The industrialization of services business model is a

business model A business model describes how an organization creates, delivers, and captures value,''Business Model Generation'', Alexander Osterwalder, Yves Pigneur, Alan Smith, and 470 practitioners from 45 countries, self-published, 2010 in economic, soci ...

used in strategic management and

services marketing Services marketing is a specialized branch of marketing which emerged as a separate field of study in the early 1980s, following the recognition that the unique characteristics of services required different strategies compared with the marketi ...

that treats service provision as an industrial process, subject to industrial optimization procedures. It originated in the early 1970s, at a time when various quality control techniques were being successfully implemented on production assembly lines.

Theodore Levitt Theodore Levitt (March 1, 1925 – June 28, 2006) was a German-born American economist and a professor at the Harvard Business School. He was editor of the ''Harvard Business Review'', noted for increasing the Review's circulation and popularizi ...

(1972) argued that the reason the service sector suffered from inefficiency and wide variations in quality were that it was based on the craft model. Each service encounter was treated as an isolated event. He felt that service encounters could be systematized through planning, optimal processes, consistency, and capital intensive investments. This model was the foundation of the success of

McDonald's McDonald's Corporation is an American multinational fast food chain, founded in 1940 as a restaurant operated by Richard and Maurice McDonald, in San Bernardino, California, United States. They rechristened their business as a hambur ...

and many other mass service providers in the 1970s, 1980s, and 1990s. Unfortunately, the application of assembly line techniques to service provision had several undesirable consequences. Employees found working under these conditions disempowering, resulting in low morale, high staff turnover, and reduced service quality. One of the most difficult aspects of this model for employees to deal with was the "smile incentives". Employees were instructed to put a smile on their face during the service encounter. This manufacturing and commercialization of apparent happiness has been criticised by many commentators, particularly Mundie (1987). Also many customers prefer the "personal touch". By the early 1990s most service providers turned their attention back to the human element and personalized their services. Employees were empowered to customize the service encounter to the individual characteristics of customers. Subsequently, scholars developed the service-profit-chain concept to understand how employees and customers interact to create value.Loveman, Gary W. "Employee satisfaction, customer loyalty, and financial performance an empirical examination of the service profit chain in retail banking." Journal of Service Research 1.1 (1998): 18-31.

References

{{Reflist * Levitt, T. (1972) "Production line approach to service", ''Harvard Business Review'', Sept-Oct, 1972, pp. 41–52. * Mundie, P. (1987) "Internal marketing: cause for concern", ''Quarterly Review of Marketing'', spring-summer, 1987, pp. 21–24. Business models Services marketing

See also

References