This picture defines our understanding of the Law of Unintended Consequences. As you can see, this is a three-part definition.  In this post, I am only talking about the last definition; a perverse effect contrary to what was originally intended (when an intended solution makes a problem worse).  You can see why this has possibilities of happening in your service organization.

To begin, lets all get on the same page by remembering the story of Kudzu, the vine that ate the South.  Kudzu was first introduced to the Southern U.S. as an ornamental plant and was later used to prevent erosion in roadside earthworks.  It has become a major problem because it has displaced native plants, and has effectively taken over significant portions of land.  In fact, when you drive through many parts of the South you can see the plant covering trees, telephone poles, and even abandoned homes.  But it does prevent erosion!

How does the law affect service businesses?  Lets use some examples to show how easy it is to screw something up.

In the beginning, the service organization was a cost center and the service team was charged with taking care of the customers while being as economical as possible.  Then some MBA figured out that if the VP of Service were given a profit goal, with a commensurate bonus plan, the team would automatically shift into high gear to generate profits. And it worked like a charm!  But there were a few, little problems.

The first action he took was to go on a wholesale cost cutting spree:

  • He reduced the number of telephone agents because they were not always on the phone.
  • He reduced the number of field engineers because they spend a day or two per month with no immediate customers to fix.
  • He reduced his spare parts inventory because parts stayed on the shelves yet cost him a carrying cost
  • allocation.
  • And finally, he stopped paying the field people a car allowance because they were frequently travelling by airplane.

I assume there is no good reason to detail the real world results of these decisions.

When this poor person finally landed a new job, he swore he would not make the same mistakes as last time.  But this person is creative so he made some new (for him) mistakes.

He started measuring the AHT (average handling time) of the phone agents in the call center.  He noted it was 2 to 3 minutes per call and he heard that the top call centers were closing calls in about one minute.  Without understanding the type of calls the top centers were handling, and without introducing any technology to aid these already stressed-out people, he set a new target of 90 seconds and implemented a bonus system.  These creative operators figured out the value of their bonus and decided they would get on the gravy train.  They quickly figured out how to close a call without confirming that the fix actually worked.  They send a patch to the customer and closed the ticket.  When the customer’s system was still not working, they had to call in again and they were given a new ticket number. You know the rest.

So our friend was back in the job market and finally landed again.  This time he took a positive approach.  He worked with the VP of Engineering on the new product and made sure that he knew expected hardware failure rates.  He worked with the Sales VP and got expected sales forecasts by model.  And he actually ordered enough spare parts to support the forecasted sales. But the company screwed him by selling many more products than forecast and our buddy failed to consider what the elevated sales rate would mean for his inventory holdings.  Poor service resulted in a very poor rollout, which caused the product to get a bad reputation in the marketplace, which cause our buddy to be given career counseling about how to change careers at his age.

The moral of this story is that before implementing any changes that affect your customers, you must identify the range of actions that the team might take and make sure that the negative actions are stopped in their tracks.

The solution is not to stop making changes but to engage your brain, and as many other people as you can, to make sure your design will achieve the objective without any major negatives.