Handbook of Service Science

Why a handbook? We can answer that question with a question: What does a

service scientist

service scientist

need to know? This volume presents multidisciplinary perspectives on the nature of service, on research and practice in service, and on the future of research in service. It aims to be a kind of reference, a collection of papers by leading thinkers and researchers from across the spectrum of

service research

service research

– the collected basics for a budding service scientist.

In 1978 I asserted that a “rational approach to the rationalization” of services requires first of all a classification system that sets one service activity system apart from another (Chase

Chase, R. B.

1978). The classification I developed came about from an effort to derive a business classification scheme and was predicated on the extent of customer contact with the

service system

service system

and its personnel during the

service delivery

service delivery

process. Based upon open systems theory, I proposed that the less direct contact the customer has with the service system, the greater the potential of the system to operate at peak efficiency. And, conversely, where the direct customer contact is high, the less potential exists to achieve high levels of efficiency. In this chapter I will review the contact approach as it was discussed in the article and offer some suggestions for its future development.

Prior to the establishment of the first formal courses in

service management

service management

in the early 1970s, little research had been carried out to examine the properties of service activities that distinguished them from more-extensively examined activities of

manufacturing

manufacturing

organizations. While the traditional techniques of manufacturing management were invaluable to service managers, it was quickly discovered that service managers had to contend with a set of problems that the traditional tools could not solve.

The chapter presents a summary and extension of our book,

Winning the Service Game

, published in 1995 by Harvard Business School Press (Schneider

Schneider, B.

& Bowen

Bowen, D. E.

, 1995). We summarize the “rules of the game” we had presented there concerning the production and delivery primarily of consumer services and note several advances in thinking since we wrote the book. We emphasize that people (customers, employees, and managers) still are a prominent key to success in service and that this should be fully recognized in the increasingly technical sophistication of

service science

service science

. The foundation of this thesis is the idea that promoting service excellence and

innovation

innovation

requires an understanding of the co-creation of value by and for people. Further, that such co-creation is most likely to effectively occur when an appropriate psycho-social context is created for people as they produce, deliver and experience a service process. Such a context is the result of understanding the complexities of the people who are a central component of the

service delivery

service delivery

system.

From the standpoint of the firm,

service science

service science

involves two areas of study—1) how to reduce costs through greater efficiency and

productivity

productivity

, and 2) how to increase revenues by providing better service to customers. We focus on the second area of study, which to date has been underrepresented in the recent service science literature. Better service to customers results in greater revenues, higher profits, and a higher customer lifetime value.

Customer equity

Customer equity

, the sum of the customer lifetime values across the current and future customers of the firm, is thus the logical metric for evaluating the success of revenue expansion efforts. We summarize research findings that show that

customer equity

customer equity

is a good proxy for the stock market value of the firm, and explain why this should be the case. We also outline the key drivers of customer equity and suggest how firms can use customer equity to evaluate the return on investment (or projected return on investment) from strategic expenditures.

In this chapter ideas originally presented in

Service Worlds

service worlds

(2004) are elaborated and developed into a more nuanced understanding of the complex symbiotic relationships that exist between

manufacturing

manufacturing

and service functions. Economic geographers have researched service industries, employment and functions going back to the early but they, and

service research

service research

ers in other disciplines, have ignored manufacturing companies for too long on the grounds that there is something distinctive about the service relationship. Many manufacturing firms have been transformed into service firms; firms that create and provide product and service bundles. This realization coincides with the movement to construct a new discipline of

service science

service science

and is a welcome opportunity to engage with that debate. It is timely to develop a multi-disciplinary, service-informed understanding of the manufacturing sector that highlights the service aspects of manufacturing and simultaneously reveals the difficulties of classifying activities as either services or manufacturing. Ultimately, we must move beyond the traditional bipolar division of the economy and begin to focus on value creation and production processes. This involves a shift towards understanding the ways in which manufacturing and service functions are combined to create value in the evolving Service World or, perhaps, in the new

manuservice

economy.

This chapter discusses a Unified Service Theory (UST) that has been set forth as a foundational paradigm for Service Operations, Service Management, and now

Service Science

service science

. The fundamental purpose of the UST is to unify the various phenomena we call “services” (i.e., service processes) in a way that demonstrates both how they are distinct from non-services and how they share common managerial principles. The UST prescribes boundaries for Service Science and reveals a gamut of service topics of interest to designers, managers, and researchers. Although the UST has its origins from a business operations perspective, it draws a common thread between the various perspectives pertaining to service.

Service Science

service science

is an interdisciplinary effort to understand how service systems

service system

interact and co-create value. Service-dominant (S-D) logic is an alternative perspective to the traditional, goods-dominant (G-D) logic paradigm, which has been recognized as a potential theoretical foundation on which a science of service can be developed. While there are efforts to support and develop an S-D-logic-grounded service science, the paradigmatic power of G-D logic remains strong. This is evidenced by several recurring misconceptions about S-D logic

service-dominant logic

and its application in service science. This chapter aims to guide the advancement of an S-D-logic-grounded service science by clarifying several misconstruals associated with S-D logic and moving forward with the formalization of key concepts associated with S-D logic and service science.

Economics has accumulated a great body of knowledge about

value

. Building on economics and other disciplines,

service science

service science

is an emerging transdiscipline. It is the study of value-cocreation

value cocreation

phenomena (Spohrer

Spohrer, J.

& Maglio

Maglio, P. P.

, 2010). Value cocreation occurs in the real-world ecology of diverse types of

service system

service system

entities (e.g., people, families, universities, businesses, and nations). These entities use symbols to reason about the value of knowledge. Like mathematics (quantity relationship proofs) and computer science (efficient representations and algorithms), service science must ultimately embody a set of proven techniques for processing symbols

,

allowing us to model the world better and to take better actions. In addition, the emergence of service science promises to accelerate the creation of T-shaped

T-shaped professionals

Science, Technology, Engineering, and Math (STEM) professionals who are highly adaptive innovators that combine deep problem solving skills in one area with broad communication skills across many areas. This paper casts service science as a transdiscipline based on symbolic processes that adaptively compute the value of interactions among systems.

This chapter presents a foundational framework for

service science

service science

– the Gaps Model of Service Quality. For over two decades the model has been used across industries and worldwide to help companies formulate strategies to deliver quality service, to integrate customer focus across functions, and to provide a foundation for service as a competitive strategy. It was developed at a time when most services were delivered interpersonally and in real time without the advantages (and sometimes disadvantages) of technology infusion. In the intervening years, technology has profoundly changed the nature of service(s) and at the same time it has influenced strategies for closing each of the

service quality

service quality

gaps. Thus, this chapter has a dual purpose: to provide a general overview of the Gaps Model of Service Quality and to demonstrate how key aspects of the model have changed and evolved due to advances in technologies. We begin with background on the Gaps Model and a discussion of the role of technology and services in general. We then discuss strategies for closing each gap in the model and illustrate the influence of technologies on these fundamental management strategies.

Many of the most complex service systems

service system

being built and imagined today combine person-to-person encounters, technology-enhanced encounters, self-service,

computational service

computational service

s, multi-channel, multi-device, and location-based and context-aware services. This paper examines the characteristic concerns and methods for these seven different design contexts to propose a unifying view that spans them, especially when the service-system is “information-intensive.” A focus on the information required to perform the service, how the responsibility to provide this information is divided between the service provider and service consumer, and the patterns that govern information exchange yields a more abstract description of service encounters and outcomes. This makes it easier to see the systematic relationships among the contexts that can be exploited as design parameters or patterns, such as the substitutability of stored or contextual information for person-to-person interactions. A case study for the design of a “smart multi-channel bookstore” illustrates the use of the different design contexts as building blocks for service systems.

Business Architecture provides foundational and actionable concepts for

enterprise service

enterprise service

systems and their transformation. In practical terms, Business Architecture is an approach to formalizing the way an organization operates based on the convergence among strategy management, business process management and information technology. Partial perspectives on this convergence have received a great deal of attention from different disciplines in the last two decades. Companies and industries in regimes of fast technological change and

innovation

innovation

have made Business Architecture gain new emphasis, and thus, the discipline has been recently revisited intensively by companies, government, analysts, standards organizations, and researchers.

Business Architecture comprises three core components or dimensions, namely, conceptual model, methodology and tooling. Thereby, the variety of Business Architecture perspectives is wide and applications depend on purpose of adoption, scope of usage, and overall maturity of specific concepts. As Business Architecture involves different concepts and it has a strong multidisciplinary nature, it is common to find “different Business Architectures” in the literature. However, it is the different contexts for its application what makes Business Architecture appear as distinct.

With the goal of providing some practical assessment, this chapter reviews ten approaches to Business Architecture from the literature and evaluates them according to proposed measures of strength and weakness. Emphasizing the

service system

service system

nature of an enterprise, the evaluation makes emphasis on the service concept as a main constituent of Business Architecture.

In the practice of designing and engineering business systems, work is often defined and represented by a series of activities comprised of discrete tasks performed in a prescribed sequence, within a particular timeframe and set in the context of a particular technology. These elements are often reduced to a set of controlled system inputs and outputs, ignoring the complex interactions that need to be supported in highly collaborative work systems endemic of service systems

service system

. It is our position that designing and engineering service

engineering services

-based systems requires a new approach to understanding the interactions between the people, information technology and activities needed to enable services. We have approached service system design from the perspective of investigating and understanding work practices as the basis for system

innovation

innovation

. As such, our focus is on understanding what people actually do in practice, including their use of information, tools, methods and the relationships amongst these elements. This paper describes a practice-based approach for investigating work in service organizations. We argue for a need to understand work from the practice perspective, describe our practice-based approach, present a new way to represent work using practice diagrams, provide a case study as an example of our approach and make recommendations for future research.

Services have dominated Western economies for over half a century. Worldwide, services are now the largest economic sector, recently replacing agriculture. Services are now a larger portion of the economy than

manufacturing

manufacturing

for every nation on Earth. Yet, much of the scholarly work in Operations Management (OM) still addresses manufacturing issues. While Western economies are 70%–85% services, less than 10% of OM research done by Western academics is dedicated to services. Here, we examine some causes for this state of affairs: The attitude that “service = servile”, the rise of supply chain as an organizing paradigm, and the research methods needed for services.

While the

productivity

productivity

and quality of manufactured products steadily improve,

service sector

service sector

productivity lags and quality has fallen. Many service organizations fall into “death spirals” in which pressure to boost throughput and control costs leads to worker burnout and corner cutting, lowering

service quality

service quality

, raising costs while revenue falls, forcing still greater cuts in capacity and even lower quality. We present a formal model to explore the dynamics of

service delivery

service delivery

and quality, focusing on the service quality death spiral and how it can be overcome. We use the

system dynamics

system dynamics

modeling method as it is well suited to dynamic environments in which human behavior interacts with the physics of an operation, and in which there are multiple feedbacks connecting servers, managers, customers, and other actors. Through simulations we demonstrate that major recurring problems in the service industry—erosion of service quality, high turnover, and low profitability—can be explained by the organization’s internal responses to

work pressure

work pressure

. Although the reinforcing feedbacks can operate as virtuous as well as vicious cycles, the system is biased toward quality erosion by basic asymmetries and nonlinearities. We show how, with the right mix of policies, these same feedbacks can become virtuous cycles that lead to higher employee,

customer satisfaction

customer satisfaction

and additional resources to invest in still greater service quality improvement.

An initial set of requirements for a proposed next-generation

telecom

telecom

service innovation

service innovation

model is derived by viewing telecommunications service in the context of the emergent

service science

service science

principles. An in-depth review of the industry-standardized telecom business operations, eTOM, the next-generation network (NGN) architecture and advances made by global leading service providers yields the basic constructs for the proposed model which is centered on collaborative

innovation

innovation

, particularly customer collaboration. The proposed model is broadly described, and an initial review of challenges and recent advances in customer co-creation of service offering is provided.

In order to compete in a global economy organizations are forced to regard their worldwide activities as an integrated collaborative activity. In-sourcing supporting capabilities through collaboration with external service suppliers is now crucial to deliver high quality solutions to customers at any time and any place in the world. The aim of this article is to provide a framework which enhances the existing scope of the discipline of

service engineering

service engineering

. Existing research shows that industrial services and service based relationships are characterized by complex and unique aspects that require a broader and more comprehensive view on designing service based solutions and establishing the organizational prerequisites for successful

innovation

innovation

with service based solutions.

Almost all major economies in the world are already dominated by services. A more recent trend is their evolution towards becoming information economies. The confluence of these trends is leading towards the growth of information intensive service

information-intensive service

information-intensive service

s which is already the major part of many developed economies. This change is being accompanied by a technology driven process of “

industrialization

industrialization

” in information services that has some similarities to the industrialization of

manufacturing

manufacturing

, but also some important differences. Outcomes of industrialization include increases in

productivity

productivity

, standardization and mass markets. The consequences for industry structure, sector size and growth, employment and management practice are significant and again have both similarities to and differences from what occurred in manufacturing. One difference for industry structure is the tendency towards vertical de-integration and lateral dominance, as the role of transport media diminishes, and transaction costs reduce.

Central to the notion of services operation are concepts of labor and people – the deployment of knowledge, skills, and competences that one person or organization has for the benefit of another. In the new economics of services, the ability to manage skills and resources more effectively and efficiently is becoming the critical driver of success for any organization.

This chapter considers alternative views of complex systems that deliver products and services to consumers and other constituencies. Holistic views of complex systems are discussed in the context of several public-private systems and a notional model is introduced that relates complexity to the number of enterprises in a domain and the levels of integration required for these enterprises to function successfully.

We define a

service delivery

service delivery

system

as a set of interacting entities that are involved in the delivery of one or more business services. A service operating system manages the processes and resources within a service

delivery system

delivery system

. This paper develops a formal model for these concepts, with the goal of clearly and precisely describing the delivery behavior of service systems

service system

. The model lays the groundwork for reasoning about the scenarios that occur in service delivery. We evaluate the model by capturing the structure and behavior of some realistic service delivery systems – a credit card service, a hospital, an IT problem service and a hotel reception desk — and reason about key performance indicators.

Innovation

innovation

is widely recognized to be a critical contributor to economic growth, quality of life, and industrial competitiveness. Accordingly, a whole discipline of “

innovation studies

innovation studies

” emerged during the last quarter of the twentieth century, with major impacts on economic policymaking, management thinking, and approaches to science and technology studies. But

innovation research

innovation research

was overwhelmingly focused on technological innovation in

manufacturing

manufacturing

sectors – and in particular, on high-tech sectors such as pharmaceuticals, electronics, and aerospace. It was not until the last decade of the twentieth century that serious and sustained attention to service industries and firms, and their innovation processes and outcomes, was more than the province of a few pioneers. We now have almost two decades of such analysis, and this chapter reviews highlights of the literature. Since the area covered by “services” and “

service innovation

service innovation

” is so vast, and because the literature is fragmented across many disciplines, the aim is to give a broad overview rather than to synthesize the literature into a new grand theory. It is apparent that there are many ways in which service innovation parallels the processes described for manufacturing activities, and that some of the “new” features that are brought to light are ones that also exists in manufacturing firms but that have typically been neglected. The study of service innovation leads us to reconsider how we think about innovation more generally.

The questions of

innovation

innovation

in services, on the one hand, and

sustainable development

sustainable development

, on the other, are relatively recent concerns for economic theorists and public policymakers alike. They have become key issues, which pose considerable academic, economic and political challenges. However, these two questions, and the problems they raise, have evolved independently of each other. The present chapter seeks to link them by considering innovation in and by services and innovation-based

entrepreneurship

entrepreneurship

in services in terms of their relationship to sustainable development. Our hope in so doing is that we can play a part in moderating the industrialist, technologist, environmentalist and curative concept of sustainable development that is, paradoxically, still dominant in our service economies.

Customer co-development is a core concept to understand

service innovation

service innovation

. Our point of departure is that there is an untapped business potential from customer co-development, i.e. integration of customers, throughout the service

innovation

innovation

process. From a service logic perspective, the customer has an important role both in service production and service innovation. Most of the focus thus far has been on the role of the customer in production. We argue that there should be a relationship between the role of the customer in service production and the potential role of the customer in service innovation. When there is a change in the process of service production it ought to be followed by a change in the service innovation process. Customers can be integrated as interpreters and translators during various phases of the service innovation process. Companies must be able to understand and manage various

customer roles

customer roles

as they complement one another; close and in-depth integration of customers throughout the innovation process is important but at the same time also challenging.

As the many chapters in this volume agree, there is growing awareness of the importance of services innovation

service innovation

to the prosperity of advanced economies in the 21

st

century. In this chapter, we explore the challenges that services

innovation

innovation

poses, as well as the potential value it may create. The conceptual differences between products and services are also outlined. We pay particular attention to five key concepts in systems integration: the role of complexity; the role of dynamics; the role of systems integration; the role of openness; and the structure of organizations.

Intellectual property

intellectual property

, contract, and tort laws likely have some effects on levels of

innovation

innovation

in

service sector

service sector

s of the economy. Legal

law/legal

rules that are too strong or too strict may discourage investment in

service innovation

service innovation

; yet, rules that are too weak or too loose may result in suboptimal investments in sound innovation. Intellectual property protections have traditionally been quite strong in protecting innovation in

manufacturing

manufacturing

sectors, but much less so in service sectors. Services have, for example, traditionally been unpatentable because they were perceived to be non-technological. Whether digital information services, such as

web services

web services

, should be patentable is currently unsettled and highly controversial. Contract and tort rules are currently quite strict as to manufactured goods, but less so as to services.

How can the future be overdue; it isn’t there yet? Or is it? The chapter lays bare select issues concerning service systems

service system

and an emerging

service science

service science

. What happens now in service should have happened long ago. But why complain now that things start picking up? I do it to emphasize that we need to unfold mental blindfolds and be less conservative, ritualistic and bureaucratic. We need to see things in a productive light and a contemporary context and to act accordingly.

This chapter describes the evolution of the service field over two eras that encompass its emergence, growth and eventual broadening into a multidisciplinary field. The first era, described with the metaphor of biological evolution, encompasses the development of the

service marketing

service marketing

field across three stages: Crawling Out, Scurrying About, and Walking Erect. The second era witnessed the rapid expansion of the service field beyond service marketing. This era, described with the metaphor of social evolution, progresses through three additional stages: Making Tools, Creating Language, and Building Community. We expand on Building Community as the future of the service field with discussion of the state of

Service Science

service science

, Management, and Engineering

SSME

(SSME), the idea of adding

service arts

service arts

, the need to serve customers, and memes for building the service community. We envision a service field that is customer-centered, multidisciplinary and collaborative.

This chapter will consider how

service science

service science

could transform socio-technical systems in beneficial ways. The term socio-technical system is used in the science and technology studies (STS) literature to refer to the way in which technological and human activity are tightly coupled (M. E. Gorman

author

, 2008). Beneficial here refers both to improvements in quality of life and to increasing revenue for services—complementary objectives, because adding social value is one way of creating sources of revenue.

In July 2007, IBM

author

and Cambridge University’s Institute for

Manufacturing

manufacturing

(IfM

author

), in conjunction with BAE Systems, convened a group of leading academics and senior industrialists in a two-day symposium to address the critical questions facing the emerging field of

Service Science

service science

, Management and Engineering (

SSME

SSME

). The meeting, together with a consultation process involving over a hundred international respondents, created a white paper for universities, businesses and governments globally (IfM and IBM 2008). The report called for (1) the advancement of SSME as a distinct subject of research and education through intensive collaboration across disciplines, and (2) the creation of national Service

Innovation

innovation

Roadmaps (SIR) to double investment in

service research

service research

and education worldwide by 2015. Since the white paper was released, exciting progress has taken place; many universities have started SSME courses while various governments released SIR reports (see Appendices I and II for lists of such initiatives). In the remainder of this chapter, we provide an updated summary of the white paper and revisit its original recommendations for SSME stakeholders.

This paper reports the latest academic and government activities relating to Service

Innovation

innovation

and

Service Science

service science

, Management, Engineering (

SSME

SSME

) in Japan. Universities, government institutes, and government officials are looking for new ideas to cultivate economic growth, especially following the financial crisis that began in late 2008.

Service innovation

service innovation

makes an excellent place to look for these new ideas, and SSME, as a new academic initiative for giving fundamentals for service innovation, may make an excellent basis for service innovation.

Maglio

author

and Spohrer (2008) state that a work force that is capable of adaptation and problem solving requires people with capability and unique skills across many areas. While this cannot be disputed, it is clear that we still lack understanding of key skill areas within the

service economy

service economy

and of the relationship between skills requirements and education provision. This chapter describes the range and diversity of service and presents a forecast of the demand for higher level skills and knowledge. It examines education provision in terms of context, content and constructs and discusses the challenge for higher education in meeting the demands of a complex service economy.