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