Monday, January 6, 2014

Kafkaesque Operations Management and the Good Jobs Strategy

Yesterday's Sunday New York Times was waving the flag for operations management and operations research and management science. In the Sunday Review section there was a timely OpEd by Drs. Kevin Volpp and Katherine Milkman, "How to Keep Your Resolutions," which cited their forthcoming article in Management Science, which I tracked down with the very catchy title of: "Holding the Hunger Games Hostage at the Gym: An Evaluation of Temptation Bundling." This article offered 4 tips from behavioral economics and health on how to keep your New Year's resolutions.

But another article also caught my eye - it was in the magazine section and was entitled in my hardcopy version: "A Ready-to-Assemble Business Plan"  and in the online version (no idea why the title changed) "Thinking Outside the (Big) Box," by Adam Davidson  It began with Davidson describing a trip to Ikea in Brooklyn with his wife (readers of my blog know that I love Sweden and Scandinavia and have held multiple visiting professorships there) that he said might cost him his marriage. This was a while back and was due to what he said was the lack of available sales staff to answer questions.

Well, times have changed, at least for some big box stores and their employees (and I won't in this post, revel in our great experiences of visiting Ikea when our daughter was 2, and we lived in Stockholm -- just last week, and now a teenager, she was missing Swedish meatballs with lingonberries, which we dined on last summer but in Gothenburg). Davidson and his wife did not have this meal in Ikea (perhaps they should have).

Adam Davidson's article focused on the work of Dr. Zeynep Ton, whose book, The Good Jobs Strategy, was just published and in it she argues how treating retail employees much better may make everyone (including their employers) much richer (contrary to conventional thinking).
Dr. Ton had worked in her father's apparel factory in Turkey, sewing on pockets to garments. Nothing like a difficult job to instill the value of education and good  working conditions. (I worked summers as a nurses' aide while in college (Brown University) and had lots of practice emptying bedpans but I loved the interactions with my patients, especially the elderly ones,  as well as the esprit de corps among the nursing staff).

And what do you think of the following provocative sentence by Davidson in his article: "In the last few years, Ton has become a revolutionary force in a field that would seem unlikely to generate many -- the Kafkaesque-titled Operations Management." I read a lot of Kafka (as well as Dostoevsky) as a teenager and now am propitiously a chaired professor of Operations Management. Davidson  goes on to note a study by Professor Marshall Fisher at Wharton (Volpp and Milkman also have appts. there), which noted that, for every dollar of increased wages, one retailer that was studied brought in $10 more in revenue but for more understaffed stores in the study, the boost was as high as $28. Davidson mentions that the software that is typically used considers workers as a "cost" and does not quantify the "profit" potential in terms of customer service, value added,  and quality of experience, if I may. This shows, also, the importance of selecting the right objective function that you are optimizing (or trying to)!

Since I am a researcher, I had to dig deeper and located the article that Fisher wrote that was co-authored and it is: Marshall L. Fisher, Jayanth Krishnan, Serguei Netessine (Working), Retail Store Execution: an Empirical Study, and you can read it online here.  It does have the dollar figures as noted in the Davidson article above.  More information can be found in Fisher and Raman's book, The New Science of Retailing: How Analytics are Transforming the Supply Chain and Improving Performance, which includes results for the Fisher et al. study.

Now, and this is Kafkaesque (and not found in the New York Times piece), Dr. Zeynep Ton, who received her undergrad degree at Penn State and her DBA at Harvard Business School, is an Ajunct Associate Professor at the Sloan School at MIT, and she was denied tenure at Harvard Business School where she was a very popular faculty member -- you can read more about what transpired in this article, HBS Loses 'Rock Star' Prof to MIT,  posted on the Poets & Quants website. According to the article:  Despite her sterling reputation in the classroom, Harvard decided not to promote the assistant professor who had been at the business school since 2002. The decision was a surprise to many on campus given her widespread popularity. Indeed. some students could be seen crying in the classroom when she taught the last session of a supply chain elective course.

In September, I wrote a post, Some of the First Years Had Never Had a Female Professor -- Gender Ineqality at Harvard Business School.

Perhaps Harvard will now bring back Dr. Zeynep Ton to its Harvard Business School faculty, given the visibility of her new book! Or MIT will give her tenure!

And, for those who are interested (and still reading), you can listen to Dr. Ton in her TEDx presentation.