Oral Defense - The Effectiveness, Adoption and Application of New Service Development (NSD) Tools and Techniques (by Dayu JIN)

NUS Presentation Title 2001
The Effectiveness, Adoption and
Application of New Service
Development (NSD) Tools and
Techniques
Jin Dayu
Supervisor: A/P Chai Kah Hin and A/P Tan Kay Chuan
Department of Industrial and Systems Engineering
14 Nov 2012

Agenda
 Introduction
 Study 1: New Service Development: Research Themes, Intellectual
Structure, and Future Research Opportunities
 Study 2: New Service Development Tools and Techniques: Use and
Effectiveness (revised)
 Study 3: Organizational Adoption of New Service Development Tools
 Study 4: New Service Development Maturity Model
 Research Contributions
 Limitations and Future Research
1

INTRODUCTION

Introduction – Background
NSD is not an easy task.
• Involves adaptive combinations of various elements (Ostrom et al., 2010).
• Success rate is as low as 58% (Griffin, 1997).
2
New Service Development (NSD) is at the heart of service firm’s
competitiveness.
• Enhances the profitability, attracts customers, and opens a new
market (Storey and Easingwood, 1999).
Services are becoming the front edge of the economy.
• 80+% of jobs in developed countries (Tidd and Hull, 2003).
• Huge growth in developing countries (Metters and Marucheck, 2007).

Tools and equipment
Procedures and
methods defining the
relationship of tasks
People with skills,
training, and
motivation
Introduction – Motivation
3
• There are few studies focused on the tools employed for successful
NSD (Menor et al., 2002).
• The determinants of tool adoption are unclear (Kettinger et al, 1997).
• Formal tools especially designed for NSD are few (Menor et al., 2002).
(Source: Paulk et al., 1995; SEI, 2010)

Introduction – Outline and Objectives
4
Study 1 Literature review of NSD
Study 2 Effectiveness
Objective 1: to investigate the usage pattern and the
effectiveness of NSD tools.
Study 3 Adoption
Objective 2: to identify antecedents of NSD tool
adoption.
Study 4 Application
Objective 3: to design a service-specific tool—NSD
Maturity Model.

New Service Development: Research Themes,
Intellectual Structure, and Future Research
Opportunities
STUDY 1

Study 1– Literature Review
5
Qualitative literature review has its limitations.
• Subjective judgements (Kunz and Hogreve, 2011).
• Individual interests (Baumgartner and Pieters, 2003; Podsakoff et al., 2005).
A number of NSD literature reviews have been conducted (e.g., Johne
and Storey, 1998; Menor et al., 2002; de Jong and Vermeulen, 2003; Droege et al., 2009;
Papastathopoulou and Hultink, 2012).
• Current developments in the field.
• Future research opportunities.
Bibliometric analysis complements qualitative NSD reviews.
• Quantifiability and objectivity (Nerur et al., 2008).
• Unveil undetected research themes (Kunz and Hogreve, 2011).
To provide a quantitative review of the NSD research and to suggest future research
opportunities based on bibliometric analysis techniques.

Study 1– Methodology
Discipline: service, innovation management,
marketing, operations, and management
(Bitner and Brown, 2006; Tronvoll et al., 2011).
Step 1: Journal Selection Step 2: Sample Preparation
Published 1981-2010 and with key words -
“service innovation”, “service development”,
“service design” (Goldsten et al., 2002).
Top ten journals
from each
discipline
Step 3: Sample Refinement
Sample was manually filtered by two authors
and another two NSD scholars.
472 articles
Correct database errors, such as misspelled
author names and missing publication years.
Step 4: Coding and Purification
187 articles
• Citation analysis
• Bibliographic coupling analysis (via MDS)
Step 5: Analysis of Source Articles
• Co-citation analysis (via factor analysis)
Step 6: Analysis of Cited References
Cleansed database
• Impacts of NSD works
• Research themes of NSD
• Intellectual structure of NSD
6

Study 1– Results & Implications (1)
7-1
Citation analysis.

Citation analysis.
The growing popularity of NSD topics among academics.
7-2

Citation analysis.
7-3

Citation analysis.
NSD research is becoming an important source of ideas and thinking
in areas beyond the service field. 7-4

8
Bibliographic coupling analysis.

9
Co-citation analysis.
Increasing sophistication, depth and
rigor, and consistency evidence that
NSD has reached the mature stage.

New Service Development Tools and Techniques: Use
and Effectiveness.
Revision:
- Innovativeness removed from framework
- Descriptive sections added
STUDY 2

10
NSD tool is defined as a precisely described method for supporting
and improving NSD processes (Brady et al., 1997).
Various NSD tools have been proposed by researchers.
• Tool plays an enabling role in the innovation process (Chiesa et al., 1996).
• Prototype new offerings, identify customer needs, and trouble-
shoot problems (Shostack, 1984; Alam, 2002).
Existent NSD tool studies have their limitations.
• Focus on one particular NSD tool.
• Few empirical descriptive studies.
• Efficacy of NSD tools is mainly demonstrated by case study
research (e.g., Wind et al., 1989; Thomke, 2003; Bitner et al., 2008).
To investigate (1) what are the common NSD tools? (2) How are they used in
service firms? and (3) Whether their use improves NSD performance?

Study 2– What are common NSD Tools?
11
Services result from cross-functional efforts of operations and
marketing management (Zeithaml et al., 2009).
• Market tools: to engage customers for a better understanding of
their needs and commercial potentials.
• Development tools: to support development efforts of technical
design and testing.
Idea generation
and screen
Business and
market analysis
Service design Service testing
Service
launching
MarketTools
Brainstorming ●
Focus Groups ●
Benchmarking ●
Scenario Planning ●
Development
Tools
Concept Testing ● ●
Quality Function Deployment
(QFD)
● ●
Service Blueprinting ● ● ●
Structured Analysis and
Design Technique (SADT)
● ● ●
● main role n ● supporting role

Study 2– How NSD Tools are Used? (1)
12
Industry: financial service.
• Financial institutions are active innovators (Menor and Roth, 2008).
• Financial services are standardized and available off-the-shelf, and
this provides opportunities to use NSD tools (Easingwood, 1986).
Data collection strategy: large-scale survey.
• Able to unveil NSD tool usage patterns and effectiveness.
• Invitation letter  questionnaire 1st/2nd reminder  phone call.
Location: Singapore and Taiwan.
• Subtle differences in NSD practices (Song et al., 2000).
• Post-hoc analysis passed Mann-Whitney U test (Siegel and Castellan, 1988).
Unit of analysis: NSD projects conducted in recent 3 years.
• 75 projects for analysis (Singapore: 34 and Taiwan:41).

13
Overall usage of NSD tools.
● Market Tool ● Development Tool
Market tools are heavily used while development tools are under-utilized.

14
Use of NSD tools in different financial service sectors.
The fluctuations of tool usage levels across industries are small, yet distinguishable.

15
Use of NSD tools in different NSD stages.
Idea generation
and screen
Business and
market analysis
Service design Service testing
Service
launching
MarketTools
Brainstorming 71% 47% 68% 12% 20%
Focus Groups 39% 53% 45% 39% 29%
Benchmarking 45% 75% 49% 25% 16%
Scenario Planning 53% 57% 45% 28% 17%
DevelopmentTools
Concept Testing 39% 24% 42% 39% 21%
Quality Function Deployment
(QFD)
17% 17% 58% 29% 13%
Service Blueprinting 15% 22% 54% 37% 34%
Structured Analysis and
Design Technique (SADT)
41% 38% 69% 31% 21%
Market tools are used more frequently in early stages while development tools are
more likely to be used in later stages.

Study 2– Whether NSD Tools are Useful?
Measurement quality.
• Reliability: α > 0.7, composite reliability > 0.7 (Nunnally, 1978).
• Convergent validity: AVE > 0.5 (Fornell and Larcker, 1981).
• Discriminant validity: correlation < 𝐴𝐴𝐴 (Fornell and Larcker, 1981).
Data analysis method: Partial Least Squares (PLS).
• Ideal for study which is exploratory in nature (Wold, 1985).
• Well handle small sample size (Chin et al., 2003).
16
Dependent Variable Predictor β t-Value
Operational Performance
(R2=0.10)
Development tool usage 0.02 0.29
Market tool usage 0.29 2.53
Product Performance
(R2=0.30)
Development tool usage 0.08 0.91
Market tool usage -0.08 1.09
Operational Performance 0.55 5.09
Market tool usage positively influences operational performance.
Operational performance positively influences product performance.
Use of NSD
development tools
Use of NSD market tools Product performance
Operational performance
H1a (+)
H2b (+)
H3 (+)
H1b (+)
H2a (+)

Organizational Adoption of New Service Development
Tools
STUDY 3

17
NSD tools have not been widely adopted.
• Study 2 shows that only 3 tools are used by 70%+ respondents.
• Tool usage level is not high in service industry (Barczak et al., 2009).
• Service firms are less likely to introduce new elements (e.g., tools)
(Damanpour and Gopalakrishnan, 2001).
To conceptualize and empirically test a theory-driven model that
attempts to explain antecedents of NSD tool adoption.
Ajzen’s (1985) Theory of Planned Behaviour is adapted.
• Popular psychological model with high predictive power (Ajzen, 2011).
• Frequently used to study organizational adoption of process
innovation.

Study 3– Theoretical Framework
18
Adoption
Intention
Attitude
Subjective
Norm
Perceived
Behavior
Control
Behavioral
Beliefs
Normative
Beliefs
Control Beliefs
H1 (+)
H2 (+)
H3 (+)
Perceived
Usefulness
Perceived
Ease of Use
H4 (+)
H5 (+)
Supplier
Coercive
Pressure
Competitive
Pressure
Customer
Coercive
Pressure
H6 (+)
H7 (+)
H8 (+)
Compatibility
Resource
Commitment
H9 (+)
H10 (+)

19
Data collection is conducted in conjunction with Study 2.
• 79 responses: 34 from Singapore and 45 from Taiwan.
• Post-hoc analysis passed Mann-Whitney U test (Siegel and Castellan, 1988).
Data analysis method: PLS.
• Competitive pressure, compatibility, and resource commitment are
formative constructs.
Measurement quality.
• Reflective : reliability, convergent validity, discriminant validity.
• Formative: content validity, indicator reliability, construct
reliability
Model fit.
• GoFmodel (0.62) > GoFlarge (0.36) (Wetzels et al., 2009).

20
Antecedents of adoption intention.
• A, SN, and PBC positively influence adoption intention of NSD tools.
• Explain 47% of the total variance.
TPB has high predictive power for process innovation adoption.
It is reasonable to apply TPB at firm level.
Behavioral intention
(R2 = 0.47, F2 = 0.41)
Attitude 0.26 2.30
Subjective norm 0.22 1.86
Perceived behavioral control 0.34 3.08
Adoption
Intention
Attitude
Subjective Norm
Perceived
Behavior
Control
H1 (+)
H2 (+)
H3 (+)

21
Antecedents of A, SN, and PBC.
• Perceived usefulness and ease of use positively influence A.
• Only competitive pressure positively influence SN.
• Compatibility and resource commitment positively influence PBC.
Scholars who develop new tools should balance trade-
offs among these antecedents.
Managers should allocate adequate resources while
being cautious about competitors’ influences.
Attitude
(R2 = 0.54, F2 = 0.40)
Perceived usefulness 0.56 7.14
Perceived ease of use 0.27 3.27
Subjective norm
(R2 = 0.30, F2 = 0.27)
Supplier coercive pressure -0.01 0.19
Competitive pressure 0.43 3.34
Customer coercive pressure 0.18 1.43
Perceived behavioral control
(R2 = 0.50, F2 = 0.39)
Compatibility 0.45 5.27
Resource commitment 0.40 3.69
Attitude
Subjective
Norm
Perceived
Behavior
Control
Perceived
Usefulness
Perceived
Ease of Use
H4 (+)
H5 (+)
Supplier
Coercive
Pressure
Competitive
Pressure
Customer
Coercive
Pressure
H7 (+)
Compatibility
Resource
Commitment
H9 (+)
H10 (+)

New Service Development Maturity Model
STUDY 4

22
To develop a maturity model which facilitates the evaluation of
NSD process and shows direction for continuous improvement.
The execution quality of NSD process is critical.
• Good execution reduces miscommunications, eliminates non-value-
added activities, and improves project flows (Froehle et al., 2000).
Maturity model can be used as a process management tool.
• High maturity leads to consistent and repeatable processes (Paulk et
al., 1995).
• Maturity model assesses current situation and provides guidelines
for continuous improvement (Niessink et al., 2005).
There is a shortage of NSD process assessment tool.
• Determining project execution capability is something less than a
science but more of an art (Crawford, 2002).

23-1
• Aim: (1) assess current NSD process; and (2) diagnose opportunities for
continuous improvement.
• Audience: organizational unit which is responsible for NSD.
Step 1: Define aim and specify audience
• Four process areas are solicited from NSD success factors: strategy
management, process formalization, knowledge management, and
customer involvement.
• Maturity dimensions are constructed to capture critical aspects.
Step 2: Select process areas
• Five maturity levels are constructed for each process area by referring to
rigorous theories which model evolutionary path of capabilities.
Step 3: Select maturity levels
• Determine behavioural characteristics associated with different maturity
levels of each process area.
Step 4: Formulate maturity grid

23-2

Study 4– NSD Maturity Model (1)
24
Strategy management.
• Capability of strategic planning of NSD.
• Maturity dimensions: new product strategy (Cooper and Edgett 2010).
• Maturity levels: four phases of strategic management (Gluck et al. 1982).
Goals and objectives Arenas of focus Resource allocation
Initial No clear goal or objective
No market research
No focus of markets
No established practices
Financial
planning
Don’t screw up
Informal market research
Similar markets as competitors
Informally documented practices
for single project
Forecast-based
planning
Don’t let competitors gain too
much of an advantage of us
Formal market research
Niche markets
Formally documented practices
for almost all projects
Externally
oriented
planning
Do better than competitors
In-depth market research
Markets with high synergy
which are institutionalized
Strategic
management
Do things that competitors
cannot do
Advanced market research
New markets by creating needs
to improve effectiveness

25
Process formalization.
• Capability of executing formal NSD processes.
• Maturity dimensions: process formality (Avlonitis et al., 2001).
• Maturity levels: software capability maturity model (Paulk et al., 1995).
System behavior Documentation Assignment of responsibility
Initial None None None
Managed
Informal rule
Basic metrics
Informal documentation
Intermediate-/summary-level
Basic definition for key members
Defined
Formal rule
Informal metrics
Formal documentation
Summary-/detail-level
Formal definition for all
members
Quantitatively
managed
Institutionalized rules
Formal metrics
Institutionalized documentation
Detail-level
members through mandate
Optimizing
Institutionalized rules
Formal metrics
Institutionalized documentation
Detail-level
members through mandate

26
Knowledge management.
• Capability of managing skills and know-how pertaining to NSD.
• Maturity dimensions: KM (Chait, 2000; Gold et al., 2001)/KMMM (Pee et al., 2008).
• Maturity levels: 4I model (Crossan et al., 1999).
Culture Processes Technology
Initial Management is not aware None None
Intuiting
Management becomes aware
Valued by none team member
Tacit personal experience
No sharing
Individual
Individual knowledge
repositories
Interpreting
Management recognizes
Valued by some team members
Explicit personal experience
Informal sharing
Personal network
Personal network knowledge
repositories
Integrating
Management makes
commitments
Valued by all team members
Basic training
Collective understanding
Formal sharing
NSD team
NSD team knowledge
repositories
Institutionalizing
Institutionalized
Team members find it easy
Advanced training
Organizational rules
Institutionalized sharing
Service firm
Enterprise-wide knowledge
repositories

27
Customer involvement.
• Capability of engaging customers in NSD.
• Maturity dimensions: customer involvement (e.g., Martin and Horne, 1995;
Kaulio, 1998; Lagrosen, 2005).
• Maturity levels: customer involvement continuums (Ives and Olson, 1984;
Alam, 2002; Nagele, 2006).
Customer role Stage Method
No involvement Pure buyer None None
Involvement by
observation
Object of study Only in early stage. Indirect need analysis techniques.
Involvement by
advice
Source of information In early and late stages.
Direct and structured need
analysis techniques.
Involvement by
doing
Co-designer Through all NSD stages.
Direct and unstructured need
analysis techniques and co-
development methods.
Involvement by
strong control
Partner
Maintain long-term
relationship with customers.
Long-term relationship
maintenance methods.

Study 4– Implementation
28

RESEARCH CONTRIBUTIONS

Research Contributions
29
Theoretical Practical
Study 1
(Literature
Review)
Bibliometric analysis reveals research
themes, intellectual structure, and
future research directions
Major outlets of NSD work have been
identified.
Study 2
(Effectiveness)
Understanding of NSD tools has been
advanced as for the usage pattern and
effectiveness.
Managers can refer to our research to
identify appropriate NSD tools which
can be used for certain purpose.
Study 3
(Adoption)
TPB is extended to predict
organizational adoption behavior.
Managers should pay attentions to the
identified adoption antecedents so as to
facilitate the diffusion of NSD tools.
Study 4
(Application)
Four process areas crucial to NSD
success have been identified.
NSDMM can be used to analyze and
improve NSD processes.

LIMITATIONS & FUTURE DIRECTIONS

Limitations & Future Directions
30
Limitation.
• Size and nature of the sample do not allow us to make robust
inferences.
• Results are susceptible to CMV due to key informant approach.
• NSDMM has yet to be tested in service firms.
Future directions.
• Review of NSD field has identified several research themes which
need to be further strengthened.
• More comprehensive reviews on NSD tools.
• Empirically test NSDMM in the corporate setting.

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