A Complete and Balanced Service Scorecard: Creating Value Through Sustained Performance Improvement
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A Complete and Balanced Service Scorecard: Creating Value Through Sustained Performance Improvement

by Rajesh K. Tyagi, Praveen K. Gupta

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In the U.S., service related activities have become dominant aspects of the economy and currently account for well over 50% of our GNP. The authors' framework eliminates outdated, low-value techniques originally created for manufacturing firms, replacing them with advanced techniques that fully leverage your investments in technology. Tyagi and Gupta begin by


In the U.S., service related activities have become dominant aspects of the economy and currently account for well over 50% of our GNP. The authors' framework eliminates outdated, low-value techniques originally created for manufacturing firms, replacing them with advanced techniques that fully leverage your investments in technology. Tyagi and Gupta begin by explaining why conventional balanced scorecard approaches don't work well for service organizations, discussing issues ranging from the inherent variability of customers, servers, and processes, the crucial importance of engagement, and the unique challenges of service innovation. Next, they introduce a Service Scorecard framework that encompasses the seven key elements of service organization success: Growth, Leadership, Acceleration, Collaboration, Innovation, Execution, and Retention. You'll learn how to set clear performance targets at the function and business level; benchmark performance against best practices; identify improvement opportunities; and capture performance data that offers a leading indicator for financials. Their proven approach is designed for easy understanding and implementation without the need for expensive consultants. Simply put, it offers today's most direct path to measuring performance and optimizing business value in any service organization.

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FT Press
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As economic focus shifts to service businesses, performance management of service organizations becomes of interest. Most management work has been geared toward businesses comprised of manufacturing supported by associated service operations. Our experience teaches us that as the role of manufacturing in developed or developing economies shifts toward service businesses, performance of services suffer due to ineffective and inefficient management of service resources. For example, customers are more dissatisfied with services in the service economy than with services in the manufacturing economy. There is a consistent and steady decline in the perception of service quality. Customers today get less, and poorer, services in many business sectors—be it telecommunication, fast food, airline, or personal computers—and they feel helpless (Service quality ACSI index of 80.3 in year 1994 compared to an index of 78.3 in year 2004).

Business management for product-driven companies—such as Proctor & Gamble, Motorola, Rubbermaid, Exxon Mobil, Apple, Boeing, or Toyota—is not suitable for companies like Goldman Sachs, Bank of America, American Express, Disney, Starbucks, Southwest, or McKinsey. In other words, service organizations do have their uniqueness that must be managed to achieve sustainable, profitable growth. The main differences between services and manufacturing operations include service focus, interaction with customers and customer participation, job skills, intellectual component, compensation, process and experience management, perception of research and development in services, and performance measurements. Componentsof the cost of goods sold vary from that of the cost of services due to the lack of physical inventory involved. On the other hand, payroll dollars may be higher for services businesses than the manufacturing business due to the qualification level of service professionals. Even though service functions at the surface level sound and appear to be similar to their manufacturing counterparts, adaptation to service intent becomes an implementation issue that creates a need for the Service Scorecard.

The authors have experience with a variety of scorecards, including the Balanced Scorecard and Six Sigma Business Scorecard, in a variety of industries. Channeling their personal academic and business experience has led them to develop the Service Scorecard. The Service Scorecard builds on the framework used in Six Sigma Business Scorecard, which is a hybrid of Six Sigma and Balanced Scorecard for ensuring completeness and ease of implementation. The authors have written the Service Scorecard book to enable service performance professionals to view their service operations in the business context and manage it for best in class performance. This book benefits from the historical performance management principles and presents the complete model that drives best in class performance, service innovation, and employee engagement. Eventually, service organizations need Service Scorecard to ensure sustained profitable growth for for-profit organizations, or sustained value for not-for-profit organizations. The sustained profitable growth implies that service businesses can grow and make money at the same time, rather than either grow or earn profit year after year through excellence in execution and innovation. Similarly sustained value implies that a not-for-profit must define its value proposition and continue to grow the value creation yearly.

The Service Scorecard book has been organized in three parts.

Part I, "Understanding Service Performance," builds the background in performance management and presents its challenges. Part I also includes a chapter on Six Sigma for services, which introduces the concepts as the Six Sigma intent as incorporated in the Service Scorecard. The intent of Six Sigma is to accelerate improvement in order to achieve superior and best in class performance. At the end of Part I, you learn about the challenges of service performance management, various performance management models, gaps in performance management for service, and the need for the Service Scorecard.

Part II, "Learning Service Scorecard," is written to introduce Service Scorecard. You will learn about Service Scorecard concepts and GLACIER elements. GLACIER is an easy way to remember all seven elements: Growth, Leadership, Acceleration, Collaboration, Innovation, Execution, and Retention. In service operations, collaboration and retention are two distinct aspects that differ significantly from manufacturing operations. You learn about the Service Performance Index (SPIN), which is based on the overall performance of the service organization and developed specifically for leadership of the organization for identifying opportunities for performance improvement. By the end of Part II, you will understand the framework of the Service Scorecard, its elements, associated measurements, and their applications for driving organization-wide performance improvement.

Part III, "Practicing Service Scorecard," focuses on implementation aspects. It covers the step-by-step approach to implementation, integration with various existing improvement initiatives, and best practices for various elements of the Scorecard. Also, validation of the Service Scorecard demonstrates the importance and relevance of each element, and the causal relationship between each element and SPIN, which is a predictor of the service corporation in achieving sustained profitable growth. In identifying best practices, the authors have identified several successful service corporations that use various elements of the Service Scorecard. Practicing all elements in an organization is bound to make the service organization perform at a much higher level, thus making it a profitable and growing organization. Wall Street rewards profitable firms—however, employees love a profitably growing organization as it facilitates their growth and brings out their best. Finally, profitable growing organizations are fun to work for!Praise Quotes

"This is a must read for any executive of a services organization who is serious about sustainable profitable growth."

—Steve DuBrow, President and Managing Director of the Americas Region, i-nexus

"Understanding service process and performance measurement are essential in global economy today. This book provides key insights and methods for getting a grip on the performance of any service business."

—Professor Andy Neely, Director of Research, Cranfield School of Management, and author of The Performance Prism

"Gupta and Tyagi further extend the scorecard framework Gupta pioneered into another area of business ripe for metrics. Organizations who wish to grow would do well by reading and adopting their scorecard methodology."

—William Dunn, President, Dunn Solutions Group

"A very thoughtful and practical approach to build and sustain an environment ofcontinuous improvement and innovation...a must read for managers."

—Rohit Kapoor, President and Chief Operating Officer, EXLService

"This is a remarkable book about corporate performance! By illustrating real-life case studies, the authors solidify their argument that Service Scorecard can be an extraordinarily effective tool in empowering the service side to materially affect profit margins in any company."

—Peter Traynor, Editor in Chief, Dashboard Insight, Canada

"With all the tips to deploy the Service Scorecard, this is an excellent framework to sustain profitable growth in the service industry."

—Rodrigo Carrillo, Managing Director, DINAMO Value Partners, Mexico

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Meet the Author

Dr. Rajesh Kumar Tyagi joined HEC Montreal as an Assistant Professor of Logistics and Operations Management in June 2008. Earlier, Dr. Tyagi was a faculty member at the Department of Management, College of Commerce, DePaul University. Professor Tyagi teaches Service Operations, Operations Management, and Quality Management. Dr. Tyagi has also taught service operations and operations management at Kellogg School of Management, at Northwestern University, and in East Europe and Southeast Asia. His current research and consulting interests are in areas of service delivery chain design, service performance management, measurement of service quality, Six Sigma applications in the services sector, and design of a reverse supply chain. He has more than 12 publications in scientific and technology journals and has presented at various national and international conferences. He is the co-author of Six Sigma for Transactions and Service.

Professor Tyagi also co-founded a biomedical device manufacturing company in Singapore. Professor Tyagi is a consultant to an early-stage venture fund and also consults on operations and technology management issues for early-stage companies and established corporations. He obtained his Ph.D. in Engineering at the University of Ottawa, Canada, and his MBA from the Kellogg School of Management, Northwestern University.

Praveen Gupta, president of Accelper Consulting (www.accelper.com), developed the Six Sigma Business Scorecard that has been recognized worldwide for its innovative approach to corporate performance, ease of implementation, and importance to sustained profitable growth. Praveen has also developed a Business Innovation framework, and pioneered the Six Sigma methodology at Motorola, and the 4P Model for process management. Integration and adaptation of these methods to service operations have been addressed in continuing work for sustaining profitable growth and creating success opportunities for leadership and employees.

Praveen’s experience at working with dozens of companies in the manufacturing, service, and software industries has given him a uniquely holistic perspective on business performance. Praveen teaches his methods and tools at Illinois Institute of Technology and at DePaul University to graduate students in the IT and Management departments.

Praveen has led several organizations in improving their operations and financial performance using Business Scorecard, Six Sigma, Business Innovation, and the 4P model. He frequently speaks in conferences and seminars around the world.

Praveen holds BS and MS degrees from Indian Institute of Technology, Roorkee, and Illinois Institute of Technology, respectively. Prior to founding his consulting company, Praveen worked at Motorola and AT&T Bell Laboratories.

Besides his books on scorecards, Praveen has authored Business Innovation in the 21st Century, Stat Free Six Sigma, Improving Healthcare Quality and Cost with Six Sigma, and The Six Sigma Performance Handbook. Praveen regularly writes for various publications and is the Editor of the International Journal of Innovation Science being launched in 2009.

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