Lessons in Service Sector

Published: 2021-06-29 06:32:48
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Lessons in the Service Sector
by James L. Heskett
Reprint 87206
Harvard Business Review
HBR MARCH-APRIL 1987
Lessons in the Service Sector
by James L. Heskett
Alarge food and lodging company creates and
staffs more general management jobs than
any ten manufacturers of comparable size.
This company, like many others dispensing high customer-
contact services, has eliminated functional
lines of responsibility between operations and marketing.
In its planning the company routinely combines
operations and marketing with what I call a
strategic service vision.
The most profitable largeAmerican company daily
assumes the task of managing a work force of window
washers, cooks, and maintenance personnel. An almost
single-minded concentration on people--their
jobs, their equipment, their personal development--
accounts for much of its success.
The quality control process in a decentralized oilfield
services business involves careful selection, development,
assignment, and compensation of employees
working under varying conditions and in
widespread locations where close supervision is impossible.
In this prosperous company, the process
builds shared values and bonds people together.
An international airline, by paying more attention
to market economies than to production scale economies,
reduces the average size of its aircraft and
increases its net income.
Products introduced since 1982 by a well-known
financial service generated 10% of its revenues in
1985. The raw material for these products is data
already existing in other forms in the company's vast
data base.
These examples give a glimpse of forward-looking
management practice. When examined closely, they
offer insights into the ideas on which successful
competitive strategies have been fashioned in the
much-maligned and little-understood service sector.
It's no coincidence that dominant industries have
cutting-edge management practices. Some U.S. railroads

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