©2013 Dr. Scott E. Sampson
http://services.byu.edu
Instructor slides to
accompany
Essentials of Service
Design, 2nd Edition
Instructor in-class use only.
Please do not distribute.
Provided by Dr. Scott Sampson
Brigham Young University
Provo, Utah, USA
©2013 BYU
Essentials of Service Design 2/E
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http://services.byu.edu
Chapter 1: Services
Designed to
Disappoint?
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Call centers
What do you experience?...
Thank you for
calling Comcast.
I hope you have
not been waiting
long.
Do you mind if I put
you on hold again
while I talk with my
supervisor?
…or…
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Financial institutions
What do you experience?...
I love coming to
this bank. It
makes me feel
more confident in
my life.
That is too bad that your credit card number
was stolen. If you will just fill out these affidavit
forms and bring them back in we can process
them at our home office and re-issue the card
and then you can go on with your life.
This process sucks.
Did you know that?
Do you even care?
…or…
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Financial institutions prone to disappoint
“A [2010] Harris survey reveals that more and
more Americans say they don’t believe a word
of what banks and credit card companies are
telling them.”
2,755 U.S. adults surveyed…
Banks
“completely
believable”
4%
“somewhat
believable”
57%
???
39%
Mortgage companies
Credit card companies
2%
2%
47%
34%
51%
64%
From http://www.mainstreet.com/article/moneyinvesting/savings/americans-don-t-trust-banks-credit-card-firms
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http://services.byu.edu
Airlines
Essentials of Service Design 2/E
This
airline really
sucks.
It looks like your flight has been
canceled. We can put you on the flight
tomorrow, so make yourself comfortable.
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http://services.byu.edu
Other services of varying quality…
• Healthcare
• Government services
• Education
• Hospitality services
• Insurance claim
services
• Legal services
• Remodeling services
• Technical support
• Retail services
• Repair services
Essentials of Service Design 2/E
Services…
• some are standouts 
• many are floundering
• often confusing
• often arduous
• often untrustworthy
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American Customer Satisfaction Index
70
72
74
76
78
80
82
84
Manufacturing/Durable Goods
Manufacturing/Nondurable Goods
E-Commerce (selling websites)
Accomodation & Food Services
Health Care & Social Assistance
Energy Utilities
Finance & Insurance
Retail Trade
E-Business
Transportation services
Information services
source: http://www.theacsi.org/
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http://services.byu.edu
Chapter 2:
Understanding
Services
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What are services?
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http://services.byu.edu
Dictionary definitions of “service”
1. “the occupation or function of serving”
2. “the work performed by one that serves”
3. “a form followed in worship or in a
religious ceremony”
4. “the act of serving”
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Two perspectives on service
Intangible product
“A ‘service’ is an intangible
product vs. a ‘good’ which
is a tangible product.”
Essentials of Service Design 2/E
Interactive process
“A ‘service’ is a co-productive
process that involves provider
and customer interactions.”
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Making food – service or not?
processing food
(for future customers)
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processing customer orders
Service!
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Assembly – service or not?
assembling plastic
people
(for future customers)
Essentials of Service Design 2/E
assembling real people
(customers)
Service!
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Auto painting – service or not?
painting autos on an assembly line
(for future customers)
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painting customer’s autos
Service!
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Playing music – service or not?
producing musical recordings
(for future customers)
producing crazed teenagers
Service!
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http://services.byu.edu
What are services?
“Services are production processes that act on or
with customer resources.”
(from The Unified Service Theory*)
Suppliers
inputs
Provider
outputs
Customers
self, belongings, or information
Suppliers
inputs
Service
provider
outputs
Customers
* see Sampson, S. E.; Froehle, C. M., 2006, “Foundations and Implications of a Proposed Unified Services Theory,” Production and Operations
Management, Vol. 15, No. 2 (Summer), pp. 329-343.
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In a nutshell…
“Services process customer resources”
• customers’ selves or effort,
• customers’ belongings, and/or
• customers’ information
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“Services process customer resources.”
Service
provider
Customer provides resources
Service provider adds value
Customer
Service process
accounting
air transportation
auto repair
consulting
dentistry
education
legal services
healthcare
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Customer inputs
financial records
selves and baggage
broken car
business problems
patient’s teeth
student’s mind
legal problems
illness and injuries
Service provider outputs
financial statements
transported passengers
repaired car
business solutions
mended teeth
educated mind
legal remedies
healthier patients
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©2013 Dr. Scott E. Sampson
http://services.byu.edu
Summary: What are services?
“intangible goods”
“an operation that
processes customer
resources”
“a customer-provider coproductive process”
see: Sampson & Snow, 2011, “What are services? An empirical assessment”
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Chapter 3: Creating
PCN Diagrams
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http://services.byu.edu
“Services are co-productive processes.”
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http://services.byu.edu
What is a process?
• Sequence of dependent steps
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http://services.byu.edu
What is a process?
• Sequence of dependent steps
negotiate
supply
contract
identify
ingredients
order
supplies
online
receive
supplies
Essentials of Service Design 2/E
forecast
supply needs
develop
recipes
preheat
ovens
maintain
supplies
cook
pizza
take order
serve
pizza
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http://services.byu.edu
What is a process?
• Sequence of dependent steps
Process Step
(action verb and
object noun)
Precedence relationship
(implies a required
resource state)
negotiate
supply
contract
identify
ingredients
order
supplies
online
receive
supplies
Essentials of Service Design 2/E
forecast
supply needs
develop
recipes
preheat
ovens
maintain
supplies
cook
pizza
take order
serve
pizza
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http://services.byu.edu
Process Entity
Entity
Entity’s Process Domain
An entity’s Process
Domain includes all
processes that are
directly performed
by the entity.
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Process Entity example
Pizza Restaurant
Restaurant’s Process Domain
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Process Entity example
Pizza Restaurant
Restaurant’s Process Domain
negotiate
supply
contract
identify
ingredients
order
supplies
online
receive
supplies
Essentials of Service Design 2/E
forecast
supply needs
develop
recipes
preheat
ovens
maintain
supplies
cook
pizza
take order
serve
pizza
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http://services.byu.edu
Three regions of a Process Domain
Pizza Restaurant
Restaurant’s Process Domain
Direct
interaction
(e.g. with
supplier)
Surrogate
interaction
(e.g. acting
on supplier
resources)
negotiate
supply
contract
identify
ingredients
order
supplies
online
receive
supplies
Essentials of Service Design 2/E
Independent processing
(entity acting on entity’s
owned/controlled
resources)
forecast
supply needs
Surrogate
interaction
(e.g. acting
on customer
resources)
Direct
interaction
(e.g. with
customer)
develop
recipes
preheat
ovens
maintain
supplies
cook
pizza
take order
serve
pizza
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©2013 Dr. Scott E. Sampson
http://services.byu.edu
Three regions of a Process Domain
Pizza Restaurant
Restaurant’s Process Domain
Direct
interaction
Surrogate
interaction
negotiate
supply
contract
identify
ingredients
order
supplies
online
receive
supplies
Essentials of Service Design 2/E
Independent processing
forecast
supply needs
Surrogate
interaction
Direct
interaction
develop
recipes
preheat
ovens
maintain
supplies
cook
pizza
take order
serve
pizza
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http://services.byu.edu
Three regions of a Process Domain
1. Direct Interaction
Entity person acting in conjunction
with another entity person.
People with people.
2. Surrogate Interaction
Entity person acting on/with
resource(s) of another entity.
People with things (belongings,
information).
3. Independent Processing
Entity acting only on/with entity’s
own resources.
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Process Chain Networks
(“PCN”)
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http://services.byu.edu
What is a Process Chain Network (PCN)?
a network of interdependent process chains that
span multiple process entities.
entity
process domain
entity
process domain
entity
processes
entity
process domain
entity
processes
entity
processes
entity
process domain
entity
processes
Essentials of Service Design 2/E
entity
process domain
entity
processes
entity
process domain
entity
processes
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gate
tion
©2013 Dr. Scott E. Sampson
http://services.byu.edu
Interdependent Process Entities
Pizza Restaurant
Restaurant’s Process Domain
Direct
interaction
Direct
interaction
Surrogate
interaction
negotiate
supply
contract
identify
ingredients
order
supplies
online
fill
order
Independent processing
receive
supplies
forecast
supply needs
Surrogate
interaction
develop
recipes
preheat
ovens
Direct
interaction
Surroga
interacti
wait to be
seated
seat
customer
review me
cook
Does
pizzathis
matter to the
restaurant?
create order
wait for
pizza
serve
pizza
maintain
supplies
prepare
check
Essentials of Service Design 2/E
Direct
interaction
eat
pizza
present check
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pay chec
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©2013 Dr. Scott E. Sampson
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Healthcare PCN Diagram
2
Patient
1
Health Clinic
Dir.
Sur.
Ind.
Sur.
Dir.
Dir.
Sur.
3
Insurance Company
Dir.
Essentials of Service Design 2/E
Sur.
Ind.
Sur.
Ind.
Sur.
Dir.
Sur.
Dir.
4
Pharmacy
Dir.
Dir.
Sur.
Ind.
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©2013 Dr. Scott E. Sampson
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Healthcare PCN Diagram
2
Patient
1
Health Clinic
Dir.
PCN
Diagrams
can span
any
number of
entities.
procure
lab tools
Ind.
Sur.
train staff
on tools
clean
lab tools
Dir.
Dir.
discuss
symptoms
analyze
blood
take blood
Sur.
Ind.
wait
feel weak
check-in
at kiosk
drive to
clinic
A/3
submit
payment
claim
pay
covered
amount
develop
payment
schedule
review
claim
Sur.
B/1
4
Pharmacy
Dir.
Dir.
Sur.
establish
medication
coverage
agreement
process
payment
D/4
feel better
3
Insurance Company
Ind.
give
payment
take
medication
call in
prescription
Sur.
Dir.
show
ID
drive to
pharmacy
B/4
Dir.
Sur.
C/4
prescribe
mediction
A/1
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Sur.
Ind.
C/2
Sur.
Dir.
fill prescription
check
ID
check
coverage
tell
copay
amount
submit
payment
claim
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D/2
ogate
action
©2013 Dr. Scott E. Sampson
http://services.byu.edu
Service on a PCN Diagram
Provider
Customer
(Provider’s Process Domain)
(Customer’s Process Domain)
Independent processing
Surrogate
interaction
The provider’s
actions
Direct
interaction
Direct
interaction
Interactive,
co-productive
actions.
Surrogate
interaction
Independent processing
Surrog
interac
The customer’s
actions
“Service”
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Chapter 4: Identifying
the Value Proposition
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Where is customer value?
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Automobile PCN Diagram
Toyota
Driver
process domain
process domain
Independent processing
produce
car
Essentials of Service Design 2/E
interaction
interaction
sell car
Independent processing
drive car
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ogate
action
©2013 Dr. Scott E. Sampson
http://services.byu.edu
Knee surgery PCN Diagram
Healthcare provider
Patient
process domain
process domain
Independent processing
surrogate
interaction
procure
artificial
knee
interaction
interaction
surrogate
interaction
Independent processing
surroga
interact
damage
knee
replace
knee
use knee
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ogate
action
©2013 Dr. Scott E. Sampson
http://services.byu.edu
Consulting PCN Diagram
Consultant
Client
process domain
process domain
Independent processing
develop
expertise
surrogate
interaction
interaction
analyze
data
Essentials of Service Design 2/E
interaction
surrogate
interaction
Independent processing
collect
data
identify
problem
present
analysis
act on
analysis
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surroga
interact
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©2013 Dr. Scott E. Sampson
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Co-productive
Process?
ogate
action
Ethan Allen
Customer
(Ethan Allen’s Process Domain)
(Customer’s Process Domain)
Independent processing
Surrogate
interaction
Direct
interaction
Direct
interaction
Surrogate
interaction
give advice
ask questions
browse
showroom
forecast demand
decide on
furniture offerings
no
source furniture
backorder
item
stock retail stores
fill backorder
deliver item
Essentials of Service Design 2/E
Independent processing
Surroga
interact
trash old furniture
make
selection
in stock?
yes
purchase item
use item
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©2013 Dr. Scott E. Sampson
http://services.byu.edu
Value proposition?
“You’ve got questions,
we’ve got answers.”
“We do it all for you.”
ogate
action
Ethan Allen
Customer
(Ethan Allen’s Process Domain)
(Customer’s Process Domain)
Independent processing
Surrogate
interaction
Direct
interaction
Direct
interaction
Surrogate
interaction
give advice
ask questions
browse
showroom
forecast demand
decide on
furniture offerings
no
source furniture
backorder
item
stock retail stores
fill backorder
deliver item
Essentials of Service Design 2/E
Independent processing
Surroga
interact
trash old furniture
make
selection
in stock?
yes
purchase item
use item
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©2013 Dr. Scott E. Sampson
http://services.byu.edu
Value
representation?
ogate
action
Ethan Allen
Customer
(Ethan Allen’s Process Domain)
(Customer’s Process Domain)
Independent processing
Surrogate
interaction
Direct
interaction
Direct
interaction
Surrogate
interaction
give advice
ask questions
browse
showroom
forecast demand
decide on
furniture offerings
no
source furniture
backorder
item
stock retail stores
fill backorder
deliver item
Essentials of Service Design 2/E
Independent processing
Surroga
interact
trash old furniture
make
selection
in stock?
yes
purchase item
use item
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ogate
action
©2013 Dr. Scott E. Sampson
http://services.byu.edu
Co-productive
Process?
IKEA
Customer
(IKEA’s Process Domain)
(Customer’s Process Domain)
Independent processing
Surrogate
interaction
Direct
interaction
Direct
interaction
forecast demand
Surrogate
interaction
browse
showroom
design furniture offerings
Independent processing
Surroga
interact
trash old furniture
make
selection
fabricate furniture kits
transport
item to
register
ship to retail stores
use item
assemble item
purchase item
transport item home
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ogate
action
©2013 Dr. Scott E. Sampson
http://services.byu.edu
Value proposition?
“You’ve got questions,
we’ve got answers.”
“We do it all for you.”
“We will enable you
to do it yourself.”
IKEA
Customer
(IKEA’s Process Domain)
Independent processing
(Customer’s Process Domain)
Surrogate
interaction
Direct
interaction
Direct
interaction
forecast demand
Surrogate
interaction
browse
showroom
design furniture offerings
Independent processing
Surroga
interact
trash old furniture
make
selection
fabricate furniture kits
transport
item to
register
ship to retail stores
use item
assemble item
purchase item
transport item home
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ogate
action
©2013 Dr. Scott E. Sampson
http://services.byu.edu
Value
representation?
IKEA
Customer
(IKEA’s Process Domain)
(Customer’s Process Domain)
Independent processing
Surrogate
interaction
Direct
interaction
Direct
interaction
forecast demand
Surrogate
interaction
browse
showroom
design furniture offerings
Independent processing
Surroga
interact
trash old furniture
make
selection
fabricate furniture kits
transport
item to
register
ship to retail stores
use item
assemble item
purchase item
transport item home
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Difference?
Ethan Allen
Independent
processing
Customer
Surrogate
interaction
Direct interaction
Direct interaction
get/give
advice
design
furniture
offerings
Surrogate
interaction
Independent
processing
browse
showroom
trash old
furniture
make
selection
source
furniture
in stock?
use item
backorder
item
ship to retail
stores
fill
backorder
purchase
item
transport
home
versus
IKEA
Independent
processing
Customer
Surrogate
interaction
Direct interaction
Direct interaction
design
furniture
offerings
fabricate
furniture
kits
ship to
retail
stores
Essentials of Service Design 2/E
purchase
item
Surrogate
interaction
Independent
processing
browse
store
trash old
furniture
make
selection
use item
transport
item to
register
assemble
item
transport
home
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Principles of PCN Analysis
• Customer value is usually realized in the
customers’ process domain.
• Therefore, it is important to understand what goes
on in customers’ process domain.
• The primary purpose of service interaction is to
facilitate value realization.
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Chapter 5: Strategic
Process Positioning
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Process positioning
analyze
investments
Provider's Process Domain
Independent
processing
Surrogate
interaction
?
?
Investor's Process Domain
Direct
interaction
Direct
interaction
?
Surrogate
interaction
Independent
processing
?
?
What process positioning is best?
What does it depend on?
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Process positioning
analyze
investments
Provider's Process Domain
Independent
processing
Surrogate
interaction
Option 1:
analyze
investments for
printing in a
newsletter
Option 2:
centrally analyze
client investor’s
investment
portfolio
Essentials of Service Design 2/E
Investor's Process Domain
Direct
interaction
Direct
interaction
Option 3:
discuss client investor's
financial needs and help
client analyze investment
alternatives
Surrogate
interaction
Independent
processing
Option 4:
analyze own
investments using
provider's online
tools
Option 5:
analyze own
investments
using a
spreadsheet
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©2013 Dr. Scott E. Sampson
http://services.byu.edu
Process positioning
analyze
investments
Provider's Process Domain
Independent
processing
Surrogate
interaction
Option 1:
analyze
investments for
printing in a
newsletter
Option 2:
centrally analyze
client investor’s
investment
portfolio
greater scale and expertise
Investor's Process Domain
Direct
interaction
Direct
interaction
Option 3:
discuss client investor's
financial needs and help
client analyze investment
alternatives
lowest
provider efficiency
Surrogate
interaction
Independent
processing
Option 4:
analyze own
investments using
provider's online
tools
Option 5:
analyze own
investments
using a
spreadsheet
greater customization potential
Process positioning decision…
process requires
specialized skills
Essentials of Service Design 2/E
process
requires both
process requires
customized attention
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ogate
action
©2013 Dr. Scott E. Sampson
http://services.byu.edu
Sandwich example
assemble sandwich
Sandwich Supplier
Sandwich Consumer
Supplier’s Process Domain
Consumer’s Process Domain
Independent processing
assemble prepackaged
sandwich in a factory for
sale at grocery store
Surrogate
interaction
Direct
interaction
Direct
interaction
Surrogate
interaction
Independent processing
assemble sandwich at
home using ingredients
from the refrigerator
assemble
sandwich
to order in
restaurant
kitchen
assemble
sandwich at
a buffet
restaurant
assemble
sandwich at a
Subway sandwich
as customer
selects orders
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Surrog
interact
ogate
action
©2013 Dr. Scott E. Sampson
http://services.byu.edu
Principles of process positioning
assemble sandwich
Sandwich Supplier
Sandwich Consumer
Supplier’s Process Domain
Consumer’s Process Domain
Independent processing
Surrogate
interaction
assemble prepackaged
sandwich in a factory for
sale at grocery store
assemble
sandwich
to order in
restaurant
kitchen
Direct
interaction
Direct
interaction
assemble
sandwich at a
Subway sandwich
as customer
selects orders
Surrogate
interaction
Independent processing
assemble
sandwich at
a buffet
restaurant
assemble sandwich at
home using ingredients
from the refrigerator
Principle #1: Process inefficiency
Principle #2: Customization
Principle #3: Economies of scale
Principle #4
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©2013 Dr. Scott E. Sampson
http://services.byu.edu
Principles of PCN Analysis
• Process positioning has strategic implications.
• Process positioning defines your value
proposition.
• You can change and improve your value
proposition by repositioning your process.
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