Teatro Real, the Madrid opera house, must give its customers excellent service, while keeping costs within the limits set by the budget, which is allocated from outside the company. Furthermore, the company operates in an atmosphere of constant innovation, with more than eight new opera productions every year. The various agents involved contribute to the innovation insofar as they are expected to demonstrate originality and imagination in conceiving the shows to be produced.
All this means that the people who work in Teatro Real have to be very flexible. Working hours are long, and when there are performances or an important show is being prepared, there are no weekends. The agents' remuneration is set by the government and is relatively fixed, so there is no such thing as "performance-based pay".
And yet, in spite of the above, the agents' commitment to customer service is spectacular. Each person knows exactly how his or her work influences the success of the performance and of the opera company as a whole. And everybody is obsessed with achieving the best possible results. Whatever the circumstances, the show must go on, and the least mistake or carelessness, however insignificant, will detract from the performance and the service. That applies at all levels, from management to the lowliest scene shifter.
The Teatro Real Company has various customers, to whom it must provide an excellent service. The company's first customer is obviously the audience who attends performances. The audience is not homogenous, but can be segmented into at least two groups: regular customers and occasional customers. They all want to see a good show, but the emphasis is different.
The second customer is the government. The service the government expects from the Teatro Real company and for which it pays 20 million euros is, essentially, publicity. Here, the significance of art is ambiguous. We can operationalize it by saying that the government wants the educated public around the world to have a high opinion of Teatro Real, and thus, by implication, of Spain.
However, between the operations and the end customers, there are other, internal customers. The most important are the singers, guest conductors and stage directors. They are very influential in shaping international opinion about an opera company. If they are critical of Teatro Real, sooner or later that negative opinion will spread and influence other customers' perceptions. These people, with their well endowed egos, have to be kept happy. And not just that - the company must cater to their every whim.
What's more, serving these customers well enhances the company's ability to serve other customers well in the future. International word-of-mouth spreads at lightning speed, so the news that a particular opera company "treats people well" soon gets around. Then, singers, stage directors, conductors and others will be keen to take part in Teatro Real productions. There is a ceiling on singers' fees, which suggests that what attracts the singers is not only the financial reward.
The case study "Fundación del Teatro Lírico: Teatro Real," presents the Madrid opera house as an example of problem-driven operations management in a highly demanding environment. The management structure, inherited from previous governments, could be reorganized if necessary. But how should Teatro Real meet existing demand? Should it stage more performances? Can opera be opened up to a wider audience without breaking the budget? What role can new technology play? How can the company stay within budget, which is highly dependent on public subsidy, without sacrificing artistic quality?