Feargal Quinn, the legendary head of the SuperQuinn food retail chain in Ireland, used to tell his frontline staff: “I do not want any salesman in this company who tries to push products to customers. I just want you all to become expert boomerang throwers — that is, make every customer who walks out of the store come back.” He went on to tell them, “every time a customer walks in, imagine £50,000 walking in.” He explained that given the expected stay of 10 years in a locality, a happy customer would buy £25,000 over that period and get at least one other customer in through referral, accounting for another £25,000!
Mr Quinn put this into operation by empowering every frontline employee with a budget of £100 per month to fix customer complaints on the spot. If a customer came with a damaged or spoilt good he had purchased from the chain, the employee was expected to immediately apologise and replace it for free — without having to ask for permission to do so.
There are some questions this example throws up. First, if customer retention is to be achieved through good service by front-line staff with a budget to back them up, what sort of co-operation is required from the different functional silos such as sales and marketing, operations, human resources and accounting? Secondly, would a shop manager permit his frontline staff to give away replacements for free, thus eating into the profitability of the shop? Thirdly, would the £100 per month be part of marketing’s budget, operations’ budget — or someone else’s? Finally, how responsive would an accountant be to creating a separate system for accounting customer retention expenses within the shop’s operational budget?
What Feargal Quinn instituted in his retail chain over two decades ago is merely what the best service organisations have been doing for a very long time. Successful hoteliers, retailers, knowledge-service providers, airlines and so on have long understood that their organisations have to be managed holistically rather than from limited, functional perspectives. While sales and marketing work on getting a new customer in, frontline staff in operations have to assume the role of part-time marketers to ensure that the quality of service they provide to customers not only makes them come back, but also makes them potential sources of positive referrals.
While Sales depends on the line/ Operations function to keep customers very happy — and thus provide positive referrals to help the salesman get more customers — Operations are dependent on the HR department to plan for, select, recruit, induct and train the very people who eventually become the frontline. Unless they break down the silos that separate them and work towards a shared goal, confusion will reign supreme — as it does in many an ineffective organisation.
One would assume that such a holistic approach would be an essential ingredient of any syllabus in a good management institution today, when services are dominating economies everywhere, especially India. Unfortunately, management is still being taught in most schools by functional specialists whose perspective is dominated by models built on a study of what it takes to design, produce, market and sell industrial and consumer goods. In the old days, when goods rather than services accounted for the bulk of economic activity, such a perspective might have made sense — for sales and marketing specialists had little need to get into details of factory production methodologies and vice versa. Experts in consumer-goods marketing, product costing, production technology and so on had reasonably independent domains with much less of an interface between them than in services.
When a researcher dared to suggest in the 1970s that the marketing of services was different from marketing of products, none other than the great Philip Kotler came down on him like a ton of bricks, rejecting his thesis outright. It is only since the late 1990s that the more enlightened schools of management have woken up to the fact that management education has to be revamped completely to answer the challenges of managing service- as against product-centred companies.
The example of how science has evolved as a subject of study is one that management educators must examine and learn from. Till a few centuries ago, the study of science encompassed physics, chemistry, mathematics, and such, and the highest degree one obtained in a university was justly called a doctorate in philosophy (a PhD, or DPhil). When greater amounts of knowledge accumulated over the years, it made sense — in the 19th and 20th centuries — to make students specialise in sub areas and study for degrees in physics, mathematics, or chemistry as stand-alone areas, albeit with some amount of overlap with other areas.
In recent years, however, it has become fairly obvious that these artificial separations demanded by specialisations have hindered progress in scientific advancement. There are more and more cases of people migrating from one area to another and achieving an holistic perspective. The most recent Nobel Laureate of Indian origin, Dr Venkataraman, who straddled physics and biochemistry, is a case in point.
Management educators would be guilty of gross disservice to current and future students of management — whether freshmen or mid-career participants in executive development programmes — if they do not teach the management of services as a comprehensive field that goes far beyond a limited focus on one or two sub areas. What Feargal Quinn and other effective managers have understood and been practising for a few decades has to be reflected in what is taught in management schools. It is imperative that our elite management institutions gear themselves up to rapidly change the structure, content and focus of their syllabi.
This is easier said than done. An atomistic approach to education is easy, and lapped up by students who have been brought up on a serious diet of left-brain education — the sort traditionally recruited to management schools. A holistic approach to education is far more difficult as it is to be delivered as well as received by use of that part of the brain which is not often tested in modern day school and college curriculum: the right brain. The shift could be as difficult as it would be for a specialist in growing roses to suddenly become a landscape designer.
The writer, a former corporate executive, was the founder-director of the Centre for Service Management at the University of Buckingham, and is now MD of Chennai-based VSM Consulting Services.