Service design has two aspects: technical execution and relationship building.
Technical execution is about making the mechanical bits work. For example: the aircraft takes off and lands without unnecessarily killing anyone on board.
Relationship building is making people feel good about the process. For example: hot pre-flight towels, good in-flight movies and service with a smile.
Technical execution is easier to plan, implement, and measure. In many cases, good execution is a prerequisite to be in the game and may not present that much of a competitive advantage. If you run an airline, your planes should fly. If you run a bank, your ATMs should dispense the right amount of cash.
Relationship building is way fuzzier. Qualitative measures are easier to do – how else could you really measure love and loyalty in the short term? It is also where you have the most opportunity for defining a clear competitive advantage.
(Thought at Innovation and Service Design conference, 29 Jan 2010, Malmö, Sweden.)