The Four Things a Service Business Must Get Right

The Four Things a Service Business Must Get Right.
By: Frei, Frances X.,
Harvard Business Review,
April, 2008, Vol. 86, Issue 4

This article outlines an approach for crafting a profitable service business based on 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.

1. The Offering

2. The Funding Mechanism

3. The Employee Management System
Companies often live or die on the quality of their workforces, but because service businesses are typically people intensive, a relative advantage in employee management has all the more impact there. Top management must give careful attention to recruiting and selection processes, training, job design, performance management, and other components that make up the employee management system.

4. 4. The Customer Management System
a service business, however, employees and customers are both part of the value-creation process.

When students participate more in a classroom environment, for example, they learn more.