Editorial for Journal of Operations Management special issue on “Professional Service Operations Management (PSOM)”

Professional services such as medicine, law, dentistry and education clearly sit at the center of our societies but, perhaps less obviously, knowledge-intensive services of various kinds also make increasingly important economic and employment contributions as economies develop. These services, including management consulting, investment banking, advertising, engineering, architecture, etc., also provide critical inputs for other public and private sector organizations as they seek to create high value products and services. Yet despite this societal and economic significance, perhaps in part because of their typically ‘supporting’ role, professional services remain largely under-researched in the Operations Management field. This special issue represents the multi-year cumulative efforts of a group of scholars who responded to our call to attempt to better characterize this “distinct environment for managing operations” (Goodale et al., 2008, p. 670). Their work is varied in approach and focus, ranging from analyses of ‘classic’ professional service settings, such as healthcare operations, to investigations of other advisory services, such as global engineering networks, to explorations of how bodies of professional knowledge emerge and the dynamics of how value is appropriated by boundary keepers, knowledge workers, and clients. Taken together we believe these papers better detail the shape of what we are convinced remains a significant opportunity for OM scholars to undertake novel, interesting and, critically, impactful research. In this editorial, we try to locate the various papers in a broader conceptual framework, include some specific additional insights where appropriate, and to signpost some areas where we feel the SI has limited coverage. Levels of customer contact (i.e., lots of face to face interactions, meetings, consultations, etc.) and consequent delivery specifications (i.e., every condition, case, problem is different) are understood to be high, and; Operational processes that emerge as a consequence of ‘professionals’ making judgments about both ends (what constitutes an adequate/appropriate outcome) and means (the content and sequence of process steps) are essentially fluid/flexible in character. Interesting - and broadly valid – though such service characterizations can be, they leave scope for substantial further reflection/investigation. Fig. 1 builds on insights from Abbott's seminal sociological analysis of professions (1988) to model this process of professional judgment. The process of knowledge work (adapted from Abbott, 1998). In both the diagnosis and treatment phases (N.B. the language is medical in origin but equally applicable to other professional settings, such as law), information is taken from/about the client into the professionals’ knowledge system – itself typically acquired via extended, multi-year, specialized training in a body of, often abstract, knowledge - and “instructions” are brought out. It is important to highlight (cf. Lewis and Brown, 2012) that in many cases this diagnosis/treatment process can be almost automatic, connecting a series of essentially standardised inputs and outcomes but in those circumstances “when the connection between diagnosis and treatment is obscure” (Abbot, 1988: 49), the professional will engage in a process of inference. This is where reflection and creativity are applied, inputs, process and outputs are subject to significant uncertainty and decisions regarding all three are potentially risk-bearing. Of course, this interaction between abstract knowledge and “real” problems also endows professional groups with significant strategic flexibility because, as Abbott (1988: 9) suggests: “only a knowledge system governed by abstraction can redefine its problems and tasks, defend them from interlopers and seize new problems.” Although these ‘abstraction-inference’ characteristics apply to most knowledge-intensive services, what defines some of these groupings as explicitly professional is that the body of knowledge they train with, and subsequently draw on when making judgments is externally (but normally non-governmentally) regulated and controlled in its content and application (von Nordenflycht, 2010). These professional boundaries create what is, in effect, a series of knowledge monopolies, with evolving and contested boundaries that act to exclude others (for example, you cannot practice law in a country unless you achieve credentials within that country legal system) and ensure high relative labor costs (Verma, 2000, p. 14). They are also central in the maintenance of standards. For example, professional bodies typically maintain explicit codes of ethics and shape implicit norms that guide appropriate professional behavior. The American Bar Association, for instance, articulates the ‘core values of the legal profession’ to include undivided client loyalty. In other words, because professionals should privilege client interests (Caveat Venditor) above their own, clients can trust the quality of their work despite the opaque nature of the judgment process, which is based on asymmetric knowledge, and often ambiguous outcomes. Interestingly, the question of professional standards, where they come from, and the extent to which a formal professional body is necessary for their maintenance, is itself a dynamic, often strategic, choice. McKenna (2006) for example, in his history of management consultancy, notes how McKinsey and Co. managing director Marvin Bower strongly emphasized the voluntary adoption of professional norms more commonly associated with law firms as a key part of setting his firm apart from its rivals. So far the definitional discussion has centered on the professional service exchange itself, typically embodied in advisor-client dyads, and the relationship with a meta-level body of knowledge (regulated or not). These characteristics, autonomous judgment and external regulation/accreditation, also create a significant practical challenge for any notion of management or co-ordination in a professional service setting (cf. Harvey, 1990). An illustration of these governance dilemmas can be framed in triadic terms. Consider how initial power afforded to the firm (Fig. 2a) is significantly diminished after initiating client-employee engagement. It is now professional employees who build ties with clients (Fig. 2b), building independent relationships that can potentially be the basis for disintermediation (i.e., individual employees regularly take their clients with them as they move to new firms, set up their own, etc.). (a) The PSO firm acts as an ‘initiating bridge’ between professional(s) and client; (b) PSO firm experiences bridge decay as direct relationship between client and professional(s) develops. Bridge decay is neither universal nor inevitable – if the firm controls specific intellectual property (e.g., IDEO and its proprietary design method) or certifications and/or has a significant reputation (perhaps supported by a large marketing spend) – then the firm can maintain significant control. Because important problems are involved and a professional knowledge gap exists, the strong bond hinges on who the customer trusts. In some sectors, these dilemmas are offered as an explanation for the persistence of the partnership model, but partnerships are not prevalent or even possible in all professional services settings (e.g., there are more accountants and engineers working outside PSOs than inside; many European doctors are government employees, most social workers work for government agencies, etc.). While their work is no less professional, questions about their management and control depend on a host of different variables. That said, there is evidence that in a non-partnership setting, professionals are able to resist traditional normative interventions (such as knowledge management initiatives). Given that OM is primarily concerned with the operation/organization as a unit of analysis, what about the questions that pre-occupy OM: processes, performance, scale economies and capacity, technology, quality, continuous improvement, supply chains, etc.? We have already explained that the extant PSOM literature is under-developed but drawing together our analyses with insights from the papers in the SI, we can provide an overview of areas that can inform the current state of the art in PSOM and help identify areas for further exploration. It is (somewhat ironically) accepted – and widely taught – that professional services are characterized by their extensive process customization, complexity and throughput variability. In this special issue, Brandon–Jones et al. challenge this simplifying assumption with the results of their ‘deep dive’ into consultancy in the US travel, tourism, and hospitality sector. They note, for instance, that rather than being highly engaged with their clients, consultancies can be actually quite remote and passive and that face-to-face engagement is typically time-limited and focused on specific project phases. Moreover, this distance is often at the behest of the client. They also observed significant contingent variation in the operational characteristics of their sample. For example, the relative degree of client–consultant interaction appeared dependent upon degree of expertise, with super-specialists spending less time with clients and only the more generalist firms (complementing their limited expert status) engaged with high levels of interaction (networking, etc.). The well-documented use of leveraged work management where ‘simpler’ work is devolved to lower cost (e.g., junior lawyers) and/or differently (less) qualified (e.g., paralegal) employees also contradicts the simplistic notion of all professional work as complex. Lewis and Brown (2012) used case-based observation to conclude that ‘judgment’ work made up much less of the total activity mix than might have been expected, with a classic portfolio of ‘grey matter’, ‘grey hair’ and procedural work evident. The presence of significant amounts of standard work inside the professional service space suggests an opportunity for PSOM in terms of classic process improvement interventions. In the SI for example, Dobrzykowski et al. used hospital survey data from 211 US acute care hospitals to look at the adoption of Lean techniques in a healthcare setting. They discovered that a lean orientation permitted providers to both focus on individual patient needs and standardize care delivery procedures. Interestingly however, the conditions that will finally precipitate this division of labor remain unclear. Richard Susskind, for example, celebrated legal futurist, has long argued that technology will accelerate the process of decomposition of (some) professional work into its component processes and yet, to date, the adoption of process management and other technological solutions remains at best partial. Perhaps informal questions of trust, formal barriers to entry (and the political lobbying power of many professions) still favor traditional models of service delivery? Consider the online legal services provider, Rocket Lawyer, offering a range of standard on-line legal services (incorporation, wills, etc.) plus connection to a network of ‘real’ lawyers. Founded in 2008, it has received $45 million in funding, claims 30 million users and yet today only generates $20 million in revenues. Firms like Rocket Lawyer and LegalZoom may already be fascinating PSOM exemplars but, at least initially, they are more likely to be expanding into underserved markets rather than displacing existing legal services. In the SI, Lawrence et al. extend our understanding of the dynamics of process change, the tension between innovation and commodification, with professional standards playing an integral role, by presenting a longitudinal study of the evolution of a specific professional service – Leadership in Energy & Environmental Design (LEED) consulting. They propose a life-cycle model to better capture the dynamics of the knowledge base (embodied in practice and the body of knowledge). This approach has significant theoretical implications for the essentially static, cross-sectional view of all services but more practically, suggests that professional firms can co-ordinate efforts (both hierarchically and temporally) to proactively manage transitions along the evolutionary path. Standardization and specialization in their case improved talent allocation and boosted future innovation. When compared with large-scale manufacturing (and many service) operations, professional services in general exhibit relatively low capital intensity but there are still often very significant levels of investment (Segelod, 2000). In the SI, Brandon–Jones et al. observation of higher-than-expected levels of capital intensity suggests that the assumption that most PSOM investment is infrastructural (training, R&D, etc.) may need revising. In part this observation probably reflects the 20+ year vintage of most service typologies but the level of capital intensity was also contingent on organizational scale – the bigger firms spending significant amounts on communications, knowledge management, project management, etc. infrastructure (cf. Stratman, 2008; Boone and Ganeshan, 2001). In other words, the greater levels of concentration (acquisition, merger, etc.) in many global professional service sectors over the last decade have resulted in larger firms, and managing their global operations necessitates the use of techniques more closely aligned to traditional volume practice. Interestingly, and critically, there are also likely to be significant investment differences between types of professional service. In general, surprisingly few of the submissions to the SI engaged with more strategic technological questions. There has been a recent spate of works that explore what increasing technological capabilities (and declining costs) like Machine Learning and Mobile Robotics will mean for various jobs, and public policy (e.g., Brynjolfsson and McAfee, 2014). Of more specific interest to the challenge of PSOM, Spohrer and Banavar (2015) recently presented a provocative vision for the use of cognitive computing, arguing that it has (finally, after a number of false dawns) reached a transformative ‘tipping point’ with significant implications for a very wide range of work activities. Their observations resonate with others who have challenged the persistent value of human judgment in certain tasks. Expert radiologists are routinely outperformed by pattern-recognition software, diagnosticians by simple computer questionnaires. Silicon Valley investor Vinod Khosla (somewhat self-interestedly!) predicted that algorithms and machines would replace 80% of doctors within a generation. More recently, Gerd Gigerenzer of the Max Planck Institute argued (Brockman, 2015) that in a world where 1 million US children (annually) have unnecessary CT scans, a Robotic Doctor that could interpret statistics (unlike many medical professionals?), would be immune to conflicts of interest (especially challenging in a fee-for-service system) and would not be pre-occupied with “defensive medicine” might provide an improved service offering. We have already indicated that the definition and management of service quality has some specific attributes in a PSOM setting. The Lawrence et al. SI paper emphasizes how professional standards define appropriate professional practice and subsequently, how structuring the work environment so that those standards are followed also assures external and internal quality (i.e. rework is less often required, reducing costs, etc.). More generally, if professional service customers are “typically unaware or imprecise about both what will best serve their interest and how to go about remedying the situation” (Mills and Margulies, 1980, p. 264) the consequence is that they often quality or of the service how is the how is the professional, was a medical etc.). have argued that organizational the partnership and can provide a of and that the firm will not the to In the SI, of the customer service service different professionals over an extended, often multi-year, additional quality as his exemplars make are a key in this more of professional service the control and quality that can emerge as professionals (i.e. the and/or set of standards as an to our initial of PSOM, centered on advisor-client what the paper in most settings professional work is by of knowledge workers, even if they the knowledge base (i.e. all will about their judgments about the process of and, in many cases the to any judgment process will be from areas (e.g., and any model of professional service operations should also include some of this network of professionals to what OM scholars might as supply (cf. and specific to the challenge of and in the SI, this is the central focus of the et al. of between professional and This acute care how and that act as barriers to care of (what et al. their to more of care despite their professional their with the a Although this of the and the is the of medical it provide a that (a) professionals work in delivery models and that (b) these can create very challenging operational et al. for that many of the commonly solutions (such as and how new of the of power and could be much more More SI paper there are not only professional service supply at work – a building a new will need the services of various types of and and are likely to be involved as etc. In such cases we are also and with a and customer rather than the simplistic of the client. 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