What if there's no contract?

Last week's post, in which I argued that a poorly-designed Quality Management System can actually prevent customer satisfaction, generated some interesting discussions. One of the most productive threads was started by Robert Baron, whose first comment was deceptively simple: "What the Customer 'really' wants is what is in the contract."

But what if there is no contract? This happens a lot in daily life. Go to the corner store for a loaf of bread, send your kids to school, pay your taxes, or connect to a public utility for electricity or water: in any of these cases, typically either there is no formal written contract, or else the "contract" is a fixed boilerplate of terms and conditions that you personally have no power to negotiate. Either way, it's a far cry from the simple model we often use in the Quality business where a Customer and a Supplier interact according to the fixed rules of a negotiated contract. And when we leave that model behind, two questions suddenly arise: What does the Customer want? and Why should the Supplier care?

The answers differ, depending on the details. Who is the Supplier, and what kind of service are they offering? So let's look at two cases: the corner store, and the public utility.

The corner store

Here the answers are pretty easy. What the Customer wants is that the goods for sale be as advertised, and that they meet commonly-accepted criteria of quality. 

• If it's a grocery store, the food should be fresh and free of vermin. 
• If it's an antique store, the articles should truly be antiques, and any flaws or frailties should be disclosed by the seller. 
• If it's a gas station, the pump should dispense what it says on the sign (gasoline or diesel, octane level, leaded or unleaded) and the fuel should be stored at a uniform temperature and pressure so that the customer gets the amount she pays for. 

These criteria are all universally accepted; and for that reason, they are generally backed up by force of law.

It's also easy to see why the Supplier cares: for this kind of store there is typically plenty of competition. If your store gets a reputation for bad quality or poor customer service, it's pretty easy for customers to take their money somewhere else. 

The public utility

When we look at public utilities, nothing is so simple.

What does the Customer want? A public utility provides some kind of good or service that most customers take for granted most of the time. So what the customer really wants, probably, is not to have to think about the good or service at all, but to rely on it implicitly. In other words, what the customer wants is not to have to deal with the public utility in the first place. Clearly it is impossible for any utility to satisfy this want.

Failing that, the customer wants her problem solved, quickly and completely, on her schedule and at her convenience. The utility might or might not be able to do this, but they probably have other customers with other problems that have to be solved at the same time. So the odds are not high that this want can be satisfied either. 

Is this a problem? For those of us who receive the services, yes it can be. But for the utilities, it's not so clear. Last year we discussed the question "Who is the customer for government agencies?" and some of the same ambiguity affects public utilities. In important ways, the people served by utilities aren't even their real customers: the real customers—the ones the utilities have to satisfy—are the regulatory bodies that oversee them, who can approve rate changes or impose penalties for misbehavior. And those of us who receive the services? It's simply not important to the utilities—as organizations*—to make us happy. 

Why should the Supplier care? In the case of a public utility, there's no serious threat of competition. Generally a utility has a guaranteed monopoly on the provision of its service; in very rare cases, it might be possible for someone on the fringe of PG&E territory to switch to SCE instead, but the total numbers are no more than a rounding error. (When I was young, telephone service was subject to the same kind of monopoly; but that's no longer true.) Since a utility's real customers are the regulatory bodies, what matters to the utility is to avoid any hostile interaction with those bodies. And that concern has a kind of trickle-down effect on those of us who receive the services. For while it's true (as I just noted) that it's generally not important to the utilities to make us happy, nonetheless what is important is to make us happy-enough that we don't make trouble with the regulators ... or the legislature. Since most of us are willing to tolerate a certain level of inconvenience in our lives without complaining, that's what we get most of the time. 

In fact, I would guess that this dynamic is at the root of the problem my mother faced in last week's post. 

• It is very likely that the regulatory body overseeing her Electric Company requires them to have a QMS with calculable metrics. 
• It is even plausible that the regulatory body requires them to report their metrics regularly, which would explain why it is so important for those metrics to be always green. 
• But it is also likely that this requirement was imposed with no input from the public—or, more exactly, with no input from any member of the public who understands QMSes. 😀 

So there was no one in the room to insist on a loop in the procedure that checks back with the customer before closing a trouble ticket, and the point was simply overlooked. You could call it "human error."

Note that this line of thought, if true, also tells us how to improve the situation. Find the regulatory body responsible for overseeing the Electric Company, and register a complaint with them. But remember that the regulatory body is another very large organization; so getting them to respond in a helpful way might be almost as difficult as getting a helpful response from the Electric Company.

This sounds like a depressing conclusion, but I don't think it has to be. What it shows us is that the system-level analysis of an organization's management system works: it is a tool that gives meaningful results. If it shows us that some problems are harder to solve than others, at least we know what's involved. 

As for Quality, our results are a lot like when we examined Quality in government: it's the same but different. The basic Quality principles apply robustly even when there is no negotiated contract spelling out all the terms explicitly. But of course the details depend on the individual case.

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* To be very clear, I'm not saying a word against the human beings who work for the utilities! I am certain that, like in any organization, most of them are hard-working and care about doing their jobs as well as they possibly can. But the system they work inside-of has goals of its own, based on what the organization needs. And that's what I am talking about here.