Business

Thoughts on Service

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Carl From Chicago’s post on poor service reminded of my own service career during my extended college tenure. I learned that some problems in service have to do with customers.  

For example, Carl innocently observes:  

There are two dimensions for my coffee – “black” and “large”. I have learned through hard experience to wait until the clerk is ready to receive this complex and easily forgotten information; you’ll just have to repeat it five more times.  

The problem that a counter-jockey has with this order lies not its complexity but rather its ubiquity.

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Expectations… and the Productivity of the Service Economy

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Recently I needed to go to the post office in downtown Chicago for a certified letter. Yes, it would seem, the post almost writes itself… the lines were long and, in the middle of it, one of the two employees wandered off to take a break or something. The guy next to me, an older guy, was about to lose his mind with rage. He said “this must be how it is under communism” and seethed with rage. My response was that the selection of employees was essentially designed to “employ the unemployable” in the name of limiting social unrest as a thinly disguised government work program. At one point, an actual competent employee came in and took all the people in line to self-service machines and helped me personally, for which I was thankful. The entire process, which should have been simple, took over an hour.

I was in a local sandwich shop called “Corner Bakery” (which I usually call “Corner Confusion”) where you order in one place and they give you a tag to put on your table, and then you wait for your sandwich to come to you. This sort of process always scares me, because the shop is big and there is a patio outside, so they don’t know where you are sitting and it just seems like they could miss you. Well, this time they found me… a waiter who didn’t speak English very well came over and set my sandwich in front of an older guy and gave him my sandwich (one was flat bread so it should have been obvious which was which). The other guy was about to go apoplectic with rage but I had been watching the whole thing, just assuming that it would be screwed up, and I calmly got up and switched sandwiches with the guy (I was watching him, too, to make sure he didn’t take a bite out of it). He was in mid rant but I didn’t care, I just wanted lunch.

Often I go by McDonalds for coffee (I don’t like Starbucks very much, although I usually go there just because it is preferred by others and I don’t care very much overall) and it is part of the rest of my order. There are two dimensions for my coffee – “black” and “large”. I have learned through hard experience to wait until the clerk is ready to receive this complex and easily forgotten information; you’ll just have to repeat it five more times. It is beyond expectations that you could ask for your order (like a number “9” or something and AT THE SAME TIME say “large coffee, black”) without having to repeat it later. But you need to stay on it, or you never know what you’ll get.

Through myriad travels and eating out continually for years I have three expectations for the US service sector, so that I am never disappointed:

1) they know nothing
2) they do nothing
3) they annoy me

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Wall Street, Pro Wrestling, and Seventh Grade

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A couple of years ago, Sallie Krawcheck, then CFO of Citigroup (now Chairman & CEO of Citi Global Wealth Management) was asked how being a woman had affected her career. Her response:

I think it’s an advantage. I grew up in Charleston, a very genteel, very Southern city, a gorgeous city. I will say there’s something about going to an all-girls school in Charleston that’s tougher than Wall Street. You don’t know what it’s like. I had the glasses, the braces, the corrective shoes. I was half-Jewish, half-WASPy. I couldn’t have been further outcast. There was nothing they could do to me at Salomon Brothers in the ’80s that was worse than the seventh grade.

The current issue of Fortune (8/18) has a profile of Meredith Whitney, who was one of the first securities analysts to recognize the seriousness of the subprime/CDO situation. Ms Whitney is married to a professional wrestler. From the article:

Another eye opener for Whitney has been how gracious most wrestlers are–at least when the cameras aren’t rolling–in comparison with the viper-pit culture on Wall Street. It sounds absurd–the world of high finance being less collegial than an industry in which employees belt each other in the face.

If we put these two assessments together, we get:

Pro Wrestling

is nicer than

Wall Street

which is nicer than

Seventh Grade

Communal Memory and Financial Markets

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Via Instapundit, an interesting NYT column about how quickly, after a natural disaster, people start to over-discount the risks of future disasters, especially in advanced societies:

Communal memory of rare disasters is worse in more developed societies because knowledge now is passed on in schools, movies or the internet leaving no time for oral history or reliance on the elders to learn about the world.

Something similar to the quick-forgetting phenomenon happens in financial markets. In every market, some players prosper for a while by following trading strategies that tend to be highly profitable from day to day but that are almost guaranteed to be big long-term losers: martingales, naked out-of-the-money option writing and other short-gamma strategies. Every time there is a big market event, a lot of these players suffer large losses and go out of business. They move on to other businesses (I assume) and are no longer around to warn market newcomers to avoid the kind of risky, short-term-profitable strategies that they themselves once followed. So there is a constant stream of new traders who enter the markets and rediscover risk.

This is an oversimplification, since the better traders, by definition, somehow learn how to stay in the game for the long term. But the behavioral parallels between market traders and people who rebuild villages in flood zones — and countries that seek to appease their enemies — seem clear. The common element is lack of an adequate inter-generational feedback mechanism. I doubt that there is a remedy for this pattern of human behavior (I wouldn’t characterize it as a “problem” any more than I would say that rain is a weather problem) other than for people to study history more.

The Return of Commercial Sail?

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In a post on Ships and the Global Economy, I mentioned a sail-assist technology which has been develope by a German company. Operating something like a kite, the SkySails system is said to be capable of lowering vessel fuel costs by 10-35%.

Comes now Compagnie de Transport Maritime à la Voile which has entered the cargo transportation business with a pure-sail approach. The 106-year-old Kathleen & May will be running wine from Bordeaux to Dublin. CMTV has chartered several additional sailing ships and will be using them to ship products such as coffee and jam. The company also intends to have new vessels built to its specifications.

Here’s CMTV’s website. Note that shippers get a “logo sticker” that they can attach to their products, certifying that “goods are transferred to consumers in a clean and socially responsible way that contributes to sustainable development, without neglecting the requirement to exchange necessary goods between people.”

I doubt if pure sail will ever recapture a significant portion of the world ocean transportation industry, but it may well thrive in some niche markets, serving people who want to buy products which are defined as “green” or “sustainable” and who may also enjoy the association with the romance of sail.

Sail-assist technologies for powered vessels, on the other hand, may have a significant role to play, particularly if oil prices continue to climb and if environmental restrictions mandate the replacement of bunker fuel with the more-expensive distillates.

Here’s a report on the test on the SkySails system on the multipurpose cargo ship Michael A. Note the interesting comparison of the tractive force from the sail with the thrust from an Airbus A318 turbine engine.

CMTV item via Checks with Chart.