01 Jul 2014Working Paper Summaries

Creating Reciprocal Value Through Operational Transparency

by Ryan W. Buell, Tami Kim and Chia-Jung Tsay

Our labor is a part of a constant social process in which we work reciprocally on each other's behalf. Yet despite this interconnectivity, labor is becoming less and less interactive. We rarely observe the beneficiaries of our own efforts, nor do we observe and appreciate the people and processes that create the products and services we enjoy. In this paper, the authors argue and demonstrate through experiments that operational transparency between customers and employees essentially positions both parties as actor and observer, each with the potential to benefit from the other, and in ways that create perceived and objective value. The gains in performance can also be economically meaningful. The results therefore cast transparency as one additional lever that service managers may consider to improve the efficiency of their processes and the quality of outcomes they deliver. Furthermore, by making operational processes transparent, the authors suggest that companies can imbue the processes with substantive meaning for customers and employees alike, in ways that could potentially benefit the company. Key concepts include:

Seeing the work can cause consumers to better appreciate the effort exerted by producers, increasing their perceptions of service value.
Feeling appreciated can cause producers not only to feel more satisfied with their jobs, but also to exert more effort on behalf of consumers, leading to better performance.
Transparency visually reveals operating processes to both producers and consumers, and generates a positive feedback loop through which value is created for both parties.
Understanding the contextual factors and boundary conditions that influence the effects of operational transparency on service outcomes remains a fruitful area for future research.

Author Abstract

We investigate whether organizations can create value by introducing visual transparency between consumers and producers. Although existing theory posits that increased contact between the two parties can diminish work performance, we conducted two field and two laboratory experiments in food service contexts that suggest that the introduction of operational transparency improves service quality and efficiency. The introduction of reciprocal operational transparency contributed to a 22.5% increase in customer-reported quality and reduced throughput times to 67.5% of standard. Customers who observed employees engaged in labor perceived greater effort, appreciated that effort, and valued the service more. Employees who observed customers felt more appreciated and, in turn, were more satisfied with their work and exerted increased levels of effort. We find that transparency, by visually revealing operating processes to both producers and consumers, generates a positive feedback loop through which value is created for both parties.