This study takes a holistic view on new service development (NSD) tools. A thorough literature review was conducted to identify the commonly used NSD tools, together with their purposes, strengths and weaknesses. We executed a large-scale survey among Singapore financial institutions to offer empirical evidences regarding NSD tools usage patterns, their impacts on NSD performance, and the contingencies on NSD innovativeness. The results showed that: (1) NSD tools are still underutilized in service firms; (2) NSD tools have positive influences on NSD performance; and (3) more tools are adopted when services are new to the firm and new to the customer.

1. A Survey of
New Service Development Tools
Dayu Jin, Kah-Hin Chai, Chi-Chuan Wu, Kay-Chuan Tan
Department of Industrial and Systems Engineering
National University of Singapore
Department of Business Management
Tatung University

2. Introduction - Background
• New service development (NSD) is important; however
NSD success rate is low.

Success rate is as low as 58% (Griffin, 1997).

NSD lacks structured processes and services just “happen” ((de Jong and
Vermeulen, 2003).
• Critical factors for the development of quality services
(Paulk et al., 1995; SEI, 2010).

People

Procedures and methods

Tools and techniques
• There is no systematic review of the NSD tools used
in NSD projects (Menor et al., 2002).
1

3. Introduction – Research Questions
RQ1: What are the NSD tools that can facilitate NSD
process?
RQ2: What are the usage patterns of NSD tools in
service firms?
RQ3: Do the use of NSD tools influence NSD
performance?
RQ4: Is the use of NSD tools contingent on NSD
innovativeness?
2

4. Research Methodology
Sample: 420 financial institutions in Singapore.

Active innovators of a range of services (Menor and Roth, 2008).

Offerings are standardized which provides opportunities for tool use
(Easingwood, 1986).
Unit of analysis: NSD projects conducted in 3 years.

Chief executive officers as respondents.
Response: 99, response rate of 23.6%.


63 responses indicated no NSD, and 2 incomplete.
Data analysis is based on 34 usable replies.
3

5. RQ1 – Review of NSD Tools
• Definition: a precisely described framework, procedure,
system or method for supporting and improving NSD
processes (Brady et al, 1997).
• Three different approaches to studying the development
of new services (Coombs and Miles, 2000).

Assimilation: benchmarking, scenario planning, focus group,
brainstorming, concept testing, QFD, SADT

Demarcation: service blueprinting, SERVQUAL

Synthesis
4

6. Purpose
Advantage
Disadvantage
To benchmark against best
practices of NSD
Powerful to facilitate
organizational learning
Difficult to select appropriate
benchmarking partners
Scenario Planning
To predict risks and needs in
the future
Help establish first-mover
advantage
Difficult to assess future
needs
Focus Group
To understand customers’
opinions about new service
ideas
Low cost and quick
implementation
Group might not be
representative
Brainstorming
To generate innovative new
service ideas
Facilitate group participation
to share ideas
May result in creative yet
meaningless ideas
To identify promising new
service ideas for further
consideration
Easy to implement
No single best decision rule to
predict market acceptance
To translate customer
requirements into new
service specifications
Provide actions-oriented
guidelines to design quality
into a process
Complex to use and require
extensive cross-functional
involvement
Benchmarking
Concept Testing
Quality Function
Deployment (QFD)
To map service processes
Structured Analysis and
with clearly defined
Design Technique (SADT)
responsibilities
Service Blueprinting
SERVQUAL
To clarify service concepts
and systematize service
delivery processes
Allow rigorous expression of
Provide little instructions to
high-level ideas and problems solve the identified problems
Powerful to design processes Too much focus on
emphasizing on efficiency and standardization and individual
time reduction
encounter
Easy to uncover service
To assess customers’
quality strengths and
perceptions of service quality
weaknesses
Provide little instructions to
narrow the identified gaps 5

7. RQ2 – Usage Pattern of NSD Tools
Percentage of firms that adopted NSD tools
6

8. RQ2 – Usage Pattern of NSD Tools
Percentage of firms applying tools across stages
Market
Research
Tool
Design
Focused
Tool
7

9. RQ2 – Usage Pattern of NSD Tools
Percentage of firms applying tools across sectors
8

10. RQ3 – Effectiveness of NSD Tools
Impact of NSD tools on market performance
9

11. RQ3 – Effectiveness of NSD Tools
Impact of NSD tools on operational performance
10

12. RQ4 – Contingency on NSD Innovativeness
Impact of newness to the firm on NSD tools usage
11

13. RQ4 – Contingency on NSD Innovativeness
Impact of newness to the customer on NSD tools usage
12

14. Conclusions
NSD tools are still underutilized.

Market research tools are relatively more frequently used.
NSD tools are applied at various NSD stages.

Market research tools: initial phases.

Design focused tools: design and testing stages.
NSD tools have positive influences on NSD performance.

Market research tools: operations performance.

Design focused tools: market performance.
More tools are adopted when services are new to the firm
and new to the customer.
13

15. Thank you!