May 27, 2008

Operation Strategy Lesson 7 Exercise

The entire lesson emphasizes the strong connection between “operation resources” and “market resources” in the development of a new product/service.

These resources have to be seen as forces that drives the ideation and leads the final production/providing.

The development of “something” new is perhaps more important in services then in products: it possible that a minimum level of market request for a consuming object resists over time; a services provider, not able to renovate/introduce new services, cannot hope to maintain its revenue stream over time.

The services “demand” seems to me more changing over time then the products one.

The “time to market” is as important as for products but we have to consider that:

  • the idea of a new service often born more at direct contact with customers (i.e. providing an already existing service) then in a laboratory/industry

  • services are often developed and personalized at customer site (once the new service is already “in production”)
In the relationship between product/services and process, if we deal with a new service it’s quite hard to create a new one without changing the process itself.

For instance talking about a mobile company a new phone may be created in the “old laboratory” but it’s quite hard to set up a new supporting call-centre without involving new employees (or old ones organized in a new way).

Let’s analyze the 4 “organizational routes” in product/service development described in picture 1

Picture 1

In my opinion it’s possible to affirm that:

  • in services, more then in products, the approach is more a bottom-up then a top-down one (only with a direct contact with the daily “operations” new requirements/ideas can emerge; while with product a new great idea may come from top management)

  • in services, more then in products, the operations resources has to be proactive from 2 point of view:
  • adapt themselves to new market requirements

  • being able to make customer understand new need that may be provided by the organization

In services communication seems to me more complex and time requiring then in products (a new “SW” description/business case is easier then a new “support/consulting activity on SW” description/business case).

The “internal design chain’s resources” is more chaotic in services then in products contest. The management involvement in products seems to me more strong during the very early stages (when the new product has to be conceived) while with services it seems to me later on in time, when the services have to be designed and developed.

Analyzing “time” in services projects are a continuous overlap of different stages. It often happens that the idea of a new services and its early design are performed in other projects that are in their more active providing phase (it often happen in IT services).

About the “team strategy”, in services more then in products market, usually we have one person that share responsibility for N development project.

Moving to the “external design networks” in services the risk that a supplier (more then to collaborate with its customer to develop something new) works by its own in order to become one competitor is high.

The only way to mitigate this risk is to create a “partnership” more then a “transactional” relationship with suppliers hoping to persuade them that “common” performance may bring some competitive advantages and not the “personal” one.

Becoming the “final end user providers” more then a “supplier” in services is easier then in product so it’s important not to share all the information and maintain a direct contact with the final customer not to be substituted by one own supplier.


Slack, Nigel and Lewis, Michael (2008), "Operations Strategy", Prentice Hall, Great Britain

University of Warwick(2008), "The Warwick MBA: Operations Strategy, Lesson 7", Warwick Business School.

- One comment Not publicly viewable

  1. Desmond Yarham

    You are progressing through the course well. This blog concerns a familiar theme in Operations; the difference between Product and Service – new product development.
    Yes, the alignment of resources to market requirements is paramount – you could have included a diagram similar to Fig 7.2 of Slack et al.
    I take your point that new services or changes to existing services can mappen incrementally through customer contact at the point of service delivery – more so than with products. This supports your view that NPD in services tends to be ‘bottom up’ than in manufacturing a new product. I believe that IBM’s ‘Jam’ sessions are supported by all levels of staff and that many new ideas are generated – you will know better than me!
    You were right to refer to competition in service companies and the temptation to copy other organisations ideas – with less capital outlay on process costs it is easier to copy a service. Long-term partnerships are one way, another is to Modularise parts of the service package and only share information on parts of the service package.
    Gppd, you included an illustration, exapmles and references.

    29 May 2008, 19:17

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