Industrialization of Service
5/2/16
Around this time of the year – a month after the arrival of the new year and a couple of months before the birth of the financial year – there is a renewed focus on the state of the economy and debates on the strategies to be pursued in the coming year. This has been a repeating yearly feature and some of the same arguments are looked at from new data and new angle. Nevertheless, three repeating prominent themes among a few dozen more gets thrown around – industry, manufacturing, services. The leader of the current government introduced the slogan “Make in India” to emphasize greater involvement of the manufacturing segment to the economy. The notion that prosperity predominantly comes from industry is rather well entrenched in the thinking of leaders, at least of the developing countries. Although industry encompasses both manufacturing and service, it is fair to say that manufacturing has a bigger influence on industry in terms of ideas, models, mechanisms, thoughts, etc., although not necessarily on the wellbeing for all the citizens. But the debate in the last two decades has been about the influence – does manufacturing or service contribute and thus influence industry more, and thus impact prosperity more. With the growth of the IT sector in the 90s and its contribution to job creation there has been a doubt or fear that manufacturing will lose its prominence in contributing to the prosperity of the country. Thus, the PM’s initiative to invigorate the manufacturing segment can be seen to assuage these fears. From the 90s onwards the world over has tried to move towards service industries from manufacturing. This is particularly suitable for small countries which are limited in the access to natural resources and have used their human and knowledge capital to drive their economy. By this strategy they not only could overcome their access hurdle, but can also be relieved of other difficulties such as waste and byproduct management, labor difficulties, etc. and move to offshore activities where they can put to use their expertise and knowhow. However, this approach for a large country and a more populous country creates a problem. Because of their large area some or many of the nature’s resources such as minerals or forests are bound to be available, and ignoring such a facile source can be politically unsettling. Also, large populations require jobs to be engaged in and fed.
The problem with service industry is that many of the management principles which have been developed from the manufacturing methodologies do not apply. However, for industries trying to switch or expand from a manufacturing experience to a service business, it is difficult to unlearn or reinvent new models and paradigms that are appropriate and effective for service industry. Let me explore the education business as a case in question that exemplifies this principle. For a manufacturing industry the prime controlling factor is the product which needs to be catered to and processed as per the process requirement that yields the most profitable outcome. Thus, concepts like quality, time cycle, sourcing costs, etc. apply keeping the final product in mind. Although in theory this approach can work in a service industry, like education, in practice many of the strategies and processes cannot be replicated. For example, the quality of the source – raw material – is difficult to be defined and selected. It is more nebulous, and the many assessment methods currently employed, mainly due the ease of deployment, fall short. Unlike rejection of any manufactured product that does not meet specification, the end product of any service cannot be rejected, or rather should not be.
It is easy to implement the rules of manufacturing, and this works very well in manufacturing industries. But they are difficult to be followed or do not result in desired outcome in service industries. For example, time cycle. One can design processes with precise time allocation and use it to plan for production, staff engagement, manpower requirement assessment, capital requirement assessment, etc. In service industries such procedures work only for overhead costs and activities, but not for the core activity. For example, it will be very difficult to premeditate the time required to learn a technique or a concept. It depends on many variables, least significant of which is the time utilized in teaching. But in most organizations this is the metric that is prescribed, as though the function of the organization is to deliver the concept or technique and not imparting knowledge or skill. Learning comes with the engagement of the individual with the job, and most training programs are not designed with that scale in mind. On the contrary, many skills are attempted to be crammed within the time allocated, not necessarily in the sequence or structure which is a highly individualistic learning trait.
Industry, Education, Models