Service Factory Conversation with Bruce La Fetra

I recently had a conversation with Bruce La Fetra of La Fetra Consulting on a “Service Factory” concept I have been working on. What follows is a 20 minute audio and edited transcript of some of the key points in our conversation. I have added some hyperlinks for clarity.

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Building a Factory in Your Service Firm

Bruce: Can you explain what you mean by the “factory in your service firm?”

Sean: To me, it’s the specialized set of tools that you bring to bear on a problem and typically this may be masked, at least in part, from the outside, even from your customers. In the theater it is the area behind the curtain or backstage.

Bruce: Say a little bit more about that in terms of are you talking about infrastructure? Are you talking about things that people are served with but they don’t really realize that it’s a special offering?

Sean: At a high level, it’s decomposing your business into what is in front of the customer and what else that you do that may not be in front of the customer.

Bruce: How is that different from, we as consultants always hear about productizing our service?

Sean: When I think about productizing the service, which I think is related, I think about standardizing what is happening in front of the customer. Right? It’s promising a consistent experience. It’s trying to create at least a Lego block structure of things that they can assemble that say, “I would like for you to do these three things.” Or, you’re offering some kind of Chinese menu. To me, productizing the service, the factory piece is what you would do to support productizing or a consistent result, but it’s not necessarily visible to the customer.

Factories Are More Productive Than Workshops:
You Need Both

Bruce: Dive in a little bit more about that. Because, we hear about consistency of service and being able to be adaptable. It’s one of these things that sounds like it’s really important and the high-level concepts are maybe clear, but then when you sit down to try to do it, okay what were we talking about? The execution. Maybe talk a little bit more, take it down a couple more levels.

Sean: It’s about becoming more productive. Factories exist because it’s more productive to build things in a factory than it is to build things one off. A workshop exists because it makes the people in it more effective, either at producing art, or producing handy crafts. The factory is about your productivity. To me, productizing your service is about making your offering more understandable to the customer.

Bruce: In some sense, it’s process.

Sean: Yes. It is process because I think that customers value process to the extent that it gives them a more consistent or predictable result.

Bruce: You can have a big factory that pumps out similar things, similar items, but you can also have the workshop that gives you some of the process, some of that benefit, while giving you also the flexibility to create unique or small batch objects. Is that a good analogy?

Sean: Yes. You are investing in making yourself much more productive in the factory. You’re making capital investments and standardizing the work: you then need to bound what inputs you will accept so that you can deliver a more consistent set of outputs.

Bruce: Partly it’s helping you focus on your own business as well. It forces you to think within certain bounds as to where can you be flexible and what processes do you need in order to maintain efficiency.

Sean: Right. The factory in your service is about consistency and efficiency. The stage or the improv area is about customizing or particularizing it to the customer’s unique requirement.

Bruce: I almost wonder whether the factory analogy that we grew up with is going to have to change because when I think of a factory, I think of Henry Ford, and you got three people in a row, they each turn the nut two times, and eventually the nut gets tightened. Whereas today, factories are programmable robots that can take a diversity of things coming down the line and perform different tasks. It’s still about efficiency. It’s still about the core of what Henry Ford was after, but it looks way different and what can come off the line is extremely different. I think that’s, when we talk about our services, it’s not once size fits all for most of us, but if everything is one off we become artisans as opposed to any sort of efficiency.

Sean: If everything you do involves a lot of discovery and experimentation, you may not be uncovering places where you can sell what you’re good at. Of course you’re always learning, but what I see sometimes is consultants who value novelty or learning new things instead of focusing on where they can meet people’s needs with an already developed expertise.

In other words: if you’ve already got an expertise, where else can you sell it? I think the problem is that tends to be “boring.” A lot of people I know that have gone into consulting did so because they’re naturally curious people. They want to keep learning. There’s a tension between that and excellence.

Debugging Your Service When The Customer is Not Satisfied

Sean: Another aspect of the factory model: let’s say that you delivered a project and the customer is unsatisfied. At some level, you’ve got to incorporate some of the other thinking that goes into manufacturing:

  • What was the process I followed?
  • How did I test what I was going to deliver before I delivered it?
  • How did I check the out of the box quality? In other words, when you delivered the service when they opened the box, what was their reaction?

It’s also about thinking really hard about how you’re going to build quality into what you are delivering and how you’re going to validate or verify quality of what you delivered.

What About Intangibles?

Bruce: Services have a lot of intangibles in them. Sometimes there’s a report at the end or a product prototype, the recommendations, but there’s a lot of intangibles in most services. How do intangibles figure into the service factory?

Sean: I think there are two ends of the spectrum: more specific and measurable and more subjective.

The more specific or measurable aspect of a project: in a lot of the work we do, and I think in a lot of the work you do, we are supporting a specific set of decisions that the customer needs to make. They’ve already got a framework defined and they’re looking for our help in one or more aspects of gathering information, clarifying options, or calculating the value of different options. Our value is in the improvement of the decision outcomes.

A second kind of project is a double check that we both do for our respective clients when we call their customers and ask, “What do you feel about the service that this company is delivering to you?” It’s a subjective measure.

Bruce: I think almost everyone I’ve met, in a range of businesses, and you probably have the same experience, if they are really good at what they do, they probably have some process. Once I’m aware of it, I can do a lot more of it. It’s no longer just happenstance or that’s the way that feels right. It’s, “Oh, I know this is right.” Once you’re deliberate, you’re focusing. Once you start to focus, you can really change the out in a myriad of ways.

Sean: The other thing about this, if you structure an engagement where you’ve got a plan before you start, I think you involve the customer more deeply If you can define a process and define checkpoint or quality inspection steps, or whatever.

Working In Wikis: Everyone Is In The Workshop

Bruce: You do the same thing. Is you’re helping people along with bringing their products out.

Sean: One of the big changes for us early on was to work in Wiki’s and essentially shared work spaces and to let our customers into the shared workspace. We had looked at some workspaces that had this idea of a behind the curtain area on each project. We essentially decided just to put all of the materials into the workspace and let the customer see it.

Bruce: That is funny that you say that because I had never thought about this, but I do exactly the same thing. I don’t share transcripts of the interviews, but I distill it down, I dedupe stuff, but I put as much of the raw information out there. Most of my clients don’t read it, but there’s always someone that reads through everything and that gives them the confidence. They ask those other questions. It’s exactly the same thing you’re doing with the Wiki, I think.

Sean: Where it comes up sometimes is when people want to drill down.

Bruce: It’s managing those expectations and whether its a prototype product or a marketing strategy. If they have the ability to drill down, most of the time they won’t take advantage of that if they have confidence in the rest of the process, but part of having that information helps build that confidence.

Think About Customer’s Questions In Scoping Your Service

Bruce: Why don’t more people do this? Why are we having this conversation? If everyone did it, we wouldn’t be talking about it.

Sean: I think a lot of people do it without necessarily consciously looking at the implications of it. I think we do it when we want to hire somebody else. When you think about new contracting people, the typical questions you ask are:

  • What do I get?
  • How long will it take?
  • How much will it cost?
  • What do I need to give you to get started?

You’re defining the inputs, the outputs, the length of the box, the cost. You may ask,

  • How can I check in?
  • What status reports do you give me?
  • What is the status of my order?

I think we do this as buyers of services all the time. Trying to make yourself more transparent or become more conscious of building a process I think is where it’s hard.

You Need Structure To Be Effective

Sean: I think a lot of us left the highly structured environment of big companies–escaped the bureaucracy–and said, “Thank God that’s all over. Now, I can be a free spirit.” The reality is, you have to create a fair amount of structure to be effective.

If you understand what the deliverables are, if you understand what the customer is paying for, then you can subject your actions, your process, where you’re spending your time, to scrutiny in terms of what is the end value? What is the customer paying for? Is what I’m doing connected to either making that happen or reducing variance in the result?

Bruce: I’m going to take that a step further. It’s more than just the thing, the report, or the product, or the prototype. I’ve said this before, there’s confidence that having a process leaves the client or the customer with that, yes I’ve got this thing that you delivered. It seems to be good. The more confidence I have in the process that got it there, then I have a better feel for it that it’s the best thing or it’s the appropriate thing for my situation as opposed to merely adequate.

Sean: It’s a funny thing about reports. I remember a conversation with a prospect a few years ago when he opened a desk drawer, pulled out this half an inch thick briefing and said, “I want something at least this thick from you guys.”

Bruce: (laughs)

Sean: I said, “I’m sorry, but that’s not what we do.” I tell people I have traded in wrestling with the political problems of large companies for helping  entrepreneurs manage their psychological quirks and I have never looked back.

A Lesson From Voler Systems

Bruce: Compare that to the story you told me a while back about Walt and the visibility of tracking budget versus milestones. Part of his internal process, but it gives enormous confidence to the customer.

Sean: Right. Walt MaClay, Voler Systems, the way they manage a project is they pay a lot of attention to, what risks have we uncovered? What is our level of completion? Versus, How much billable time have we incurred? How much time is left on the clock or the calendar to get this delivered? They’re working within a box in terms of the customer needs it by this date, to cost this much, and what are the risks? What they realized a couple of years ago is, if we actually share where we are weekly, then if we have to bring a bad news, at least we’ve got a structure in place and we’re providing visibility for them to where we are. In other words, if we only ever tell them where we are when there’s problems, it’s a worse conversation, a more difficult conversation than if we’re constantly keeping them in the loop.

I think it also inoculates his team against, “we’ll just work twice as hard next week and make up the time or let’s not tell the client about that yet because maybe we can handle it.” You’re right. I think it brings a level of discipline inside the team as well that’s useful.

What Is Your Customer Actually Paying You For?

Bruce: How do I go about identifying my factory? I mean, I could try to make everything this slavish process, which destroys the creativity and the variability, but I can also misread. How do I go about identifying my factory?

Sean: I think the really hard thing is that it requires you to focus on what the customer is actually paying for and what are you doing to ensure high quality of results and consistent results. In the mid-90’s, I was doing web consulting. We were building websites for people. I looked at myself as being in the website business because websites were new and it was technology, etcetera. We had a conversation with a guy who said, “I’m going to go with another firm for my next website design.” I said, “Well, it’s been a pleasure working with you.” He said, “I’m not done yet. I want to hire you to help with the marketing strategy and the messaging because I like what you have done there. I think these guys are going to do a better job on the artwork and this and that.” It was a revelation for me that what he had been paying me all along for was for the marketing strategy, the marketing content and not the website per se. I try now to focus a little more on what are people actually paying for.

I would look at what the outcomes are that people are paying you to either avoid or achieve. In your practice your clients are paying you to warn them about some things and hopefully to improve some other metrics.

SKMurphy Office Hours Model

Bruce: Correct. You talked a little bit in another conversation about your office hours. That could easily be just a rambling conversation, but I think what you’ve done is you’ve tried to make a factory out of it so that you go into it with a certain amount of structure. You don’t know what you’re going to find, but there’s a certain amount of structure going into that so that you’re more likely to identify the types of information that is valuable to you and to your client. Talk a little bit more about that.

Sean: We looked at a couple of examples.

  • Edward Tufte had this epiphany,  doctors are very busy, if patients were to actually write down everything that had happened and do a concise summary in 2 minutes they can read that versus 10 minutes you trying to talk to them.
  • The Quakers have a process that they call a clearness committee where you ask for help on a particular issue that’s troubling you and the people on the committee can only ask you questions to help clarify. They don’t tell you what to do, they help you to get clear in your own mind on the decision. The first step in that process is you have to write down a summary of your situation from your perspective, maybe options you’re considering, so that you can set the table.

For the most part, I found that people that were willing to write down a little bit about their journey were more serious entrepreneurs. I think it was still important for them to talk about it because the emotional feeling that comes out in the telling the story, not reading it. That was one big part of it.

Bruce: Instead of rambling for 20 minutes, they can write it down and you can read it in 2, and you can get started that much more efficiently.

Sean: Especially if they take time to reflect on it. Also, if they write it, they can revise it three times. If they tell the story and they go, “Oh wait, that was wrong.” Then, you’re in this edit loop live. Which still always happens and it’s OK because it means they are learning something. But there is less “shallow” backtracking if you ask people to write it down in advance and a deeper conversation as a result. We’ve had good luck with that.

Bruce: I think that’s a fabulous tool. To help people figure out where they are. It’s hard to take them to a new destination if they don’t even know where they are.

How To Start Building Your Own Service Factory

Sean: Another thing to think about in the factory analogy: what is the real source of your competitive differentiation? Some of that you want to mask from customers. When you buy a product from somebody, they don’t necessarily tell you all the steps that went into it. And you normally care more about how it will perform not how it was made.

Bruce: People are listening and they say, “Wow, okay, I see some real benefits to that approach.” I won’t exploit the factory or my service business. Where do they start?

Sean: I think they define what the key deliverables are and then they define what they’re doing now. Just document what they’re doing now and then try to see the connections between what they’re delivering and what they’re doing now and look at either where they can take non-value added effort out of the process, or they can risk out of the process, or they can do things that remove variance in the result.

Bruce: Evaluate each step of what they do for what they’re accomplishing, and how they are accomplishing that.

What Is Your Checklist For Quality Of Final Result?

Sean: If you say to yourself, “Look, I’ve been doing this a while, but I don’t think I have a process,” then the most important thing is to write down the checklists for what you’re doing for quality control. Start at the end and say, “What is a checklist I would run through?” At some level determining how you’re going to check things, and then you can start to define processes against those checklists. A checklist is just an unordered list of things you’re going to verify. A process normally has a sequence to it.

Bruce: Think backwards from the end of, what would the final checklist be that you’re happy with the process, as opposed to starting at the front end trying to create the outline that covers all possibilities. If people needed help, is this something that you help them with? You use it internally. Do you also help teach them?

Sean: Yes. The way that this intersects with the new product introduction problem, is that we normally see a sequence of three steps in the evolution of a technology product.

A lot of times, that’s initially delivered as a service. There’s other kinds of terms of art for this. Sometimes this is called a Wizard of Oz approach. Sometimes this is called Flintstoning. Sometimes it’s called the concierge method.

A lot of times you can initially deliver a piece of software as a service.

Then you think about, “Where could I integrate existing off the shelf tools into some kind of patchwork quilt to complement the service?”

Then finally, “How do I think about writing a product or fully productizing this?” The neat thing about services and system integration, is they are much more plastic. If you need to tinker with it, if you need to modify it, if you need to refine it, you could move much more quickly than if you’re buying a mold, or you’re trying to write a lot of code, things like that. We see that progression: from service, to system integration, to product. This is the front end of that process as well.

Bruce: Any other thoughts?

Sean: No, these have been some great questions to help me clarify my thinking on the Service Factory concept.

Bruce: Great. Thank you very much for having this enlightening conversation.

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