February 16, 2005

Services Science : A new discipline

One of the "Breakthrough Ideas" identified by the Harvard Business Review for 2005 is the emergence of a new academic discipline called "Services Science".

This is certainly a very interesting and important concept because of two reasons. First "services" is something that is gaining prominence from a financial perspective as the focus of the global economy moves from goods ( or products ) to services ... and an increasing proportion of corporate revenue is being derived from the latter. Simply put, that which brings in the moolah is worthy of my attention.

The second reason is that the definition of services is now expanding to include an ever expanding gamut of tasks. From pizza delivery to tax-return processing, from clinical design to hair stying there is a vast area of economic activity that falls into this category. This is precisely why we need to a theoretical basis that isolates the core essentials of this elusive activity and presents it in a manner that is relevent to all.

We study arithmetic ( or mathematics ) as a science because the same principles can be applied across a vast range of physical and economic phenomena that are useful to mankind in general. Similar is the case of any of the other sciences. This process of abstracting the general from the myriad specifics that surround us and giving it a structure that is independent of all that is emerged out of is the challenge that is worth addressing.

The analogy with Management Science is both intuitive and illuminative. Management Science emerged from the fuzzy and ill-defined process of running a business and has now acquired a respectable structure based on two fundamental pillars .. of which one is quantitative ( based on Operations Research and other 'hard' disciplines ) and the other is behavioural ( based on psychology and other 'soft' disciplines)

When we move to Services Science, we need to do something similar. The single most difficult area in the area of services is to put a value to the service being delivered. Costs are easy to determine, based on inputs and prices are dictated by the market. What is most elusive is the value that is delivered and it is this perception of 'value' -- which is in general always over estimated by the provider and underestimated by the consumer -- which is the at the heart of most disputes in this area.

A fair estimation of value, based on (once again) quantitative techniques PLUS psychological insight could be be key to a sound Services Science.

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