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Service Management 3.0
Service management is the practice of managing a service company. Theories about service management were firmly established between 1985 and 1995 when ideas about ‘turning the pyramid upside down’ (the Scandinavian service model) and ‘service profit chain’ (the American service model) saw the light. It was established that frontline employees are key to creating satisfied customers and that processes and service design are about creating the best trained and most satisfied employees. Since then much has changed. Although the key concepts – the importance of processes and frontline employees – remain the same, today there are additional elements that need to be considered in the way service organizations approach service management.

1. Fostering a culture of service. Culture determines discretionary behavior in the absence of direct supervision. In service organizations it is usually the case that frontline service employees are working without constant supervision. Culture will then be the most important guide to behavior.


2. Creating a sense of purpose in the organization. Frontline service employees are looking for more than just a place to work and to fulfill their basic physical needs, they are looking for meaning and an identity in their work.


3. Engaging employees. Service employees must not just be satisfied, they must be engaged. Although the two concepts appear similar they require separate things to achieve them and have different outcomes.


4. Leading instead of managing. Many service management theories feature instilling a sense of pride in the profession and the company.
   We believe that these four changes are so significant that we collectively label them ‘Service Management 3.0’. The following chapters will expand on these four points. Building on the understanding of why companies fail to deliver excellent service, companies must design their service delivery based on the following five understandings (Grönroos, 2000):


5. What value the customer is getting from the service.


6. How total quality is perceived in customer relationships to facilitate such value.


7. How an organization will be able to deliver this perceived quality.


8. How an organization should be developed and managed.


9. Making the organization function so the customer value expectation is met.
   The service concept comprises the value proposition offered to the customer and the services associated with delivering this value proposition. The market segment indicates the type of customer for whom the services and the value proposition is designed. The value proposition is a combination of both the physical and/or emotional needs of the recipient organization. The service delivery comprises all the aspects of actually organizing and delivering the service; this would be equivalent to the production and distribution systems in a production environment.