If managers don’t get all four pulling together, they risk pulling the enterprise apart. There is no “right” way to combine them the appropriate design of one depends upon the other three.
Additionally, however, service firms must manage their customers, who do not simply use the service but also can be integral to its production: Because customers’ involvement as producers can wreak havoc on costs, companies must also develop creative ways to fund their distinctive offerings, by providing a self-service alternative, for example, or by offsetting expenses with operational savings.Ī close look at successful service businesses-Wal-Mart, Commerce Bank, the Cleveland Clinic, and others-reveals that effective integration of the four elements is key. Just like a product that’s going to market, a service needs to be compellingly designed, and management must field a workforce capable of producing it at an attractive price. After years of extensive research and analysis, she offers an approach for crafting a profitable service business based on four critical elements: the design of the offering, employee management, customer management, and the funding mechanism. In this article, Harvard Business School’s Frei explains why and urges companies to add some new ones to the mix. Although they are valuable to service managers, they aren’t sufficient for success. Many of the management tools and techniques used in service businesses were designed to tackle the challenges of product companies.
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