Have you ever called customer service and wondered why it took so long to get an answer?  Most people blame the representative that they are talking to at the other end of the line.  “Stupid people, they just don’t train them very well” or “This company must hire the dumbest people” is usually the conclusion.

Tripp BabbittWhat if I were to tell you . . . it is not the representative’s fault?  Indulge me for a moment.

Some time ago, I came across the term “economies of flow” when reading John Seddon’s Freedom from Command and Control.  He was describing the important work of Taiichi Ohno in manufacturing.  For those not familiar, Taiichi Ohno is one that uncovered some counter-intuitive truths at Toyota. 

In order to compete in the automotive industry, Mr. Ohno had a problem.  He didn’t have the same number of press machines that the Americans had . . .  in fact, he had only one machine.  This wasn’t the only problem Mr. Ohno had, the other problem was the variety of demand in styles and options in automobiles.  In those days, to handle the variety, Ohno was faced with change-overs to different styles and options of about 10 days. 

Out of necessity (one machine), he worked to reduce waste in the changeover process reducing the time to 10 minutes.  A counter-intuitive moment occurred . . . smaller batch sizes actually reduced costs, because problems were caught earlier with smaller batches and less inventory was required.  He had reduced the time between the order and completion of the product.

In service, John Seddon discovered that variety was even greater.  He realized that the ability to handle variety was key to improving service and reducing costs.  Further, what he discovered was that “people are good at handling variety and computers are not.”  This meant that in service the need for fewer computer applications and systems (in a management paradox) leads to more control and ability to absorb variety with people – reducing costs AND improving service.

I know what you are thinking . . . NO WAY! Everyone is investing in technology to reduce costs and improve service.  BPM, IVR and a host of other existing and emerging technologies are being sold as the panacea or cure-all for the next service problem. What we have found is that computer systems (for the most part) prevent the absorption in the variety of demand.  Partly because of the things that precede IT applications like best practices, scripts, written procedures, etc. that wind up entrapping the service worker and not allowing them to handle the variety offered.

Does this mean the end of IT?  No, it doesn’t mean the end of IT.  IT needs to be movedEntrapping Technology back to the supporting role it once had, up until IT vendors started selling solutions with out understanding the problem . . . and the problem is variety of demand.  The work and the people who understand the work need to “pull” technology as needed to enable the work that needs to be done.  Something all service organizations need to improve to achieve business cost reductions that last.

What we have is an important business cost reduction method that if leveraged will bring about a change in thinking that can start an organization down a path to reducing expenses and improving service by the ability to absorb variety.

Where does my organization start?  How can I quantify the inability to absorb variety? When a service organization (private or public sector) can not absorb variety the fallout includes (but not limited to) failure demand.  Failure demand comes from the failure to do something or do something right for a customer.  Things like missing an appointment, chasing progress on an order, etc.  I have found this number ranges between 25% and 75% of all contacts from a customer for service organizations.  This is an exercise that will bring service organizations to the doorstep of business improvement.

Does your service have failure demand?  Let me know what you find.

Leave me a comment. . . share your opinion!  Click on comments below.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.