1. JAN 2013 Semester
1
Service Quality
MKTG 1268
Lecture Eleven
Organizing for Change
Management and
Service Leadership
(Chapter 15)

2. Overview of Chapter 15
2
 The Service Profit Chain
 Integrating Marketing, Operations, and Human
Resources
 Creating a Leading Service Organization
 Leadership, Organizational Culture and Climate
 Leadership in the Future

3. Opening Case Study : Reinvention and Leadership at
American Express
3

4. 4
EFFECTIVE MARKETING
LIES AT THE HEART OF
VALUE CREATION

5. The Service Profit Chain (Fig. 15.2)
5

6. Links in the Service Profit Chain (Table 15.1)
6

7. 7
INTEGRATING MARKETING,
OPERATIONS, AND
HUMAN RESOURCES

8. Interdependence Between Functions
(Fig. 15.3)
8

9. Service Leaders Integrate Functions
9
 Implementation of Service Profit Chain requires
complete understanding of how marketing,
operations and human resource functions relate to a
firm’s strategy
 Integrated functions create value for the firm
 Strategies are defined and driven by a strong,
effective leadership team
 Has a coherent vision of what it takes to succeed

10. Defining the Three Functions
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 Marketing Function
 Target “right” customers and build relationships
 Offer solutions that meet their needs
 Define quality package with competitive advantage
 Operations Function
 Create, deliver specified service to target customers
 Adhere to consistent quality standards
 Achieve high productivity to ensure acceptable costs
 Human Resource Function
 Recruit and retain the best employees for each job
 Train and motivate them to work well together
 Achieve both productivity & customer satisfaction

11. Reducing Inter-functional Conflict
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 One challenge is to avoid creating ―functional silos‖
 High-value creating enterprises should be thinking in terms of activities, not
functions
 Top management needs to establish clear imperatives for each function that
defines how a specific function contributes to the overall mission
HOW ?
 Inter-functional transfers will  Appointing formally
provide a holistic designated individuals to
perspective for individuals integrate objectives
 Establishing integrated  Internal marketing and
project teams training
 Having inter-functional  Commitment of top
service delivery teams management

12. Integrating Service Operations
12

13. 13
CREATING A LEADING
SERVICE ORGANIZATION

14. From Losers to Leaders: Four Levels of Service
Performance (1)
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 Service Losers
 Bottom of the barrel from both customer and managerial
perspectives
 Customers patronize them because there is no viable
alternative
 New technology introduced only under duress; uncaring
workforce
 Service Nonentities
 Dominated by a traditional operations mindset
 Unsophisticated marketing strategies
 Consumers neither seek out nor avoid them

15. Lack of leadership will lead to employee
confusion and poor service performance
15

16. 16

17. From Losers to Leaders: Four Levels of Service
Performance (2)
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 Service Professionals
 Clear market positioning strategy
 Customers within target segment(s) seek them out
 Research used to measure customer satisfaction
 Operations and marketing work together
 Proactive, investment-oriented approach to HRM
 Service Leaders
 The crème da la crème of their respective industries
 Names synonymous with outstanding service, customer delight
 Service delivery is seamless process organized around customer
 Employees empowered and committed to firm’s values and goa

18. 18

19. Companies that exhibit
service leadership
qualities
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20. Moving to a Higher Level of Performance
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 Firms can move either up or down the performance ladder
 Organizations that are devoted to satisfying their current
customers may miss important shifts in the marketplace
 As a result, they may face difficulties
attracting demanding new consumers with
different expectations
 Companies defending their control of their competitive edge may
have encouraged competitors to find higher-performing
alternatives
 Organizations with a service-oriented culture may turn otherwise
as a result of a merger or acquisition that brings in new leaders
who emphasize short-term profits

21. Effective HRM Practices Enhances Service
Performance
21

22. Leading Change in a Service Organization
Involves 8 Stages
1. Creating a sense of 6. Producing sufficient 7. Building momentum
urgency to develop the short-term results to and using that to
impetus for change create credibility and tackle tougher change
counter cynicism problems
2. Putting together a 5. Empowering 8. Anchoring new
strong enough team to employees to act on behaviors in
direct the process that vision organizational culture
3. Creating an
appropriate vision of 4. Communicating that
where the organization new vision broadly
needs to go
Source: John Kotter
22

23. 23
IN SEARCH OF
HUMAN LEADERSHIP

24. Leadership vs. Management
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 Leadership
 Concerned with development of vision and strategies, and empowerment
of people to overcome obstacles, make vision happen
 Emphasis on emotional and spiritual resources
 Works through people and culture
 Produces useful change, especially non-incremental change
 Management
 Involves keeping current situation operating through planning, budgeting,
organizing, staffing, controlling, and problem solving
 Emphasizes physical resources—raw materials, technology, capital
 Works through hierarchy and systems
 Keeps current system functioning

25. Setting Direction vs. Planning
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 Planning
a management process, designed to produce orderly
results, not change
 Setting direction
 involves creating visions and strategies that describe a
business, technology, or corporate culture in terms of what
it should become over long term and articulating feasible
way of achieving goal
 Many of best visions and strategies combine basic insights and translate them
into realistic competitive strategy
 ―Stretch‖ – a challenge to attain new levels of
performance and competitive advantage that might as
first seem to be beyond the organization’s reach
 Planning follows and complements direction setting, serving as useful reality
check and road map for strategic execution

26. Individual Leadership Qualities
26
 Love for the business
 See service quality as foundation for
competing
 Recognize key role of employees
 Driven by a set of core values they pass
on
 Make communication a priority
 Work with a team on decision-making
 Know when to change when necessary
 Walk the talk

27. Qualities Associated with Service Leaders
27
 Understands mutual dependency among
marketing, operations, and human resource
functions of the firm
 Has a coherent vision of what it takes to
succeed
 Strategies are defined and driven by a
strong, effective leadership team
 Responsive to various stakeholders
 Value created through customer satisfaction

28. Leadership, Culture and Climate (1)
28
 Leadership traits are needed of everyone in supervisory or
managerial positions, including those heading teams
 Effective communication is essential for a leader
 Organizational culture:
 Shares understanding regarding what is important in the
organization
 Shares values about what is right or wrong
 Shares understanding about what works and what doesn’t
work
 Shares beliefs, and assumptions about why things are
important
 Shares styles of working and relating to others

29. Leadership, Culture and Climate (2)
29
 Organizational climate
 The tangible surface layer on top of the organization’s
underlying culture
 Factors of influence:
 Flexibility, Responsibility, Standards that people set, Perceived
aptness of rewards, Clarity people have about mission and values,
Level of commitment to a common purpose
 Creating a new climate for service, based on
understanding of what is needed for market success,
may require
 radical rethinking of HRM activities, operational procedures,
and the firm’s reward and recognition policies

30. Creating a
dynamic
organization
culture through
strong
leadership and
management
30

31. Service Insight 15.2
Reversing Course at
the Museum of Fine
Arts (MFA)
31

32. Leadership in the Future
• Leadership is more collaborative, using team
approach with process of collective genius
• Leadership is from behind, by a leader not afraid of
sharing power with others
• Innovation will remain key for organizations to
succeed
• Collective efforts will yield results far superior to
individual efforts
3
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2

33. Service Leadership in a Global Context
33

34. Summary of Chapter 15: Change Management and
Service Leadership (1)
34
 Service profit chain provides useful summary of behaviors required of
service leaders to manage effectively
 Marketing, operations, and human resource management functions need to
be closely coordinated and integrated in service businesses
 Four levels of service performance
 Service losers
 Service non-entitites
 Service professionals
 Service leaders
 Service leadership is not based on outstanding performance within a single
dimension, but must cut across marketing, operations and human resources

35. Summary of Chapter 15: Change Management and
Service Leadership (2)
35
 Leaders play a big part in nurturing an effective
organizational culture that transforms an
organization into a successful one
 Leadership in the future does not just lie in one
person. It relies on collective genius. Leaders of the
future are not afraid of sharing power with others
 Innovation will remain key for organizations to
succeed