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Frei: The four things a service business must get right

10 important questions on Frei: The four things a service business must get right

Service must develop creative ways to fund their distinctive advantages.  How can the four elements (the offering of its funding mechanism, the  employee management system of the customer management system) combined  right according to Frei?

There is no 'right' way to combine these elements. The appropriate  design of any one of them, depends upon the other three. The effective  integration of the elements stands out more than the cleverness of any  element in isolation.

What is the objective of the article of Frei?

To outline an approach for crafting a profitable service business based  on the four critical elements - collectively called the service model  (the offering, the funding mechanism, the employee management system and  the customer management system). Developed as a core teaching module,  this model recognizes the differences between service business and  product business.

What is meant with the first element 'the service offering' of the service model of Frei?

Service designers focus on the experiences customers want to have.  Within services the offering can be considered as a trade-off: perform  badly at some things, to excel at others. Managers need to determine  which attributes to target for excellence and which to target for  inferior performance. This must be influenced by customer needs. It is  therefore important to identify customers segment in terms of attribute  preferences.

(Service  excellence can be defined as what a business chooses not to do well).
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What is meant with the second element 'the funding mechanism' of the service model of Frei?

There must be a funding mechanism (financieringsmechanisme) in place to  allow the company to outshine competitors in the attributes it has  chosen. However, in service business, developing a way to fund  excellence can be more complicated because pricing is not transaction  based but involves the bundling of various elements of value or entails  some kind of subscription (f.e. monthly fee).

What is meant with the third element 'The employee management system' of the service model of Frei?

The decision made in these areas should reflect the service attributes  the company aims to be known for. Design a system that allows the  average employee to thrive (bloeien). A business that wants to maintain a  competitive cost structure will probably need to compromise on one  quality or the other.

How can the 4 elements be integrated? (Frei)

Successful service companies have a working plan that incorporates all 4  elements of service design. Within each of those areas it is hard to  spot any best practice. The whole business depend more on the  interconnection of the four elements.

What are two important principles of service design? (Frei)

1 Importance of fit: there is no such thing as a good idea in isolation,  there is only a good idea in the context of a specific service model.
2  It is impossible to attempt to be all things to all customers: instead,  firms should design their service models for more targeted excellence  by being specific things to specific people. Great service companies are  very clever about selecting their customers.

How does a company become multi-focused? (Frei)

When a company accomplish the 2 important strategies (importance of fit  and don't attempt to be all things). They stopped trying to cover the  entire waterfront with a single service model. Instead they pursued  multiple niches with optimized service models.

What is the secret to success according to Frei?

The secret to success in a multi-focused firm is the ability to benefit  from having various service models under one house umbrella. This  benefit often comes in the form of shared services (internal service  providers), which enable firms to generate economies of scale and  economies of experience across its service models. another common is  directive (or even autocratic) leadership (richtlijnen/autoritair).  Without strong, centralized leadership, revenue generating line managers  typically overrule shared-services.

Which 4 things must a service business get right according to Frei?

1 Offering (service concept)
2 Funding mechanism (revenue & cost model)
3 Employee management system
4 Customer management system
> Are the decisions you make in one dimension supported by those you've made in other dimensions?

The question on the page originate from the summary of the following study material:

Managing Service Innovation | Flikkema

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