Unchallenged Management is Weak Management

October 31, 2011 Tripp Babbitt Leave a comment

Most organizations understand that when systems (not just IT systems) aren’t improved or maintained that they entropy. And so it is with management too. Just like an untrained or little used muscle . . . management becomes weaker.

Open door policies are a facade to the real attitude of some management hierarchies. “Tell me any news you want, as long as it is good. But don’t tell me when things are bad, that would be politically incorrect.” How management looks can be more important than say being told what the current realities really are.

Many management hierarchies want to protect their culture. However, the very thing they are trying to protect is what keeps it weak. The culture is quite often already broken. Embracing the reality is the first step to making it better.

Telling management the truth about their performance is a tough business. The best way is to have them see for themselves why the hierarchy is broken. Barring that, you are left to telling them straight. Many are afraid because the truth carries with it a risk to the messenger . . . and so fear in the organization, rules culture.

Unchallenged management masks its deficiencies by hiding behind plans and ancient assumptions. They provide cover, but not improvement. This leaves entropy to rule the day, system and the culture.

That which does not kill us makes us stronger.

– Friederich Nietzsche

Learning new ways requires perspective and perspective comes from a different view. When embraced the system finds new and better ways.

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

Why Do Companies do Reorganizations and Why they Fail

October 29, 2011 Tripp Babbitt 5 Comments

Organizations of all types look to reorganize. But the reasons are based in assumptions with the hope that it will lead to improvement. Less evidence exists that reorganizations actually make the business or government run better.

I have heard many reasons why companies/government do reorganizations. Here is a list of reasons – by no means comprehensive:

Recent merger or acquisition
To stay competitive
To “shake things up”
Realign the business
New strategy (or strategies)
Improve communication
Prelude to downsizing
Better decision-making
Better execution – related to strategy
Going global
Free-up creativity and innovation

Please comment if you have more to add. The assumption is that the reorganization will somehow make things better. After all, isn’t reorganization what a leader does in the first two years during the honeymoon period?

If you look at these reasons many are based in assumptions. Mergers and acquisitions are many times are decisions made based on economy of scale thinking. But scale thinking in organizations is flawed. Improvement comes from flow and not scale.

Strategies lead to plans and the flaw here is that knowledge is needed before talking about strategies or plans. Reorganizations are rarely based in fact about how a business will improve, they are full of assumptions about economy of scale, functional separation of duties, and how much an individual leader can affect change.

Knowledge is gained by actually understanding an organization as a system, not from what other organizations are doing or what is “believed” to be true. This is the reason reorganizations become such incredible failures. Even though they are often spun as being magnificent successes. If executives only knew that basing reorganizations on flawed assumptions was a mistake they could bring much to the bottom-line.

Reorganizations don’t have to be a bad thing though. However, they need to be based in evidence and fact. This is gained through understanding your organization outside-in as a system. In essence, understanding the work that creates value for customers, understanding customer purpose and then gaining knowledge about how well an organization performs against purpose.

Reorganization with knowledge of your system leads to a natural change in the roles that workers and managers do. Otherwise, it becomes an assumptive activity that leads to an expensive failure.

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Outsourcing, Shared Services, Systems Thinking and Contact Centers, Systems Thinking and Financial Industry, Systems Thinking and Government, Systems Thinking and Healthcare, Systems Thinking and Management, Systems Thinking and Technology

Technology – A History of Increasing Costs

October 27, 2011 Tripp Babbitt Leave a comment

The problem isn’t technology alone when it comes to costs, but more the thinking behind it that increases costs. The transaction costs are very visible and for the gullible represent quick savings for companies. And companies laden with rewards and pressure to reduce costs “quick” is an embraceable proposition – it becomes a way to achieve instant gratification and survival in organizations.

I recently had a phone call with a technology company that assured me that IVR systems – that I loathe – were saving companies millions. No evidence but the reduction in visible transaction costs – this means each transaction cost is lower. Systemic or total costs are completely ignored.

No one asks about how many transactions that come in the form of customer demands are actually value or failure they just look at the transaction alone . . . not whether the transaction should have occurred in the first place or not.

Reducing failure demand (demand caused by a failure to do something or do something right for a customer) becomes a huge area to make improvement and does not involve any IT. As part of reducing failure demand, we are improving the flow . . . as economies come from flow and not scale.

Looking at the history of reducing transaction costs with a flawed mindset, we see that in the good old days we would get service face-to-face. Telephony advances in technology allowed for a cost reduction in centralizing customer demands through contact centers. Now, we have websites to reduce transaction costs and avoid the contact center.

The result has been worse service and more costs. A natural extension of when the focus is on reducing costs . . . costs increase.

Outsourcing and shared services have been enabled by technology – couldn’t have either without technology. However, both perpetuate the reduction of transaction costs as a form of improvement and ignore the systemic customer demand and flow that really are behind reducing costs. The management paradox is that the transactional mindset is increasing costs in the form of lost customers and acceptance of a poor service design.

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Systems Thinking and Management

The Untouchables in Management

October 26, 2011 Tripp Babbitt Leave a comment

In most organizations there are the “untouchables,” they cannot be challenged or even looked at in the wrong way. Sometimes they are “lucky sperm” that are the relative of an owner. Other times it is the “in” crowd in management. Still others are the group that were brought in by new management. Regardless, the attitude they bring to management is a “don’t cross me . . . but groveling is accepted and expected.”

Usually management types, these are people imbedded – like a low-hooking golf ball hit by a 2-iron that lands in the soft bank of a river – in the hierarchy. They run welding their power like Attila the Hun. Evidence? Reason? All out the window with these types, they are unchallengeable.

Some brown-nose and most lie because there is no repercussion as they are authority. This is the politics of fear and position.

The untouchables are a huge barrier to improving systems. They take the eye off of the customer, evidence and learning to defend position. Everything is about winning and losing . . . arguments, coercion and position win the day.

They are killing your culture and service organization.

Left unchallenged, instead of innovation you get brown-nosing and a culture of “tell me what I want to hear.” The truth is buried in a sea of proverbial BS and CYA.

There is at least one way for leaders to break up the kingdom. Executives need to focus on the work, going to the work working with front-line workers destroys the hierarchy and the “untouchables” with it.

Dismantling is easy because everyone knows what is really important when executives spend time in the work. Evidence and truth replaces lies and posturing. Culture improves because there are fewer dark places for the “untouchables” to hide . . . salt and light replaces them. Like throwing water on the Wicked Witch of the West.

Ultimately, management has many paths to choose from in how they will operate. The best path is the well lit one. The one that focuses on customer purpose, the work, evidence and method. All else is just waste.

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Systems Thinking and Management

Systems Thinking . . . Even Jocks Get It!

October 24, 2011 Tripp Babbitt Leave a comment

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My Indianapolis Colts are now 0-7 for the year. Not much to cheer about, but I did see a quote from Curtis Painter that should be a lesson to all management.

Peyton Manning has not played this year and has been an advisor to his back-up at quarterback, Curtis Painter. In an interview with the Indianapolis Star, Painter said this about Manning’s help:

“Nothing against the coaches,” he said, “but that’s something you don’t get other than from somebody who’s been in the system. Just having someone that’s been in the offense, that’s been on the field and seen so much helps out.”

What? There is something to actually having been there that coaches cannot understand! Outrageous!

Management lives the life of NFL coaches. Only those that have actually worked in the system that management has put together can have insight into how best to use it and how it performs. Just as defenses change before a snap, so does customer purpose and demands. The people actually doing the work have a true understanding. Management has no context to the realities of what is really happening from a report, assumptions or theory.

Management has long been missing context and front-line workers are often perplexed bu uninformed management plans and projects that they see hurting the business. No knowledge means bad decisions. Better decisions can be made by relying those that can provide insight and perspective.

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Systems Thinking Concepts

Want Service Improvement? Make No Assumption

October 21, 2011 Tripp Babbitt Leave a comment

Assumptions . . . the killer of an organization’s ability to get innovation, improve culture, delight customers, optimize systems, sustain improvement and capture the market. Management is filled with assumptions about how the work should be done. The carnage created by these assumptions can be seen increased costs and disappearing customers.

I thought I would put together a list of some top assumptions I see regularly i working with service organizations – with brief commentary:

Cutting Costs to Improve the Bottom Line – A focus on costs always increases them. Costs are reduced by improving flow, not scale.
Workers (and Customers) Can’t be Trusted – The system management put together filled with carrots and sticks leads to manipulation and cheating. Surviving a poorly designed service system is all about survival for workers and customers. Inspection, auditing and governance are poor substitutes for a good system. Further, why design our systems for the less than 1/2% that might cheat a good system.
Technology will Improve Service – IVRs and entrapping IT are the result of attempts to reduce costs (see #1). The partial or complete failure rate of IT projects is over 90%. Redesigning systems is a better and cheaper alternative.
Rewards Motivate People to Do the Right Thing – Rewards do motivate . . . to focus on the reward and not customer purpose. Rewards sub-optimize the system and create competition where cooperation is needed.
Functional Separation of Work is the Only Way to Design an Organization – No one articulates that they want functional separation, but no one challenges it either. Service organizations broken into sales, marketing, operations, finance, HR, IT and more. One size fits all in organizational design is really bizarre if you think about it.

I’ve run into scores more, but these really show up in so many organizations. If management is to improve . . . changing the design and management of work begins with erasing (not just challenging) our assumptions.

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Systems Thinking and Education, Systems Thinking and Management

Question for Deficit Panel – By What Method?

October 20, 2011 Tripp Babbitt Leave a comment

The call for a “plan” to deal with issues like taxes, immigration, budget deficits, social security, medicaid and other weighty issues is staple to the political season. The real deficit is not the plans, but the knowledge that they lack.

By November 23rd, a select group of Republicans and Democrats must come up with a Deficit Reduction Plan or automatic cuts go into effect. The Joint Select Committee on Deficit Reduction needs to come up with legislation without knowledge.

I am absolutely for reducing the deficit, the question becomes, “By what method?”

Legislators putting together plans or legislation to reduce spending without first understanding the what and why of current performance stand to increase costs. Across the board cuts is bad enough, but recommendations from a panel without intimate knowledge of what they are doing is even worse. It is the reason that legislators should stay out of government management.

Whether you are in the Tea Party or Occupy Wall Street you are on the same continuum of dissatisfaction of the way things are going. Some say government should disappear and others say government should do everything. Each are extremes of a polarized political system.

Political ideology needs to be replaced with evidence that comes from knowledge. Too many expensive solutions are being implemented that don’t deliver anything but more costs.

Compromise is not going to happen with the extremes of the political parties. But even if it did, we would get a negotiated solution rather than one that makes sense.

We do not need a plan or another committee of “bipartisan participants.” This is a waste of time and resources. We need to get knowledge, redesign government services and design out non-value adding agencies like the Department of Education.

It all starts with one question, “By what method?”

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Pay and Performance – Two Separate Things

October 18, 2011 Tripp Babbitt 3 Comments

As the political season heats up, so does the call for “pay for performance.” The assumption here is that it works . . . and yes, to some degree it does. Unfortunately, it works in a manner that actually diminishes and destroys service.

Performance is dictated by the system in which you work. This is true for front-line workers and executives.

I have often quoted W. Edwards Deming and written about the 95/5 Rule. 95% of the performance of any organization is dependent upon how well your system is set-up, and only 5% is down to the individual/ The system is comprised of processes, work design, management thinking, measures, roles and any other element that exists.

It is true that pay drives individual performance. However, this takes away from the focus on the customer. Organizations that are functionally separated try to give managers individual pieces of the organization to optimize which results in sub-optimization. Sub-optimization is the enemy of synthesizing the whole – creating waste and inefficiency.

Individual pay for performance creates competition between workers where cooperation needs to exist to improve any system. Further, individuals learn to manipulate the system to survive or gain reward. What this boils down to is that the system loses when pay is tied to performance.

I have seen organizations go out of business while everyone is still getting bonuses for performance. How can this be? Some claim it is just the wrong measures and miss the point. The problem is that pay is tied to performance in the first place.

Improving performance requires redesigning our organizations be they governments or private companies. Working on the 5% is just dumb and wastes what little time we have already. This requires a shift in Western mindsets about how we think about work. It wouldn’t hurt to have governments start to learn this with teachers, police officers and other government jobs.

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Systems Thinking and Government, Systems Thinking and Management

Targets and Quotas – Wrong for Police and Business

October 13, 2011 Tripp Babbitt Leave a comment

The New York Daily News has reported the cheating going on by NYPD narcotics detectives. Police feared their being demoted or being paid attention to by superiors by not achieving quotas set by the department. Targets, quotas or arbitrary numerical goals as W. Edwards Deming called them will always lead to bad behavior.

This is no different in business.

In a survey conducted in the article 96% of readers believe arrest quotas drive the wrong behavior. Yet quotas and targets are prevalent in many organizations both public and private. Targets and quotas become the defacto purpose driving behavior in any system.

I am not attempting to excuse the detectives, but we shouldn’t excuse the system that made them cheat either. Fix the system and you fix much of the behavior. Fear and rewards better known as carrot and sticks has long become an outdated way to manage.

Building systems that work for customers and not focus attention on an individual’s performance is a good place to start. You get clarity when you focus on the customer and their needs . . . and you get manipulation when you targets, quotas, incentives and rewards. Managing with targets and quotas is lazy, building a better system to build value and profit is much harder work.

If 96% of us believe that quotas are the wrong thing for police, shouldn’t we be looking at the damage they are causing in business?

I think so.

The evidence is out there, but you have to look for it. Making up evidence does no one any good.

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Systems Thinking and Management

The .4 Multiplier

October 12, 2011 Tripp Babbitt Leave a comment

“How much improvement can be accomplished by using a systemic approach (like the 95 Method)?” I get this question on phone calls, emails and questions from interviewers.

.4 is my best guess . . .

Take your current expenses and multiply times .4. How close you come to this figure depends on your ability to change thinking – management thinking. Recent interventions have seen the usual call for speedy results, until management realizes they have to change too. Whoa! You are going way too fast – Changing front-line employee = fast change. Changing Management = slow change.

In management you have politics, it is harder to embrace change with politics – ask President Obama. This is where leadership comes to play and the ability to change thinking and assumptions by using evidence that cuts through the crap. The larger the organization the bigger the pile of . . . well, you know.

To get the .4 multiplier management has to change. This includes leaving assumptions behind and embracing evidence, changing management roles, seeking systemic measures, and adopting new methods that enable work. Sounds easy, but management as quick as they are to want results hesitate when getting a .4 multiplier means them too. Progress is slowed by those that want quick results.

All systems have different issues and sitting in the comfort of a climate-controlled office will not change your thinking. Claiming to be a strategist or a visionary rather than rubbing elbows with customers and front-line folks is the biggest bunch of hokey going. You have to understand customer purpose and demands by being there, not from reports.

“If you want to revolutionize a company, shouldn’t you know it first.” Ryan Bingham (George Clooney) in Up in the Air

The .4 multiplier is there for the taking, but management has to have some cojones first.

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Monthly Archives: October 2011

Unchallenged Management is Weak Management

Why Do Companies do Reorganizations and Why they Fail

Technology – A History of Increasing Costs

The Untouchables in Management

Systems Thinking . . . Even Jocks Get It!

Want Service Improvement? Make No Assumption

Question for Deficit Panel – By What Method?

Pay and Performance – Two Separate Things

Targets and Quotas – Wrong for Police and Business

The .4 Multiplier

The 95 Method