HCS 589 Profit Services
HCS 589 Profit Services
HCS 589 Profit Services
What programs or services would you implement even if they did not show a profit? Why?
Any of these four elements—the offering or its funding mechanism, the employee management system or the customer management system—can be the undoing of a service business. This is amply demonstrated by my analysis of service companies that have struggled over the past decade. What is just as clear, however, is that there is no “right” way to combine the elements. The appropriate design of any one of them depends upon the other three. When we look at service businesses that have grown and prospered—companies like Wal-Mart in retail, Commerce Bank in banking, and the Cleveland Clinic in health care—it is their effective integration of the elements that stands out more than the cleverness of any element in isolation.
This article outlines an approach for crafting a profitable service business based on these four critical elements (collectively called the “service model”). Developed as a core teaching module at Harvard Business School, this approach recognizes the differences between service businesses and product businesses. Students in my course learn to think about those differences and their implications for management practice. Above all, they learn that to build a great service business, managers must get the core elements of service design pulling together or else risk pulling the business apart.
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