Some may think it strange to deal with Business Management of a Laboratory before dealing with technical issues – especially for a “captive lab.” We do this for couple of reasons. First of all, business issues are everywhere, even in academic labs. All organizations require resources to function and labs can be especially expensive. Hence, in a general way, business management skills are needed in all labs.
This question actually goes quite a bit deeper than the general statement above. For commercial labs, it turns out that business issues are quite a bit MORE important than technical issues. In most commercial labs the technologies are specified and begin to approach a commodity. That is, everyone must do exactly the same test and produce the same results. Differentiation is most often found in areas that are actually general business management. These include customer service, reliability, convenience and cost. Even in the highly touted area of data management, it is often these business issues that dominate this discussion rather than the technology behind the delivery system.
For “captive labs,” technology may rival business issues for importance, but even there issues like identifying and satisfying internal customer needs in cost effective ways can dominate all discussions. We will deal with a handful of business issues surrounding the commercial and internal laboratory. We will deal with:
- Sales/Marketing/Customer Service
- Revenue/Productivity
- Cost and Pricing
- Profitability
- Sustainability
This is done deliberately to make the point:
“The purpose of business is to create a customer....” Peter Drucker
First we should probably note that in the lab business, customers are always going away. That is the nature of all service businesses, but the customer cycle in the lab business can be surprisingly short. Long-term contracts are fairly rare. The project is done and service relationship ended or at least suspended. Hence, for a lab, instead of saying “...create a customer,” we could easily say, “...re-create a customer....” This seems intuitive for the for-profit, commercial lab, but what about a “captive lab?” If we include the internal customer we quickly get the point. The “captive lab” that does not create and re-create the internal customer soon finds itself without support and shrinking or closed. Any laboratory manager who thinks that they really have a “captive internal client” will soon find that internal relationships are quickly strained to the breaking point. Hence, every lab has as its fundamental mission finding, engaging, servicing and retaining the customer.
Every laboratory manager needs to fully understand the needs of the client when it comes to:
- Analytical techniques needed
- Precision and accuracy needed
- Turnaround needed
- Reporting formats needed
- Sample archival/retrieval needed
- Data archival/retrieval needed
In addition to these hard specifications, there are two other client related talents that every successful laboratory manager needs:
- The ability to anticipate client needs and
- The ability to design and maintain good client relations
The first of these is important in commercial labs just from a profitability perspective. It can be a financial disaster to miss a real emerging customer need and allow the competition to take away the very volatile client relationship. Nevertheless, this skill is even MORE important for the captive lab. There is a presumption with the clients of the captive lab that the laboratory manager is paying attention to changing organizational needs. It is expected that when a need become critical that the laboratory manager has thought about it and has pro-actively made plans to handle the need is some reasonable fashion.
This could be something as simple has having found the proper sub-contractor, but it may be as complex as having found or developed new methods. Many laboratory managers of captive labs lose all their goodwill with internal clients by having failed to anticipate a crisis. On the other hand, those who anticipate needs are and are ready to “bail-out” their peers with a quick fix to their latest problem often find undying support from unusual sectors of their company.
The ability to control client relations effectively is also a key skill for laboratory managers – especially in captive labs. Often in commercial labs the client interaction is “top-of-the-mind” enough to warrant careful organizational design. This can go so far as to consciously design formal lines of communication between external clients, sales and an internal group, often called something like “project management” or “client service.” Commercial labs almost instinctively recoil from the notion of letting a bench chemist or technical talk directly to a client. The results are so bad and so fast that this is rarely attempted in the commercial world.
For the internal or captive lab the situation is much different. It is rare that the relationship between the internal client and the lab is given much thought. Furthermore, lab personnel and the internal client(s) often work in close proximity. It is assumed that “we are all one company” and when conflict arises between a bench chemist and an engineer everyone is shocked. Unless these relationships are managed the organization will be paralyzed by screaming matches over “who shot John.” Even if the organization fails to manage this interaction the laboratory manager MUST manage it. I have seen more than one laboratory manager lose their job over conflicts with internal clients that, at the root, were conflicts between lower level individuals inside the organization.
It is always best for the laboratory manager to work with HR to formalize lines of communication in order to minimize interaction between bench chemists and technicians and other hominoids. Laboratory personnel are notorious for lacking basic personal interaction skills. Throw them into a tense situation with a hot-headed junior engineer and you will have an HR case study. Unfortunately, many organizations refuse to deal with this issue directly. They not only fail to recognize the problem, they often feel compelled to keep lab head counts low and try to force low level personnel to “get along.”
When this is the case, the laboratory manager MUST make interpersonal skills among his or her laboratory staff a high priority. He or she MUST take action to keep lab cretins away from internal clients. Sometimes this can be done by clever scheduling, coaching or “performance improvement plans.” This would be how most HR programs would approach the problem. Unfortunately, such programs are rarely successful. More often than not, the only solution is removal of the offending personnel from the lab organization. It is almost immaterial who actually “shot John.” The lab is considered the “supplier” and is presumed “guilty” of poor “client service” in all but the most extreme situations.
The shrewd lab manager works diligently at resolving these issues ahead of time by deliberately and systematically culling out lab personnel who have interpersonal problems. Furthermore, he or she makes interpersonal skills more important than technical skills in the hiring (or internal transfer) process. The clever lab manager reduces the risk of HR fires by keeping the amount of fuel on hand at a minimum.
In the next blog we will deal with the issue of Revenue/Productivity.
Stites & Associates, LLC, is a group of technical professionals who work with clients to improve laboratory performance and evaluate and improve technology by applying good management judgment based on objective evidence and sound scientific thinking. For more information see: www.tek-dev.net or email us at ron@tek-dev.net or amandine@tek-dev.net.
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