CHAPTER 1: KEY CONCEPTS OF SERVICE MANAGEMENT

This chapter includes:

•Definition of value

•Definition of service management

•Definition of organisation

•How value is co-created

•How organisations collaborate with consumers and suppliers to co-create value

Value

Products and services need to add value to consumers to be successful. Value is “the perceived benefits, usefulness and importance of something.”

Service management

Service management is “a set of specialized organizational capabilities for enabling value for customers in the form of services.”

An organisation can only develop these specialised organisational capabilities when it understands:

•The nature of value

•The nature and scope of the stakeholders involved

•How value creation is enabled through services

Organisation

Organisations facilitate value creation. “An organization is a person or a group of people that has its own functions with responsibilities, authorities, and relationships to achieve its objectives.”

An organisation could be:

•A single person

•A team (within a larger organisation)

•A legal entity (a company, or a charity)

•A government department or public sector body

•A collection of legal entities and teams

Historically, some organisations did not listen to their customers. They saw their relationship with customers as being:

•One-directional

•Distant

•Without feedback

In fact, value is the outcome of a bi-directional relationship. Value is co-created.

Co-creation

Co-creation focuses on customer experience and interactive relationships. It encourages active customer involvement. Organisations need to collaborate with their consumers as well as the suppliers that help them offer valuable services. Each product and service is part of a web of service relationships. Most organisations act as a customer and a service provider as part of service delivery: buying and selling or consuming and supplying services and service elements.