How Incremental Degradation Can Destroy You

by Dec 1, 2021Personal Finance, Practice Finance, Success

On January 28, 1986, the space shuttle Challenger exploded while millions of people watched live TV in utter disbelief. It is one of the most profound tragedies in US history. 

This unbelievable explosion was caused by a measly faulty seal (the famous “O-ring”) in a rocket booster. This defect allowed flames to escape and ignite an external fuel tank. Amazingly, the failure of the O-rings was not an unexpected catastrophic event. It was a known but ignored failure. The US president asked a special commission to investigate the accident. It concluded that the real culprit was shoddy engineering due to lax management at NASA and its primary contractor. 

Purchasing the O-rings may look like a minor decision that incrementally moved NASA towards a catastrophe. In “The Challenger Launch Decision,” Diane Vaughan writes: “NASA insiders, when repeatedly faced with evidence that something was wrong, normalized the deviance so that it became acceptable to them.” Further, “NASA’s institutional history (…) fostered a structure that accepted risk-taking and corner-cutting as norms that shaped decision-making. Small, seemingly harmless modifications to technical and procedural standards collectively propelled the space agency toward disaster even though no specific rules were broken.”

Similarly, the nuclear accident at the Three Mile Island nuclear plant near Harrisburg, PA, in 1979 was not due to a single, disastrous error. It was due to a series of small, improbable, human and technical errors. 

Such errors are based on an interesting psychological phenomenon. 

When you repeatedly do something wrong (smoking, cheating, stealing) with no negative consequence, it reinforces the idea that it wasn’t that wrong after all. Take speeding for example. Your mind subconsciously tells you “hey, nobody caught me last time.” The false sense of security may be reinforced by having anti-lock brakes, airbags and a solid car. And so the downward spiral continues, until something really bad happens. 

The same concept applies to the airline industry. We think our planes are safer and safer (this is a whole other topic which we won’t discuss today. Ignorance may be bliss here).  Yet customers seem to value quick and cheap flights more than safety. Nothing bad happened last time, right (OK, besides horrendous customer service)? And so we accept the fact that planes can take off or land in a storm or in the snow or in the midst of intense traffic conditions. 

How do these technological tragedies apply to a humble veterinary clinic? 

Incremental degradation is the result of tiny, progressive reductions in quality of a product or a service. Most of the time, these changes are made to cut costs: using 5 screws per stud instead of 4; skipping an ingredient from a recipe; lowering the quality of shipping material. 

Sadly, incremental degradation happens in our practices as well – most of the time to decrease costs. It might involve cheaper pens and paper up front, and cheaper IV catheters and tape in the back. Nothing wrong with that so far, right? Few employees or clients may ever notice the difference. 

But of course, this continues to happen during the next quarter or semester or year.

  • The next round of cost-cutting might entail cheaper reminder cards and coffee upfront, and cheaper medications and anesthetic gas in the back.
  • If you tell your groomer to skip the bow in the dog’s hair, your clients will notice.
  • If you ask your nurses to stop decorating bandages with cutesy designs made of scrap “cohesive bandage” material, your clients will notice.
  • If you replace an experienced receptionist, who knows most clients and pets by name, by someone paid half as much, or with no experience, or who impatiently answers “what?” or “huh?” when she is asked a question, your clients will notice.
  • Here are two consequences of not replacing a technician assistant to save money. You may need 2 credentialed technicians to take X-rays, instead of one tech and one assistant. And you may start sending smelly and dirty dogs home without a bath, simply because nobody was available to ensure better service. Your clients will notice.
  • One day, you may recap a needle with a plastic cap so thin and so soft, that the needle might go right through it! Your nurses will notice and may not enjoy the piercings…
  • When was the last time you took an objective look at your waiting room or the exterior of your practice? If your walls look like they should have gotten a fresh coat of paint 10 years ago, your clients will notice and judge your medicine based on that alone.
  • If your mission statement promises to treat every pet like (s)he’s your own, and you stop giving free baths after any boarding longer than 3 days, your clients will notice, and may go elsewhere, where their beloved Fifi is truly pampered.

You can have the best intentions in mind, but do your employees implement them? Just remember the last time you flew on a national airline. Do you really think the CEO would approve of the way you were treated by the airline employees? 

Remember the last time you ordered a burger. Would you imagine that sneezing in your food and not washing hands after a bathroom break are part of the protocol or the mission statement? 

Of course not. Yet this is how business is conducted day after day after day. Customer service, when left alone, will deteriorate. It’s human nature. So you must constantly pay attention to it, train, and hold hands. 

In the surgery world, you can always find cheaper gowns and gloves and scrub soap and plates and screws. But is that such a good idea? 

You know where we’re going with this downhill slope concept. 

Could this ever happen at your clinic? Has it already started? Isn’t the inventory person asked to find cheaper supplies at every order? Don’t they compare suppliers? Isn’t that the right thing? Do you want to be known as the clinic that gets a little worse at each visit? 

Sadly, when you go down this road over months and years, both employees and clients will notice the difference. Your appointment book and your online ratings may suffer from incremental degradation. The short-term savings may lead to long-term losses. It is tough to build a solid reputation and a faithful clientele, and it is even harder to restore either one once the relationship has been damaged. 

There is nothing wrong with trying to reduce cost. In fact, it very well may be the duty of a responsible practice owner or manager to maintain profitability. Reducing cost is fine. But reducing quality is hardly ever a good idea. 

Clients have expectations based on your reputation, their past experiences and your hospital name (Pampered Pets, Gentle Doctor, Happy Critters etc). If you have a sophisticated website and clients walk into a dirty or smelly waiting room, they will notice the discrepancy before they ever get a chance to know how good a doctor you are.

Incremental degradation is a great way to sabotage your work, your reputation and your clinic.  It is a form of self-destruction. It leads to irreparable damages from within, none of which can be blamed on your friendly competition or the economy. 

Is there a better way to do things? 

Surely there is. If you can find an honest way to reduce costs without allowing quality to slip (or, to some degree, without severely affecting a good relationship with a supplier or vendor), then go for it. This applies to products or services. For example, if you can save 0.5% on every credit card transaction for the same service, why on earth wouldn’t you? Cheaper reams of paper of the same weight or quality? Absolutely! 

But lowering your standards, decreasing quality and accepting poor customer service should be the last things a business owner or manager or employee would want to do. Your job should be to increase value and exceed clients’ expectations. 

This whole concept goes well beyond cost-cutting. Here are a few examples:

  • If you ignore your clinic’s KPIs (Key Performance Indicators) and financial statements, and ignore the fact that profit keeps decreasing month after month, you may suddenly have to face a harsh reality.
  • If you repeatedly avoid taking care of a problem employee, the problem will continue to lead to mistakes. It may slowly lead to disgruntlement in the ranks.
  • If you slowly let stress get the better of you, or if you hate your job more and more every week, then something may “suddenly” snap when you hit the point of no return.

In our next blog, we will describe the opposite strategy of incremental degradation: incremental improvement. We will discuss why it is a much smarter strategy, especially in this economy.

Phil Zeltzman, DVM, DACVS
Meredith Jones, DVM
Co-Founders of Veterinary Financial Summit

This article is very loosely inspired from several sources:

  • “The Secret of Incremental Degradation” by Michael Masterson at (11-2-2007).
  • Malcolm Glaxwell, “What the Dog Saw,” audiobook by Hachette Audio.