Compromising Values and Customer Demand

June 26, 2010 Tripp Babbitt Leave a comment

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I few years ago I took a tour of the Magic Kingdom at Disney World. Here, I learned about the values at Disney – Safety, Courtesy, Show and Efficiency. I am not here to debate the validity of the values that Disney has aspired to, but more what they represent and how they play out.

During my “keys to the Kingdom Tour” our guide talked about each value and how the respective value is demonstrated. The popcorn smell as you enter the Magic Kingdom represents Show like at a movie theater. The air conditioning that blasts from the shops into the “Africa hot” outdoors to give patrons some relief is another.

Each time I visit Disney World I look for ways they demonstrate these values. This time I was taken aback by something that to me was noticeable. Only a seasoned Disney parks veteran would have noticed. But the airconditioning I usually feel blasting from the shops on Main Street was considerably dimished. I soon noticed the same at other shops.

The reason for this change is unknown and of course each Disney Cast Member denied it, but the difference was undeniable. Was this the work of some bean counter finding profit or a change to save money . . . or a response to a crisis economy? I may never know.

The question to me – Is compromising their values? Is this the first step to a decline? Time will tell.

The genius of understanding customer demand is profound and effective. Values are typically generated inside-out based on interpretations of customer expectations or a lofty vision. Customer demands on the system are the real deal.

The power of customer demand is that it is constantly changing. Building systems that can absorb the variety of customer demand makes for flexible systems. As customer demand changes so should the organization be allowed to change too.

Front-line employees are in the best position to absorb variety from customers and armed with an understanding of customer demand can make adjustments as needed. This is far different than the top-down, command and control style of management that most service organizations embrace. With understanding, workers can experiment with method or adjust as necessary to improve the system in accordance with customer demand.

Values may still have their place in the corporate psyche, but customer demand has a more outside-in focus that can separate “what matters” to customers from “what matters’ to the corporate hierarchy.

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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 and Technology

An Assault on Our (Business) Intelligence

June 17, 2010 Tripp Babbitt 4 Comments

My post a couple days ago on Business Intelligence got the ire of people in the technology world. Most wanted to tell me how wrong I was about what Business Intelligence (BI) was about. However, the definition of BI must be fuzzy to these folks too . . . the answers I received were all different.

Information is not knowledge let’s not confuse the two. – W. Edwards Deming

I reject the purported fact some used to say that BI was about making better decisions. Data may tell me how many, but tells us nothing about “why” or even give us context around how many.

Case in point: If I ask how many units I sold in the last year, I might conclude (wrongly) from data that this is representative. What if I was out of stock for 6 months? Would I miss demand that was there, but I failed to see?

Other objectors pointed to how BI ties multiple data warehouses together or keeps IT out of the loop of “getting data.” But is that really intelligence of any kind?

One person told me that management was hungry for more data . . . and BI vendors are ready to take their money. We already have way too much information and with it not necessarily the right information to make better decisions.

One BI defender wrote this:

Like it or not, the business world revolves around numbers. And businesses, rightly, set targets around the numbers they want to achieve. Without data, businesses would be unable to measure performance against targets, judge success of strategies, and implement corrective action. – From the BI Journal Blog

They rightly set targets? He obviously hasn’t learned about systems thinking and that targets become the defacto purpose of managers and workers when they should be serving customer purpose.

Further performance against targets is dictated by the system in place. The work design, structure, technology, management, measures, etc. If an organization is operating at a certain level it will continue to unless the system changes and that should be managers focus – improving the design and management of work. More data is just keeping score (at best).

You see, a lot of the BI techeads (those that use technology to solve every problem) have bought into the command and control mindset that decision-making should be separated from the work and that targets improve performance. The reality is neither of these work very well (for other elements see command and control vs. systems thinking).

A better way to achieve better decisions is to go to the work and get knowledge and first determine what the customer purpose is (i.e., what matters to customers). Armed with knowledge of customer purpose we can derive customer measures.

These customer measures I have found are always (so far) different from what organizations think is important like costs and productivity. Once an organization has customer measures that matter costs and productivity take care of themselves as they experiment with method and innovate.

BI does not lead to innovation, experimentation with method leads to innovation and this needs to be done with knowledge and with the work. BI is becoming more of a distraction to getting on with business improvement.

So my BI friends, I stand by the fact that data needs context and alone does not help make better decisions.

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Systems Thinking and Technology

Business Intelligence Requires Thinking . . . Not Technology

June 15, 2010 Tripp Babbitt 4 Comments

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Looking at some LinkedIn conversations I find a discussion around business intelligence. IBM apparently has maturity levels for being intelligent as they strive to sell more software. And of course, if you are to mature in intelligence it requires (you guessed it) hardware and software.

Here are the levels shared (assumed from IBM):

1. Data to run the business – Basic spreadsheet reporting and information overload.

2. Information to Manage the Business – Basic queries, reports and analytics.

3. Information as a strategic asset – Introduction of role-based and contextual work environments. Business performance management has been integrated. Insights from analytics are made in real time.

4. Information to enable innovation – Role-based work environment. Fully embedded analytical capabilities within processes and systems. Analytics used for foresights and predictive analysis.

5. Information as competitive differentiator – Flexible and adaptive business environments across the enterprise. Business performance and operation are optimized. Analytics gives strategic insights. All relevant internal and external information are seamless and shared.

So there it is, what you need to be intelligent.

This is a command and control manager’s dream. I can hear executives now saying things like “I’m a 4″ or “Once we get the new $7 million system in we will be a 4.5 on the maturity scale.” In the words of John McEnroe . . . “You can’t be serious!”

The divide between knowledge and information/data is so large that you can fit a new Super WalMart between it. The appeal of better decision-making with data perpetuates both poor thinking and work design. No matter how “intelligent” your software is better decision-making through more data is ludicrous.

But like bugs to a light managers love the lure of technology to make them “more intelligent.” Costs, productivity, revenue split 60 different ways numbers can not replace the knowledge and context you get by going to the points of transaction where you customers and front-line people reside.

In my world we reference this as performing check or getting knowledge of the what and why of current performance. There has rarely been a moment when I take an executive to the work and they say “Wow, that isn’t what the report said.” Entrapping technology can do that to you it leads to assumptions and assumptions lead to poor decisions.

If you need to make better decisions (and who doesn’t need that?), go to the work and get knowledge because there are some things you just need to hear and understand that technology can’t give you. Oh and it will save you money too.

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Systems Thinking and Government

Indiana Welfare Modernization – What are the Real Results?

June 11, 2010 Tripp Babbitt 1 Comment

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Indiana’s new hybrid system for welfare eligibilty is now being touted as a success. But before we move on and say “phew” there are a couple things we should know. How do we know things are working well?

Vaneta Becker (State Senator in Indiana) claims that she has received less complaints, but is this the measure of success? In December, FSSA Secretary Anne Murphy claimed that 30% more people had been hired to deal with the mess caused by the modernization effort.

Are we processing more with less or just throwing money at the problem to make it go away? The cost conscious administration probably knows the answer to the cost question and whether or not more money is being spent on vendors. A bit of transparency is in order.

What about the other measures that are derived from customer purpose (or in this case what matters to welfare recipients). Is there less failure demand (demand caused by a failure to do something or do something right for a customer)? What is the end-to-end time of receiving approval – before and after the hybrid system? Have the standards for eligibilty changed?

It is premature to call fewer complaints the result of an efficient and effective system. The characteristics of such a system remain unanswered. Instead we have received assurances and anecdotal evidence that is fuzzy and unsubstantiated.

With government spending wildly and putting future generations at risk with increased spend to cover political shortcomings . . . these are answers we deserve to know.

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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 Government

City Government Modernization – The New Money Pit

June 11, 2010 Tripp Babbitt 1 Comment

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The State of Indiana is still stinging from the failed Welfare Eligibilty Modernization project apparently has not had enough, but this time it is city government. The City of Indianapolis is now spending $16 million to update the antiquated computer system they now have. Efficiencies like less paper-pushing, fewer errors and data-mining opportunities are noted.

The new ERP (Enterprise Resource Planning) that is being pusehed will be a money pit for state taxpayers. These implementations are never the expenditures that vendors predict. My guess is that this project will cost the City of Indianapolis $30 – 45 million dollars and will result in finger pointing between the City and the vendor chosen over this increase.

Using technology as a change agent is never a good idea for service organizations. The underlying work-design is flawed and before IT is considered this must be addressed. The contracts process is filled with multiple approvals and automating it does not address the fundamental issue of why we have this dysfunction in the design.

The ultimate goal of ERP implementations is better planning and budgets. Neither of these things address the core issues associated with causes of costs. Indianapolis will be able to keep score better, but have nothing to show for provisioning services better.

Indianapolis is talking about budget cuts that include eliminating bus services and closing libraries. Wasting money on a money pit seems a bad place to go.

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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 Healthcare

Cost Cutting Center Stage – Nurses Strike

June 10, 2010 Tripp Babbitt 1 Comment

Expect more than just nurse strikes in the upcoming days. Command and control thinking with its cost-cutting mentality is sure to get worse. Let’s not limit this to just hospitals, but I expect to see strikes in many other industries as workers of all sorts say enough is enough.

It is never good when workers strike . . . especially in hospitals where life and death are decided daily. The question becomes what are the root causes? They are usually same things with cost cutting being a focal point. We know that cutting costs always increase costs . . . always.

Unfortunately, command and control managers know little more than how to manage budgets and productivity. Few hospital administrators spend time in the work understanding their systems. Time instead is spent over the deteriorating income statements and reports that give them little context of the causes of costs.

A heart-wrenching story about a nurse suicide can be found on YouTube (Melissa’s Story) paints a sad picture. We have plenty of disciplinary procedures and protocol but few efforts to advance learning and improvement of services. There is much waste in hospitals and there is a need for administrators, nurses and others to work on the system (structure, technology, work design, technology, policies, etc.).

Why work on the system? Because 95% of the performance of any organiztion is attributable to the system and only 5% the individual. Working on the system gives us a huge opportunity to improve. Working on the individual results in poor outcomes.

The current structure of most hospitals with poor work design and management focused on costs leads to a predictable conflict. This is neither good management or good patient care.

Redsigning hospital work requires both management and worker looking together at customer demand and not each other. Better thinking will prevail as management and worker understand customer purpose and derive new and better customer measures that drive costs down and relationships together. The old command and control style of worker’s work and manager’s manage with cost cutting does nothing good for management, worker or patient.

We face an era of more strikes or more cooperation, I would suggest that it is more profitable to seek cooperation. Proper focus on the system and the causes of costs is a great place to begin.

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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 Healthcare

Hospitals – Start with Demand, Not Standardization

June 9, 2010 Tripp Babbitt Leave a comment

Recently, in talking with some hospitals I have discovered that many have taken what they call a “lean path” to improvement. A short surf to some of the forums that support conversations about this path has people sending pictures of cleaned up areas using 5S (discussed in my post: 5S in Hospitals and Service). No wonder hospitals need to have Employee Assistance Program representatives on standby to help employees cope with the stress caused by change.

The movement of hospitals running around finding a best method for everything seems plausible, but they miss bigger opportunities to change their systems so nurses and other workers don’t have to go to the psychiatric couch. Worse, many of the lean implementations are sub-optimizing their systems by improvement department by department. This means one piece or finction is optimized but the overall system pays the price.

Why does this happen? The problem is the inside-out approach that is too often taken. I have found the better approach is to start with demand from the outside-in. After all, why spend time on improving a hospital based off another hospital’s demand . . . which is what copying gives you.

Every hospital system is different by demand, structure, work design, technology, policies, people, etc. Making assumptions to achieve a best practice can be costly.

Studying the type and frequency of demand and whether the demand is of value or failure (demand caused a failure to do something or do something right for a customer) can give us a better starting point. All this can be learned at the points of transactions that customers communicate demands to your hospital. Hospitals can be better informed about their system because looking at things from a customer’s point of view gives us new perspective.

The important thing about this customer perspective is that customers don’t see functions they see a hospital system. Understanding customer purpose (what matters to them) leads to better systemic measures. This helps shift the focus from internal to external . . . it is one system after all.

5S and other tools distract from the system and management focuses on the wrong or “functional” measures. This creates a missed opportunity to redesign the work to accommodate customer demand through systemic changes.

This has led to arguments that may not benefit anyone between systems thinking and lean crowds, but I believe these are important arguments as the tool-based approach is missing huge opportunity to change thinking and get far more comprehensive systemic changes. I doubt there will be lean people converted. However, it is important to know there is a different and from what I have seen better approach.

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Systems Thinking Concepts

Belts and Tools Not Needed to Improve Service

June 8, 2010 Tripp Babbitt 1 Comment

As I was looking at some forums over the weekend, I ran across a poor fellow that was trying to improve his organization. He had been duped into thinking that he was a Lean Six Sigma Green belt trying to do things only a Master Black Belt could do. It was demoralizing that his willingness to improve was being blocked by an artificial barrier.

I have long taking the stance that I am a “reformed” Lean Six Sigma Master Black Belt. This is no slight to Dr. Frony Ward who I worked with to achieve the designation, as she saw little value in the multitude of statistical components needed to be a Master Black Belt (but proceeded to teach them and tell us why they were of little value). In the manufacturing world, Dr. Ward is one of the best.

Most of the reformation came from working in service industry and discovering through application that lean manufacturing tools and belt designations have so little to do with improvement. In fact, after reading Freedom from Command and Control did the pieces start to fit. You see manufacturing is different from service (in many ways) and all the efforts to improve were making things worse or new management decisions were reversing the improvements.

Here in the US it has become almost comical how in order to achieve uniformity of service and reduce costs we have increased them. Over-standardized and entrapped with technology costs have risen. In an effort to stem the rise in costs companies do things like outsource or share services which compound the problem.

The green, black and master black belt clan have created an elitist group to implement improvement through projects. Over and over again do I hear stories of organizations (that subscribe to the belt mentality) that show savings after each project. However, they never show up in the financial reports.

There is nothing so useless as doing efficiently that which should not be done at all. – Peter Drucker

With lean manufacturing tools like 5S, standardization does not allow for the absorption of variety of demand that customers bring. This variety is much greater in service than manufacturing. With tools, there is a missed opportunity to study this variety and design better systems through understanding customer demand.

The important part of the non-belt and tool crowd to know is that by studying the “what and why” of current performance and deriving customer purpose and measures you can learn to improve the systems you work in. The only class you need is to get knowledge of your system and its interaction with customers.

Armed with knowledge of customer purpose and measures you can begin to experiment with method and innovate. New methods will be found and the discovery of new ways for your problems in service will advance the thinking.

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Systems Thinking and Financial Industry, Systems Thinking and Technology, Uncategorized

Good Management Reporting is No Substitute for Knowledge

June 7, 2010 Tripp Babbitt Leave a comment

How many times do you hear – “If we had better management reporting we would make better decisions.” And so it goes with management, better reports lead to better management. It must be true as technology companies are selling business analytics and intelligence like iPads.

Companies spending large sums of money to get the perfect report or mine nuggets of relevant information from massive amounts of data. This has to provide us with better decision-making . . . doesn’t it? After all, one executive suite after another invests in these technology marvels.

Information is not knowledge, let’s not confuse the two. – W. Edwards Deming

For information to become knowledge, management needs context. The ability to understand the “what and why” of current performance is something best done with the work. A financial, productivity, risk or myriad other reports are no substitute.

Decisions made from what reports tell you is even worse. Information and data can be both misleading and not representative of what is actually happening. Robert Loggia playing the president of a toy manufacturer in the movie Big is found walking at FAO Shwarz with Josh (Tom Hanks) and says “You can’t see this in a marketing report.” How right he was as knowledge comes from understanding and context.

I once had a CIO of a technology company that served the banking industry tell me “I was a teller once” as an excuse to make decisions on what was good for banks. You really can’t make this stuff up. I am not sure if this was executive ego, ignorance or stupidity . . . but none of these options are good.

The path to knowledge begins with check even if you have untold knowledge in the industry you work in, you need to understand the system you manage. Decision-making then becomes an exercise of experimentation with method as knowledge is gained from understanding the work outside-in from a customer’s perspective.

Executives quite often say they don’t have time to go to the work. Taking a look at their schedule you find budget and strategic planning meetings take precedent. This tells me that they are OK with making assumptions in their decision-making process . . . must be they got better reporting (?).

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Systems Thinking and Education

Experimenting with Method in Education

June 3, 2010 Tripp Babbitt Leave a comment

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My UK 95 counterparts have come across new method in education, something you like to see in these days of testing, standards and targets ( especially Deliverology). The US has built such a bureaucracy in the Department of Education. Established under President Jimmy Carter this department and all the state departments have grown into behemoths.

The only real value that is being added is in the classroom. We have created all these non-value-adding education departments that have done so little to improve education. Instead they create standards and targets for schools for things like graduation rates and mandatory school days holding schools and teachers accountable for the results.

Testing students, targets and new standards do not change methods for learning. Instead they create a defacto purpose where the game is to hit the target. The State of Indiana’s Department of Education wants a 90% graduation rate as a target, but by what method? If the jobs of teachers and administrators is at stake they will find a way to graduate 90% even if that means Johnny can’t read.

In the Telegraph article, Revealed: new teaching methods that are producing dramatic results we finally have someone experimenting with method to improve education. A relief from the status quo. Finding better ways to teach requires experimentation and may even compromise the standards, testing and targets crowd.

The spaced learning outlined in the article is something different. Is it the only answer to better education? No. Looking for better ways should be part of a teachers job and to try things that have promise a staple of education.

The question becomes how do we get more experimentation and less interference, we could get rid of them and give the money to teachers to experiment with method. That is $53 billion dollars for the teaching profession and learning new methods for learning and/or deficit reduction.

The future of education is in the classroom, not in the education departments. This is where the value work is and where experimentation with method is done.

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Tripp Babbitt’s Blog

Monthly Archives: June 2010

Compromising Values and Customer Demand

An Assault on Our (Business) Intelligence

Business Intelligence Requires Thinking . . . Not Technology

Indiana Welfare Modernization – What are the Real Results?

City Government Modernization – The New Money Pit

Cost Cutting Center Stage – Nurses Strike

Hospitals – Start with Demand, Not Standardization

Belts and Tools Not Needed to Improve Service

Good Management Reporting is No Substitute for Knowledge

Experimenting with Method in Education

The 95 Method