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This book asks: (1) How is the service sector growing; (2) what is service innovation; (3) what are the drivers of service innovation; and (4) how can organizations innovate service in a structured way? The book views service as the value-creating activity of customers. The role of a company is to provide the resources and knowledge to enable value creation. We develop a model of service innovation. We also develop guidelines for what is required from the organizational perspective: how should an organization view its customers to be successful, what does a service development process look like, and how to transform an organization that has a product focus to a service orientation. Chapter 7 summarizes many of the key insights from Chapters 1 through 6. Service innovation is different from new product development for goods. It is iterative and less structured than NPD for goods. Scientific inquiry and true experimentation are built into a good service innovation process. A deep understanding of customer needs and the value-creation process can be obtained only through direct observation and participation. Important customer knowledge cannot easily be shared; it becomes second nature and is contextual, tacit, or sticky knowledge that is not communicated even within an organization.

At the age of 39, Solmaz Altın took over the helm at Allianz Turkey. Solmaz quickly realized that, although the insurance market was thinly penetrated in Turkey, the company was operating in a very competitive environment with pressure on prices and, hence, cost control. Consequently, customer satisfaction was suffering. Despite the growing Turkish economy and a favorable regulatory environment, Solmaz was struggling to grow the company without further sacrificing customer satisfaction or profitability. Used as part of a course on service excellence, the case provides an insurance context in which to explore the link between customer satisfaction and competitive performance and challenges the students to ponder the extent of the relationship between customer satisfaction and financial performance. In the (A) case, the Allianz Turkey executives focus their initial efforts on the claims process of the automobile insurance business-a lowly rated segment of the insurance industry by their policyholders. They begin by creating a map of the customer experience and then doing extensive consumer research to determine what really matters to the policyholder. The insights gleaned from the detailed consumer analysis are quite different than the original beliefs of the management team. Students must devise a new customer service model for the claims process based upon the customer analysis. The (B) case describes the new customer service model for the claims process and the resulting increase in customer satisfaction as measured by the Net Promoter Score (NPS) metric. Students must first decide whether the initial effort is a success and then develop a plan for the future.

At the age of 39, Solmaz Altın took over the helm at Allianz Turkey. Solmaz quickly realized that, although the insurance market was thinly penetrated in Turkey, the company was operating in a very competitive environment with pressure on prices and, hence, cost control. Consequently, customer satisfaction was suffering. Despite the growing Turkish economy and a favorable regulatory environment, Solmaz was struggling to grow the company without further sacrificing customer satisfaction or profitability. Used as part of a course on service excellence, the case provides an insurance context in which to explore the link between customer satisfaction and competitive performance and challenges the students to ponder the extent of the relationship between customer satisfaction and financial performance. In the (A) case, the Allianz Turkey executives focus their initial efforts on the claims process of the automobile insurance business-a lowly rated segment of the insurance industry by their policyholders. They begin by creating a map of the customer experience and then doing extensive consumer research to determine what really matters to the policyholder. The insights gleaned from the detailed consumer analysis are quite different than the original beliefs of the management team. Students must devise a new customer service model for the claims process based upon the customer analysis. The (B) case describes the new customer service model for the claims process and the resulting increase in customer satisfaction as measured by the Net Promoter Score (NPS) metric. Students must first decide whether the initial effort is a success and then develop a plan for the future.

Agarwal Packers and Movers Limited is an example of a business that delivers superior customer service with continuous logistics design innovation. The case provides details of a leading logistics and solution provider for household goods relocation who in past was facing problems due to increase in number of customer complaints and claims and also increase in packaging costs. APML believed that mistakes could be avoided and defects could be prevented. Solutions were offered by modifying the processes through innovation in its services resulting in customers' delight. As a result of continuously improving capabilities, people, processes, and technology; the services improved too. The case gives an insight on how the company improved its services by innovating and how these innovations were sustained by such a large organization with many branches throughout India.

Swedish electronics accessories retailer Kjell is considering several issues as it plots its next stage of growth. How should it balance opportunities to expand retail stores into a new market (Oslo, Norway) with additional growth in its home market-Sweden-with decisions about investments to build out its nascent online channel? Simultaneously, the company is piloting a new sales associate performance management system: should store associates be measured by monthly targets, or will daily targets prove to be more useful?

In Chapter 2, Strategic Differentiation (40 pages), the author explores one of the two basic approaches to service leadership: creating strategic differentiation. This approach is focused on the creation of innovative service offerings. Chang defines core and supplemental service elements and how services have a life cycle, much like products. He reviews methods for idea generation and provides an in-depth look at the "DeepThink" approach. He explains how to achieve success by using DeepThink within a virtual team structure. He considers key issues in determining which ideas to pursue, such as financial viability and marketplace success, and outlines a stage-gate process to address the five main issues in service innovation. He looks at the importance of customer satisfaction and retaining learning from the innovation process. He describes the responsibilities of service enterprise leaders and concludes with practical insight for managers. The chapter includes two appendices for implementing a DeepThink methodology and one appendix on evaluating financial viability.

Chapter 1, Service Growth (10 pages), considers the development of the service economy across several segments, including professional, business, government, and education. The author reviews trends in service growth and explains the factors that predict continued growth in service jobs, including the aging population's need for services, customer demand for sophisticated services, and market expectations for technology-based service improvement. He explores how a service enterprise can maximize resources such as employees, knowledge, and technology, and suggests that there are two approaches to service leadership-strategic differentiation and operational excellence-each of which is explored in subsequent chapters.

Having explored one approach to service excellence (strategic differentiation through innovation) in Chapter 2, Chang explores his second approach in Chapter 3, Operational Excellence (49 pages), which focuses on improving work productivity. He explores how managers can improve service speed, quality, and cost through a combination of the Lean principle and Six Sigma methodology. He reviews web-based tools for customer relationship management, enterprise resource management, and project management tools, and provides real-world examples of each. He explores emerging web services used by companies like Amazon.com and provides an in-depth analysis of Service Oriented Architecture (SOA) and the important implications for managers. He shares insight into the implementation of programs that improve business operations and outlines practical steps and key considerations. The chapter includes an appendix on the using Lean Six Sigma as a service model.

In Chapter 4, Take Charge-Conclusions (16 pages), the author summarizes the knowledge, skills, and values that he considers essential to service leadership. He reviews the foundational skills and capabilities that are essential to all service professionals. He presents a Three-Decker Knowledge Architecture that outlines twelve additional skill sets that are critical for advanced leadership. He considers a model for leadership and provides a list of ten habits for successful service professionals. He frames the challenges facing the service industry in six dimensions: inside, outside, present, future, local, and global, and summarizes research on global economic growth. He explains the importance of satisfying the five key stakeholders and maps his two paths to service excellence to each stakeholder. He concludes with an overview of his "Take Charge" model for service professionals and leaders to achieve service excellence.

Set in August 2011, Meru Cabs ¾ A Spectacular Growth Story is a case that documents the design and positioning of a service business in India, where the service industry is the fastest growing and most competitive sector. It tracks how strategies, processes and technologies are integrated to reduce cost and offer world-class service. Specifically, it traces the factors that have contributed to making Meru Cabs (Meru) the largest taxi operator in India and third largest in the world. Success in the four major cities of India has given senior management the confidence to consider rollouts in other cities in India and abroad. However, the immediate focus is on improving service and reducing the cancellation rate in the cities where Meru currently operates. The case describes the design and implementation of the service from the twin perspectives of efficient service operation and customer orientation, and raises questions related to the expansion of the service to other Indian and global cities. It also takes into account such factors as cab reengineering, driver selection, cab assignment, cab maintenance and fleet maintenance for the proposed service improvement and extension.

This case provides the setting to evaluate the capital raising and management strategies taken by Genting International/Singapore to build Resorts World Sentosa. The case introduces the Singapore Integrated Resorts concept which is a distinct new business model in the global gaming business. This is followed by a review of the parent company behind Resort World Sentosa, Genting Berhad and Genting International which was subsequently renamed Genting Singapore. The case then discusses the several capital raising initiatives and management strategies taken by Genting International/Singapore for the development of Resort World Sentosa.

ITC's hotel division successfully implemented several structure and process-oriented drivers of sustainability by leveraging its dominant position among India's luxury hotels, financial might and overall group commitment to sustainability. These design restructuring efforts resulted in eight of ITC's luxury hotels being awarded LEED (Leadership in Energy and Environmental Design) Platinum ratings, making the ITC Hotel chain the 'greenest luxury hotel chain in the world'. The case provides an overview of the process that ITC Hotels adopted for designing luxury responsibly. It also describes the various challenges and issues that contributed to the management's decision to retrofit eight existing properties and launch ITC Gardenia along LEED guidelines to attain Platinum ratings. The case is set against the backdrop of a meeting at which Nakul Anand, Executive Director, ITC Limited , and his top management team are discussing the possibility of retrofitting eight of ITC's existing luxury hotels along LEED Platinum rating parameters. In order to make ITC Hotels the world's greenest luxury hotel chain, they know that not only will they have to design their future properties along LEED guidelines to attain Platinum ratings, but will also have to remodel the structural design, systems and processes at their other luxury brand hotels in India. Since the 1980s, ITC Hotels had tailored their service and product offerings around environmental concerns such as water recycling, energy conservation and waste management. However, these efforts had to be significantly scaled up to meet the strict standards of LEED. This scale-up involved significant costs, operational redesign and revamping of the organizational culture. Given these challenges, Anand and his team are faced with the question: Should they or should they not retrofit the existing properties?

Cross Country (renamed Agero in 2011) operated call centers that coordinated with thousands of small, independent towing companies-Cross Country's "service provider network"-to deliver roadside assistance services, such as vehicle towing and tire changes, to motorists covered by automakers' warranties and insurers' policies. The case describes Cross Country's evolution from 1972 to 2012 in three phases. This allows students to, at various stages, grapple with defining Cross Country's business (what business is it, and should it be, in?) and its primary customer (vehicle makers and insurers? motorists? service providers?). The answers to these questions have important implications for organization design. During the first phase, from 1972 to 1998, founder Sidney Wolk built the business through personal relationships with clients. A passionate entrepreneur, his approach to growth-secure customers first, figure out how to make money later-was remarkably successful, if sometimes chaotic. Facing an increasingly commoditized marketplace, in 1998 Wolk hired professional managers who implemented formal performance management systems and invested in sophisticated data analytics. From 1998 to 2007 (phase two), these investments allowed Cross Country to quantify service providers' impact on motorist satisfaction, monitor service providers' performance, and introduce programs to strengthen top-performing service providers' loyalty to Cross Country. Concurrently, the company undertook a two-step organization redesign to focus more resources on service providers (the new primary customer?), improve market-focused innovation and increase client satisfaction. In phase three, from 2008 to 2012, Cross Country entered the high-tech telematics/connected-vehicle business, invested in additional innovations to strengthen its service provider network, and rebranded itself as "Agero." Wolk and his team believed Cross Country had "more driver information than any other company."

State Bank of India: SMS Unhappy, is a deceptively simple but comprehensive case of a public sector company using a customer complaint management tool as a catalyst to improve overall service performance and overtaking even its private sector competitors in terms of both customer satisfaction and organizational performance. The case describes a novel, mobile phone-based complaint redressal system designed and implemented by Shiva Kumar, chief general manager (south) of the State Bank of India (SBI). The long-term impact of the simple system was the alignment of the entire organization, especially at the branch level, with customer-defined parameters of performance, driving it towards very high levels of customer-centricity. The SMS Unhappy initiative brought greater levels of transparency to all levels of branch performance, resulting in superior service operations with low variance, and ultimately, better customer response.

This case teaches the impact of variability on process performance. In 2009, media coverage of long wait times in a local hospital brought considerable embarrassment to the state secretary of health. The hospital, located in a midsize European city, had the only emergency care facility in its metropolitan region. After the delays in care were brought to light, the secretary of health ordered the hospital's CEO to produce an action plan-and measurable progress-before the end of the month. But the CEO faced scarce resources and was already under pressure to reduce spending. What reforms should he make? Would he need to increase the emergency department's staff, and if so, how should he balance the costs? As this case explores the challenges of the healthcare industry, students learn to address questions of process mapping and operations.

This case compares and contrasts four different models for delivering cancer care in India and the US. Students are asked to select the best model in its alignment with the Six Forces in those two countries and Africa, to which one of the models is considering expansion, and intrinsic business characteristics. The Indian models are all focused factories, but one is a hub and spoke model, with a radiology hub and ambulatory spokes, while the other offers only ambulatory services. The U.S. models are all focused factory hospitals, one academic and the other a private, for-profit firm located on the grounds of teaching hospitals.

Cancer Treatment Centers of America (CTCA), a U.S. network of four privately owned oncology focused factory hospitals, was weighing options for growth. CTCA was entirely cancer focused and specialized in treating patients with complex and advanced-stage cancers, who were reached through advertising its integrative, team-based approach to care. CEO Stephen Bonner needed to decide whether to focus future expansion on building additional full-scale hospitals or pursuing a hub-and-spoke model, in which numerous oncology outpatient centers would be built in the region of each CTCA hospital. His decision would be made in the context of CTCA's unique business model and treatment philosophy and the public policy landscape, including certificate-of-need laws and the advent of Accountable Care Organizations (ACOs) and bundled payments. CTCA's for-profit status and direct-to-consumer advertising made it a target, he knew.

The case examines Ritz's processes, leadership, technology, systems, and people as they align to achieve long term goals. In 1992, the Ritz-Carlton Hotel chain won the top US industry prize for excellence in quality and service. However, customer demand for value, as well as growing competition within the hotel industry, was making it harder for the company to continue this legacy. Students learn about Ritz-Carlton's history and corporate philosophy, and analyze the challenges of being a quality service provider. Issues addressed include how the company should remedy defects in its customer service, achieve its customer retention goals, and maintain a culture of service while experiencing rapid growth.

The founders of Beleza Natural, a Brazilian chain of beauty institutes which specialized in products and services for women with curly and wavy hair, were at a key juncture for their venture; they had to decide how to consolidate their business model and growth. This case explores potential capacity investments in Beleza Natural's environment and the associated issues of workforce management. Students are asked to determine how these measures might improve Beleza Natural's operations and how the management team should prioritize the issues they face. Students learn the importance of selecting a process matching business strategy and marketing plans.