Competing in a Service Economy: How to Create a Competitive Advantage through Service Development and Innovation

Citation

Narasimhan, K. (2004), "Competing in a Service Economy: How to Create a Competitive Advantage through Service Development and Innovation", Managing Service Quality: An International Journal, Vol. 14 No. 2/3, pp. 258-258. https://doi.org/10.1108/09604520410528671

Designing, developing and delivering high‐quality service has become important, even for manufacturing firms trying to compete in the knowledge economy and the global market. This book is a hands‐on guide with illustrative examples from a number of multi‐national companies such as Disney, Ericsson, and IKEA.

Andres Gustafsson is a research leader at the Service Research Centre, Karlstad University, Sweden; and Michael D. Johnson is the D. Maynard Phelps Professor of Business Administration and Professor of Marketing at the University of Michigan Business School (UMBS). They are also the authors of UMBS best‐selling book Improving Customer Satisfaction, Loyalty, and Profit.

The book comprises six chapters, chapter by chapter notes (which is nothing but a bibliography) at the end and an Appendix (an excerpt of the article by Bo Edvardsson and Bo Enquist, “The IKEA saga: how service culture drives strategy”, Service Industries Journal, Vol. 22 No. 4, 2002, pp. 153‐86).

In chapter 1, first the key differences between goods and services are briefly covered followed by the reasons for the increasing importance placed on service development. The roles played by services and their development are illustrated with the aid of two case studies, before a framework is introduced for developing services to gain a competitive advantage.

In chapter 2, the importance of formulating a strategy and devising a plan to gain competitive advantage is emphasized. How building a customer service culture, focusing on customer segments, and linking activities to form a seamless system, in which employees and customers interact, are employed in “creating a service advantage” are briefly described.

Service maintenance is the topic of chapter 3, in which it is shown how to view service processes from a customer's perspective to remove defects that cause customer dissatisfaction. The steps involved in the process from commitment to eliminating things that have gone wrong, identifying and prioritizing defects, to testing and implementing selected solutions are briefly explained.

How to retain customers by understanding customers’ requirements and a framework for improving service by optimizing performance are covered in chapter 4. Using the IKEA case study, the process of building the “lens of the customer” using critical incident technique to define and operationalize product and service attributes; the application of principal components regression analysis for setting priorities; and the application of quality function deployment to transform customer requirements into service features are briefly covered.

The importance of the customer involvement in the co‐production of new ideas and designs is emphasized in chapter 5 dealing with service innovation, a prerequisite for attracting new customers. A six‐stage process from directing energy to testing ideas using consensual assessment technique, and implementing them is explained.

The final chapter is devoted to recapping what is covered in the previous five chapters, by exploring the process of building culture, staying focused and linking activities in the pursuit of creating a competitive advantage.

The book is well written with a brief introduction to the chapters, a summary of the chapters at the end of each chapter giving a lead into the topic of the next chapter, followed by questions to be answered about an organization's stand and performance. A very useful book to consider by those pursuing differentiation based on service quality.