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 SERVICE
OPERATIONS
DYNAMICS
Managing in an Age of
Digitization, Disruption and
Discontent

Henk Akkermans
Service Operations Dynamics
 Henk Akkermans

Service Operations
Dynamics
Managing in an Age of Digitization,
Disruption and Discontent
Henk Akkermans
Tilburg University
Tilburg, The Netherlands

Foreword by Chris Voss

Warwick Business School
University of Warwick
Warwick, UK

ISBN 978-3-319-72016-6    ISBN 978-3-319-72017-3 (eBook)

https://doi.org/10.1007/978-3-319-72017-3

Library of Congress Control Number: 2018939156

© The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer
International Publishing AG, part of Springer Nature 2018
This work is subject to copyright. All rights are solely and exclusively licensed by the
Publisher, whether the whole or part of the material is concerned, specifically the rights of
translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on
microfilms or in any other physical way, and transmission or information storage and retrieval,
electronic adaptation, computer software, or by similar or dissimilar methodology now
known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this
publication does not imply, even in the absence of a specific statement, that such names are
exempt from the relevant protective laws and regulations and therefore free for general use.
The publisher, the authors, and the editors are safe to assume that the advice and information
in this book are believed to be true and accurate at the date of publication. Neither the pub-
lisher nor the authors or the editors give a warranty, express or implied, with respect to the
material contained herein or for any errors or omissions that may have been made. The
publisher remains neutral with regard to jurisdictional claims in published maps and institu-
tional affiliations.

Cover illustration: Pattern adapted from an Indian cotton print produced in the 19th century

Printed on acid-free paper

This Palgrave Pivot imprint is published by the registered company Springer International
Publishing AG part of Springer Nature.
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
He thought nothing less becoming in a well-trained leader than haste and
rashness, and, accordingly, favorite sayings of his were: “Hasten slowly”;
“Better a safe commander than a bold”; and “That which has been done
well has been done quickly enough”.
Suetonius, De vita Caesarum
The notion of festina lente, of combining speed with moderation, has a long
history in mankind. The ancient Greeks had it as a proverb. The Roman
emperor Augustus held it as his motto. In the Renaissance, this notion was
symbolized by the intertwined symbols of the anchor and the dolphin, so
combining stability and flexibility. In service operations management, it
remains sound advice today.
 Foreword

Technology and the need for rapid change are creating new challenges for
the management of services. The classic approach to the management of
service has been characterized by a focus on the service encounter, the
service experience, the quality of the service, and the service employee. In
recent years this has developed on three fronts. The first has been the
broad area of e-services, including multichannel shopping and the Internet
of Things. The second has been a focus on value creation and the related
area of service-dominant logic. The third has been the recognition that
any service should be considered as part of a broader ecosystem.
We have now moved into a new context. First is the growing digitiza-
tion of services where increasingly services are IT enabled. Second, whilst
the study of the management of service has focused on simple B2C
(Business-to-Consumer) service, today it is important to think in terms of
services, not just service, that are delivered by companies in every sector
from government and publishing to aero engines. Next, there is a need to
move on from just looking at the point of delivery; scholars may see value
added through co-creation of service with customers, but the reality is
that value comes from managing the whole service supply chain. This in
turn means that management of services must have a wide discipline base
that embracing marketing, operations, and systems.
Associated with digitization is the rapid pace of change; new services
are increasingly launched in Beta to gain competitive advantage, and, at
the industry level, companies have to change very rapidly—for example,
manufacturing firms must embrace servitization, banks must become
technology led, and textbook publishers must become digital educational

vii
viii FOREWORD

service providers. All of this is creating enormous challenges: managing in

a dynamic environment not just the front line, but the complex supply
chains that are part of delivering today’s services, and facing the challenges
of IT-enabled services. The evidence from the field is that this is extremely
difficult to achieve well.
The author of this book, Henk Akkermans, brings a unique combina-
tion of expertise and practice perspectives. First, a deep understanding of
the dynamics of services combined with analytical expertise using system
dynamics approaches. Second, a unique perspective based on a service
supply chain view of services, and finally the learning from working with
companies in a wide range of IT-enabled services. This book will provide
both scholars and practitioners unique insights into how to manage ser-
vices in today’s dynamic and digitized context.

Professor of Operations Management Chris Voss

Warwick Business School
Emeritus Professor of Management Science
and Operations, London Business School
 Acknowledgments

Over the years, I learned so much from so many people, in business and
academia. I will not try to mention all of them here. For the cases pre-
sented in this book and for the research on the basis of those, these are the
people that were key, in alphabetical order: Greg Besio, Annelore Buijs,
Peter Claerhoudt, Peggy Corstens, René de Vries, Paulo Gonçalves, Jacob
Groote, Rene Heunen, Johan Hoek, Sjors Janssen, Daphne Jaspars-de
Greeff, Marco van Katwijk, Anton Khoe, Eric Kuisch, Gerard van
Laarhoven, Gerrit Loopstra, Rob Martens, Nat Mass, Frans van de Noort,
Carol Ou, Roeland van Oers, Kishore Sengupta, Peter Trienekens, Ruud
van Beeck, Kim van Oorschot, Luk van Wassenhove, Laurens Visser, Bart
Vos, Chris Voss, Theo Wakkermans, Yan Wang, Finn Wynstra, Huub
Zabel, and Quan Zhu.
Thank you for co-creating with me all those years.
Special mention deserves Willem van Oppen, reflective practitioner par
excellence, with whom I have had the pleasure of working with for more
than 15 years in the field of service operations. Many of the ideas on how
to design and improve services in a collaborative process mentioned in this
book are living examples of collaborative co-design between Willem and
me.

Tilburg Henk Akkermans

December 2017

ix
 Contents

1 Introduction   1

2 Sales and Operations Interactions: Never the Twain Shall

Meet?   9

3 Frontoffice-Backoffice Interactions: Service Quality

Cascades  31

4 Customer Interactions: How to Enrage Customers

with a Great Service  55

5 Managing Workforce Dynamics: Hiring with Moderation  71

6 Interacting with the Innovators: Innovation Tipping Points  85

7 Interacting with Key Suppliers: Relationship Spirals 109

8 Interactions with Government: Regulating the Regulators 129

xi
xii CONTENTS

9 Conclusion: No Silver Bullet 141

Index 147
 About the Author

Henk Akkermans For over 25 years, Henk Akkermans (1964) has been
researching and providing consultation services to innovation-driven ser-
vice companies in the industrial sectors of telecom, banking, insurance,
utilities, and infrastructure. He was trained as an information analyst and
industrial engineer. He looks at the processes that make service com-
panies fail or succeed from a systemic perspective. This leads him to
consider both the “soft” and the “hard” aspects of service operations.
Most importantly, this makes him integrate both aspects.
He has published widely about his findings in leading academic jour-
nals. Presently he is a professor of supply chain management at Tilburg
University. There he teaches the topics addressed in this book at the
Master’s and MBA level. He is also the Director of the World Class
Maintenance Foundation in the Netherlands. Here he works with compa-
nies and institutions in the specific services area of maintenance and asset
management to boost sustainable innovation.
He has written several books including Supply Chain Dynamics in 2015.
He lives with his wife and children in Tilburg, the Netherlands.

xiii
 List of Figures

Fig. 1.1 The logic behind the structure of this book: managing
stakeholders6
Fig. 2.1 Downstream amplification in a B2B (Business-to-Business)
telecom service supply chain 15
Fig. 2.2 Interactions of order backlog, staff, capacity, and workload.
(Adapted from Akkermans and Vos 2003) 18
Fig. 2.3 An example of a positive/reinforcing feedback loop 21
Fig. 2.4 An example of a negative/balancing feedback loop 22
Fig. 2.5 Provisioning rework inflow and outflow 24
Fig. 2.6 Accumulated backlog of provisioning rework 25
Fig. 3.1 Stylized process flow for the service supply chain under study 32
Fig. 3.2 First ramp-up from the “nursery room” 33
Fig. 3.3 Frontoffice versus backoffice order backlogs and installed base
during large-scale ramp-up 35
Fig. 3.4 Order flow rates during the large-scale ramp-up 36
Fig. 3.5 Key feedback loops regulating behavior of a generic service
system38
Fig. 3.6 The generic undiscovered rework cycle 40
Fig. 3.7 Semi-automated order flow triggering the fallout effect 43
Fig. 3.8 Example of order fallout effect in the provisioning stage in the
telecom service supply chain 44
Fig. 3.9 A visualization of the quality cascade 45
Fig. 3.10 Simulated behavior of key supply chain variables in the
ramp-up model 48
Fig. 3.11 Simulated behavior of backlog, fallout, and rework 48
Fig. 3.12 Contracting ramp-up rates: base case versus fast ops feedback
to sales 49

xv
xvi List of Figures

Fig. 3.13 Perception of operations performance by sales: base case versus

fast feedback 50
Fig. 3.14 Smooth ramp-up pattern for interactive TV services 51
Fig. 4.1 Orders for VoIP, Q1 2006—Q3 2007, normalized 57
Fig. 4.2 Frequency of calling depending on customer status 61
Fig. 4.3 Analysis of call ratio drivers in VoIP chain, June 2008 62
Fig. 4.4 The managerial decision cycle for business tsunami. (Adapted
from Akkermans and Van Wassenhove 2018) 63
Fig. 4.5 Summarizing cartoon from presenation to top management at
the end of project 67
Fig. 5.1 Growth in inflow of new requests for legal aid, 2000–2004 72
Fig. 5.2 Key feedback loops in workforce interactions 76
Fig. 5.3 Workforce numbers for hiring delays of 1–5 years 82
Fig. 6.1 The stock and flow logic of customer growth versus issue
origins87
Fig. 6.2 Performance issues for the DTV service, 2010–2012 88
Fig. 6.3 Correlation of innovation output and service breakdowns 91
Fig. 6.4 Interrelated flows of innovations, bugs, and incidents for DTV 93
Fig. 6.5 Direct effect of a sudden increase in desired innovativeness 95
Fig. 6.6 Unintended side effects: bug occurrences after a sudden
increase in innovation rate 95
Fig. 6.7 Bugs manifesting as incidents after innovation increase 97
Fig. 6.8 Active monitoring of small incidents after a sudden increase in
the innovation rate 97
Fig. 6.9 Growth of impact takeaway rate after innovation increase 98
Fig. 6.10 Effect of sudden increase in innovation rate on subsequent
service reliability 98
Fig. 6.11 Combined effect of service reliability and perceived
innovativeness on market reputation 99
Fig. 6.12 Allocation of staff between bug fixing and incident
management99
Fig. 6.13 The root problem of high innovation rates: undiscovered flaws 101
Fig. 6.14 Functionality change rates and call ratios in 2012–2013 103
Fig. 6.15 Time delays in discovering and solving incidents, 2011–2012 105
Fig. 7.1 Major incidents per source per month (normalized), 2012–
2013112
Fig. 7.2 Different possible workflows for a call from the Authority to
ITCo114
Fig. 7.3 The vicious cycle of the winner’s curse in the Port Authority
case116
Fig. 7.4 Vicious and virtuous cycles of trust, transparency, and
performance. (Adapted from Akkermans et al. 2004) 119
 List of Figures 
   xvii

Fig. 7.5 The vicious cycle of micromanagement in the Port Authority

case120
Fig. 7.6 The vicious cycle of incentive misalignment in the Port
Authority case 122
Fig. 7.7 Explanation of change approach in the Port Authority case 124
Fig. 7.8 Interlinkages between work groups and KPIs in the Port
Authority case 125
Fig. 8.1 Percentage smart meter installs planned and realized, 2015 131
Fig. 8.2 Main service supply chain processes and their key
interdependencies133
Fig. 8.3 Units of measure throughout the smart meter supply chain 135
Fig. 8.4 Photograph of system dynamics diagram created in
collaborative diagnostics session 137
Fig. 9.1 Continuous evaluation of (inter)organizational collaboration.
(Based on Ring and Van de Ven 1994) 143
 List of Tables

Table 2.1 Classical conflict areas between Sales and Operations 10

Table 2.2 Amplification ratios per stage as a result of a major sales
campaign (from Akkermans and Vos 2003) 16
Table 5.1 Intermediate Balanced Score Card (BSC) as developed during
the first stage of modeling 79
Table 5.2 Cases, FTE and productivity from 2000 to 2004 81
Table 6.1 Root causes for major incidents per type for DTV, 2011–2012 90

xix
 CHAPTER 1

Introduction

Abstract Services are the dominant mode of generating value in our

economy but their dynamics remain poorly understood. How to manage
operations is still derived from physical production processes. However,
services are different. Moreover, IT is fundamentally changing services. In
such IT-enabled service supply chains, volatility of demand and supply
become much, much greater. And so, the need to understand how they
really work and how to manage them is only becoming greater. This chap-
ter introduces these fundamental challenges. Key in managing IT-enabled
service operations is coordinating simultaneously between multiple stake-
holders. Internally, this needs to take between Sales and Operations, but
also between frontoffice and backoffice, and with Innovations. Externally,
coordination needs to take place of course with customers, but also with
key suppliers and even governmental regulators.

Services have been the dominant mode of generating value in our econ-
omy for several decades now. And still, services are poorly understood.
The bulk of the theory and practice on how to manage operations is still
derived from physical production processes. However, unlike physical
products, services cannot be buffered or stored, and production and
­consumption are instantaneous, to mention two differences that have
huge impact on how operations are best managed.

© The Author(s) 2018 1

H. Akkermans, Service Operations Dynamics,
https://doi.org/10.1007/978-3-319-72017-3_1
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