Cost-effective service excellence

Abstract

This article integrates relevant literature to develop a conceptual model on the potential avenues to achieve service excellence at low unit costs, which we term cost-effective service excellence (CESE). To gain a deeper understanding of these strategies, their applicability and interrelatedness, we analyze how 10 organizations have achieved CESE. Our findings show that CESE can be achieved through three core strategies. First, a dual culture strategy provides a comprehensive set of high-quality services at low cost, largely driven by leadership ambidexterity and contextual ambidexterity. Second, an operations management approach reduces process variability and thereby allows the increased use of systems and technology to achieve CESE. Third, a focused service factory strategy can enable CESE through a highly specialized operation, typically delivering a single type of service to a highly focused customer segment. The use of the three approaches ranges from “pure” (e.g., mostly pursuing a dual culture strategy) to combinations of the latter two approaches with the dual culture strategy (e.g., a focused service factory strategy combined with dual culture). Our conceptual model provides an integrated view of the strategic options available to organizations that aim to pursue a strategy of CESE.