Dear Sir Richard
I’m now on the sixth, or is it seventh, visit from a Virgin technician to fix a fault on my TV service and beginning to lose the will to live.
Ironically, the diagnosis made by a chirpy employee on the first visit was the right one – part of the cabling needs replacing. But she was too junior to make that call. So a week later a second employee pitched up to check what the first had done and do the tests again. He left saying he needed to report to the area manager.
When I phoned a week later to chase up progress, I was told that the case had been resolved. To my protest that it certainly hadn’t, the call-centre agent patronisingly replied that I didn’t understand: she had opened a new case, so the tests had to be done again, even though I could tell her what the results would be. But even then she couldn’t authorise the new cabling.
After several more visits, and weeks, and repeated tests, we’re not much further forward. Latest update is that there’s a further problem, requiring a visit by another manager. At worst the repair could take another six weeks. Oh, but she says brightly, she’ll ring back within five days.
I’m telling you all this not as a rant (well, not only), but because I think you'd prefer Virgin not to epitomise much of what’s wrong with modern management. Let me count the ways.
First, I bet you have no idea how bad your service is. This is because the performance measures used by your managers are dumb. They measure things you think (wrongly) matter to you (how long agents take on a call, technician visits per day, how long it takes to ring me back with the good or bad news, even the number of rings to pick up the phone) but that have no relation to the purpose of the exercise from my point of view (fix my TV channels!). I suspect all the people involved have met their service-level targets, tell you proudly they deliver excellent service and collect their bonus accordingly. What they don’t know, because they don’t measure it like that, is that they have so far taken more than two months not to fix my cable.
Nor do you know how much this appalling service is costing (I mean literally – ie not counting the invisible cost of my badmouthing on Facebook and twitter). Sigh. This is because you’ve bought the consultancy and IT sales pitch for economies of scale and specialisation.
It sounds plausible – as in Adam Smith’s pin factory, specialists concentrating on one task each (answering the phone, doing easy technical tasks, doing harder ones) will do them faster and more cheaply than non-specialists. They’ll be still cheaper if, as with many of your call centres, the workers are in a low-wage country offshore.
So, yes, your unit costs per transaction (phone call, technician visit) are lower. Unfortunately, if the specialisation, as in my case, results in many more transactions because of errors, misunderstandings, non-productive visits and additional phone calls, then any gain from lower unit costs is more than wiped out. The cost you should worry about isn’t the individual phone call or visit – it’s the cost of fixing my f****** TV from first phone call to final sign-off. In other words, the economies aren’t in scale at all, but the reverse – the lowest number of transactions, or flow.
Still, look on the bright side. My dismal experience teaches three simple, counterintuitive and incredibly powerful truths.
First, don’t believe managers who tell you that better service costs too much – it’s poor service that’s unbelievably, catastrophically expensive. Forget transaction costs and economies of scale – get the same Virgin employees to deliver excellent service by turning the system through 180 degrees. Put people at the front end with the skills and authority to solve all the common problems at the first interaction (and the rest in one more). I guarantee costs will come down as service quality goes up.
Second, relate the measures to purpose – as defined by me, not you. I want my TV channels fixed as quickly and smoothly as possible. If you aren’t measuring what matters to me, how can you learn and improve? You can’t. In most such systems suppliers are paid on quantity (numbers of transactions) and service levels. I bet yours are the same. So they have no incentive to improve quality in my terms, in fact the reverse – with their fixation on unit costs (keeping activity levels up and transaction times down) managers are unwittingly making the service worse.
Third, and perhaps most counterintuitive of all, focusing on cost through economies of scale is counterproductive: it pushes costs up. We’ve seen how that happens at Virgin. By multiplying transactions it generates mountains of waste.
Of course, you’re not the only one to have been taken in by the scale economies fairy tale. Such is its near-mystical lure that systems like yours are everywhere. Scale economies are behind the misleading ideas of front and back offices, shared services, and the dismal white-collar factories of HMRC and DWP. All these are temples to early 20th century Fordism, and like the latter are outdated technically as well as a scandal in human terms. If you believe what you say about employees (as I think you do) that should be the clincher.
Such customer and employee alienation factories serve the vested interests of consultancies and IT vendors, not yours. Virgin is supposed to be young and different, isn’t it? Well, so ditch these sad relics of Victorian management – and, as we say on twitter, FFS fix my TV.