Business services are the activities that help businesses without delivering physical goods or products. They are a huge part of the commercial world, and companies rely on them for marketing, production, safety, cost and convenience purposes.
Despite their importance, service-oriented companies face a number of challenges that product-oriented companies don’t. For one, they are less able to establish economies of scale because their services are often more abstract. This makes it harder to develop an effective model for delivering their products and services.
Another challenge is the fact that customers are involved in a service environment much more than in product environments, and their input can greatly affect cost and quality. For example, a customer who dithers at a fast-food counter will significantly slow down the service process.
To overcome these challenges, successful service companies have a working plan that incorporates four critical elements: 1. The value of the service itself (the product) 2. Service differentiation 3. Reputation 4. Employee management
All of these elements must work together to create an effective and profitable business. That’s why I developed the four elements of service design as a core teaching module at Harvard Business School.