Management Infatuation . . . The Large Project

August 29, 2011 Tripp Babbitt Leave a comment

What is it about large projects that is so attractive?

Is it the ability to put a large project on a resume? Or the feeling of power to have introduced massive change? It is hard to figure out the answer to this management paradox. Maybe there isn’t one.

Service organizations and governments love the large project. A lot of them involve information technology, but these projects certainly aren’t just IT. IT just seems a good way to fund it. No one will argue with large projects that are the future.

However, large projects seem to fail at unbelievable rates. In fact, I am yet to see a successful one. All have begun with great pomp and circumstance. Executive speeches given, resources allocate, Gantt charts populated on hundreds of pages and the master plan is unveiled.

Two months later and the ADD management has usually already lost interest. Funding for other things is poured into the financials of the projects. Large projects do represent a great way to hide costs. Our software developers put in 500 hours last month into your project . . . and you got one line of code – if you are lucky.

These days I remain amused by those that promote their company or themselves as large-scale project managers with years of working on large projects. All that experience that has delivered so very little in tangible improvement.

The problem is really quite simple, the need was never really there to do a large project. Egos and assumptions play a larger role in these decisions than need. The truth is that most of the time value can be created by small changes on the front-line. It just isn’t as glamorous.

Before the next big project kicks off, take a couple of deep breadths and do the following:

Get knowledge – leave the egos and assumptions behind
Improve the work and pull IT

There are more to these steps, but if you are reflective on this you will discover a much better way than big projects.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public). His organization helps executives find a better way to make the work work. Read his articles at Quality Digest and his column for CustomermanagementIQ.com. Learn more about the 95 Method for service organizations. Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

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Systems Thinking and Management

Sarbanes-Oxley Purpose is Being Misapplied

August 28, 2011 Tripp Babbitt Leave a comment

Sen. Paul Sarbanes (D–MD) and Rep. Michael G. ...

Image via Wikipedia

Sarbanes-Oxley, the legislation to prevent fraud. Companies seem to have forgotten the purpose of this legislation. It was to prevent the egregious acts done by Enron, Adelphia, Tyco and Worldcom that was the reason for it. More importantly, it was to prevent the likes of Lay, Kozlowski, Rigas and Ebbers from making companies their own personal banks. Instead, more and more Sarbox is being used to audit the front-line.

However, the problem is not the front-line. The greatest frauds of our time have come from the leaders of public companies and bankers. The finance game is the one to be watched.

This does not sit well in organizations. Think about it, if you are in governance, audit or risk will your focus really be about executives? I don’t think so. These are the ones that pay your salary. Makes more sense to aim lower and justify a non-value added existence.

Organizations go after easy targets the front-line. Making it virtually impossible for those that create value to do their work. Lots of wasted time analyzing systems access, and authorization levels for the front-line is easier than finding back-dating of options or CEOs and CFOs colluding to manipulate stock price. Doing so would be political suicide.

If the purpose of organizations is to make products and provision services that improve customer’s lives. It may be boring, but you don’t get into creative accounting or unnecessary interference with those that help customers get what they want.

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Systems Thinking and Contact Centers, Systems Thinking and Healthcare, Systems Thinking and Management, Systems Thinking and Technology

IT Workers – Let’s Get the Outsourcing Argument Right

August 21, 2011 Tripp Babbitt 3 Comments

Former IT workers at Molina healthcare have started a firestorm with a lawsuit (see Outsourced and Fired, IT Workers Fight Back). The article is an interesting read and I side with the former IT workers . . . but not for the reasons that keep being used. They claim discrimination and they may be right, I don’t know. The court will have to sort this one out.

Regardless, discrimination or even the patriotic message of protecting American jobs will not resonate with corporate America. Heartless . . . maybe. But workers – and not just IT workers – need a new tactic.

Plainly said, almost all outsourcing I have seen in contact centers and IT is not profitable. Yep, that is correct . . . it is NOT profitable. This is a message that corporate America will understand.

Yes, I know the wages paid to foreigners is much lower. However, reducing wages 30 – 50% or more isn’t enough to make up for the poorly designed IT when you separate developer and the work that IT is supposed to enable.

IT executives have made IT in the form of production plants in manufacturing. I even hear words like “software factory” when I speak to executives. Software is not manufacturing and to treat it as such is foolhardy. This is economy of scale thinking and is used in an IT outsourcing strategy.

So what is wrong with the design? The flow of the work – economies of flow. Traditional software process: project planning, feasibility studies, systems analysis, requirements definition, implementation, integration, testing, installation, deployment and then maintenance. There may be derivations of this, but who came up with this crap? Why has this become best practice or the “one best way.” IT projects have stunk up the place for a long time. New thinking is needed to save jobs, profit and improve IT in general.

The traditional approach allows for the functional separation of work. Project managers, business analysts, testers and other roles for the most part are non-value adding. Most outsourcing seems to go after the developers, because they are expensive in an executive’s mind. But developers are the only ones that do the work that adds value. They have been hidden away as too expensive to interact with those workers that add value in the eyes of customers.

Developers are the only workers that can add value. Having them away from the front-line employees that interact with customers is expensive. Instead they have phone calls, meetings, requirements documents to facilitate their work. Flow is disrupted and costs are increased . . . a lot!

Functional separation of work and economies of scale thinking leads to higher costs. Outsourcing the pieces makes sense with this line of thinking. This is why executives embrace it. It is wrong thinking familiarize yourself with the arguments I have linked to in this article. If you are in the midst of having outsourcing companies learn your system to get rid of your job, give me a call. New thinking that is more profitable may be your only chance.

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Systems Thinking and Management

Eating Our Own Dog Food

August 13, 2011 Tripp Babbitt Leave a comment

I spoke to a couple of auto industry engineers while flying not long ago. They lamented about all the outsourcing that the auto industry has done. Mexico, China, South Korea and many other countries all make the products that the US used to make.

The Big Three (Ford, GM and Chrysler) were on their heels since the 1970s. Japan still owns the auto industry market, but their slip ups have given competitors a window of opportunity. American manufacturing management is still in their stupid phase since the 70s. Chrysler was beginning to be feared before selling to Daimler. GM has wasted billions and the jury is till out. Ford seems to be in the best shape . . . today. However, Fords products either need greater improvement or the likes of Toyota to keep stepping on themselves.

My engineer friends see the waste everyday. They are powerless over command and control management or better labeled the management factory. Management’s job is to make decisions based on financials, not what makes sense. Too many former engineers brain-washed into the management factory. The financials override evidence.

W. Edwards Deming used to talk about our biggest export to Japan being scrap metal and they would buy this for pennies and turn it into a microphone and sell it back to the US for $50. Japan knew how to create value. American management outsources instead of using US labor to create value. China’s dog food must taste better . . . it is cheap.

This is not a patriotic tale. What American management misses is total system costs. In manufacturing its in shipping and other costs that add costs that get lost in translation.

In service, it is the service design of the work. Total systems costs are not realized in most outsourcing arrangements. No one questions whether we need a back office or another call center. In most cases I find that back offices can be designed out. Contact centers are full of failure demand that when reduced gives the contact center fewer calls.

China owns a lot of US debt. To be honest if the US economy has problems they lose a big customer. However, they are selling products to the US and taking wealth away. American management has to wake up at some point that this whole outsourcing thing is not creating long term profit. Again, not because we need to be better patriots, but because we have to open our eyes to total system costs. A management paradox . . . yes, but our own dog food may just save us.

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Systems Thinking Concepts, Uncategorized

Re-Inventing Capitalism

August 7, 2011 Tripp Babbitt Leave a comment

Back in 1931, during the Great Depression, many other countries thought the end of capitalism had come. They looked to communism and socialism as the failed attempt at capitalism seemed imminent as the Depression dragged on. Hitler rose to power in Germany and Stalin in Russia.

In the past 50 years, the US has managed to:

Shed its manufacturing jobs with a combination of thirst for profit (outsourcing) and being out-competed by a country with few natural resources, but better method – Japan.
Ruined its world standing with risky loans from US banks (no matter who is to blame)
Increased the government deficit to the point that we have lost the coveted AAA credit rating and stand to lose the dollar as the currency of choice for the world
Running an unemployment rate of over 9% with the reality is the real number is much larger
Compromise whole organizations by executives maximizing corporate profits through manipulation to increase their personal balance sheets

Most of this has happened in more recent history and certainly isn’t a comprehensive list. W. Edwards Deming told us that the peak for the US was 1968 and been in decline ever since. All is not lost, but a wake-up call anyone?

Today’s turmoil with budget deficits and high unemployment rates leaves many questions about where the United States is heading. It made me begin to question what capitalism is. So, I looked up a definition:

An economic system in which the means of production and distribution are privately or corporately owned and development is proportionate to the accumulation and reinvestment of profits gained in a free market.
Source: Dictionary.com

Somehow profits has been bastardized into meaning that if my own individual balance sheet is better off – that is profit. Executives and investors get a bulk of the profit because that is who should profit in a capitalist system. Somehow we have left the worker behind in favor of the other groups. Aren’t the people that DO the work important? What about the work itself?

Seems to me that making the work and the worker relevant again would be a good thing. This has less to do with trickle down economics and more to do with greater profit. And can we start making things again? Products and services create value, shifting money around does little to improve our standing – the results are obvious. Investment banking has become gambling.

Naturally a reset on how we design and manage work needs to happen and soon. US businesses using industrialized design and economy of scale thinking for manufacturing and business will continue the slide Deming warned us about 30 years ago. Little has changed . . . and in fact entropy has taken over and the decline accelerating.

Capitalism is still the best thing that is going, but some of the “add-ons” to the definition of capitalism or how they have been played out need evaluation. The principles are there, but the details need rewritten.

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Systems Thinking and Government, Systems Thinking and Management, Systems Thinking Concepts

Simplify, Standardize and Centralize – The Mantra of Fools

August 6, 2011 Tripp Babbitt Leave a comment

Industrialized service design in government and service industry continues to drag us all down. Government and service companies with higher costs and customers with poor service and higher prices – somebody has to pay for the waste and sub-optimization.

Technology vendors make a ton of money selling their wares with the cover of simplify, standardize and centralize. They will show you ROI on a PowerPoint but you can rarely find evidence that the TOTAL economic system has been improved. Hype via marketing is a much stronger tool because in that world you can make up all kinds of stuff and not get challenged. We (technology vendors) are making lots of money, it must be good!

In service, variety is the enemy. Standardization fits the industrialized mindset. But variety of demand is inescapable. A counter-intuitive truth that remains foreign to government and service companies.

Technology is much cheaper to deploy when there is standardization. The key word is deploy meaning code and sell. The wrong questions get asked and the technology factory spits out more and more worthless software.

Centralization is all about getting economies of scale. However economies are in flow, not scale. Good flow of services involves an organizational design that is devoid of non-sensical functional separation of work.

Ultimately, making good decisions about technology comes down to knowledge and evidence. The fools will make assumptions without evidence.

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Systems Thinking Concepts, Uncategorized

Our Unemployment Debacle and the Deming Chain Reaction

August 2, 2011 Tripp Babbitt Leave a comment

W. Edwards Deming’s Chain Reaction is simple:

Improve Quality
Costs Decrease (by removal of waste and sub-optimization)
Productivity Improves
Capture the Market with Better Quality and Lower Price
Stay in Business
Provide Jobs and More Jobs

I have seen the “Chain Reaction” changed to “return on investment” from “provide jobs and more jobs.” Rather self-serving to manipulate Deming’s thoughts. The aim was to create jobs – a higher purpose.

Looking at the larger system called the US economy, there is great benefit to providing more jobs. Less people in the welfare systems means less government spend and less government debt. Something that has had our attention for the last two weeks. An expensive system is the welfare system when over 9% of people are unemployed.

Private organizations are hoarding cash and are helping create a deteriorating economy in a Catch 22 – an attempt to protect themselves only worsens their condition. More people go on the unemployment line meaning less people to spend money on products and services and then these same unemployed have to go through a welfare system wrought with waste that adds to the budget deficit.

We need a reset on corporate purpose. A broader system is at stake than just our personal or corporate balance sheets. Optimizing the American system will take a different approach. The “me first” mentality has proven less than optimal. Dr. Deming’s Chain Reaction is looking more brilliant everyday.

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Tripp Babbitt’s Blog

Monthly Archives: August 2011

Management Infatuation . . . The Large Project

Sarbanes-Oxley Purpose is Being Misapplied

IT Workers – Let’s Get the Outsourcing Argument Right

Eating Our Own Dog Food

Re-Inventing Capitalism

Simplify, Standardize and Centralize – The Mantra of Fools

Our Unemployment Debacle and the Deming Chain Reaction

The 95 Method