This document discusses balancing service excellence, productivity, and profitability in service organizations. It outlines five strategies for achieving this balance: 1) generic strategies like cost control and process redesign, 2) a dual culture strategy exemplified by Singapore Airlines, 3) using systems and technology, 4) self-service technologies, and 5) the focused service factory model illustrated by healthcare organizations. These strategies range from minimizing changes to the customer interface to standardizing and industrializing the entire service process.

1. Slide © by Dr. Jochen Wirtz, 2013 Service Excellence Symposium 2013Page 1
Can we have it all – Service Excellence,
Productivity & Profitability?
ISS Service Innovation Series:
Transformation Services through Service Innovation
Professor Jochen Wirtz
Director, UCLA – NUS EMBA
NUS Business School
National University of Singapore
Singapore, 28 March 2014

2. Slide © by Dr. Jochen Wirtz, 2013 Service Excellence Symposium 2013Page 2
In Service Organizations Management Functions
Must Be Tightly Integrated With Each Other
Customers
Operations
Management
Marketing
Management
Human Resources
Management
Product
Price
Place
Promotion
People
Processes / IT
Physical Environment

3. Slide © by Dr. Jochen Wirtz, 2013 Service Excellence Symposium 2013Page 3
What is the Relationship Between Service
Quality, Productivity and Profitability?
Service
Quality
Productivity
Profitability
+ +
+ / 0 / -
4) SST2) Dual Culture
5) Focused
Service Factory
3) Systems &
Technology
1) Generic
Strategies

4. Slide © by Dr. Jochen Wirtz, 2013 Service Excellence Symposium 2013Page 4
 Cost control, reduce wastage
 Train & motivate employees to do things faster, better & more efficient
 Better capacity utilization (better matching of supply & demand
 Customer service process redesign (CSPR); (Lean) Six Sigma
 Use of machines, technology & data
 Outsourcing of non-core activities, back-office activities
 Tiering of service to allocate resources better to more important customers; Hard
product/service level choices
Increasing Productivity without (much) Impacting the Customer Interface:
1. Generic Strategies to Enhance Productivity

5. Slide © by Dr. Jochen Wirtz, 2013 Service Excellence Symposium 2013Page 5
Flying High in a
Competitive Industry:
Cost-effective
Service Excellence at
Singapore Airlines
Source: Loizos Heracleous and Jochen Wirtz,
“Singapore Airlines’ Balancing Act - Asia’s Premier Carrier Successfully
Executes a Dual Strategy: It Offers World-class Service and is a Cost Leader,”
Harvard Business Review, 2010, Vol. 88, No. 7/8, 145-149
2. Dual Culture Strategy

6. Slide © by Dr. Jochen Wirtz, 2013 Service Excellence Symposium 2013Page 6
3. Systems & Technology

7. Slide © by Dr. Jochen Wirtz, 2013 Service Excellence Symposium 2013Page 7
4. Self-service Technology (SST)

8. Slide © by Dr. Jochen Wirtz, 2013 Service Excellence Symposium 2013Page 8
UCLA – NUS EMBA participants visiting Narayana
Hrudayalaya Hospital in Bangalore
5. The Focused Service Factory

9. Slide © by Dr. Jochen Wirtz, 2013 Service Excellence Symposium 2013Page 9
(2) Isolate Technical Core &
Shift Activities to Back-Office
(3) Reduce Customer Contact & Choice
(4) Production Lining/
Industrialized Service Model
(1) Full-service model
ReducingUncertainty,ProcessFlexibility,CustomerChoice
StandardizationofInput,Process&Output
• Cost control, reduce wastage
• Train & motivate employees to
do things faster, better, more
efficient
• Better capacity utilization (better
matching of supply & demand)
• Customer service process
redesign (CSPR); (Lean) Six Sigma
• Use of technology (e.g.,
biometrics)
• Outsourcing on non-core
activities, back-office activities
• Tiering of service to allocate
resources better to more
important customers; Hard
product/service level choices
Increasing Productivity
without (much) Impacting the
Customer Interface
Possible Avenues to Cost-effective Service Excellence
4) SST
5) Focused
Service Factory
3) Systems &
Technology
1) Generic
Strategies
2) Dual Culture

10. Slide © by Dr. Jochen Wirtz, 2013 Service Excellence Symposium 2013Page 10
(1) No/Little Change in
Customer Interface
Change in Business Model / Value Proposition to Customers
(2) Isolate Technical Core &
Shift Activities to Back-Office
(3) Reduce
Customer Contact
(4) Production Lining/
Industrialization of Service
> Same output with less input:
• Cost control
• Train & motivate employees to
do things faster, better, more
efficient
• Better capacity utilization (better
matching of supply & demand)
• Customer service process
redesign (CSPR); (Lean) Six Sigma
• Use of technology (e.g.,
biometrics)
• Outsourcing on non-core
activities, back-office activities
• Tiering of service to allocate
resources better to more
important customers;
Dual Culture Strategy
Example: Singapore Airlines
Same Business Model
Front-office Minus Modularization of
Service, SST
Reduced Uncertainty, Process Flexibility & Customer Choice  Allows Increased Use of Technology & Systems 
Standardization of Input, Processes & Output
Examples: Taco Bell’s K-Minus
Program; Banks’ cheque
processing plants
Examples: Google’s AdWords; ING
Direct, ATMs, Ikea; Biometric-
enabled immigration
Examples: Shouldice Hospital,
Narayana Hrudayalaya Hospital;
TranscribeMe; many Web- & App-
based services
> Separate & buffer activities in
the front-office and back-office.
> Shift activities from the
inefficient front-office to the
back-office.
> Then, industrialize the back-
office.
• PWP + buffering
• Two focused factories (front-
office: sales, customer
satisfaction; back-office:
productivity and low error rate)
• Use systems and technology to
industrialize the back-office
> Reduce customer input into
the process to reduce
uncertainty
> Reduce customer contact with
the servuction system
• Modularization of products
and their features;
• Hard product/service level
choices
• Tight customer scripts
• Use systems and technology
to industrialize the front -
office
• Replace customer interactions
with SST
> Standardize customer input into
the process
> Minimize customer contact with
the servuction system
> Standardize/ industrialize the
entire servuction process
• One/few standard products with
few standard features
• Tight selection of customer who
fit the service model
• Extremely tight customer scripts;
little flexibility & customization
possible
• Standard process with much SST
Need for Dual Culture
Focused Service FactoryGeneric Strategies

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