanding the by the UST. Source: adapted from see Figure 4. In corporate customer can be an option, this is not without consequence Salvendy and Karwowski (2010) relation to the (Salvendy and Karwowski 2010). operational I/O model, which acknowledges that “all Example 2: Consequence of obtaining low quality input during service production processes transform inputs into outputs”, UST provisioning recognizes that “customers are both suppliers of inputs and consumers of outputs” (Salvendy and Karwowski 2010 p. III. CONCLUSIONS AND DISCUSSION 35/36). This complies with the characteristic of service Based on the service theory that is presented in the previous provisioning as part of the uno-actu-principle, whereby chapters, it can be concluded that based on the collaboration production and consumption occurs simultaneously (Meier, needed in order to design a service which is robust and that Roy et al. 2010). The input that the customer provides can can benefit from collaboration between stakeholders, KPI be based on the entity of the customer, its assets or its and input & output variables should be included in the knowledge and information. In the package delivery service, design process. The process of constructing a service customers have to provide information input in the form of blueprint can be altered in the following manner, see Figure an address in order for the package to be delivered. If during 5. As shown, for step three, two additional sub-steps are package transport a driver becomes ill and has to call for added. After creating the service blueprint as was depicted emergency assistance, the driver becomes the input for in figure 1, the chronological linkages between the actions health services. Or when leftover packaging material has to of the stakeholders are known. Afterwards, the facilitator be recycled, the firm has to put their own assets into the can opt to include input and output variables to the service process. The dilemma arises when services which collaborative design process. This will enrich the process require input from the customer are not of adequate quality. and allow the stakeholders to initially debate on which input In such cases the service process can ultimately lead to the and output variables are needed in order to infuse the needs of the customer not being met or a disruptive service process with high qualitative input. When the input relationship between service provider and customer and output variables are known, the facilitator can include (Salvendy and Karwowski 2010), see Example 2. measuring systems in the session. During this sub-step the

leading, lagging and perceptive measures can be discussed The impact of customers’ input can have an influence in the which will primarily be used during service evaluation. By way the service unfolds. Due to the process like behavior of doing so, the process of service design will gain services and the different actions which are required in order transparency on the way the stakeholders can assess the to provide a service, the inputs of either the internal service. Since a hierarchy exists between different types of customer as well as the external customer can change the KPI, first the substance of the service as it is rendered. This means that Figure 5: An altered service blueprinting lagging indicators the primary focus of the designer within the service design process. Source: adapted from Bitner, Ostrom can be assessed, et al. (2008) process is to develop a design which is robust in order to followed by the Service blueprinting process deal with the input of the internal as well as the external leading indicators Prep 1 Service Blueprint goal customer. Prep 2 Service Blueprint involvement which can be Step 1 Service Blueprint fundamentals subdivided based on Step 2 Service Blueprint familiarization the lagging Step 3a Service Blueprinting of service indicators. Step 3b Adding process input and output

Afterwards, the Step 3c Adding key performance indicators perceptive measures Step 4 Service Blueprint modification

4 can be assessed. Figure 6 represents a possible service Lack of process validation blueprint based in the altered blueprinting process. Due to the exploratory nature of this research and its results, currently no process validation has been pursued. In order to

Track & trace fully understand the impact of the process alteration, a Physical web site suited case should be appointed in the future. Front desk Receive receipt evidence KPI: # of users

Hand in Customer package Track package Accept package action KPI: # packages

Address Line of Interaction

Hand over Onstage package Accept package actions KPI: # packages on time Current Line of Visibility condition

Transport package Backstage Scan package Scan package actions KPI: Distance traveled

Line of Internal Interaction

Support Package ID Track and trace Current Processes system location system

Figure 6: Simplified version of altered service blueprint model. Source: adapted from Bitner, Ostrom et al. (2008) The following points of discussion can be noted.

Stakeholders reluctance in sharing KPI In many cases it can be noted that stakeholders, who are of different firms, are reluctant in sharing information concerning performance indicators. Although this is true in many cases, when stakeholders in a value chain share a strategic alliance with each other, such reluctance can be replaced with affirmation of the stated KPI. Therefore it can be stated that such an approach can be more successful when stakeholders in the process are seen as strategic partners with a mutual power balance.

Longer process due to additional collaboration More steps have to be taken in order to derive a definitive service blueprint. It can be argued that, due to the increased length of the blue printing session, the stakeholders are reluctant in participating. A possible alternative would be to not include the KPI and I/O variables into the definitive service blueprint, but acquire statements of stakeholders as how they would ideally see KPI and I/O variables being used to measure the performance. This would improve the general overview of the blueprint. Furthermore adding KPI and I/O variables would introduce more complexity into the process. In order for the process to remain orderly, more research should be done on new blueprinting techniques with KPI and I/O variables in mind.

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