Strategic Steering of Large Service Organizations

A highly innovative, forward-looking process

By Dr.-Ing. Walter Tritt · Parts 1 & 2 · Service Management Award 1992

A good soccer player doesn't run to where the ball is.
He runs to where the ball will be.

The Status Quo: When Steering Fails

Large service organizations - from about a hundred to several thousand service employees - can hardly be steered strategically with current control mechanisms. The feedback loops are too large, and multiple management layers are often involved. These are sometimes referred to as "bureaucratic mud layers" or "paralysis layers."

What arrives at the employees' level often has little in common with the original strategy and only partially fits individual customer and deployment situations. Conflicts are inevitable:

If a service specialist follows the guidelines, his customers may become upset. If he doesn't follow them, he may run into unpleasant problems with his employer. When employees repeatedly find themselves in such situations, tendencies toward "working to rule" and internal resignation grow.

The Controlling Dilemma

Feedback on work results is processed, condensed, and reported to top management. Along this reporting path, there are various opportunities for interpretation, classification, and manipulation. The resulting values only partially reflect what is actually happening and are usually time-delayed.

Controllers burden technicians with numerical codes through which they are supposed to report on their assignments. The technicians groan under the additional administrative work. The evaluations lose their appeal after a while. But the technicians must continue entering data.

The "Titanium Approach": Humans as Material

To make behavior controllable, automated disposition systems are introduced. Optimal routes are calculated and prescribed. Spare parts and technicians are dispatched in combination. The technicians' room for maneuver becomes minimal.

They are directed as components of an automated process. Independent thinking in disposition is unnecessary and disruptive. Only a specifically formal, recordable part of their technical skill is needed. Their personality is not wanted.

The system is purely organized as a planned economy based on command and obedience. It becomes difficult when customers appear as individual human beings who do not want to fit into this automated process.

The Car Analogy

This is how top management steers today:

Top management sits at the steering wheel of a vehicle and makes steering movements (the strategic steering). Through an elastic rubber band, the steering movements are transferred to a very rigid steering axle. The vehicle has no suspension and inflexible stone wheels.

With such a vehicle you can only drive on smooth and straight roads - and not very far, as wheel wear would be enormous. Obstacles or bumps become a risk.

Control is exercised via monitors showing - with time delay - pre-recorded films of the outside world. The films have been edited and assembled by various people.

What we need instead: Good steering capability, appropriate suspension and shock absorption, good road holding and traction. A system that can respond elastically to bumps - as a synonym for different customer interests and market fluctuations.

The Goals

High customer satisfaction - the primary goal
Good profit - if possible
Satisfied employees - because only satisfied employees lead to satisfied customers

A dissatisfied employee will almost certainly influence their customers negatively, whether consciously or unconsciously.

The Solution: Internal Market Economy

Working with a grand plan and then command and obedience doesn't work here. A task disposition where the executor has extensive degrees of freedom in how tasks are carried out promises far better results.

There is a system that meets these requirements. It is a highly dynamic principle that also functions - quasi as a regulatory mechanism for permanent self-optimization - according to internal market-based premises. A highly interesting, dynamic, and highly efficient system.

It can be compared to dynamite: helpful when used correctly, dangerous when used improperly - especially with poor implementation.

How the Steering Works: Four Levels

The process makes it possible to influence the disposition of service tasks immediately and directly from the various management levels. Each level influences the steering values within an appropriate framework:

1. Top Management - Global Strategy

Example: An older technology is to be replaced by a new one. Top management sets the task values for the old technology lower. Effect: immediate, worldwide, with a mouse movement from the desk. All newly arriving tasks are immediately valued lower. Technicians statistically dispatch somewhat more slowly. Customers gradually notice the reduced service.

2. Regional Management - Regional Adjustment

A regional manager finds that a competitor with a rival product is pushing into the market in his region. Poor own service would pave the way for the competitor. He corrects the valuation of the affected technology upward in his region.

3. Team Leader / Supervisor - Team-specific

A supervisor finds that he has enough service technicians available for exactly this technology in his team. There is no need to additionally prioritize the corresponding tasks. He intervenes in the valuation within an appropriate framework.

4. Service Specialist - Customer-individual

The specialist knows how important this particular task is to this particular customer. He accepts it - task value or not - and executes it. Because he knows that he can do this customer a special favor and maintain a good relationship over time.

The whole thing corresponds - figuratively speaking in terms of the car analogy - to an appropriately elastic adaptation to bumps in the road. The important road grip and driving characteristics are overall ensured. The driver - top management - doesn't notice the details. You just feel that suspension and shock absorption are good and appropriate.

Implementation: Carefulness Is Crucial

When introducing this innovative disposition process, caution and care are required. Various attempts to introduce similar systems have become known, all of which were aborted.

It doesn't work for people whose work has been organized and controlled for years according to planned economy criteria to suddenly orient themselves according to market-based premises. The experience with German reunification shows some of the difficulties that arise.

You need to proceed carefully - with empathy for the behavior of the employees involved and the expectations of the respective customers - and in a socially responsible way.

The Outlook

Sooner or later, somewhere in the world, a sufficiently large organization will successfully introduce this disposition model. It can be assumed that this company will then influence the service market in its favor. It can offer service more cheaply and more efficiently. And it can steer service strategically - effectively for the first time.

Incidentally, this model - as one can easily imagine - should be suitable for far more services than just technical service.

The organization that does not at least seriously test and pilot this model must reproach itself for having slept through a highly interesting innovation and a forward-looking new process.

This steering model is the foundation of GoodPoints:

Discover GoodPoints →

Original: "Strategic Steering of Large Service Organizations" (Parts 1 & 2) by Dr.-Ing. Walter Tritt. More publications at www.scwt.de.