An Executive Summary Report - The Usage and Effectiveness of New Service Development Tools

Grappling with fierce competitions and economic instability, financial service institutions invest a lot in new service development (NSD) in an attempt to attract new customers and gain competitive advantage. However, to their dismay, NSD success rate is on average 58%To turn things around, a number of NSD tools have been proposed to facilitate development efforts. For a complete report, please contact Jin Dayu at dayu_jin[at]nus[dot]edu[dot]sg

The purpose of this survey is to estimate the usage and effectiveness of NSD tools adopted by Singapore financial service institutions. Specific objectives include: (1) analyze NSD tools usage pattern; (2) assess NSD performance and its measurement; (3) estimate the impact of NSD tools on NSD performance; (4) estimate the influence of NSD innovativeness on the choice of NSD tools.

This report is based on information collected from 34 NSD projects in a mailed survey of 532 Singapore financial institutions. The results for each objective are presented in the following sections.

NSD Tools Usage Pattern
NSD tools are classified into market tools (to encourage customers’ input) and development tools (to facilitate technical development and testing). Their usage is inspected by looking into different development stages and industries.

• Market tools are used more frequently than development tools. Top 3 market tools are brainstorming, benchmarking, and scenario planning. Top 3 development tools are concept testing, structured analysis and design, and service blueprint;

• Most market tools are used in NSD stages with intensive customer interaction while most development tools are employed in the design and testing stages;
• Fund management firms utilize more market tools than other industries, and banks more development tools.

NSD Performance and Its Measurement
NSD performance is assessed by differentiating market performance (commercial outcomes) from operational performance (project execution outcomes). Performance rating and importance attached to specific measurement are evaluated across various industries.

• Financial service institutions obtain better market performance than operational performance. Specifically, real estate firms and banks report above-average operational and market results, and insurance firms achieve above-average market results;
• Firms emphasize more on market outcomes than operational outcomes. Prevalent NSD performance measurements include obtaining high product quality, achieving competitive advantages, and satisfying customer needs;
• The more the importance is attached to certain performance measurement, the better the performance is reported.

NSD Tools Effectiveness
Each NSD project is labeled as either success or failure according to its market performance and operational performance. The tools usage in successful projects is compared to that in failed projects.

• Market tools have a positive impact on operational performance, but not on market performance;
• Development tools have a positive influence on market performance, but not on operational performance.

NSD Innovativeness
NSD innovativeness is mapped along four independent dimensions—firm familiarity, firm fit, customer familiarity, and customer behavior change. Tools usage is compared between projects with higher and lower rating on each dimension.

• Most financial products are modifications and extensions of existing products.
• Firms are inclined to develop services that are compatible with existing resources and are familiar to customers.
• NSD tools are used more frequently when (1) service concepts are new to firm; (2) service concepts are new to customers; (3) firm has sufficient capital and human resources; and (4) behavior change is required for customer consumption.
  

New Service Development (1) – Public Service

When making introduction to others that my research is about new service development, I was often questioned "what is new service?". To be frank, I don't know the exact answer even if after doing research for almost 2 years. Thus, I decide to write a series about new service development in different industries so as to give you a taste of "what is new service?".

INTRODUCTION: Singapore Work Pass Division processes work passes for foreigners who plan to work in Singapore. As one of the best public service provider in the world, it strives to improve processing efficiency and customer experience. Thus, the business process redesign is conducted in partnership with IDEO, an innovation consulting firm.

PROCESS: The project team targeted at enhancing customer experience through the redesign of internal processes and supporting policies. They took a human-centered approach, which focuses on the people who use the process (e.g., staff and applicants). The NSD project comprises incremental, evolutionary, and transformational upgrades in services, interactions, spaces, communications, and staff training.

RESULTS: The efficiency improved impressively for an already quite efficient process. Previously, the division served at least 80% visitors within 30 minutes, and now more than 95% are served within 15 minutes.

EXAMPLES:

Visitors book appointments on-line in advance even before they set foot into Singapore.

Visitors are called by their name instead of queue number.

A square “doughnut” instead of the traditional straight-line counter is built so that counters never seemed inadequately manned.

Amenities are provided to entertain kids while their parents register for work passes.

Note: for a complete report, please log on to: www.ideo.com/work/business-process-redesign

Lesson Learned - How to Find Company Contact Information

The unit-of-analysis in my survey is senior manager who is in charge of new service development, most probably from marketing and business development functions. Since my databases don’t provide such specific information, I have to handpick contacts from company websites. After days of work, I found that there are several ways to retrieve contacts from the Internet (click the photos to enlarge).

Home >> About us >> Management team. This is the most popular place where company put contact information. Some banks use website as part of business (e.g., online banking). In such case, you can try to locate “About XXX” at the bottom of the webpage and then you will enter the corporation website.

Home >> Management team. This is the second most likely place where you can find what you are looking for.

Home >> Global location >> Regional website. It is possible you will log on MNC’s website in which you have to choose your own region. After that, everything is just the same as when you are searching in a local website.

Home >> Contact us >> People locator. If you are lucky enough to find the people locator, you can probably find managers at any level you want.

Home >> Contact us. This is the most efficient way to find company address, but it doesn't appear to be very effective to find contact information. You still can have a try. There may be surprise waiting for you like the following,

Home >> @#$ >> ^&* >> +%@ >> …. Searching everywhere, you still cannot find any contact information. Don’t be panic. There are website like Businessweek and Google Finance that you can find at least board member names.


After you find company information, you may wish to compile it into a company list. Refer to How to Make a Company List.

Lesson Learned – How to Make a Company List

Finally, it comes the time for my survey mailing. Actually I began preparing this survey more than two months ago, so I would like to share with you some of the experiences and lessons about how to make a company list.

Step 1—Be clear about what you are looking for.

First thing first, you should make a list of the key information you are looking for. What is the focal industry, service or product? What are the company types, private or public, listed or unlisted? What’s the company size, MNC or SME? Who will be your respondents, CEOs or senior managers?

My study is about new service development (NSD) tools in financial service industry, so I am looking for: (1) names and addresses of financial service companies; (2) names of business development managers; (3) company size.

Step 2—Collect existing database.

Rome was not built in one day. You have to resort to existing databases and base your own on them. You can consult with your university librarians or seniors to see which databases are at your disposal.

I collected four databases in total and they supplement one another.

Step 3—Find strength and weakness of each database.

Then you should spend some time familiarizing yourself with each database. What key information do they include? What is missing? Are they up-to-date? Are they easy to organize? Are they specific enough? Do they offer a broad enough coverage of the industry?

I randomly choose some company from different databases and compare them to the information provided in company’s website (most accurate). The following is what I found,

Step 4—Choose main database.

Main database is the one you will do modification on it later on. After choosing on main database, you will be able to focus more easily and do the job more efficiently. It should possess, if not all, most of the key information.

OneSource cover all the three type of information I want so that I chose it as my main database.

Step 5—Supplement main database.

No database is perfect, so you should supplement main database with the missing company entries from other databases. This is the most critical yet time-consuming part of the whole process and be prepared that it will take you days and even weeks. One tricky part is that different database may use different names to indicate the same company, i.e., LTD/Limited/Ltd. So, I suggest you first sorting all the companies by their names and then compare the main database with only one database at a time. It’s better to color entries from different database because you can you will know which items have already been updated.

The following is a screen shot of my main database where I use different colors to indicate different sources, and you can find it’s really a tedious work.

Step 6—Polish final database.

After combining databases, duplicated items will become a big problem. It is very annoying for companies to receive several surveys, so you need to pay more attestation to that. What you can do is to sort in a single column (e.g., company name, company address, and manager name) to find whether there are similar items.

Another issue is incorrectness. You don’t want your survey to be returned due to incorrect address, so you’d better double-check the information which you are not so sure with the company website (How to Find Company Contact Information).

Some footnotes: some very helpful videos about survey implementation.

Mail Merge

Create mailing labels

Research Methogology - How to Increase Response Rate

Now I am about to conduct my own survey on NSD tools application and adoption. My top concern is the low response rate. Thanks to the research methodology class and several reference books, I get to know some factors that I can control to increase response rate.

All the methods are classified according to the survey procedure, so one can make it as a check list to see whether certain point is considered or not. Besides, the examples under each point are the real situation I adopted in my questionnaire design. I wish this may help those PhD students who share the same concern with me.

Just as an old saying goes, plan for the worst and hope for the best!

Part 1 - Constructing the Questionnaire

Place interesting questions first. Questionnaires often get discarded when the respondent peruses the questionnaire but cannot figure out where to start, or what the first question means.

• "Has your company done any NSD project in the past 3 years?"

Make questionnaire short and easy. This lessens the perceived cost of responding. However, limiting a questionnaire to only a couple of questions may make it seem less useful or important.

• I indicated in the cover letter that “this questionnaire should take about 20 minutes.”

Minimize requests to obtain personal information.

• Email was the only personal information I requested as it was used to send summary report.

Part 2 - Constructing the Cover Letter

Highlight survey salience. Respondents are more interested in the topic which is more relevant and important to them. So, choose the research topic more relevant and important to the respondents.

• "It aims to find out: (1) what are the new service development (NSD) tools frequently used in various NSD projects? (2) how do their applications influence project efficiency and success rate?"
• "A summary report of this study intends to offer a new perspective for successfully conducting NSD projects."

Ask for help. People often get a sense of accomplishment from knowing that they helped someone else solve a problem.

• “We are writing to ask for your help with an important study…”
• “Your response is very important to our work.”
• “Your thoughts and opinions can really help us out.”

Highlight opportunities to respond are rare. People have a tendency to view scarce opportunities as more valuable than more common opportunities.

• I used the deadline dates for returning a questionnaire: “...preferably before November 15.”
• “Your company is among a small group that is randomly selected for this study.”

Ensure confidentiality. This may lower perceived cost of their response being made public and should also foster a sense of trust. However, strong statements may backfire.

• I included a statement of confidentiality: "Your responses are voluntary and will be kept strictly confidential. Survey data will be aggregated and statistically analyzed exclusively for research purpose."

Show positive regard. Being regarded positively by another person has reward value to many people.

• Phrases such as “we appreciate very much your help” or “many thanks in advance” can be added to correspondence.
• Use a follow-up postcard designed as a thank you for the prompt return of “the important questionnaire we sent to you recently.”

Make the task appear important.

• Make each contact look important by printing personalized cover letters on letterhead stationery.
• Use organizational email address and logo.

Cooperate with legitimate authority. People are more likely to comply with a request if it comes from an authoritative source.

• Find whether each service sector has a institution or association which we can work together with.

No need to highlight negative aspects. It will only backfire.

Part 3 - Mail out the Questionnaire

Give incentives in advance. Prepaid incentives consistently raise response rates, while postpaid incentives do not, because trust is established between the administrator and respondents and a sense of reciprocal obligation is evoked.

• Enclose material incentives (e.g., summary report, ball point pens) with survey.
• Enclose monetary incentives (e.g., a 2 dollar note, a pair movie ticket). This may not work for business respondents because of company policy.

Conduct a two staged survey. In panel surveys, once people have responded to the first request, it is much easier to get them to respond to subsequent requests.

• “We have several initial questions to ask right now. If you agree to participate…” (Dillman, Dolsen et al. 1995)
• Send pre-notification. “If (1) you decide not to participate in this survey; or (2) your company hasn’t conducted any NSD project so far, please do reply us by email…”

Use Foot-in-the-door/drop off method.

• Questionnaires are handed to respondents in person and a picking-up appointment is set.

Use social network. Executives are more responsive to surveys conducted by those in their existing networks.

• Involve existing social relationship such as trade, industry, professional groups.

Avoid inconvenience.

• Include a business reply envelope.

Part 4 - Send the Reminder

Give social validation. Knowing that other people like themselves have completed a similar action can strongly influence people’s willingness to comply with a request.

• Mention that “We have already received responses from many service firms, and they provided valuable insights into improving NSD success rate.”

Delete those who have responded from contact list. My experience told me that some respondents will get mad at surveyor when they repeatedly receive questionnaires.


This passage largely bases on,
Dillman, D. A. et al. (2000) and Porter, S. (2004). I strongly recommend readers referring to these two classic materials.
Dillman, D. A., J. D. Smyth, et al. (2009). Internet, mail, and mixed-mode surveys : the tailored design method. Hoboken, N.J., Wiley & Sons.
Porter, S. (2004). "Raising response rates: What works?" New directions for institutional research 2004(121): 5-21.