1.2 From the Industrial Model to the Market-Focused Model
Economies formerly based on an industrial market model have evolved to a market-focused model that requires a different way to manage employees. At the beginning of the twentieth century, taylorism was an innovative way to produce goods that advocated standardization and the "one best method" to achieve a goal. It has been proven to have its advantages and allowed many gains in productivity. Even if the principle was logical and has been successful, it ignored a major aspect: the employee side, workers were considered as machines and some attributes were left out, such as the individual differences and the different interests among workers.As a result, with the growth of services, the industrial model has been replaced progressively with the Market Focus model. In the industrial model, the orientation was based on goods and production, in the Market-focus one; the customer is the core attention.
For Chase and Rathmell , the market focus model differs from the industrial scheme in many points, amongst others; the customer is involved in the production process. Production and consumption are simultaneous, the relation employee-customer is tied and invests are achieved through training rather than physical equipment.According to Stamatis , it is possible to characterize these two models with the following chart:
The Industrial Model Goods and Production Centred The Market-Focused Model Customers Centred Revenue depends on: Locations Sales promotion Advertising Revenue comes from services to customersBenefits depends on Customer/employee relation or customer/ system (ATM machine) Full time staff are replaced by part time for cost reduction Focus on selection and training of personnelService delivery is the competitive advantage Labour and operating cost must be the lowest The organisation provides the resources to employees who serves customers Employees are considered unskilled and enable to do complex tasks. The good service starts at the top and depends on the organizational strategy Few opportunities of improvement Investment is achieved in people rather than on machine Figure 1-1 Comparison Between the Industrial Model and the Market-Focused Model
Stamatis emphasizes on the employees and customers orientation of the Market-Focused Model. In this model, employees are considered as a competitive advantage. They are the direct link between a company and its customers. As a result companies, invest massively on people by training and increasing wages. Stamatis , Albrecht and Zemke among others have used the service triangle (Figure 1-2) to represent this model.
The strategy: "is a well-communicated statement of the organization's position and goals on customer service"
The systems: "Organizational programs, procedures, and resources designed to encourage, deliver, and assess convenient and quality services to the customers" .
The people: "Employees in all position who has the capacity and desire to be responsive to the customer needs" .
Figure 1-2: The Service Triangle
The service triangle model helps to understand the Market-Focus Model. It represents the key relationships within the organization with the customer in its centre. Paralleling theory X and theory Y, it supports that employees generally are involved and want to do good work. As a result, companies should invest in people through training. Moreover, this approach by Stamatis, Albrecht and Zemke considers technology as a mean to assist front line employees. The evolution between these two different approaches can be illustrated by a story related by T. Stewart in his article. A customer has asked an employee at a Westinghouse plant in Columbia, South Carolina if "he was a machine operator", the worker answered, "I used to be a machine operator", "I manage machines now". This example stresses the evolution between these two approaches.
The Market-focused pattern emphasizes on communication. It supports that the company's strategy must be communicated to the customers. The company differentiates its services from competitors and has to inform its customers. Then, the employees also must be familiarised by management. These two connections are necessary to stress the firm's goal statement. The system then is the technology that aims to help employees and customers.
Finally, the most important interaction occurs between the customers and the service providers. That creates a "critical incident", and from this interaction determines customer satisfaction evaluations that will be discussed later in this report.This new vision of management is mainly based on the evolution of the market with the increasing role of the service industry in each economy. The thesis now focuses on service industry where the core value-add is from employees.
