5: Influences on the Service Environment

The author refers to a few recent trends: nearly 50% of college freshmen need remedial courses in English or mathematics, the size of the average house is increasing while the size of the average family is decreasing, newspaper readership is sharply declining, fewer people vote, cell phone usage is on the rise, and common courtesy is becoming very uncommon. In all, this means that people are becoming less intelligent and less socially connected.

In the service industry, this means that supervisors must deal with "ill-educated, poorly mannered young people" - though the author backpedals a bit to note that it's not limited to youth. While the stories above suggest a generation gap, you can witness people of every age acting in rude and stupid ways.

There's a section that follows on contemporary culture, the glorification of depravity and stupidity. (EN: it's a crabby-old-man rant, but he definitely has a point.)

The author also notes the decrease in the labor force, as the "baby boomer" generation retires and a smaller number of people are available. However, this doesn't mean a shrinking labor force to serve the same number of customers - the numbers will be fewer on both sides. So there's no need to fully replace the number of workers who are retiring.

(EN: The author also overlooks the influx of population to the U.S., and the net population is growing rather than declining, largely due to an influx of foreign workers.)

The Retail Challenge

Americans have become more efficient and producing "stuff," which makes products better and cheaper, though that's balanced by rapid obsolescence: a cell phone may be built to last a decade, but it will be surpassed by something better and cheaper within a few months.

But more to the point, most physical products are becoming commodities, and a company can't count on having a unique product for long, as another competitor can clone the features in a very rapid manner. The differentiating factor will be the service component - though even that is dwindling with the plug-and-play capabilities of many devices.

The author mentions Wal-Mart as a paragon of price leadership: through size, the company can muscle suppliers and gain economies of scale with which smaller merchants can't compete. It's a giant with which few can successfully compete in the markets it decides to serve, and it's unlikely you can win on price competing with giants like this.

The Manufacturing Sector

The author returns to the notion of product quality: products are made very cheaply and have a long lifespan (the example of a 40-year-old scroll saw, bought at Sears, that still works fine today) or are cheaply replaced (he mentions VCRs, which are cheaper to replace than fix), but tend to become obsolete quickly (how fast were records replaced by cassettes, then CDs, and now digital downloads).

From a labor perspective, this means workers must be very efficient as well as adaptable to changes. The problem is that American manufacturing isn't up to the challenge: it is still stuck in the era where workers could perform a specific task, over a long period of time, and was highly compensated for doing so. We're simply no match for foreign manufacturing, which has a cheap labor supply and nimble operations.

As such, the future of the American landscape will have two types of workers: knowledge workers and service workers. Knowledge workers will have expertise in a specific area, but will adapt to new technologies and tasks regularly. Service workers are specialists in providing a service experience.

The author mentions that there may be an "all-new" career for something like a customer experience engineer who works behind the scenes to support the service workers. (EN: or substitute for them as the Internet eliminates the human service element in favor of one that is designed by an experience architect.)

Faster and Cheaper Customer Service

Unfortunately, the notion of "faster and cheaper" that has improved the manufacturing process has also degraded the service process - as companies seek to cut costs by minimizing the amount of effort put into the service process.

The "winner" in the competition for customer service will not be fast or cheap, but excellent. The companies that will attract and retain customers will have to provide over-the-top, "positively outrageous" level of service that their competitors can't match. Much of that depends on having the right kind of worker in this critical role.