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October 1997 Volume 2.02
Death of a Customer
The concept of the internal customer came not from TQM but from
Thomas Batcher, a shoemaker. It was Thomas who first said to the
workers in his shoe factory in 1921,"The next person in line
is your customer".
While this was a useful metaphor in the manufacture of shoes in
1921, it really has no place in today's information technology based
service and manufacturing industries. The person I know who first
pointed out the dangers of the internal customer concept was John
Guaspari in, "The Customer Connection ö Chapt. 8, A Dash of
Heresy", (Amacom 1988).
While the "internal customer" may be useful in solving
minor problems between workgroups it may compound bigger problems.
The concept appears straightforward. The workings of an organisation
can be thought of as a series of transactions between "internal
customers" and "internal suppliers". This seems logical
enough doesn't it.
The two critical differences between a real customer and an "internal
customer" are that the real customers have money in their hand
to pay for the service, and also they have the right to get a competitive
bid and take their business elsewhere.
If an organisation expects individual work groups to improve overall
customer processes, by treating each group as an internal customersit
will fail. The best they can hope to achieve is to optimise every
hand over point. They will never improve the process from the paying
customer's viewpoint or the company view as each work group will
adopt the position that they don't have much impact on real customers.
Since the '80s, considerable work has been done to come up with
customer opinion measurement approaches that can be linked through
to business process improvement work. Customer service can be improved
while at the same time reducing overall costs for the company. The
customer value approach puts the paying customer where they belong
at the top of the blueprint for delivering products and services.
There is no place for an internal customerswhen it comes to delivering
maximum customer and business benefit. At best internal customer'sdistract
you from the paying customers.
In Fortune magazine's February 3rd 1997 issue, Thomas Stewart covered
this subject in his article, "Another Fad Worth Killing".
Yes, I guess after 76 years this fad does need to be killed off.
The Pillars
Of our Internet companies, only Company X has adopted the internal
customer supplier model. All staff at X, on instruction from X corporate
owner have been given a one day course to dip them in Quality. As
a result of this new knowledge, Company X has reorganised into a
series of functional groups based on vertical pillars. There is
a Human Resources pillar, a Legal pillar, a Networks pillar, a Sales
& Service pillar, a Computer Platforms & Operations pillar,
and an Accounting pillar. Each group has set up a series of service
level agreements for the interface between each other. This has
seen a total of [(5+4+3+2+1)X 2] = 30 agreements to define how each
pillar will interface with the other ones. Each department has been
quite reasonable in setting the time they need to perform each activity.
They have said they will do their bit in 5 days.
Consider then a customer wanting a high capacity Internet link
to be connected. They contacted Sales & Service that defined
the need, then sent it on to Accounting, to undertake a credit check.
Accounting then sent it to Networks to design the Internet link.
They then arranged for Legal to prepare the contract, Sales &
Service to get it signed, Platforms and Operations to install it.
Before they could agree to install the link they needed to hire
more staff, so they asked Human Resources to evaluate the new position.
And so far this had taken 6 X 5 = 30 days. While every requirement
specified in the agreements between each internal customer and supplier
was met the overall result for the paying customer is not a happy
one. There must be a better way.
Applying a customer value approach to installation of this circuit
would see the time when the customer needed the Internet link, being
taken as the objective. Development of an overall cost effective
way of achieving it would follow looking at the delivery process
as a whole.
The Clyde
One of England's most enjoyable traditions is its pubs. The locals
go along for a glass of ale and to feast on the meals, which range
from mediocre to superb. We were chatting in one pub to an Englishman
who had visited New Zealand. "Well of course you don't have
pubs in New Zealand", he told us.
When I first came to Hamilton, I stayed for a few nights at the
Riverina on Hamilton's Clyde Street. It was a rambling New Zealand
style hotel but with a bit of character. Well a few years ago the
Riverina was pulled down to make way for a shopping complex. At
the back of the complex a small tavern, the Clyde, was built out
of chipboard and cement. Early this year, Kath told us that the
Clyde now had a new owner and was providing a good range of meals
that were good value. We decided to try it out. The meals were good
and complemented by superb friendly service. We have returned many
times since. The red wine was a bit patchy at first, but they now
keep a bottle or two of Australian Shiraz ready for me.
At this time of the year the road from Hillcrest to the Clyde is
lined with cherry trees blossoming in a gorgeous arrays of pinks
and the kowhai trees with their lush golden blooms. The journey
takes a few minutes. Tonight the Clyde is nearly full of locals,
and Virginia chats with a friend she has spotted as we head over
to see the Chef. Tonight she has steak and kidney pie with baked
potatoes as a special. Yes that will do nicely thanks. The barmaid
has my bottle of Shiraz ready and pours a glass. We find a table
to enjoy our meal.
When we first started going to the Clyde it was usually fairly
empty. Now it always full of people enjoying themselves. Amazing
what a difference high quality products and services make that are
priced competitively. I believe the Clyde has become a pub.
Regards,
Rodger Gallagher
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