Raising the Red Flag on Command and Control Management

May 28, 2010 Tripp Babbitt 1 Comment

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I continue to monitor comments and pieces of information regarding the BP Oil Catastrophe and the application of command and control management. This is a system condition not unique to just BP. Too many times do organizations rely on the structure and not the expertise of the people in the organization. There are so many elements that go into this command and control thinking and my 95 partners have done a terrific job of identifying them.

Command and Control Thinking (from 95 Consulting):

Top-down hierarchy – Don’t do anything unless management orders you to do something through a plan or dictate.
Functional Work Design – Work separated into specialties. Complete with procedures that are to be followed unless approval is gained.
Contracts – Contracts that dictate the work to be done for customers or by vendors. Doing what is right is trumped by doing what is in a contract.
Decisions Separated from the Work – Management by reports, budgets and assumptions with little or no knowledge or context of the work.
Measurement – Typically from budgets, targets, outputs, activity and standards.
Management Style – Control people through budgets and people need to be managed.
Extrinsic Motivation – Control people through the use of “carrots and sticks.”

Workers in these types of organizations are micro-managed. They have a complete hierarchy to navigate if they want to raise a red flag. Even if they do successfully chart a course through this hierarchy, they stand to receive consternation for being a troublemaker.

Managers make decisions and worker’s work this is the way of the command and control organization. If worker input is needed, management will “let you know.” The worker is there to do their job and not make waves.

I have heard on more than one occasion an executive say, “I need someone that can manage to a budget.” And I think, “What they need is someone that knows how to manage a system.” Any moron can manage a budget, it takes talent to build a system to create value for customers.

As much as we have learned over the years to find ways to kill each other and make huge leaps in technology . . . we have done little to change the way we think about the design and management of work. The old way is still the old way, it is like some kind of management dark ages. Power still overcomes knowledge when it comes to raising the red flag.

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Make the new decade a profitable and rewarding one, start a new path here. Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about how to get started at [email protected]. Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

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Systems Thinking Concepts

Seeking Approval Nightmare in BP Oil Spill

May 27, 2010 Tripp Babbitt Leave a comment

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A colleague sent me another article on the BP oil spill and this one is about as alarming as anything I have read to date. The article from AP is titled Workers Describe Failures on Oil Rig. The article describes how a worker had to seek approval to hit the switch on the emergency disconnect system. By the time approval was given the hydraulics were out. You can’t make this stuff up.

We are talking about the epitome of command and control management. Can you imagine standing on a burning platform calling for approval? I can’t, but something made this individual perform in this way. I can not blame the individual, he did what he was told to do.

I saw the same thing in my bank management consulting days where workers are monitored and inspected into compliance to rules about giving a $5 credit to a customer. But it was bank management making the really big mistakes on bad loans or acquisitions of mortgage companies. These are truly broken systems.

Don’t give me the BS empowerment thing I keep hearing. Organizations have built these systems to fail if not now . . . eventually. To compete in the new world we have to stop the insanity.

A.P. Sloan separated the decision-making from the work long ago. We have continued this practice to the point common sense is compromised. I can not imagine anything more important for a company to do then putting decision-making back with the work where context and knowledge exist.

Most decisions are not life threatening, but I would much rather have someone making the decision that knows the conditions on the ground than some manager without knowledge or (worse) some cost accountant.

Command and control has run its course. Until organizations discover that improvement and innovation comes from rethinking the design and management of work we face more disasters, less profit and dysfunctional organizations.

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Make the new decade a profitable and rewarding one, start a new path here. Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about how to get started at [email protected]. Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

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Systems Thinking and Measures

Worker Mistakes – How to End Them

May 27, 2010 Tripp Babbitt 5 Comments

*Reader warning: as this blog post will require some thinking and possibly learning.

When a system is stable, telling the worker about mistakes is only tampering. – W. Edwards Deming

Not long ago, I observed a manager informing workers about their mistakes. Explaining in a calm tome about the types of mistakes that were coming out later in the process. Workers intently listened and there were promises to do better. Later, I asked the manager how often these mistakes occurred. She replied, “all the time.”

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Although I have seen managers try to end mistakes through training, software edits, mistake-proofing, etc. I rarely find they understand the source of these mistake. A manager and anyone else wanting to reduce mistakes must understand variation. If you do not understand variation you may want to read this post (Service Metrics: What You Need to Understand) to give you some clue before reading on.

Too many managers treat mistakes as if each one is a special cause, when they are being produced predictably by the system (structure, work design, measures, technology, etc.) that they work in. The use of control charts is the ONLY way to know whether the system is stable or not. In service industry I rarely find many special causes with regards to mistakes, when I do I may find a new worker in training or an unusual circumstance that that worker already knows about.

However, when mistakes are predictable (between the limits) and the result of a stable system, more training and/or more communications about them will do no good. In a stable system, the focus on the worker is misguided. Systemic changes are needed to eliminate the mistakes. Wishing, begging, inspecting or imploring workers will do no good.

Systemic issues have to be corrected in the design and management of the work. Too many managers see the system as something they can’t control (too hard to do for department-separated service organizations) and instead turn to the one thing they can control . . . the worker. The worker becomes frustrated, morale falls and business improvement is not achieved.

Systems that workers work in need management . . . workers, not so much. Understanding the nature of these systems and aligning them with customer purpose almost always leads to breakthrough performance and innovation leadership. The only time it doesn’t is when organizations give up.

To improve systems requires experimentation with method (innovation). This requires that we derive measures associated with customer purpose (what matters to customers). All of this requires a different approach to how we handle mistakes.

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Make the new decade a profitable and rewarding one, start a new path here. Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about how to get started at [email protected]. Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

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Systems Thinking and Contact Centers

Net Promoter Score is Nothing More than Another Lagging Measure

May 26, 2010 Tripp Babbitt 2 Comments

When a whole industry emerges from a single measure, I get concerned. The aim of Net Promoter Score) NPS is to increase the score of a lagging measure and this puts into the same category as financial and productivity measures. The measure doesn’t tell us how to increase or indicate “what matters” to customers.

What is the NPS? You basically ask the question “How likely is it that you would recommend our company to a friend or colleague?” The customer responds with a score of 1-10. A 9-10 makes you a promoter, 7-8 makes you a passive and 1-6 a detractor. Subtract the percentage of promoters from detractors and voila . . . you have an NPS score.

Of course I have found that companies have targets for their NPS. The defacto purpose is to increase a lagging measure. You can improve the number by firing detractor customers or improving the service. A lot of debate about firing customers in the blogosphere, but I usually find this not to be a good idea.

Service organizations don’t need more lagging measures they need to find measures that are leading and derived from “what matters” to customers or customer purpose. Leading measures that if improved will make customers happier and costs lower. These measures drive NPS, financial and productivity measures.

The job in service organizations is to study your system by conducting “check” and determine what matters to customers. Determine customer measures and design work so that there is improvement in these measures. In the hands of workers, customer measures can be improved by experimentation with method.

A goal without a method is nonsense. – W. Edwards Deming

service organizations can not improve or achieve business cost reduction with lagging measures. This can only be done with measures derived from customer purpose and innovation through new method.

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Systems Thinking Concepts

The Droids We Build

May 25, 2010 Tripp Babbitt Leave a comment

I challenge myself each day to hearing something different. Sometimes this is about education, liberals, conservatives, tree huggers or many other opinions and topics that counter my perspective. For me, this develops new perspectives on problems and issues that service organizations face. Even if the topic is distasteful and challenges my core values.

Scientific management theory has long driven our education, management thinking and our design of work. The plight of Call Center Cindy in a government agency still haunts me. Too many service organizations have killed innovation and destroyed hopes for change (that is improvement) by the organizations we have built.

Students are trained to do well on tests and workers are trained to comply with scripts, audits, monitoring, entrapping technology, and procedures. Then the question is asked “why can’t we get workers to change?” Because the system has built droids that learn to comply and not think.

The sad news is that this thinking is making us less competitive. We have a few people making decisions at the top based on information from financials and reports. This gives executives little context to make decisions and to make better ones they need the help of those that understand the work that pleases customers.

The gap organizations have built between the top floor and the front-line may only be an elevator ride, but they may as well be in different continents with different languages. Service organizations have coffee with the boss days, Undercover Boss programs on TV, summer picnics and other activities to bridge the gap. But when push comes to shove . . . manager’s manager and worker’s work.

Executives need a new perspective when making decisions. This perspective needs to be from understanding the work and how customers view the performance against their purpose (or what matters to them). This act only turns front-line workers from droids to important sources of information to drive revenue and reduce costs.

Together a combination of executives, managers and workers can look at their systems and perform check on their system. This will help all to understand customer purpose, core end-to-end processes, capability and the systems conditions that exist that help us understand why the system behaves that way. All focused on a common purpose and not the type of office or which function you work in.

Droids armed with customer purpose (and customer measures derived from purpose) become innovative juggernauts. Executives can clear paths for innovation as workers experiment with method to achieve customer purpose. Roles may change, but executives and managers will replace conformance and rules with innovation.

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Make the new decade a profitable and rewarding one, start a new path here. Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about how to get started at [email protected]. Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

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Systems Thinking and Contact Centers

Contact Centers – An Alternative to Scoring Agents

May 24, 2010 Tripp Babbitt Leave a comment

Contact Centers and Scoring

In recent weeks, I have had a number of requests from readers about what to do if you don’t score agents. The first thing is to be sure you understand that the work design and management thinking offer greater opportunities for improvement. Agent scoring can not just be taken away, you must put something better in its place.

An understanding of the 95/5 rule is in order. This was first communicated by W. Edwards Deming and simply states that 95% of performance is attributable to the system and not the individual. You can read more about this at The 95/5 Rule.

If you can pull yourself through this different perspective about the system carrying more weight than the individual (a difficult obstacle for Americans), you can begin to see that work design in contact centers is poor at best. Scripts, written procedures and standardization entrapped by technology and IVRs does not allow for the absorption of the variety of demand customers pose to agents. To overcome these problems with variety different thinking must be present.

Contact center managers have learned the wrong lessons about how to handle variety and instead built systems that increase costs, lose revenue and ruin culture. The pursuit has been to manage costs and productivity leading to both increased costs and decreased productivity . . a management paradox. Most don’t see this paradox because they have not been trained to look.

Costs are not in economies of scale, they are in flow. The flow can be optimized by a better work design that absorbs variety and designs out the waste. To do this we need to better understand our systems by performing check.

Looking at the system from the outside-in we can listen to calls and determine the type and frequency of calls from customers. To get this you need to throw out those computer generated reports from technology as they lack the context needed to get knowledge. Some will be value and some will be failure demand. Failure demand for some industries run as high as 75 – 90%.

For each call type determine the customer purpose of the call or what matters to them. Once understood we now have a failure demand measure and some customer measures related to customer purpose. Customer measures are typically systemic and not functional.

Customer measures can be end-to-end times to provide a service, getting an answer from an agent on the first call, failure demand and any of an endless possibilities learned from purpose. Each set of measures is unique by company and should never be copied from other contact centers.

An understanding of the current design and its performance against customer measures will lead to experimentation with work designs that absorb variety, eliminate failure demand and perform better against customer measures. Centers also get the expense savings of eliminating all that unnecessary monitoring and inspection to arbitrary management dictates.

I have learned many things about the redesign of contact centers. The functional front/back office design has in many cases gets re-designed. Whether this is true for your service organization can only be determined by performing check.

Ultimately, customer measures can replace agent scoring. Better performance follows as putting the customer purpose and measures in an agent’s hands allows them to experiment with method leading to innovation. Improved culture, productivity and financial performance will soon follow.

To get this you need to throw out those computer generated reports from technology as they lack the context needed to get knowledge.

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Systems Thinking Concepts, Uncategorized

Breaking the Cycle of Command and Control Management

May 21, 2010 Tripp Babbitt Leave a comment

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So few companies have the environment of a systems thinking organization. They compete with other companies on the same command and control playing field . . . so why break the epitome of best practices?

As I wrote in my last post, perspective is needed or we wind up not challenging existing thinking. It is pretty safe to say the design and management of work hasn’t changed in a 100 years (except for the Japanese industrial miracle). Since then, we have done everything to copy what the Japanese did with things like lean, JIT, TQM, etc. The result has been less than spectacular (seen any new Toyota companies lately).

The perspective we need is quite different than the command and control sort. let’s review what command and control management gives us.

A top-down hierarchy
Decisions made from financials, reports and anecdotal evidence (separated from the work)
Compliance to contracts
Measures from outputs, activity, targets and (of course) budgets
Executives controlling budgets and managing the people
Extrinsic motivation (rewards, bonuses, incentives) to make work tolerable, interesting and/or to control the actions of workers
Work separated by function

For as fast as we have moved with new technology, we sure love command and control. Huge leaps in flying to the moon, cell phones, automobiles . . . just don’t change the way work is designed and managed. Change is for the front-line, not managers.

Few people understand that when they give up command and control thinking they don’t lose control, but gain it instead. This is a management paradox to the way managers think. They believe that unless they monitor, inspect, incentivize, cajole, badger, etc. the worker that we can’t get work done.

Instead if we do things differently, we may find better ways of managing. In systems thinking using the 95 Method we have found this is not only true, but leads to profound improvement in culture, sales and reducing costs. The irony is none of these things are the focus.

If we focus our efforts outside-in rather than top-down we can find a whole new set of measures that relate to customer purpose. Decision-making with the work the work creates both better decisions and and improved culture. Taking action on the system rather than plans and milestones leads to experimentation with method and innovation follows.

All these things and more await those that seek a different path. The first step is always the hardest . . . so let’s begin.

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Systems Thinking and Financial Industry, Systems Thinking and Government, Systems Thinking and Technology, Systems Thinking Concepts

Wisdom or Superstitious Learning – Which is It?

May 20, 2010 Tripp Babbitt 1 Comment

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Many times when visiting a service organization, I run into what is called “wisdom.” Sometimes I find it is real wisdom and a lot of the time I find it is superstitious learning. CEOs, executives, managers and workers alike believe they have found wisdom from their past experiences. W. Edwards Deming would say “experience by itself (without the aid of theory) teaches nothing.”

Knowledge has two opposites, ignorance and error. If I can observe things from every angle, the restriction to one perspective at a time will not mean necessary ignorance. But if perception were restricted to a single angle, that relativity would mean ignorance. Ignorance of whatever sort increases the likelihood of error. – C.I. Lewis (Mind and the World Order)

Too many service organizations have become of a single perspective. A perspective of banks is to closely control employees while the really bad decisions are made by managers approving loans (sound familiar?). What these organizations need to improve is more perspectives.

Most organizations are run in command and control manner which is where we see decisions made top-down. I have found that the outside-in perspective is better when decisions are made. As no theory is wrong some are more useful tan others. It doesn’t mean top-down is wrong, but I have found it is not as useful as outside-in.

The experiences we have guide our wisdom, but many times we wind up with a single perspective that is superstitious learning (a form of ignorance). Superstitious learning is shown in the form of business assumptions. These assumptions we hear everyday and sound like this:

It’s a manual or paper process and automation will make it better.

Sharing services and outsourcing will reduce costs.

One best way to do something (best practice).

Incentives and targets are needed to improve performance.

Functional separation of work into sales, marketing, operations, front/back office, etc. is an assumed good design.

Lean manufacturing tools are good for service.

Standardization makes service better.

Organizations need plans, budgets, milestones to achieve business improvement.

All of the above come from a single perspective and this is no means an exhaustive list.

When top-down decisions are made we lose the perspective of the worker and customer. We need all to improve the design and the management of the work. The single-minded approach associated with superstitious learning is so sanctimonious it is dumb.

Executives and managers that have all this wisdom they have accumulated need to sort out their perspectives to see if it is from one (superstitious learning) or many perspectives (wisdom). Otherwise, experience by itself teaches nothing.

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Systems Thinking and Financial Industry

The New Way to Brand

May 19, 2010 Tripp Babbitt Leave a comment

After working with a banking software company, I understood that marketing was about building a brand. The problem was the service was awful. Piles of change requests and poor execution to customer demands.

This software company had it all wrong. They spent large amounts of money on marketing to build brand and reputation but were losing the battle on the front-line every day to customers. What mattered to many of the banks was decent service.

At the time I was working on the customer service calls about the software. Although they had 100s of change requests and broken code only about 50 got regular complaints from different banks. While I was working to get the software fixed the focus became to develop the brand.

The management paradox was that they wouldn’t need to brand if the service was good. The service could be the brand and build the reputation by word-of-mouth rather than false perceptions through slick marketing and semi-annual boondoogles to appease frustrated banks.

In recent years this formula holds true: when you take care of customers you build a reputation and then the brand will follow. This, of course, is exactly counter-intuitive to the way things are done today. Most companies brand, build reputation and then work on improving the transactions or service.

If the service is there customers will reference you to other customers. If it is not you may still get customers, but it will cost you a lot more. The constant need to replace or pacify customers will be a drag on the financials. Taking a different approach to branding will bring you more revenue for less money.

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Make the new decade a profitable and rewarding one, start a new path here. Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about how to get started at [email protected]. Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

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Systems Thinking and Measures, Systems Thinking Concepts

The Problem with Measures in Service Industry and How to Fix It

May 18, 2010 Tripp Babbitt 4 Comments

In service we have built measurements that serve management purpose (or more appropriately perceived management purpose). Very few (if any) measures are associated with those that relate to the customer. In my company we call this deriving measures from customer purpose (or what matters to them).

Traditional measures used in service management include:

Expenses (especially salary, building, overhead, etc.)
Revenue
Targets (usually by function in the form of KPIs, SLAs, etc.)
Activity and Productivity (WiP, work completed, projects, milestones, schedules)
Surveys

Financial measures are no more than keeping score. Targets drive the wrong behavior functional or not. Activity and productivity measures do not mean you are producing anything just doing things and not necessarily the right things. Surveys do not tell us what matters to customers only how we did (plus they give us little actionable information).

Measures derived from customer purpose give a clear sense of customer and I have found that when customer purpose is served all the traditional management measures get better. This is a management paradox to current thinking. When working with managers, I can not take away the crutch of traditional measures until they see that those related to customer purpose drive the traditional measures.

Once I identify the customer measures I put them in the hands of the workers so they can decide what to do to improve them. They have greater understanding of context so it is important to study the work with managers and workers alike. Managers learn that reports are unreliable and workers put their minds to work to innovate and design the system against customer demand.

Costs fall dramatically as workers engage in the work to achieve customer purpose. Culture improves as the worker engages (intrinsic motivation) and functional finger-pointing ends as achievement of customer purpose is systemic.

It is to find better measures that matter and can improve your system.

Leave me a comment. . . share your opinion! Click on comments below.

Make the new decade a profitable and rewarding one, start a new path here. Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about how to get started at [email protected]. Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

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Tripp Babbitt’s Blog

Monthly Archives: May 2010

Raising the Red Flag on Command and Control Management

Seeking Approval Nightmare in BP Oil Spill

Worker Mistakes – How to End Them

Net Promoter Score is Nothing More than Another Lagging Measure

The Droids We Build

Contact Centers – An Alternative to Scoring Agents

Breaking the Cycle of Command and Control Management

Wisdom or Superstitious Learning – Which is It?

The New Way to Brand

The Problem with Measures in Service Industry and How to Fix It

The 95 Method