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Managing Services Requires Different Success Metrics

Customers are not as locked into services as they are to products. Therefore, we need a continuous process to ensure that the customer is satisfied.

The shift towards services continues. Almost 80 percent of the US economy is already made up of services. Increasingly, products are becoming commodities. Service differentiates. 

Service culture often runs up against productivity culture which has a fundamental belief: Machines are productive, people are wasteful. In this worldview, the more automation, the more profit.

It annoys me when I arrive at an airport and can’t go to a machine to get my ticket. The machines save time and are more convenient. (It’s nearly always faster and you can choose your own seat, for example.)

When Alaska Airlines introduced check-in machines they saw an 18 percent improvement in labor productivity, a 10 percent reduction in their workforce and a 25 percent net income increase. This is automation nirvana. Everyone wins.

Things don’t always work out so well, as Ming-Hui Huang and Roland T. Rust point out in their paper for MIT Sloan Management Review, entitled “Should Your Business Be Less Productive?” They cite Comcast Corp. who increased productivity by over 20 percent between 2006 and 2008, with a consequent drop in customer satisfaction.

Many organizations practice the “Your call is important to us” and “staff are our most valuable resource” brand of productivity thinking. Here, you make life miserable for customers so that you can have less trained staff and thus become more "productive." Or you buy a content management system for the intranet that allows anyone to publish anything so that nobody has to manage anything.

It’s all about "perceived" productivity where people are inherently the problem. The more of them you can fire the better manager you are. But productivity cannot simply be equated with doing more with less or with an automation obsession.

If productivity "gains" force customers to spend more time or make life more inconvenient for them, then, given a choice, they will leave. If the website is hard to navigate, if it’s slow, if the content is poorly written, they will leave, while in the background management will be congratulating itself on how it has such a "productive" web team because they are so small and "manage" so many pages.

Huang and Rust write about visiting a Nissan car factory in China in the late 1990s, where there was an “army of workers making each car. In Japan, where wages were high, the car was manufactured almost entirely by robots.”

However, even in manufacturing there seems to be a limit to the amount of automation that is effective. “Toyota has found that the race to reduce the human element can end up making processes less efficient,” Max Nisen wrote in a piece for Quartz in April 2014.

In just one example, people replacing robots resulted in a 10 percent reduction in waste for crankshaft production, and also shortened the production line. “We cannot simply depend on the machines that only repeat the same task over and over again,” project lead Mitsuru Kawai told Bloomberg. “To be the master of the machine, you have to have the knowledge and the skills to teach the machine.”

We need smart people to get the best out of smart technologies. Smartness today involves continuous-improvement processes that make life simpler and more convenient for customers. It is about getting the right balance between humans and machines. 

About the Author

Gerry McGovern, a content management author and consultant, has spoken, written and consulted extensively on writing for the web and web content management issues since 1994. His latest book is titled The Stranger's Long Neck: How to Deliver What Your Customers Really Want Online.

 
 
 
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