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This chapter is from the book

Service Scorecard

The Service Scorecard should balance cost and revenue, improvement and innovation, management and employees, and execution and growth. This Service Scorecard must also balance the objective and subjective measurements, which are sometimes difficult to measure but that must be measured.

No performance scorecard with only objective measures can present a complete picture of the performance, because all businesses incorporate tangible and intangible assets. Actually, the ratio of intangible to tangible assets increases from manufacturing to service operations. In other words, service operations deal with more intangibles than tangibles, because the service operations are more dependent on people and, thus, are more subjective in nature. In the manufacturing sector, the objective is to reduce the cost of each widget and make it more reproducible. However, in the case of service operations that are more customized, more flexibility and variations to delight customers are required.

With the integration of technology and globalization, certain shifts occur from manufacturing to service operations (i.e., from the Business Scorecard to the Service Scorecard). For example, the manufacturing operations deal with suppliers of parts, material, and services. In the service industries, however, the focus is on intangible relationships involving various stakeholders and even customers. Establishing partnerships and collaborating with customers and suppliers is the goal.

Another shift occurs from manufacturing to service industries in the sense of execution. In manufacturing the focus of execution is excellence first before timeliness to minimize waste. In the service industries, however, the focus is often on responsiveness before perfection. Customers being served like to feel cared for before being served. Thus, the focus of execution in service operations must be on agility, care, and creativity in delivering customers what they love to have, which may be different every time a customer needs service.

The Service Scorecard Architecture presented in this book has seven categories or elements: Growth, Leadership, Acceleration, Collaboration, Innovation, Execution, and Retention (GLACIER). The Service Scorecard was created for achieving the fundamental strategy of any business: sustained profitable growth. Instead of focusing on making money (or profit at any cost), the leadership must focus on realizing profitable growth. This shift requires the utilization of other aspects of the business. A good performance scorecard must trigger critical aspects of the business for achieving its fundamental strategy, which must be constantly articulated for successful internalization by everyone on the executive team.

Growth requires critical thinking at the leadership level for assessing industry position and caring for customer needs. To grow the business, the leadership must clearly understand what its customers would love to have. Only when we care enough to listen to the customer's love-to-have requirements will we establish a successful and profitable relationship with the customer. Knowing the future needs of current customers and the needs of potential customers allows the service provider to develop new solutions to serve its customers.

Leadership is considered great when it can bring out the best in its followers, be it 1, 10, 100, or 1,000s in number. Unless people are mobilized to achieve the fundamental business strategy and objectives, sustaining profitable growth will be a daunting task. One of the best known ways to bring out the best in people is to recognize the best of people. Good breeds more good, and success breeds more success; thus, recognition of success will bring out more success. Besides, the leadership must ensure that the business is profitable while it is growing; otherwise, employees will perceive their work as a waste of their time.

Acceleration is defined as the rate of improvement to achieve ideal or desired business objectives. Accelerating improvement and reduction in waste will continually contribute to the bottom line of the company. Besides, customers ask for better, faster, and more value—not cheaper service. To provide more value faster and better requires each department manager to focus on producing more, better and faster. Ultimately, the best corporate performance will be governed by the worst departmental performance. Basically, the worst of a company is the best it can deliver to its customers. Acceleration in performance improvement continually raises the bar for higher value to the customer.

Collaboration is an imperative when accelerating performance. If a department or process has a goal to improve 5 percent per year, people usually wait for the change to come by itself; they generally do not challenge themselves to achieve improvement. The 5 percent improvement is not aggressive enough to challenge them and cause them to seek help. However, if the goals for improvement are set aggressively, collaboration from other departments, processes, or people will be required to accelerate improvement. Achieving 50 percent or more improvement requires passion to collaborate for achieving desired results.

Innovation is an outcome when people collaborate. When people work together, new ideas abound, creativity is cultivated, and innovative solutions are the outcome. Innovation to achieve growth through R&D (research and development) functions has been inefficient and slow at best. Typically, an R&D department develops a new product or service that is delivered through operations with a ton of challenges. The resulting quality and efficiency degradation leads to unsatisfactory results and delays delivery of products or services. Thus, the involvement of operations throughout the service life cycle accelerates improvement at any level.

Execution represents producing or providing service with optimum resources on time and delighting the customer. In service businesses, the customer experiencing joy matters because people are involved. Customers tend to be sensitive to receiving service without a smiling attitude. Thus, in service execution, people processes must be designed to facilitate agility, care, and creativity, as well as a sense of going the extra mile to please the customer. Basic process management principles still hold true for service processes as well; the people aspects just need extra attention.

Repeat business from customers receiving service, or Retention, is fundamental to survival as well as achieving sustained profitable growth. The cost of new customer acquisition in the service sector is much higher than that of keeping a repeat customer. Thus, effort must be invested in listening to the customer for growing requirements and customer feedback to identify opportunities for improvement. Repeat business pays for the expenses, and the new business pays for the profit. A service business cannot survive without repeat customers. Thus, specific strategies must be developed to bring the customer back continually, irrespective of the nature of the service.

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