Ryan W. Buell is an assistant professor of business administration in the Technology and Operations Management Unit at Harvard Business School. He teaches Managing Service Operations in the MBA elective curriculum and in Executive Education programs at the School. He has also taught the Technology and Operations Management course in the MBA required curriculum.
Professor Buell’s research investigates the interactions between service businesses and their customers, and how operational choices affect customer behaviors and firm performance. He is affiliated with the Behavioral Insights Group
at the Harvard Kennedy School’s Center for Public Leadership. His work has been published in Management Science
, Production and Operations Management
, Quarterly Journal of Economics
, and Harvard Business Review
. It has also received media attention from outlets such as The New York Times, The Boston Globe The Financial Post
, The Guardian
, and Forbes.com
Professor Buell earned a DBA in Technology and Operations Management at Harvard Business School, where he received the Dean's Award and the Wyss Doctoral Research Award. He also received an MBA with high distinction from Harvard Business School, where he was a George F. Baker Scholar, and a BBA with high distinction from the Ross School of Business at the University of Michigan, where he was elected to Phi Beta Kappa.
Prior to his graduate studies, Professor Buell co-founded and managed the Tour Now Network, an online real estate virtual tour service. He has also worked at McKinsey & Company and General Motors.
As Americans' trust in government nears historic lows, frustration with government performance approaches record highs. One explanation for this trend is that citizens may be unaware of both the services provided by government and the impact of those services on their lives. This short talk describes research that suggests that operational transparency, revealing the work that government does, can improve resident perceptions of the government and improve support for government programs. For more details, click here to download the research paper, Surfacing the Submerged State with Operational Transparency in Government Services
Cooks Make Tastier Food When They Can See Their Customers
While existing theory suggests that increased contact between customers and employees diminishes efficiency, recent research demonstrates that when employees can see their customers, the beneficiaries of their efforts, the quality and efficiency of the service they deliver can actually improve. Studies in food service show how revealing customers to employees can lead employees to feel more appreciated, enhancing their job satisfaction and willingness to exert effort. For details, click here to download the research paper, Creating Reciprocal Value Through Operational Transparency
The Labor Illusion: How Operational Transparency Increases Perceived Value
A ubiquitous feature of even the fastest self-service technology transactions is the wait. Conventional wisdom and operations theory suggests that the longer people wait, the less satisfied they become; we demonstrate that due to what we term the labor illusion, when websites engage in operational transparency by signaling that they are exerting effort, people can actually prefer websites with longer waits to those that return instantaneous results—even when those results are identical.
Think Customers Hate Waiting? Not So Fast...
Managers typically look for ways to reduce wait time to increase customer satisfaction. New research suggests there's a better approach: showing customers a representation of the effort, whether literal or not, being expended on their behalf while they wait. (The prototypical example is the travel website Kayak, which shows customers each airline it searches.) Studies show that customers prefer waiting when the work being done is transparent-even when the waits are longer or the results are no better than those obtained with shorter waits.
Are Self-Service Customers Satisfied or Stuck?
Numerous studies in the services literature have demonstrated that self-service customers are retained with greater frequency than their full-service counterparts. There are two competing explanations for this phenomenon. Either self-service channel usage promotes customer satisfaction and in turn, loyalty, or it imposes switching costs on customers that make it more difficult for them to defect. Our empirical analysis of multi-channel banking customers suggests the latter – that self-service customers may be retained through switching costs, not satisfaction effects. In fact, the results of our analysis suggest that self-service customers aren’t just stuck, they’re actually less satisfied.
'Last-place Aversion': Evidence and Redistributive Implications
We present evidence from laboratory experiments showing that individuals are "last-place averse." Participants choose gambles with the potential to move them out of last place that they reject when randomly placed in other parts of the distribution. In modified-dictator games, participants randomly placed in second-to-last place are the most likely to give money to the person one rank above them instead of the person one rank below. Last-place aversion suggests that low-income individuals might oppose redistribution because it could differentially help the group just beneath them. Using survey data, we show that individuals making just above the minimum wage are the most likely to oppose its increase. Similarly, in the General Social Survey, those above poverty but below median income support redistribution significantly less than their background characteristics would predict.
Keywords: Income Characteristics;
Rank and Position;
The Labor Illusion: How Operational Transparency Increases Perceived Value
A ubiquitous feature of even the fastest self-service technology transactions is the wait. Conventional wisdom and operations theory suggests that the longer people wait, the less satisfied they become; we demonstrate that due to what we term the labor illusion, when websites engage in operational transparency by signaling that they are exerting effort, people can actually prefer websites with longer waits to those that return instantaneous results—even when those results are identical. In five experiments that simulate service experiences in the domains of online travel and online dating, we demonstrate the impact of the labor illusion on service value perceptions, demonstrate that perceptions of service provider effort induce feelings of reciprocity that together mediate the link between operational transparency and increased valuation, and explore boundary conditions and alternative explanations.
Keywords: Online Technology;
Are Self-service Customers Satisfied or Stuck?
This paper investigates the impact of self-service technology (SST) usage on customer satisfaction and retention. Specifically, we disentangle the distinct effects of satisfaction and switching costs as drivers of retention among self-service customers. Our empirical analysis examines 26,924 multi-channel customers of a nationwide retail bank. We track each customer's channel usage, overall satisfaction, and retention over a 1-year period. We find that, relative to face-to-face service, customers who use self-service channels for a greater proportion of their transactions are either no more satisfied, or less satisfied with the service they receive, depending on the channel. However, we also find that these same customers are predictably less likely to defect to a competitor if they are heavily reliant on self-service channels characterized by high switching costs. Through a mediation model, we demonstrate that, when self-service usage promotes retention, it does so in a way that is consistent with switching costs. As a robustness check, we examine the behavior of channel enthusiasts, who concentrate transactions among specific channels. Relative to more diversified customers, we find that self-service enthusiasts in low switching cost channels defect with greater frequency, while self-service enthusiasts in high switching cost channels are retained with greater frequency.
Keywords: Service Delivery;
Banks and Banking;
Management Analysis, Tools, and Techniques;
Buell, Ryan W., Dennis Campbell, and Frances X. Frei. "Are Self-service Customers Satisfied or Stuck?
" November/December Production and Operations Management
19, no. 6 (2010). (Awarded the Decision Sciences Institute Stan Hardy Award for Outstanding Paper Published during 2010 in the Field of Operations Management.) View Details
Lifting the Veil: The Benefits of Cost Transparency
A firm's costs are typically tightly-guarded secrets. However, across six laboratory experiments and a field study we identify when and why firms benefit from revealing cost information to consumers. Disclosing the variable costs associated with a product's production heightens consumers' attraction to the firm, which in turn increases purchase interest (Experiments 1-3). In fact, cost transparency has a stronger impact on purchase interest than emphasizing the firm's personal relationship with the consumer—a much more involved marketing tactic (Experiment 4). Further experiments explore boundary conditions and suggest that the benefit of cost transparency weakens as firms increase price relative to costs, and when markups are made salient (Experiments 5-6). Consistent with our lab findings, a natural experiment with an online retailer demonstrates that cost transparency improves sales. In particular, cost transparency led to a 44.0% increase in daily unit sales. This research implies that by revealing costs—typically tightly-guarded secrets—marketers can potentially improve both brand attraction and sales.
Decision Making Under Information Asymmetry: Experimental Evidence on Belief Refinements
We explore how individuals make decisions in an operations management setting when there is information asymmetry between the firm and an outside investor. A common assumption in the signaling game literature is that beliefs among the participants in the game are refined using the Intuitive Criterion refinement. Our experimental results provide evidence that the predictive power of this refinement is quite low, and that the Undefeated refinement better captures actual choice behavior. This is surprising because the Intuitive Criterion refinement is the most commonly utilized belief refinement in the literature while the Undefeated refinement is rarely employed. Our results have material implications for both research and practice because the Undefeated and Intuitive Criterion refinements often produce divergent predictions. Our results demonstrate that conformance to the Undefeated and Intuitive Criterion refinements is influenced by changes in the underlying newsvendor model parameters. We also show that adherence to the Undefeated refinement is especially pronounced among subjects who report a high level of understanding of the game and that subjects whose choices conformed with the predictions of the Undefeated refinement were rewarded by investors with higher payoffs in the game. Finally, we demonstrate, through a reexamination of Cachon and Lariviere (2001), how the application of the Undefeated refinement can substantively extend the implications of extant signaling game theory in the operations management literature.
Keywords: Decision Choices and Conditions;
Creating Reciprocal Value Through Operational Transparency
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 17.3% increase in customer-reported quality and reduced throughput times by 13.2%. 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.
Keywords: operational transparency;
Surfacing the Submerged State with Operational Transparency in Government Services
As Americans' trust in government nears historic lows, frustration with government performance approaches record highs. One explanation for this trend is that citizens may be unaware of both the services provided by government and the impact of those services on their lives. In an experiment, Boston-area residents interacted with a website that visualizes both service requests submitted by the public (e.g., potholes and broken streetlamps) and efforts by the City of Boston to address them. Some participants observed a count of new, open, and recently closed service requests, while others viewed these requests visualized on an interactive map that included details and images of the work being performed. Residents who experienced this "operational transparency" in government services — seeing the work that government is doing — expressed more positive attitudes toward government and greater support for maintaining or expanding the scale of government programs. The effect of transparency on support for government programs was equivalent to a roughly 20% decline in conservatism on a political ideology scale. We further demonstrate that positive attitudes about government partially mediate the relationship between operational transparency and support for maintaining and expanding government programs. While transparency is customarily trained on elected officials as a means of ethical oversight, our research documents the benefits of increased transparency into the delivery of government services.
Public Administration Industry;
How Do Customers Respond to Increased Service Quality Competition?
When does increased service quality competition lead to customer defection, and which customers are most likely to defect? Our empirical analysis of 82,235 customers exploits the varying competitive dynamics in 644 geographically isolated markets in which a nationwide retail bank conducted business over a five-year period. We find that customers defect at a higher rate from the incumbent following increased service quality (price) competition only when the incumbent offers high (low) quality service relative to existing competitors in a local market. We provide evidence that these results are due to a sorting effect, whereby firms trade-off service quality and price, and in turn, the incumbent attracts service (price) sensitive customers in markets where it has supplied relatively high (low) levels of service quality in the past. Furthermore, we show that it is the high quality incumbent's most profitable customers who are the most attracted by superior quality alternatives. Our results appear to have long-run implications whereby sustaining a high level of service quality is associated with the incumbent attracting and retaining more profitable customers over time.
Keywords: Customer Relationship Management;
Customer Value and Value Chain;
Market Entry and Exit;
IDEO: Human-Centered Design
The case describes IDEO, one of the world’s leading design firms, and its human-centered innovation culture and processes. It is an example of what managers can do to make their own organizations more innovative. In reaction to a rapidly changing competitive landscape, a team of IDEO designers have been hired by Cineplanet, the leading movie cinema chain in Peru, to reinvent the movie going experience for Peruvians. Cineplanet wishes to better align their operating model with the needs and behaviors of its customers.
Keywords: design thinking;
Innovation and Management;
Entertainment and Recreation Industry;
Buell, Ryan W., and Andrew Otazo. "IDEO: Human-Centered Design." Harvard Business School Case 615-022, October 2014. View Details
Whole Foods: The Path to 1,000 Stores
The case examines the operations strategy of Whole Foods, one of the largest natural grocery chains in the United States. In late 2013, Whole Foods was expanding rapidly, with a publicly-stated goal of growing from 351 to 1,000 domestic stores by 2022. It was also engaged in a strategic initiative to combat "food deserts"—areas with limited access to affordable and nutritious food. In pursuit of these initiatives, the company's rapid entry into a heterogeneous set of new markets necessitated a reexamination of its store format, target customer base, and approach to human capital.
Professor Buell is advancing the understanding of customers by studying their relationship with service operations. He examines how operational choices intended to optimize firm profits may backfire if they diminish the quality of customer experiences or alter customer behavior in unintended ways. In his work, he uses large-scale econometric analysis and laboratory and online experimental methodologies.
Keywords: service operations;
Web Services Industry;
Food and Beverage Industry;
Firm decisions about the level of service quality to offer relative to competitors in a market may have unexpected effects on customer retention. In collaboration with HBS Professors Dennis Campbell and Frances Frei, Professor Buell has shown that firms offering high-quality service in a market may be especially vulnerable in the face of increased service competition: their most valuable, service-sensitive customers are likely to defect to higher-quality service, while their most price-sensitive customers migrate to lower-cost, lower-quality alternatives.
Conventional wisdom and operations theory suggest that the longer people wait during a service interaction, the less satisfied they become with the provider. In collaboration with HBS Professor Michael Norton, Professor Buell has shown that when service businesses show the work they are conducting on a customer’s behalf, the customer minds waiting less and values the service more.
Why do firms retain self-service customers at a higher rate than their full-service counterparts? Professor Buell, with Professors Campbell and Frei, has disentangled the two competing explanations for this phenomenon: greater customer satisfaction and higher costs of switching companies. An empirical analysis of banking customers suggests that higher switching costs, not satisfaction, drives customer retention.
In the first empirical investigation of the relationship between customer heterogeneity and the quality of outcomes that a service operating system can deliver, Professor Buell, together with Professors Campbell and Frei, has found evidence suggesting that differences among customers can account for more than 90 percent of the explainable variance in transaction satisfaction with a given operating system. Subsequent analyses reveal that the degree of compatibility between the customer and a firm’s operating system explains part of this difference. Further, a cross-firm analysis demonstrates that heterogeneity among customers drives down service satisfaction ratings.
Technology and Operations - MBA Required Curriculum
This course enables students to develop the skills and concepts needed to ensure the ongoing contribution of a firm's operations to its competitive position. It helps them to understand the complex processes underlying the development and manufacture of products as well as the creation and delivery of services.
Awards & Honors
Winner of the 2012 Doctoral Programs Dean's Award, honoring graduating students who have made extraordinary contributions to the overall success of the doctoral programs, and to the Harvard, HBS, and broader communities.
Winner of the 2011 Wyss Award for Excellence in Doctoral Research, awarded to Harvard Business School doctoral students who have excelled at conducting outstanding academic research.
Won the 2011 Stan Hardy Award for Outstanding Paper published in the field of Operations Management from the Decision Sciences Institute for his paper with Dennis Campbell and Frances X. Frei, “Are Self-Service Customers Satisfied or Stuck?” (Production and Operations Management, 2010).