I’ve read a number of John Seddon’s books over the years and they are ‘sprinkled’ with critiques of a range of conventional management ‘fads and fashions’. One of his key critiques is of a particular 1978 HBR article written by a Richard B. Chase, titled ‘Where does the customer fit in a service operation?’
The article title sounds relatively innocuous, but Seddon puts it forward as having been a catalyst for the splitting up of service systems into ‘front office – back office’ functions…because it will (according to Chase) make them much more efficient.
Now, whilst (I believe that) I’ve understood Seddon’s critique of the splitting up of service systems into a myriad of (supposedly) specialised components…and the hugely damaging sub-optimisation that this has caused1, I was never quite sure as to the level of ‘blame’2 that could be levelled at Chase’s article – mainly because I hadn’t read it.
…so, as chance would have it, I’ve just managed to get hold of it. And, wow, yep, it was quite illuminating. I thought that I’d write this post to ‘get behind’ the HBR article title and pull out the bones of what Chase was saying. Here goes:
In the first paragraph…
So I read the following in the very first paragraph of the article:
“…the less direct contact the customer has with the service system, the greater the potential of the system to operate at peak efficiency…”
On its own this quote reads very badly. My hackles are raised instantly, but I hold my nerve and carry on – perhaps I need to read it in context…so I take a deep breath and carry on…
Chase goes on to offer a ‘classification of service systems’ according to the extent of required ‘customer contact’ in ‘creation of the service’.
Chase defines:
- ‘customer contact’ as the “physical presence of the customer in the system”; and
- ‘creation of the service’ as “the work process that is entailed in providing the service itself”
He puts forward a table showing high contact services at the top (health care, public transportation, restaurants, schools….), low contact at the bottom (manufacturing) and mixed services in-between (banks, post offices,…). So far, so what.
He states that service systems with high customer contact are more difficult to control. Why? Because the customer can affect the demand – e.g. the time it takes, the exact nature of what’s being required, and their particular view on what defines quality.
I think that Seddon would wholeheartedly agree with these points regarding variety within customer demand (Seddon would say that “the customer comes in customer shaped”3). The difference between Chase and Seddon is in their polar opposite thinking of what this lack of control should lead on to.
Where did Chase’s article take it?
Chase went on to state what he considered were the ‘implications for management’:
“…a distinction should be made between high-contact and low-contact elements of a service system. This can be done by a separation of functions: all high-contact activities should be performed by one group of people, all low-contact activities by another. Such an adjustment minimises the influence of the customer on the production process and provides opportunities to achieve efficiency…”
In short, Chase is about breaking up the system (de-coupling the supposed ‘front’ and ‘back’) to make its components more efficient!
Mmmm, any systems thinking giant (or apprentice), even without knowing the details, might conclude that this isn’t going to end well.
Developing the idea…
Chase then develops his proposed treatment by asking a set of questions and providing answers.
Chase asks about ‘gearing your operating procedures to your system’:
“Obviously, paying service workers according to the number of customers served tends to speed up service in the high-contact system. However…if the customer feels rushed…he is likely to be dissatisfied with the organisation.
Further, it makes little sense for a seller of any service that can be at all customised to measure system effectiveness in terms of total number of customer served when in fact one should be giving more leisurely attention to a small number of ‘big spenders’.”
Wow, there’s a lot to unpack within this lot!
- The idea of ‘speeding up’ service by the use of incentives completely ignores the dysfunctional behaviour that this may cause, the failure demand likely to arise and the re-work to be performed. It is clear component-level logic at the expense of the system;
- I have always hated the idea that a service organisation should smooch with the ‘big spenders’ (and thereby demote the rest as 2nd…and even 3rd class customers) so as to milk them of their cash!
The mind-set of the above is completely ‘inside-out’: the customer is merely a host to bleed money from. The attitude being portrayed is ‘what can we (the organisation) do to you?’ rather than ‘what do you need?’
Chase asks ‘can you realign your operations to reduce unnecessary direct customer service?’
“Managers have long recognised the desirability of having ‘attractive’ personnel greet the public…while being more concerned with technical skills on the part of those individuals removed from customer contact…”
I’ve got visions of the ‘ugly people’ being hidden in the back office!
I guess that we should make allowances for the fact that he wrote this back in 1978 (a different world?) but, again, he’s trying to optimise components rather than improve (and remove) inter-dependencies between them.
Chase asks ‘can you take advantage of the efficiencies offered by low-contact operations?’
“Can you apply the production management concepts of batch scheduling, forecasting, inventory control, work measurement and simplification to back-office operations?…”
His suggestions seem laughable now.
Essentially, he is proposing the techniques that manufacturing used ‘back then’ to be applied to service ‘back offices’….and yet just about all of these manufacturing methods would now be seen as poor practise!
Just go into a well-run factory today4 and see the pulling (not pushed by forecasting) of units of work (not batches) through flow (not requiring inventory) on a production line able to handle variety (not simple), using measures against purpose (not narrow activity measurement)
…and you’ll also see those same manufacturing workers trying to get as close as possible to their customers so as to understand them and what they need.
Chase asks ‘can you enhance the customer contact you do provide?’
“If the low-contact portion of a worker’s job can be shifted to a different work force [i.e. a back office], then the opportunity exists to focus that worker’s efforts on critical interpersonal relations aspects.”
Boom! This gets to the nub of the problem – Chase misses the monumentally important point that interpersonal relationships are (worse than) useless if the ‘front of house’ worker can’t actually help the customer with their need.
In short: ‘I can smile sweetly, look good and even say nice things to you…but, sorry, I can’t help you with your need…I’ll just have to pass that on to someone else and hope for the best…but I’ll do so with a really great smile 🙂 ’
Not much customer satisfaction in that!
Chase asks ‘can you relocate parts of your service operations to lower your facility costs?’
“Can you shift back-room operations to lower rent districts…or get out of the contact facilities business entirely?”
And so we get to the eventual end game of this logic – outsourcing of the back office…because it’s (ahem) got no connection whatsoever with the customer anymore. Wonderful!
Not content with creating the unnecessary ‘front-office back-office’ interdependencies, the final nail in the coffin is to make these relationships even harder to handle by splitting up the location and ownership structure.
As Donella Meadows wrote: “Changing interconnections in a system can change it dramatically.”
To conclude:
Yep, I see why Seddon has such a downer on this 1978 HBR article…and, sadly, I can also see that many (most?) service organisations bought it ‘hook, line and sinker’.
Rather than leaving it on this depressing note, I should take us back to a Seddon quote:
“Service differs from Manufacturing. There is, inherently, more variety in customer demand…
…in service organisations, the problem is how to design the system to absorb variety [rather than frustrate it]” (Seddon)
If you want to understand what is meant by absorbing variety…then here’s a post I wrote earlier: “You keep saying that…but what does it mean?!”
…and I’ll write another post (to follow this one) that delves further into ‘Front Office/ Back Office’ and what a healthy alternative could look like.
Footnotes:
1. Seddon is standing on Deming’s shoulders in this respect.
“If the various components of an organisation are all optimised, the organisation will not be…” (Deming)
2. Regarding ‘Blame’: I’m referring to the article, not Richard B. Chase. I don’t know the man. 1978 was a long time ago – I suppose that he may think quite differently now.
3. Customer shaped: Seddon credits Taguchi with observing that we must first understand exactly what a customer wants (their nominal value) and only then can we aim at perfection.
4. A well run factory: You know what I’m going to write next don’t you….yep, the ‘T’ word: You could understand what Toyota does 🙂
Squire to the Giants 