November 12, 2010

More thoughts on operational capabilities vs. experience design

From marketing guru Seth Godin's blog post today:

It used to be that if you wanted to build an organization, you had to be prepared to do a lot of manufacturing and assembly--of something. ...

Restaurants used to be built by chefs. Now, more than ever, they're built by impresarios who know how to tie together real estate, promotion, service and chefs into a package that consumers want to buy. The difficult part isn't installing the stove, the difficult (and scarce) part is telling a story.

I'm talking about intentionally building a structure and a strategy and a position, not focusing your energy on the mechanics, because mechanics alone are insufficient. Just as you can't build a class A office building with nothing but a skilled carpenter, you can't build a business for the ages that merely puts widgets into boxes.
 Mr. Godin's thoughts are expressed in a different way, but I think the message is similar to a post I had yesterday.  Let's start to flush this idea out a bit more by creating a classic 2 by two matrix with experience design capabilities on one axis (low to high) and operational capabilities on the other.  Something like this:

So now what?   Well, I imagine the the high/high quadrant is a good place to be, but it implies high costs, but also high quality and value - think Disney. The low/low quadrant on the other hand is low service and low value, low costs - think vending machines.  It is interesting to think about the possibilities of the the other two quadrants.  For high operational capabilities, but low experience think traditional fast food with factory like precision, but very little emotional experience.   This quadrant has probably been well tread and is what most traditional operations management  people consider when thinking about improving a service.  Low operational capabilities but high experience design may lead to a service full of emotional stimulus, but with the risk of service failure lurking around since there is no operational backbone to support the experience. 

Still working through this idea and wondering if it is of any value when considering service strategy?  I think we could find examples of service firms trying to shift their offering into a different quadrant, for example McDonald's with a major redesign of store and Starbuck's pulling on the reins of their baristas operational efficiency .

I'm interested in hearing what you think about the idea.

November 11, 2010

Learning Service Management through Sesame Street: Accommodation Strategy

I'm still a pretty slow learner and Sesame Street is at about the right level for me:

I watched this video with my son tonight and it reminded me of the HBR article titled "Breaking the Trade-Off Between Efficiency and Service" by Francis Frei.  Professor Frei brings up the librarians problem, mainly that sometimes customers might want something that is not usually offered (um num num..cookies...)  and service providers have to make a choice to accommodate or not.  She argues that services that choose to accommodate special requests have higher levels of perceived service experience, but also have higher costs.  She encourages service providers to think about different types of customer induced variance when trying to create an accommodation strategy.

The library, for example, is a pretty low accommodation service, but how could it maintain its low cost while adding a degree of accommodation?  One way would be to create a self-service option that could provide some cookies in the library (vending machine).  Another way would be to outsource some cookie production to another service provider that has the capabilities of producing cookies at a low cost.  Finally, the library could maintain its "books only" policy by, as Frie puts it,  "limiting the service breadth." I read that as meaning create a service process for which customers will not ask for special accommodation.  In the case of the library maybe these means switch completely to e-books - if Cookie Monster still wants a cookie, send him am electronic tracking cookie...

This post was brought to you by the letters C and A and the number 4.

Huge Restaurants: Trade off between Factory thinking and Experience thinking

Two recent articles in WSJ have pointed out some operations of mega restaurants - both are worth investigating.  The first is from the largest restaurant in the world in Damascus.  Here is the video:

After watching the video, operations management folks like myself get a bit excited to think about the shear planning and organizing it takes to produce and deliver so much food every night.  The kitchen essentially becomes an efficient factory and the head chef like a plant manager. 

The next article is about the Tao in Las Vegas, sorry no video, but here a couple of pictures and quotes:

Seconds count because Tao's kitchen serves 1,400 dinners on a typical Saturday night, making it one of the busiest high-end restaurants in the country. While partially cooking dishes in advance isn't unusual in restaurant kitchens, doing so with quick-cooking fish is. That's one way Tao is able to keep the plates moving fast enough to get its legions of diners fed

click to see full size

Although it is only open for dinner, Tao operates 24 hours a day, preparing Chinese, Japanese and Thai-influenced cuisine. On Saturdays, the busiest day, the restaurant employs 57 cooks, eight chefs, 26 servers and 10 hostesses. It goes through 1,400 pairs of chopsticks, 50 pounds of rice and three gallons of Heinz ketchup—a key component of its kung pao sauce. A four-person set-up team folds 1,800 napkins, stocks bars with lemon, lime and apple slices and prepares Tao's over-the-top (think 20-foot-tall Buddha statue) dining room for the night, including lighting 269 candles. One employee does nothing but sweep for his eight-hour shift.

"In Las Vegas, everybody is looking for the big experience," says Rich Wolf, co-owner of the Tao Group, which owns Tao Las Vegas, 11 other restaurants and seven nightclubs in New York and Las Vegas. "It isn't your first thought for a quiet, intimate date," but it's where "people can go to when they want to be festive and celebrate and paint the town red."
The restaurant is part of a 60,000-square-foot complex that also includes a lounge, the popular nightclub and Tao Beach, an outdoor club (closed in winter) with a dance floor, pool and cabanas that offer food, drink and massages. Tao's strategy is to keep people under its roof, and spending money, all night long. Dinner is treated like a pre-party for the wilder antics upstairs at the nightclub. On a recent evening, two barely-clad models hired by Tao frolicked in a rose-petal-filled bathtub near the dance floor.
 I suggest reading the entire article - it is fun to get a glimpse at how they do what they do.

I was struck, however, at the contrast between these two examples.  The first Damascus video was nearly entirely focused on the operational execution that needs to take place every night - chopping, prepping, ordering, inventory, etc.  The article about the Tao also spent considerable time on the topics of inventory, receiving, and food production, but on the other hand it emphasized the work that is put into creating experiences, for example:

By 10 a.m., the four set-up staff started preparing the dining room. One employee donned a harness and ropes to scale the 24-foot-high red wall and place rechargeable lights in the 48 candles highlighting the Buddha that rises above a pool filled with swimming Japanese carp. A representative from the Venetian hotel's floral department replaced the rose petals that filled the eight tubs dramatically lining the entrance to the restaurant.
I have no way of knowing if the Damsus restaurant does not spend similar resources on experience creation, but I think the contrast is interesting.  One one hand, the factory approach is essential to ensuring consitent quality and delivery of food and the food certainly influences the experience.  But, the experience must also consist of more than just the food and the Tao understands that well. 

It is interesting to think about what the right mix of factory/production thinking and experience design thinking is right for specific service and how much resources should companies place in each area.  I suppose it comes down to where the value is being created - is it the output of the kitchen (factory) or the atmosphere and experience of the dinning area.  How much weight do customers put on each aspect?   If a service designer is too biased toward one side or the other (factory vs experience thinking) what will happen? 

November 1, 2010

Transparency at the post office

Customer view - additional computer screen for customers to see what the server is doing on her screen.  As seen at Cornell Post Office - picture taken by permission.

I saw this computer screen at the post office a couple of weeks ago and thought it was interesting. It allows customers a view of what the server is doing on her computer screen. It is nothing more than a duplicate screen of what the server sees, but I thought it was a good example of process transparency. It also forces the process to be simple enough that a lay customer can understand what is going on. Additionally, it allows customers to check on what's going on - am I getting charged for something I didn't want - and begins the training of customers on a self service option.

In general, most would say that transparency is a good thing. But when I asked the postal workers what thy thought if it they grumbled a bit and said they were not impressed by it. They said it often didn't work and that they had to shut it down when they were logging in.  It sounds like it just added additional work for the servers.  Unsaid, but a bit implied was that it gave customers a bit too much of a feeling of control, that is, I assume customers might start questioning a bit what is going on, especially if servers hurry through screens.  So it might actually slow down the process if customers are able to see it.

So, is it the right thing to do?  Under what conditions does added transparency work?  Under what conditions might it harm things?

On a separate note, I was impressed by this offering:

This is a prepackaged, ready to send gift in the line at the post office.  Think about it, if you are waiting in line at the post office to send your cousins and nephews and nieces all their Christmas gifts and you still have one gift left to get and suddenly a reasonably priced Christmas classic dvd appears in front of you ready to ship - talk about impulse buy!