Economies of Flow for Service Design

Most service organizations are designed with economy of scale thinking.  This is an industrialized, mass production mindset that is making service and government worse.  Service designs require different thinking to achieve better performance.

Economies of flow is a much better way to design service.  But this requires thinking outside-in and designing services that work from customers back into the organization – this is to achieve better flow.

Flow can then be evaluated by starting with customer demands.  If a service organization has good flow than there will be less failure demand (demand caused by a failure to do something or do something right for a customer) or more demands that bring revenue – the kind we like.

Resolving customer demands “one-stop” has many different meanings.  FCR (first call resolution – another name for one-stop) too often means that the service representative can’t do anything else.  The reality is that the customer’s view is the only one that matters.  If the customer doesn’t see it as one-stop, than to measure another way is just kidding ourselves.  Bottom line is a customer demand is only resolved when the customer says it is.

To improve economies of flow requires designing out failure demand and designing in better flow for the variety of demands that customers present.  And variety of demand is what makes manufacturing different from service.  Designing service to absorb variety is key.

But it is economies of scale thinking that prevents service from breakthrough performance.  The focus is on activity and reducing transaction costs rather than improving flow.  The result of scale thinking is higher costs and unhappy customers.

Conversely, service organizations and government that embrace economies of flow thinking will achieve unprecedented improvement in performance.

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.  Read his articles at Quality Digest and his column for  Download free from “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 LinkedIn at

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