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Lead Your Team Strategy

For Long-Term Business Success, Service Trumps Speed

Do you want it done fast or do you want it done right? That’s the question many business owners find themselves asking as they try to balance consumers’ demand for speed with their demand for quality.

Service businesses are particularly affected by this conundrum, said a researcher at the University of Utah.

Such enterprises — ranging from health care, education, legal and financial consulting to health clubs and beauty salons — thrive or fail depending on how well they finesse the interaction of quality and speed of their services, said Krishnan Anand, a David Eccles School of Business professor who conducted the research.

Anand said that ultimately, quality of care and time spent with individual customers are the foundation for long-term success and growth for any client-centered enterprise.

The quality of service is a critical driver in defining and implementing all segments of such businesses — and yet misunderstanding or ignorance of that truth is crippling profits, Anand said.

Over the past decade, studies show that the health care industry has actually retreated 0.4 percent in annual productivity growth. For example, doctors, pressured by increasing demands for their services, must rush between patients with the result that individual attention —and patients’ perception of service quality — has diminished, Anand said.

While such developments have spurred competition by multiplying providers within health care and other customer-intensive services, Anand and his colleagues found that competition does not necessarily result in lower costs, contrary to what has been experienced by other industries.

“In fact, we found that under competition, the service becomes slower and the price charged to customers increases. That competition is not producing lower costs is a paradox to the extent that our instinctive, and perhaps inappropriate, focus is on costs — but there are several other dimensions” that must be considered in the services sector, Anand said.

“In our view, in a service economy, the interesting stuff happens only when service quality interacts with the time taken by the service provider to serve the customer. This must be true for all the complex services provided in the modern world,” he said.

Anand’s research was conducted with co-authors M. Fazıl Pac and Senthil Veeraraghavan of the University of Pennsylvania’s Wharton School. The paper was published in the January edition of the journal Management Science.