The Tyranny Of Scale

We were all recently suitably impressed with Sundar Pichai’s dramatic presentation of an AI powered robot handling telephonic restaurant bookings. Researchers have been striving to make these responses as ‘human as possible’, i.e, with the ability to grasp the nuances of a conversation including tone and inflection, and respond with answers that are not necessarily along a straight predefined path. Pichai admitted this was a work in progress. When it is achieved it will be a real breakthrough.

The problem that faces organizations - private, public as well as in government – is the Tyranny of Scale. The mantra for progress is growth, growth and growth. Get to scale, and you will enjoy the delights from this holy grail. And there is indeed a huge range of outcomes that scale brings – both positive and negative.

Benefits of Scale

In Manufacturing, the greater the numbers the lower the cost and the same holds true in Logistics and Purchase. This works around the world and is one of the reasons why we have struggled to compete with Chinese and South East Asian suppliers. It is only now that some of our enterprises have reached levels where they can start being cost competitive.

In Retail too, achieving scale is an essential element to grow and compete. That is why any retailer worth his salt is busy carpet bombing his markets – coffee chain shops two or three in a street, brand stores in every market and every mall - block your competitors from getting space and squeeze them out where they exist.

These strategies have worked and now even more, due to the big enabler - technology. One example is the creation of one platform on which all outlets operate. Stocks no longer need to move to stores from one central location, but can be shared between outlets within a zone. This has been a real game changer in terms of speed of delivery and also in rationalization of stock levels.

Distance from the Customer

But this rapid progression towards scale also creates a huge problem which is the elephant in the room. As the organization grows, its distance from its prime stakeholder, the Customer, also grows.

When you have 500 stores located across a large geography, you end up creating an intricate web of SOPs, procedures and rules, to ensure that everyone responds to an issue in the same way. During one of my assignments, after completing a series of training programs over a couple of months, we decided to review the level of comprehension of the SOPs in the teams. The responses varied from highly competent, to partially understood, to completely confused! What happens when a customer has to interact with someone who is in the second or third category?

The response to this has been to throw technology at the problem. Step One, set up a centralized Call Centre. Create a highly trained and experienced team capable of handling most issues and put them behind telephones or even video phones. But as on the one hand the scale grew, on the other automation and machine learning developed. Human call centers began to shrink, the system took over and FAQs became the panacea for all enquiries. Chat bots have now made human responders almost non-existent and customers end up inevitably in a never ending spiral, a maze without escape.

For Ecommerce companies the concern was even more pressing. They too started with halls full of agents managing calls, but counterintuitively, as the scale grew, the first cost to be reduced was headcount. Today, the customer is lucky to find a customer service operation which connects her directly to a human. And where they do, the human Agent is almost an extension of the chatbot trail, giving canned responses -“thank you for calling”, “please accept our apology”, “we will surely solve your problem”. Issues outside the key word framework do not register. Speak to three or four agents on the same issue. It is uncanny how they all give the same response.

Managements of course emphasize that standardization of response is essential and to some extent this is true. But when problems fall outside the set predefined situations, not even big otherwise super-efficient organizations (and here I include large government entities as well) have a mechanism to cope.

Social Media

Enter Social Media, touted to be the ultimate tool to create closer customer relationships, build loyalty and convert them into brand ambassadors. There may be a few outliers who have discovered the secret sauce for this, but for most others Social Media has simply become a sales tool with about the same level of credibility as a snake oil salesman.

Human to human interface has been the touchstone of relationships through the centuries and the challenge is how to grow without losing it. This requires it seems, going against the schadenfreude of cutting costs- human costs - to show greater profits.

Human Solutions

It would also mean that the increasing dependance on data and managing by statistics would need to be tempered. Looking at the number of complaints received; complaints pending; complaints resolved; and average resolution time, has to change. While 70-80% of the queries would be uniform and could follow pre-defined routes, when the issues deviate from the norm, a separate channel is needed to provide custom made solutions.

Issue trackers could be more granular. For example, if there is a sudden spike in non-deliverables from a particular geography and this is highlighted in real time, someone in the team could proactively pick up a phone, find out what is happening and fix it in real time. People are individuals and expect solutions specifically for their problems.

Ultimately successful businesses are built on successful human relationships. In the hunger for scale and with the growing dominance of data, the human element is disappearing. This cannot be allowed, for the sake of our collective sanity.

Ajai Kumar Dayal

Guest Author The author has over 30 years’ experience in managing and consulting on big brands, retail, and ecommerce. He has been a commentator and columnist in many publications.