NEW SERVICE DEVELOPMENT AND MULTIPLE STAKEHOLDERS

NEW SERVICE DEVELOPMENT AND MULTIPLE STAKEHOLDERS

A study about designing a new service with multiple stakeholders in the health service context

Master thesis, MSc BA, Business Development University of Groningen, Faculty of Economics and Business

27-06-13

CARLINA DE BEAUVESIER WATSON Studentnumber: 2053624 Slachthuisstraat 152 9713 MH Groningen Netherlands E-mail: carlina@live.nl University supervisor prof. dr. P.S (Peter) Zwart

2nd supervisor drs. F.D (Frank) Streefland

Supervisor/ field of study (Afke) Bodewits

NEW SERVICE DEVELOPMENT AND MULTIPLE STAKEHOLDERS

A study about designing a new service with multiple stakeholders in the health service context

Author:

Carlina de Beauvesier Watson

Date: 27-06-2013

Company: NOVO

ABSTRACT

This paper presents the results of research into the initial stages of developing new services in the health service context. The purpose of this study is to examine the process of new service development with multiple stakeholders. This explorative research examined the contribution of the stakeholders in the initial stages of developing a new service. Apart from the explorative research this study gives recommendations in order to increase the innovative character of the organization and constructed a practical framework for developing a new service.

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This thesis has been written on behalf of graduating for the master Business Administration, specialisation Business Development, at the University of Groningen.

I would like to thank everyone within NOVO who gave me the opportunity to graduate at the company. I am especially thankful to Afke Bodewits for her help, support and open mindedness.

Also thanks to my supervisor Peter Zwart for his support and advice.

Carlina de Beauvesier Watson June 2013

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New service development (NSD) is the development of services which are new to the supplier. This explorative research contributes to the scientific research by offering a more comprehensive view on new service development in the Dutch health care industry. By exploring how to design the process of NSD and which stakeholders are involved, a more a greater insight in the concept of NSD in the Dutch health care industry is gained.

The first part of this study a review of the theory. The second part of this study presents the results of the case study. The research object is the health care supplier NOVO. The findings from the case study are confronted with principles from theory. This has led to the following four propositions that can serve as clear starting points for future NSD research in the Dutch health care industry:

·· Innovations in the health care industry are predominantly driven by the legislation;

·· For innovations in the health care industry a complex interplay between various stakeholders and their stakes is needed;

·· To design a new service stakeholders are dependent on each other for the finance, licences, knowledge and expertise;

·· New services are developed on an ad-hoc basis and there is no formal NSD process.

The last part, apart from the explorative research, this paper presents recommendations for the health care provider NOVO in order to increase the innovative character of the organization. The recommendations are:

·· Use formalized NSD process; ·· Formulate new service strategy;

·· Get expertise to generate and screen ideas; ·· IT-system to register ideas;

·· Examine the business attractiveness; ·· Construct detailed service description; ·· Testing the service;

·· Aftercare.

Finally, the NSD checklist in this paper (Appendix 1) can be very helpful for the health care provider in order to design a new service.

Table of contents

1. Introduction...7

1.1 Profile of the organization ...8

1.2 Research...9

1.3 Paper outline...9

2. Theoretical framework: New service development ... 10

2.1 Benefits of NSD Model ... 10

2.2 Overview NSD models ... 10

2.2.1 Process cycle ... 11

2.2.2 Systemic learning model... 12

2.3 Conclusion ... 13

3. Theoretical framework: Stakeholders ... 14

3.1 Submarkets in Dutch health care system ... 14

3.2 Stakeholders long-term care... 15

3.3 Stakeholders NSD literature... 17 3.3.1 Management... 17 3.3.2 Employees... 17 3.3.3 Consumer... 17 3.3.4 Competitor ... 17 3.3.5 Development team ... 18 3.4 Conclusion ... 18 4. Research Methods ... 19 4.1 Case selection ... 19 4.2 Selection respondents... 19 4.3 Instruments ... 19 4.3.1 Interviews ... 20 4.3.2 Observations... 20 4.3.3 Secondary data ... 20 4.4 Data analysis... 20 4.5 Quality criteria ... 21 4.5.1 Controllability... 21 4.5.2 Reliability... 21 4.5.3 Validity... 22

Appendix 1 : New Service Development Process Checklist... 37

Appendix 2: Organizational overview Dutch health care system ... 38

Appendix 3: Organogram NOVO... 39

Appendix 4: Interview guide... 40

Appendix 5: Interview report ... 41

Appendix 6: Study Bushman and Cooper (1980) ... 43

Appendix 7: Study Papastathopoulou, Avionitis and Indounas (2001) ... 44

Appendix 8: Study Sehkar (2005)... 45

Appendix 9: Study Alam (2002) ... 46

Appendix 10: List of respondents ... 48

1.

The Dutch society is characterized by trends such as ageing, increasing demand of care, labour shortage, and the increasing number of chronically ill (Putters, Breejen & Frissen, 2009). The Dutch health care system is focusing on effectiveness of care, individual freedom of choice and self-determination by consumers. Important features are the market mechanism, more competition and transparency/comparability (van der Grinten, Helderman & Putters, 2004).

For the next decades innovation in the Dutch healthcare is necessary to ensure the quality, affordability and accessibility of the care (Scheepbrouwer, 2006). Since a few years the government is trying to stimulate entrepreneurial behaviour at health care institutions, insurers, industry and professional in order to increase the demand in and of the health care system (Putters et al., 2009). The development of new products and/or new services is the result of entrepreneurial behaviour.

In order to be innovative an organization must understand and manage the relationship with their stakeholders. Since the academic literature concerning stakeholders in NSD in the health care industry context is lacking, there is a need to explore this topic. The focus of this study is to (a) create insights in which stakeholders are involved in the initial stages of NSD in the health care industry, (b) create insight in the contribution of the stakeholders in NSD, (c) explore the relationship among the stakeholders. The current NSD literature distinguishes the following stakeholders: management, employees, consumers, competition and the development team. However, is this a complete view of all stakeholders in the initial stages of NSD in the health care industry? That will be explored in this study. Furthermore, a new service is developed according to a certain process. Therefore this study will explore the process of NSD, is this a formal or an informal process?

The focus of this study is to explore how to design the process of a new service with multiple stakeholders in the health care industry. This subject will be explored from a business development perspective. Business development is a significant change between the suppliers offering and markets demand. Business development has always to do with at least two point of the triangle: market/client, product/service and organization (Huizingh, 2010) as seen in Figure 1.

This study will concentrate on the product/service and organization perspective. From the point of view of the organization NOVO this study will examine an innovation process, the design of a new service.

1.1 Profile of the organization

NOVO is a professional healthcare provider operating in the long-term care sector. The organization has 1300 professionals who support about 2000 clients. NOVO has a strong position in the Dutch provinces Groningen and Drenthe. In 2007 the turnover was € 55 million. The next figure presents an overview of the services, the target group and the percentage of revenue from the service.

Service Target group:

Children Target group: Adults % of revenue Year: 2007 Living X 50 Daycare X X 40 Ambulatory care, treatment, family support and primary care*

X 10

* Relatively new services who needs to approve their financial existence.

Figure 2 Current services of NOVO

Source: Adapted from NOVO op menselijke maat, strategisch beleidsplan 2009-2013

The organization is offering services for profoundly or severely disabled people, for both children and adults. This is a specific target group due to the condition the clients are not able to talk. Therefore, the parents of the clients must indicate their needs and wants concerning new products and services.

Currently the organization lacks to provide inpatient long-term care of living for children (ages 0-18 years) in the form of a residential centre. As a result this target will choose another health care supplier for living, or this target will choose another health care provider for both daycare and living. The organization wants to expand its services by offering a new service: a combination of daycare and living for children. This innovation project is described as the new service in this study.

1.2 Research

The main question of this study is:

“How to design the process of a new service in the health care industry?”

This main question is divided in the following sub questions:

-

-

-

Since there is not much literature and research on the specific issue yet, an exploratory research is preferable. The exploratory research process is shown in Figure 3.

Figure 3 Exploratory research process

(Source: van der Bij, 2012)

1.3 Paper outline

The starting point of this paper is this introduction (chapter 1). Thereafter the academic literature will be presented. First, the existing academic literature regarding new service development models will be analysed (chapter 2). Second, the academic literature regarding stakeholders involved in designing a new service will be analyzed (chapter 3). Thereafter the results of the case study will be presented (chapter 4). The results of the case study are filtered, analyzed and compared to existing literatures who are dealing with the same phenomenon. This leads to propositions that are changes of or additions to existing theories (chapter 5). Thereafter the discussion will be presented (chapter 6) and

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This chapter will elaborate on the theory of new service development in order to answer the research question: “What is the process of NSD?”. First the benefits of a NSD model will be presented, thereafter an overview of NSD models will follow. This chapter concludes with an analysis of the NSD models.

2.1 Benefits of NSD Model

New service development is the development of service products which are new to the supplier (Johne & Storey, 1998). Compared with new product development, research on new services development remains fragmented and has seen fewer developments (Drazin & Schoonhoven, 1996; Johne et al., 1998; Menor, 2002; Sundbo, 1997). The new service development studies have not reached consensus on a formalised development process (Menor, 2002). Studies suggesting that understanding the process of designing and launching new services may lead to improve the efficiency of the development process. Such results could contribute to increased chances of success and reduced development times (Stevens & Dimitriadis, 2005; de Brentani, 1991).

2.2 Overview NSD models

The early work of NSD is based on the new product development (NPD) frameworks and findings (Cooper, 1994; Cooper and Kleinschmidt, 1987). A fundamental model of NPD is the Booz-Allen & Hamilton (1982) model of new product development, as described briefly in Figure 4.

__________________________________________________________________________________ 1. Develop a business strategy (long term strategic direction).

2. Develop a new product strategy (a plan that outlines the type of new products to be developed). 3. Idea generation (formal process for soliciting ideas for new products).

4. Concept development and evaluation (refining and developing the concept or new products). 5. Business analysis (determining the profitability and feasibility of the new service).

6. Product development and testing (developing and testing prototypes).

7. Market testing (limited testing of both the product and the marketing mix variables). 8. Commercialization (full-scale introduction to the public)

__________________________________________________________________________________

Figure 4 Model of New Product Development Source: Booz-Allen & Hamilton (1982)

Some authors derive their NSD model from the findings of the work of Booz-Allen & Hamilton (1982) (e.g. Alam, 2002; Bowers, 1987; Bushman & Cooper, 1980; Sehkar, 2005;Stevens et al.,2005) as seen Johnson et al. (2000) NSD process cycle. The author describe NSD as a formal process. On the other hand Stevens et al. (2005) describe NSD as an informal process, as seen in the next paragraph.

2.2.1 Process cycle

Johnson et al. (2000) identified a model describing the NSD sequence which identifies four broad stages and 12 tasks that must be produced to launch a new service. Furthermore the authors identified components of the organisation in the process. These are the people, product, technology, and systems (see Figure 5). NSD process is a process cycle determined by the teams, tools, and the organizational context.

Figure 5 NSD Process cycle

2.2.2 Systemic learning model

Stevens et al. (2005) identified the systemic nature of the NSD process. The dynamics of the NSD and of organisational learning are made up of interactions (see Figure 6).

Figure 6 NSD systemic learning model

Source: Stevens et al. (2005)

Interactors refer to actors who create knowledge by constant interaction with each other. The number and functions of the interactors and the way they interact combined with the learning processes will determine the final fit between the new service and the customer’s expectations. This model reveals developing a new service is an informal development process consisting of a sequence of issues to solve and decisions to make.

2.3 Conclusion

Johnson et al. (2005) identified NSD as an organised process made up of defined steps and components of the organisation in the process. The approach is a linear conception of the development from the new service strategy to the launch. The model shows the steps should be undertaken in order to develop a new service, and NSD is described as a formal process. The model is mainly focussing on components inside the organization in order to develop a new service. Components of the external environment are not under consideration, for example competitors or changes in the environment. Furthermore, the model does not elaborate how an organization should organize the involvement of stakeholders. In real situations there may be no real clear beginning, middle and end of the NSD process. This view is captured in Stevens et al. (2005) model. This model shows NSD is an informal process. This model shows components inside the organization, as well as components in the external environment which are important for developing a new service. The model shows that the stakeholder groups are important in NSD. However, this stakeholder group is not further specified. Furthermore, the model does not elaborate how an organization should organize the involvement of stakeholders. This study assumes stakeholders play an important role in designing a new service. Therefore, the next chapter will elaborate on the theory of stakeholders.

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This chapter will elaborate on the theory of stakeholders as found in the academic literature in order to answer the sub question: “Which stakeholders are involved in NSD?”.

3.1 Submarkets in Dutch health care system

The Dutch healthcare system distinguish three sectors: curative care, long term care, and public health (see Appendix 2). The Dutch health care system is characterised by the involvement of different public, private and professional stakeholders (van der Grinten et al., 2004).

The Dutch healthcare system can be divided in different actors and submarkets. The actors are the government, the health care insurers, insured or patients, and health care providers (see Figure 7). The actor providers can be subdivided in the stakeholder groups as found in paragraph 3.3.

Figure 7 Actors and markets in Dutch health care system

Source: Adapted from Schäfer, Kroneman, Boerma, van den Berg, Westert, Devillé & van Ginneken, 2010.

The submarkets are defined as the health insurance market, health care provision market and health care purchasing market. The submarkets in the Dutch health care system have a mutual relationship. In the health insurance market, health insurers offer the basic insurance package to citizens. Citizens are obliged to insure themselves. In the health care purchasing market health insurers can negotiate

with providers on price, volume and quality of care. In the last submarket, the health care provision market, providers offer care to patients. The Dutch government is not directly involved in health care. The Ministry of Health, Welfare and Sport has delegated the tasks of supervision and administration to other stakeholders (Schäfer, Kroneman, Boerma, van den Berg, Westert, Devillé & van Ginneken,2010). The tasks of these stakeholders will be described in paragraph 3.2 and Figure 8.

3.2 Stakeholders long-term care

Before long term care is provided to a patient, several organizations needs to deal with the care question. This part is unravelling and describing the relationship among the relevant stakeholders in the long term care, as indicated in Appendix 2.

The government is constitutional responsible for the quality, affordability and accessibility of care but is powerless to fulfil this independently (van der Grinten, 2006). The government and the parliament are responsible for the classification of these public values. When this values have a public label, governments develop policies to ensure these public values (Putters et al., 2009). The actual secure of these public values is delegated to different independent bodies. The Centre for Needs Assessments (Centrum Indicatiestelling Zorg, CIZ) assesses the care that is necessary for a patient. Care offices organizing (Zorgkantoren) the needs assessment and the provision of care. A health care provider, such as NOVO, is actually delivering the care to a patient. Health insurers are responsible for purchasing long-term inpatient care, but they have delegated these tasks to care offices (Zorgkantoren). Care offices operate independently, but are closely allied to health insurers.

The health care industry is not a free market, but a market with regulated competition. Buyers and sellers have freedom but that freedom is restricted by regulations and laws to prevent unwanted effects to ensure the public objectives of quality, accessibility and affordability (Westert, van den Berg, Zwakhals, Heijink, de Jong & Verkleij, 2010).

The stakeholders in long-term care

.

- Classification public labels;

- The government is constitutional responsible for the quality, affordability and accessibility of care;

- Setting national health care budget.

Government ministries: Ministry of Health, Welfare and Sport

- Responsible for health care issues, such a the safeguard and control the implementation of regulations and the performance of the health care sector;

- Guarantee access to a high-quality system of health care facilities and services.

Municipality

- Setting local public health targets;

- Decides on budget for social support and home care;

- Responsible for implementing the Social Support Act (Wmo).

Dutch Healthcare Authority (Nederlandse Zorgautoriteit, NZA)

- Responsible for market surveillance, market development and tariff and performance regulation. Enforce an efficient implementation of AWBZ.

- The supervision of the all health care markets in the Netherlands, supervise insurers and providers;

- Market regulator in the care with tasks: advisory, regulatory, oversight, and enforcement; - Enforcement of the Health Care Market Regulation Act (Wmg);

- Give advice to Minister about rules in the care; - Set the budget for each care intensity package.

Health Care Inspectorate (IGZ)

- The IGZ supervises the quality and accessibility of health care, implementing targets legislation;

- Inspects safety and quality of providers; - Investigates complaints and accidents.

Care offices (Zorgkantoren)

- The responsibility of purchasing inpatient long-term care is delegated to care offices; - The needs assessment and the provision of care.

Health insurers

- Responsible for purchasing long-term inpatient care, but they have delegated these tasks to care offices.

Het College voor zorgverzekeringen (CVZ)

- Maintain efficient enforcement of the system and establish incentives and responsibilities, give advice about AWBZ claims and manage ABWZ care registration (AZR).

The Centre for Needs Assessments (Centrum Indicatiestelling Zorg, CIZ) - Assess the care that is necessary for a patient;

- Perform the care assessment.

.

Figure 8Stakeholders and responsibilities in the long-term care

Source: Adapted from Schäfer et al. (2010) and webpage of Ministry, CIZ, NZA, IGZ, CVZ & CIZ (2012).

3.3 Stakeholders NSD literature

Besides the stakeholders in the health industry there are other relevant stakeholders. These stakeholders are found in the NSD literature stream and will be elaborated in this paragraph.

3.3.1 Management

Management provides a clear direction, steer the NSD process, and adhering the strategic objectives initially set down (Kessler & Chakrabarti, 1999; Scheuing et al., 1989). Management must be committed to innovation by resources made available for development and with practical help to flourish NSD (Johne et al., 1998).

Good leadership will contribute to managing conflict constructively (Johne et al., 1998) and coordinating cross-functional teams in a manner which influences the pace with which the process moves (Froehle, Roth, Chase & Voss, 2000). It is important that management consistently encourages creative innovation and the development of ideas by setting examples with their own actions. Employees must be convinced that they will not be punished for failure because the outcome of an innovation project is always uncertain (Atuahene-Gima, 1996; Johne, 1993; Johne & Vermaak, 1993; Martin & Horne, 1995). For NSD to flourish, management must be committed to innovation, both in terms of resources made available for development and with practical help (Johne et al., 1998).

3.3.2 Employees

Employees are seen as the heart of the innovation process, because they come up with ideas for new or improved services, and turn these into successful innovations (de Brentani, 2001; Van de Ven, 1986; Schneider & Bowen, 1984). Employees’ knowledge of customers and competitive offerings is useful for defining the appropriate level of service customization and user-friendliness (Martin et al., 1995). Employees usually play an essential role in embodying a new service, in differentiating it from competitive services, and in helping clients to make the switching decision (Atuahene-Gima, 1996; Johne et al., 1998).

3.3.3 Consumer

Understanding the customers’ needs, wishes and expectations is the driving force in any new service development (Cooper, 1992; Cooper and Kleinschmidt, 1986; de Brentani 1991; Edvardsson & Olsson, 1996; Liden & Sanden, 2004; Rothwell, 1974; Rubenstein. 1976). Consumer involvement in service design increases the potential for success (Edvardsson et al., 1996; Johne et al., 1996; Martin et al., 1995; von Hippel 1988). Employees are an important source of winning new ideas (McGuire, 1973).

3.3.5 Development team

NSD is based on multi-functional development teams, relying on the expertise and co-operation of individuals from different functions working in teams (Alam, 2007; Easingwood, 1986; Edgett, 1996; Johne et al., 1998; Scheuing et al., 1989; Thwaites, 1992). This team, its leader and its team members, perform several activities, such as the identification of the consumer preferences, writing of the procedures and training of the sales department, the way the product would be advertised and promoted and finally the kind of interaction the salespersons must establish with their clients (Alam, 2007).

3.4 Conclusion

This chapter discussed the relevant stakeholders as found in the literature. Summarized the following stakeholders are distinguished in the theory:

Inside the organization Outside the organization insured/patients/consumers insurers

development team Government

management Ministry of Health, Welfare and Sport

employees Municipality

Dutch Healthcare Authority Health Care Inspectorate Care offices

Het College voor Zorgverzekeringen The Centre for Needs Assessments competitor

The theory elaborate on the role of the stakeholders inside the organization and competitor. The theory identified which NSD activities these stakeholders perform. The role of the stakeholders outside the organization (except the role of competitor) in relation to NSD is not elaborated in the literature.

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This chapter describes the research methods used in order to give an answer to the research question: “What is the contribution of the stakeholders in developing the new service?”.

This chapter will describe in detail the case selection, selection of respondents, instruments, and data analysis. Furthermore this chapter will elaborate on the quality criteria for the research.

4.1 Case selection

This study uses the exploratory research cycle based on Eisenhardt (1989) to execute the study. Exploratory research is useful to make current state affairs clear. Since there is not much academic research to NSD processes and their stakeholders (Menor, 2002; Johne et al., 1998) this study conducts the exploratory research. Exploratory research provides initial ideas about specific problems, theories, relationships, or variables (van der Bij, 2012). The research is twofold. The first part of the study involved a literature study concerning the concept of NSD process and the stakeholders. The second part is an empirical research, based on of the findings of the first part. Finally, the findings from the theory and empirical research are compared in the chapter discussion.

The case selection has been based on pragmatic grounds since the number of cases that are available are limited (Van Aken, et al. 2009). The NSD process chosen for the case study is the design of a residential centre in a health care setting. Information concerning the organization of the case study is found in chapter 1. The field work of the case study was developed over a period of 8 months.

4.2 Selection respondents

The focus of this study was to conduct an interview with all relevant stakeholders in the initial stages of new service development. The supervisor field study identified a network of respondents who have a role in the initial stages of designing the new service. The researcher interviewed these respondents, and during the interview the respondents were asked to identify other potential respondents. Thus, the technique ‘snowballing’ was used to identify all relevant respondents.

4.3 Instruments

When conducting qualitative research it might be useful to gather data from multiple resources. This is called triangulation and is also necessary when undertaking a case study (Papastathopoulou,

4.3.1 Interviews

Interviews are one of the main methods of data gathering (Van Aken, Berends & van der Bij, 2007). Interviews were conducted with participants who are involved in designing the new service. The focus of this study was to conduct an interview with all relevant stakeholders in the initial stages of new service development. Due to strategic interests from an organizational perspective, the researcher was not allowed to interview all relevant stakeholders. As a result, only the stakeholder group inside the organization were interviewed, which consist of six respondents (see Appendix 10).

The respondents were contacted by e-mail and were asked to participate in the interview. All respondents were visited once to gather the main data. The interviews were based on a semi-structured interview guide that was developed around a list of interview questions (see Appendix 4). The interview questions were based on the findings from the chapters theory (chapter 2 and 3). The interview questions served as a guidance for the interviewer and was not disturbed to the respondents in advance. The type of questions and discussion were allowed for flexibility. The initial questions were simple and more specific issues were asked to narrow the area. The respondents were asked to describe their own contribution in developing the new service. Next to that, the respondents were asked to identify other stakeholders and their contribution to NSD. This was done in order to answer the research question of the study. The interviewer was aimed at getting clear and unbiased answers to the research question.

The data regarding the interview was recorded, reported and verified with the respondents. The respondents were asked to verify the interview report.

4.3.2 Observations

The researcher made observations of new service development activities performed by the development team. The observations were made through site visits, field visits, and participation in important meetings concerning developing the new service. Next to that, observation of informal communication between the researcher and relevant stakeholders was an important source to gather data.

4.3.3 Secondary data

The researcher collected secondary data concerning general information about the firms’ operation, structure and stakeholders. This data was gathered through articles, newsletters, reports, the organizations’ webpage and the webpage of relevant stakeholders.

4.4 Data analysis

Based on the interviews a file was constructed, which is a detailed description of each interview individually (see Appendix 5) The first step was to generate insights by examining each file individually and focussing on the process of NSD, the stakeholders, and their contribution in NSD. Focussing on

each description individually allows the researcher to seek for unique patterns to emerge. The second step was to search generalized pattern across different interviews. The interviews were compared to each other in order to see what the similarities or differences are between the interviews. The search for patterns and capture novel findings was emphasized.

The data analysis consists of analyzing processes, interpretation of events, and the search for patterns and relationships among the data collection methods. In the end, the results from the analysis of the interviews, observations, and secondary data were compared to the literature, as described in chapter discussion. This gives insights to what degree the process of NSD with multiple stakeholders in this research is supported by literature sources and to what degree it is unique.

4.5 Quality criteria

Quality criteria are defined to evaluate the quality of a research. The most important research quality criteria are controllability, reliability and validity, because they provide the basis for inter-subjective agreement on research results (van Aken et al., 2007).

4.5.1 Controllability

Controllability reveals how the study is executed. The description of the study enables others to replicate it in order to check whether they get the same outcome. The chapter research methodology describes how the data is collected, how respondents are selected, what questions are asked, and the study circumstances. This present chapter gives insight on how the study is executed, the respondents, the interview questions and documents used. Hence, the controllability of the present study is high.

4.5.2 Reliability

Results are reliable when they are independent of the particular characteristics of that study and can therefore be replicated in other studies (Van Aken et al., 2007). There are four potential sources than can bias a study: the researcher, the instrument, the respondent, and the situation (Van Aken et al., 2007).

Researcher reliability concerns the smaller the possible influence of a researcher, the more objective the results are. Increasing reliability could be done by using multiple researchers. Since this academic research should be executed by one person, it could decrease the researcher reliability. Still the research reliability is relatively high, as the researcher has no interest, motivations or emotions to shape the results.

Circumstances reliability is constructed by carry out the study at different moments in time, interviews are held separated, and with different people in order to gain results independent of the circumstances.

4.5.3 Validity

The third major criteria for evaluation of research results is validity. A research is valid when its’ justified by the way its generated .Three categories of validity exists: construct validity, internal validity, and external validity (Van Aken et al., 2007), which are discussed below.

Construct validity is the extent to which the measuring instrument measures what it is intended to measure. Construct validity is high as the concept is completely covered and there is no measurement of components that do not fit the meaning of the concept. The measuring methods in this study are evaluated by the researcher itself, the supervisor of the University of Groningen and by associate students through pear reviewing each others reports critically.

Internal validity means conclusions about relationships between phenomena are justified and complete. The relationships and variables are supported through academic literature. This study is aiming the suggested relationships are complete and adequate and not be competing for explanations. This will enhance the internal validity (Van Aken et al., 2007). Internal validity may be reduced since a researcher tends to limit one self by focusing on one perspective, the one that suits best (Van Aken et al., 2007).

External validity is high as the generalizability of research results and conclusion to other people, organizations, countries, and situations (Van Aken et al., 2007). This study is focusing on one organization. The external validity in this study would be considered low, because this study is not aiming to develop a generalizable theory.

5.

This chapter will present the results of the case in order to answer the research question “What is the contribution of the stakeholders in developing the new service?” and “How to design the process of a new service in the health care industry?”.

First, the results will zoom on each stakeholder individually and elaborate on their role in the initial stages of designing the new service. Second, the results will be presented from more a helicopter view in order to answer the research question “How to design the process of a new service in the health care industry?” The results will be elaborated from the perspective of the sector, the stakeholders and the organization.

In the initial stages of NSD the following stakeholders are identified: - The government - The organization - The board - Development team - Municipality - Citizens - Care office - Cooperation partner - Other health care suppliers - Parents

- Employees - Family council

The next part will elaborate the contribution of each stakeholders individually in designing the new service.

The government

The government is responsible for regulation and supervision of the Dutch health care system. The organization is to a large extent dependent on the choices of the government. The choices of the government determines the strategy and the policy of the organization. The government have been taken measures in the AWBZ (the collective funding of the organization). This means the organization

business with the insurers. Thus, the government determines the operating framework of the organization in terms of strategy, business partners, and financial resources.

The organization

The funding of the organization is to a large extent dependent on the AWBZ, which is a collective funding from the government. The AWBZ is for people with serve disabilities who need (often lifelong) care, nursing and support. As the chief care argued: “the government is taking measures to ensure the AWBZ will be staying affordable, for now and in the future”. The measures are also indented to improve the quality and accessibility of the AWBZ. The new service will be staying in the AWBZ. Therefore the new service is called ‘guaranteed AWBZ-care’. This means the financial resources for this innovation project are secured.

The organization wants to deliver the new service in order to derive the existence of the organization. The new service is important for the future proof of the organization. Within the organization the idea of the new service is created in the following way, as stated by the divisiemanager: “The parents of the clients have been indicated they wish continued care for their children”. The children are going to day care, but continued care in the form of living is not possible. The wish of the parents is communicated via the staff of the day care and via the family council through the board. The service is shaped through interaction between the parents of the clients and the health care provider.

The board

The boad noticed the wish of the parents and responded by conducting a quick scan. The wish of the parents is weighted against the company’s strategy. This resulted in the idea to offer living for children and their parents. As the chief care argued: “due to cuts in the AWBZ relatively less resources will be available. To deliver the new service the organization is expecting to appeal on parents, students and volunteers”.

Subsequently the board decided to implement the idea according to written rules that describes the necessary tasks and activities to conduct an idea (called approach MMP).

Development team

According to the procedure MMP the division manager assigned the members of the development team individually. The development team consist of two managers of a daycare centre and one property employee. It was not clear for all members of the development team what their role and responsibility was. The development have been carried out various development work, such as:

- Construct the project plan;

- Examine strengths and weaknesses of new residential building at other health care providers; - Present the idea of the new service to the care office;

The employees were part-time assigned to develop the project. The development team had not enough time to do development work. There was a tension between development work and daily activities. However, the development team is responsible to complete project tasks successfully.

Municipality

The development team and the Municipality discussed how the location of the residential centre could fit the legislation Spatial Planning Act and in the future the Municipality needs to give building permission. Therefore, the divisiemanager, the property employee and the Municipality discussed how the location of the residential centre could fit the policies of the Municipality. A necessary change in the function in the Spatial Planning Act is needed. The organization and the Municipality made an agreement to satisfy procedures around the legislation. However, unexpectedly the Municipality withdraw the agreement and came up with an infeasible, disadvantageous and impossible agreement for the firm. This resulted in conflict between both parties. As the property employee argued: “The organization deployed a lawyer to resolve the conflict. The outcome was the organization needed to start a new, expensive procedure to fit the Spatial Planning Act”. The organization is dependent on the Municipality for the changes in the legislation and acquiring licences. The Municipality needs to defend her own stakes and is responsible to implement her own and local policies.

Besides this conflict with the Municipality the citizen had objections against the changes in Spatial Planning Act.

Citizens

Citizens have the right of voice when changes in the Spatial Planning Act occur. The citizens who live near the location of the residential centre are represented in the neighbourhood association Buitenhof. As the property employee argued: “The citizens have made objections against the modification of the Spatial Planning Act”. During a regular meeting The Municipality communicated this objection to the firm. Such objections of citizens affecting the project in terms of slowing down the project. Now, the firm and the Municipality need to explore new possibilities how the residential centre could fit the legislation.

Care office

The care office is responsible to purchase inpatient long term care, thus the new service of providing living for children. The care office needs to ensure the financial resources are available for this innovation project. In the past the Care Office had a purchase requirement of 90% but that is not

external advisory agency. The goal of the presentation was to present a clear vision of the new residential centre. During the presentation a film was shown which emphasized the vision of the parents of the clients on the residential centre.

Cooperation partner

The health care provider Nieuw Woelwijck also attended the presentation. This health care provider has already experience in providing living for children. This health care provider is a cooperation partner because, as argued by the divisiemanager: “both health care providers are committed to the social interest to reduce the demand of living for children”. In the past the organization did help this health care provider in realising the building of a new residential centre. In a later stage this cooperation partner will conversely help the organization in sharing knowledge and expertise in providing the service living for children.

Other health care providers

The development team recognized other health care providers/ competitors are an important source of ideas. The development team arranged field visit to similar health care providers who just completed the building of a new residential- and daycare centre. At five different health care providers the development team examined the strengths and weaknesses of the property aspects. The development team documented the ideas by taking photographs.

Parents and employees

Other sources of ideas are parents of customers, employees, management and the development team. During the sessions of co creation these stakeholders will generate ideas for the property program requirements. An advisor will guide this session. This example shows the firm is generating new ideas only when needed. How ideas will be screened can not be elaborated as the project did not yet have reached this activity.

Family council

The family council consists of parents of the target group. During a regular meeting with the family council the development team presented the idea of the project. Since the family council is the target group, the development team wanted to involve and inform them in the early stages of the project.

The previous part presented the role of each stakeholder individually in the initial stages of designing the new service. This view is compared with the traditional view of stakeholders in NSD literature. This has led to the results in Figure 9, see next page.

Stakeholder Traditional view New view

Government Not acknowledge Determines firms’ operating framework in terms of

strategy, business partners and financial resources.

Municipality Not acknowledge NSD should fit legal issues to obtain building

permission and to changes Spatial Planning Act

Care Office Not acknowledge Purchase the ‘new service’.

Citizens Not acknowledge Resistance against new service

Cooperation partner Not acknowledge

Share knowledge and expertise Reduce demand to the service

Organization Competitive edge Future proof

Management

Made resources available, set direction, steer NSD

process adhere objectives. Traditional view applicable

Employees Come up new ideas, service concept development Traditional view applicable

Competitor Copy ideas Traditional view applicable

Development team Perform NSD project activities Traditional view applicable

In order to answer the main question of this research: “How to design the process of a new service in the health care industry?” the next part will present the results from a helicopter view instead of focussing on each stakeholder individually. The conclusion will be elaborated from the perspective of the sector, the relation between the stakeholders and from an organizational viewpoint.

Characteristics of the sector

Before the service is actually delivered, the organization knows there is more demand than supply for the new service. The demand to the new service is high, as indicated by the parents of the target group. On the other hand the supply, by other health care suppliers offering the new service, is very low. The need to a residential centre for children exceeds the actual service providers who offer such a residential centre. The need for the residential centre is present in the own organization, and the need for the care is noticeable at another health care provider Nieuw Woelwijck because they have a waiting list for the service. Offering the residential centre for children means both provider (thus NOVO and Nieuw Woelwijck) will deploy to the social importance to provide living for children. Meanwhile, from the clients’ perspective this means they have little choice to pick a health care provider.

In the health care industry there is no real competitive environment, but the market is characterised by regulated competition. Similar health care providers are basically competitors because they offering the same services. Despite this fact, among similar health care providers there is exchange of knowledge and expertise regarding the new residential centre. The health care provider are helping each other with the new building of the residential centre and they help each other with issues such as how to provide living for children. The manager Bedrijfsbureau argued: “There is no competition, but with the changes in the AWBZ we expect more competition between providers”. In the health care industry market mechanism and competition is hardly noticeable. Designing a new service in the health care industry is driven by complicated legislation. The chief care argued: “ the legislation determines the type of client” and thus the associated services that will be delivered. This leads to the first proposition of this study:

1) Innovations in the health care industry are predominantly driven by the legislation.

Stakeholders and their stakes

In the health care industry in the initial stages of designing a new service different stakeholders are involved from inside as outside the organization. Inside the organization the board, development team, employees are involved. Outside the organization the Government, the Municipality, citizens, other health care organizations, the Care office, parents of the clients and the family council are involved. Designing a new service in the heath care industry involves different stakeholders (see Figure 10).

___________________________________________________________________________

Stakeholders Stakes

Inside the firm

The firm NOVO existence of the firm in order to be future proof Outside the firm

Parents of clients the service meets immediate and explicit needs Government regulation of health care industry

Municipality implement own and local policies Citizens residential centre not in my backyard

Cooperation partner deploy to social interest to satisfy the demand living for children Care office purchase AWBZ-care

Other health care providers no direct stakes

Family council the service meets immediate and explicit needs

___________________________________________________________________________ Figure 10 Stakeholder and their stakes in the initial stages of NSD

This table shows each stakeholder has his own stake in designing the new service. This leads to the second proposition of this study:

2) For innovations in the health care industry a complex interplay between various stakeholders and their stakes is needed.

Relation between stakeholders

Besides the interplay between the stakeholders and their stakes, a certain relationship among the stakeholders is noticeable. The relation between the stakeholders will be explained in the following way. First, the health care provider is dependent on other stakeholders to finance the new service. The Care office needs to purchase the service of the provider. On the other hand, the care offices’ AWBZ-budget is dependent on the national health care budget which is set by the government. Thus, the health care provider is dependent on other stakeholders for the finance of their services.

Second, the organization is dependent on a stakeholder in order to acquire licences for the building of the residential centre. The residence should fit the legislation Spatial Planning Act set by the Municipality. To build the residential centre the organization needs to obtain licences of the Municipality, such as building permission. Thus, the health care provider is dependent on other

for children. Conversely, the organization also helped other providers in realising the new building of a residential centre. This leads to the third proposition of this study:

3) To design the new service stakeholders are dependent on each other for the finance, licences, knowledge and expertise.

Organizational level

The organization does not use a formal development process. The development process rather looks like the systematic learning model of Stevens et al. (2005). According to Stevens et al. (2005) the interactors will determine the final fit between the new service and the customer’s expectations. The model of Stevens et. al (2005) does not describe the necessary activities and tasks to develop a new service. From an organizational perspective it seems to be new services are developed on a ad-hoc basis. This is congruent with Menor (2002) who argues the generally accepted principle behind NSD is that “new services happen” rather than occurring through formal development processes. This leads to the last proposition:

6. Discussion

The main focus of this study was to explore how to design the process of developing a new service in the health service setting. The project is still standing in the beginning, as a result only the initial stages of NSD can be explored. The process of NSD is rather a informal process, as indicated by Stevens et al. (2005) . It is not yet possible to explore a complete view of the NSD process, thus to what extent Stevens et al. (2005) model of NSD may be applicable cannot be assessed.

The theory showed several stakeholders are involved in NSD, which operate independently in NSD activities. The list of the stakeholders who are involved in NSD is enlarged, and their contribution in NSD is identified. Furthermore this study identified interrelationships among stakeholders.

Although this research has provided valuable information and insights in designing a new service in the health care industry, this study has several limitations when interpreting the results. First, due to the novelty of the topic the literature is relatively small and a vast number of empirical researchers lacks. Second, a limitation is placed on the restriction of the sample size to include only respondents inside the organization. A broader sample may reveal different results. Another constraint is the bias of the researcher during this case study. An additional limitation is the generalization potential is limited by a single-case analysis. Yin (1984) argued a case study is not a proficient basis for scientific generalization. The results of this case study should be tested by further studies in order to prove the generalization of the results.

The contribution of this study could be seen as a starting point for future research. The directions for further research could be interpreted in the following way. First, the design of a new service with multiple stakeholders is only tested in the long-term care industry. Additional research is needed in other industries to assess the usefulness in other sectors (such as public health and curative care) to have a clear picture of designing a service in the Dutch health care sector. Second, the case study involves a large service provider that is well known in the industry, any predictions of the findings for smaller firms may not possible. Thus, extending the findings to smaller service suppliers should be tested. Another direction for further research is the study context (the Netherlands), so additional research in other countries could reveal different results.

Apart from the limitations, this is the first research that takes on a comprehensive view on new service development in the Dutch health care. The practical NSD model that was built, as well as the findings from the case study have contributed to the NSD literature. This research can therefore be of great value for future research.

7

The last part of this study is an addition and presents recommendations for the health care provider NOVO in order to increase the innovative character of the organization.

To increase the innovative character of the organization the activities and tools in this chapter should be applied when designing a new service. The current NSD tools and activities of the organization were compared with the literature. This have led to the following recommendations, which is based on Appendix 1 and the model of Johnson et al. (2000).

Use formalized NSD process

To increase the innovative character of the organization it is recommended to use a formalized NSD process. A formalized NSD process increases the chances of success, it unveils aspects of NSD process that can lead to better developed new services and performance (Biemans, 2012; Papastathopoulou et al., 2001).

A tailor made NSD checklist for the organization is constructed (see Appendix 1) which contains the necessary activities in order to develop a new service. The NSD checklist is constructed in the following way. The current NSD activities of the organization were compared with the NSD activities in the literature (see Appendix 5-8). This identified for example the organization lacks an innovation strategy, methods to generate and screen new service ideas and a plan to test new services. The lacking NSD activities and current NSD activities have led to the activities in the tailor made NSD checklist.

Formulate new service strategy

The organization should set a new service strategy and objectives to give insights in the strategic focus of the organization. When a new service idea is developed there is a kick-off meeting with the development team. During this kick-off meeting the individual roles, responsibilities, tasks and time for the development work should be assigned.

Get expertise to generate and screen ideas

Currently the organization is outsourcing the activity of generating ideas. To increase the innovative character of the firm it is important the firm has the expertise to generate and screen ideas. When the organization has the expertise to generate and screen ideas it will generate profit. Ideas should be generated continuously and not only when needed. Suggested techniques to generate ideas as well as methods to screen ideas are shown in Appendix 10.

IT-system to register ideas

There must be a IT-system that enables to register ideas. Sources of ideas can come from different directions, such as customers, marketing, sales, competition, market research, legislation/regulatory

changes, operations, distribution channels, customer services, suppliers, customer suggestion, outside agencies, R&D, overseas markets, IT Department, industry experts, top management, top managers (Kelly et al., 1998; Papastathopoulou et al., 2001). It is important the organization recognises ideas can come form different sources and these ideas should be registered in an IT-system.

Examine the business attractiveness

The organization should conduct a market study to examine the business attractiveness and the potential profitability of the new service.

The organization is using the procedure MPP which could be seen as examining the business attractiveness and potential profitability. However, this procedure is mainly focussing on the attractiveness of property aspects inside the organization. It is suggested to examine a business attractiveness compared to the environment.

Construct detailed service description

It is recommended to construct a detailed service description of the core attributes of the service and supplementary variables. This means the organization should develop a final service design blueprinting which describes the service enough in detail to implement and maintain it carefully. Furthermore, the organization should establish the way how they would communicate the service to the target group. This means a communication position and communication theme should be established.

Testing the service

Before the new service is actually delivered it should be tested. This means the service description should be tested and the personnel is getting trained. Furthermore, an implementation plan should be constructed and describes how the new service will be implemented.

Aftercare

The organization should determine which activities are necessary for the maintenance of the new service, for example periodically training of the personnel. This should be constructed in a life cycle maintenance program. Furthermore, shortly after the new service is launched the organization should assess the teething problems and should make improvements to the new service.

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Appendix 1 : New Service Development Process Checklist

1. New service strategy formulation Set new service strategy and objectives; Conduct quick scan;

Hold kick-off meeting;

Assign the development team, their individual roles and responsibilities.

2. Business analysis

Conduct a market study to examine the business attractiveness and the potential profitability.

3. Certificate-of-need

Obtain approval from institutions

4. Idea generation

Formal process for searching new ideas; Continuously generate new ideas.

5. Idea screening

Evaluate and screen ideas with formal screen methodology The search methodology is documented.

6. Concept development

Construct a detailed service description of the core attributes of the service and supplementary variables in the form of a service design blueprint;

Establish communication position and communication theme.

7. Testing

Test the service description and personnel training. Construct an plan to implement the new service.

8. Launch

Develop a life cycle maintenance program and post-launch assessment.