Archive for June, 2006|Monthly archive page

Process again

How process execution is important in Germany, regardless of implications on customer satisfaction, is evidenced by the following examples.  

During a recent taxi ride from the airport home, I asked the taxi driver to take a particular route, which is shorter than the typical one that most taxi drivers take and has usually less traffic. The taxi driver wasn’t pleased with me giving him directions since this apparently didn’t fit with his process. He not only mumbled something unintelligible, but also threw in a nasty comment after dropping me off. When I tried to confront him, he drove away. This shows how deeply embedded the process execution is, where a taxi driver doesn’t realize the impact of his customer unfriendliness on his business.  

This wasn’t unfortunately the only bad experience with unacceptable taxi service. On another occasion the taxi driver was driving so fast through the city that he scared some pedestrians. When I asked him to slow down, he started to argue that it’s not my business how he drives. Although I was able to convince him otherwise and he then drove me home at appropriate speed, he too threw in a nasty comment after dropping me off. 

Another example comes from Edeka, a grocery store chain. Unlike most other stores, Edeka had a policy to require additional proof of identification when paying with electronic cash for purchases over 100 Euros. The cashier had to write down the ID info on the store receipt, which didn’t only slow down the checkout process for the paying customer, but also for all other customers waiting in line. Now the store has a special card reader for purchases over 100 Euros. However, there is only one special card reader to be shared among five checkout stands and one that requires special activation by the supervisor. You can imagine the impact on the checkout time. Edeka simply doesn’t get it.

Importance of the service economy

Most economies go through three stages of economic development: primary, secondary, and tertiary. The primary stage is driven by labor- and natural resource-intensive agriculture, the secondary by capital-intensive industry, and the tertiary by knowledge-intensive services. The economies of the developed nations have been moving from the primary to secondary and to tertiary economies over the past hundred or so years.

The majority of developed countries’ gross national product (GNP) is already derived from services. And the majority of employees work in services businesses. These service businesses span all industry sectors and range from a one-person laundry service, through medium-size retail outlets, to large IT service companies.

The importance of services in developed economies will continue to grow. The outsourcing of agriculture and manufacturing jobs to developing countries will continue, leading to even higher share of services in the overall economy.

As shown in the graph below, the importance of the service sector is significant in developed countries. And since Germany participates in the global economy, it should ensure that its service offerings and service levels are competitive.

Employment by economic sector in 2003

Why most German companies will never succeed in the global service economy

Before I continue with examples for poor service levels in Germany, and this blog will unfortunately never run out of them, let me clarify the sub-title of this blog.

“Never” is such a strong word, so determining, so final. When it comes though to describing the German service economy, it is very fitting. The German service economy is namely driven by the mentality of the German population, which cannot be changed in a life time. And since most economic projections seldom span more than a life time, “never” is appropriate for all practical purposes.

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