The Pledge

November 29, 2010 Tripp Babbitt Leave a comment

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No, this is not about the movie Animal House, Flounder, pledge pins or John Belushi. Instead this is a pledge I took years ago while attending a Deming User Group seminar done by John McConnell:

“I swear, that I will never, under any circumstances what so ever, draw specifications, tolerances or any other arbitrary limits on a control chart.

On such charts I will draw only control limits calculated from the data drawing only from the Shewhart model.”

And so it was that I learned that the system governs performance and not arbitrarily set targets or numerical goals. A system operating between the limits(UCL and LCL in the above diagram) set by the data would continue to operate there until entropy would take over and deteriorate the system or method would come along and improve the measures.

A waste of time and money to send management and worker out on a mission to hit an arbitrary target without understanding that the system dictates performance that is predictably between the limits. Also, management has to understand that a predictable system means that the problem is not that of the worker and that management must solve the problem of improvement. As the system dictates performance, so does management thinking about the design and management of work.

A poorly designed system will certainly have a greater impact on an worker’s performance than anything a worker can do. Setting “stretch goals” and performance targets will either frustrate an individual or cause them to manipulate (a nice term for cheat) the system, especially if carrots and sticks are involved.

So, take the pledge by first understanding variation or start by reading Service Metrics: What You Need to Understand.

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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.

Tripp Babbitt is a columnist (Quality Digest, PSNews and IQPC), speaker, and consultant to private and public service industry.

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Systems Thinking and Education

The Case Against Merit Pay for Teachers

November 22, 2010 Tripp Babbitt 1 Comment

An important debate is occurring in my home state of Indiana, the discussion is around merit pay and teachers. And this debate is not just in Indiana, it is going on all over the US. So let’s take a look at the bad things that merit pay does for education or really any system (rather public or private sector).

If General Motors were to double the pay of everybody . . . performance would be exactly as it is now. – Norb Keller (from The New Economics

The above quote is reflective of a deeper problem. The emphasis on pay is the wrong focus. The issue is “method” and until we begin to find more effective methods in the classroom all this is just fogging up the real issues.

Method is about to be buried in an avalanche of bureaucracy that is needed to implement a merit pay system. This both increases costs in implementing these systems and keeps us away from focusing on method.

Merit pay (or pay for performance) is a form of forced ranking. The performance of all teachers is a bell-shaped distribution:

The thinking appears plausible reward the high performers and reduce the low performers. The problem with this thinking is that with any distribution there is always someone at the top and bottom. There is no guarantee that if we fire the bottom performers that if we dip into the pool of teachers we will find better ones than what we have now.

There is another problem with this thinking. Concept from The New Economics: In mathematical terms, if the contribution of the individual is x and yx is the effect of the system on the individual’s performance. Let’s say we have $8 million in sales. Our formula is:

x + (yx) = $8,000,000

Everyone who supports a merit system believes they can solve this equation for x (individual). They ignore the predominant interaction of the system with the individual.

Our systems drive the performance of any organization, not the individual.

What is a system?

A system is the sum of all the parts . . . the school building, students, work design, technology, parents, teachers, administrators, thinking, structure, measures, etc. But the to change the system, we have to understand its purpose and derive relevant measures to this purpose. This than can be followed by experimentation with method to improve our system’s performance.

If we do this we shift the whole curve that represents the performance of all teachers. A small shift in the whole curve represents a huge improvement and larger than just shifting a small group of high performers.

It was W. Edwards Deming and his insightful understanding of variation that led to the conclusion that 95% of the performance of any organization is attributable to the system and only 5% the individual. We are wasting precious time in education focusing on the individual, we need to address education systemically and not individually.

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Tripp Babbitt is a columnist (Quality Digest, PSNews and IQPC), speaker, and consultant to private and public service industry.

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Shared Services, Systems Thinking and Government, Systems Thinking and Technology

Rivlin-Domenici Plan – The Problem is the Approach

November 18, 2010 Tripp Babbitt 1 Comment

Here we go with another “plan” to reduce spending in government. I plan to post a more in-depth piece to the Rivlin-Domenici Plan. Not bad people, but the same old worn out approach where politics takes precedence over method.

One of the first things you read about from the Debt Reduction Task Force is the word compromise. The minute we read this word we should realize that we are in trouble. Compromise means that we aren’t going to get something that works, it means that we get something that can be agreed to.

The second glaring problem is the word plan. The traditional approach to improvement is putting a plan together. The Task Force may understand the size of debt, but to put a plan together without knowledge is misguided. This doesn’t mean they didn’t spend some time studying, but the report indicates high-level learning that leads to assumptions.

The plan is devoid of evidence that any of the measures will work. Big plans based on compromise rather than knowledge and method is sure to make the deficit bigger. This plan will kick off legislation and other plans that will cost billions before we ever see any action. And when action comes, we have no idea whether the Deficit Reduction Plan will work.

Other troubling keywords are modernization and shared services. The word modernization tells us that we can expect people to want to get rid of paper and automate things. Too often in government we make the assumption that information technology will make things better, when in reality it increases costs as poorly designed work is the problem, not automation. We wind up with entrapping technology that locks in the poor design.

Shared services typically only looks at functions and not the demands that are placed on government. An agency might have the different demands going into each function, just combining them won’t reduce costs. In fact, once shared we are seeing shared services departments spring up that cost us more money and adds more to the deficit.

To win this battle against the deficit, we need all hands and brains and to keep the political players from compromising, modernizing and planning us to bigger deficits.

We need to engage those that are going to improve the system and must include those that have knowledge of the work . . . as for the rest they need to get knowledge by performing “check” with those in the work.

By understanding customer purpose and the demands constituents place on the system we can develop an understanding of the causes of costs. Taking direct action on the system we can experiment with method and redesign the work to eliminate failure demand (demand caused by a failure to do something or do something right for a customer) and improve flow.

Having worked in government management, I have seen the massive amounts of waste and sub-optimization that exist from poor design and outdated thinking. Politics and compromise have no place in improvement, we must have method.

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Tripp Babbitt is a columnist (Quality Digest, PSNews and IQPC), speaker, and consultant to private and public service industry.

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Honoring Lean Principles Alone Won’t Replace Methods for Changing Thinking

November 17, 2010 Tripp Babbitt 20 Comments

As always, the lean crowd is predictably unpredictable. Everyone has a different view and I love perspective, but defining lean and every one’s different interpretations of it is virtually impossible . . . like chasing Jell-O across the table.

A recent comment caught my attention. The claim that Lean is more than tools is predictable even though they all run around with 5S, kaizens, poka yoke, standardization and other Japanese terms that long lost context of the thinking that created the tools. But this comment claims that if we honor three principles we change thinking. Well why didn’t I think of that? Here they are:

Honor Standards
Honor People’s Good Ideas
Honor Customers

Well . . . there you have it. Go improve your service organization now, but don’t forget the tools. Even though they don’t transfer very well from manufacturing to service. This thinking is why according to Nohia and Berkley in Harvard Business Review claim 75% of executives are unhappy with change initiatives in their organizations.

Now why?

American Management thinks they can just copy from Japan, but they don’t know what to copy! – W. Edwards Deming

And so here we are with failing projects to improve organizations, because copying Japan is not enough. Dr. Deming challenged us to think for ourselves not learn the Japanese language. His concern, we will never catch up . . . Japan isn’t standing still. Copying always leaves you behind the one that is advancing thinking.

Just saying buy into these principles will not get you where you want to be. The human change methods I reference, change behavior in a normative fashion.

How is this different?

I’ve ranted many times about how standards create failure demand in service organizations. The often quoted “Where there is no standard, there is no kaizen” is mostly true . . . in manufacturing, but the variety problems of service are completely ignored. It is blind copying. But don’t believe me, look for yourself.

The human change methods I am talking about have to change thinking (management thinking) and behavior changes will follow. This is Dr. Deming’s 4th area in his System of Profound Knowledge – psychology. There is no tool in the lean toolbox.

The audits for compliance lock in the waste created. The inspection police come to check their boxes, this isn’t improvement this is coercion. You may get compliance, but you haven’t changed thinking. Worse, you add to costs. The best inspection you can have is never done (not needed) or done by the worker alone.

While service companies are out building misguided standards and entrapping with technology, we miss the 95% problem that Dr. Deming talked about . . . management thinking.

From “If Japan can . . . Why can’t we?

“I ask people in management what proportion of this problem arises from your production worker. And the answer is always: All of it! That’s absolutely wrong. There’s nobody that comes out of a School of Business that knows what management is, or what its deficiencies are. There’s no one coming out of a School of Business that ever heard of the answers that I’m giving your questions—or probably even thought of the questions.” – W. Edwards Deming

So, if we want to improve our systems. We need normative methods to change thinking and behavior. The coercive and rational approaches just don’t work.

And no, Lean has nothing in their toolbox.

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Tripp Babbitt is a columnist (Quality Digest, PSNews and IQPC), speaker, and consultant to private and public service industry.

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Advancing the Thinking in Service – Standardization, Variation and Variety

November 15, 2010 Tripp Babbitt 6 Comments

The answer many organizations have come up with for problems of efficiency is to seek standardization in their processes. But they don’t understand the problem and the potential damage of not understanding the problem ends in increased costs and worse performance.

Manufacturing has taught us that a standardized process is helpful in making products. We get predictable outputs and quality in making products. Much that has happened in service industry in recent years has been an attempt to copy this thinking.

People wrongly think that the ability to standardize work in service will help improvement like in manufacturing. Here, we get a starting point to reduce the variation and get better quality. The result is the search for “one best way,” scripts for contact centers, written procedures in operational areas, etc. in service. All of these efforts to standardize work are locked-in with entrapping technology.

These efforts seem practical until we look at the evidence.

The missing element that creates a management paradox is the variety of demand that customers place on service systems. And the evidence that this exists comes in the form of failure demand (demand caused by a failure to do something or do something right for a customer).

When our service systems are full of standardization they lack the ability to absorb the variety customers bring to service. A direct measure of this comes in the form of failure demand which we find runs between 25-75% of all demands customer. This is some of the evidence that a service organization needs to know how well or poorly a system performs in absorbing variety from customers.

This does not mean that all standardization is bad. What it does mean that it dispels the notion that all standardization is good. More importantly, it means to make an assumption that to standardize and reduce variation is good for service is a wholly wrong place to begin.

Our first task needs to be to get knowledge by understanding the what and why of current performance. Purpose of the service system, type and frequencies of demand (plus value and failure demand), how the system responds to demand, studying flow, system conditions and management thinking are part of this process.

From understanding purpose, new measures and methods present new perspective and insight. Whole new and different problems emerge when we study our organizations as systems. The result is improve service, reduced costs and better performance.

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Tripp Babbitt is a columnist (Quality Digest, PSNews and IQPC), speaker, and consultant to private and public service industry.

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Systems Thinking and Education, Uncategorized

Expect Worse Performance and More Bureaucracy with Merit Pay in Education

November 12, 2010 Tripp Babbitt 6 Comments

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Andrea Neal recently wrote a column in the Indianapolis Star titled More Money for Best Teachers. This opinion article attempts to convince us of why merit pay is really a good thing for education. Although well-intended as most wrong-headed theories are, this one is especially egregious in conclusions without evidence.

So, let’s take a look at the argument she makes against each objection:

Objection: Teacher performance is impossible to measure.

Ms. Neal argues that it is possible to measure teacher performance. She cites ISTEP scores for math and english, and pre-assessment and post-assessments for other subjects.

These things seem plausible to measure, but the measures we need are not individual teacher measures . . . they are system measures. The difference is that performance of a student is 95% attributable to the system and 5% the individual. Education does not have a teacher problem, they have a system problem. The system is comprised of all those in the education system (parents, teachers, administrators, students) and other elements like structure, technology, work design, system conditions, management thinking, etc.

The argument that individual performance can be separated from the system is a flaw.

Objection: It’s not right to hold teachers responsible for problems children bring to school.

Ms. Neal argues that no one expects poverty-stricken children to post test scores equal to affluent areas. She says we should be moving the poverty stricken children from the 20th to the 40th percentile.

She skirts the issue of the poverty stricken children that a teacher can overcome the system conditions (poverty) on their own. Really? Children can’t learn if their primary concern is eating – remember Maslow’s hierarchy.

Ms. Neal is way to simplistic in her argument that a teacher can overcome a child’s issues they bring to school. It depends on what they are and they have great variety.

Objection: Merit pay will pit people against each other.

Ms. Neal completely bails on this one, saying Eli Lilly scientists would collaborate. She is saying what works in business is good for education.

She completely misses the fact that the US has been in decline in business since 1968 as marked by W. Edwards Deming. The Indiana Governor is in Asia begging for jobs for Indiana, we are not at the top in many areas of business.

Further, I have received dozens of calls from laid off Lilly employees looking for work. Former Mayor Bart Peterson completely sold out his principles (Democrat) to support the move to lay off thousands as a good thing for Eli Lilly. I would not be using Lilly as an example of “good method.”

Merit pays problem is that it becomes the defacto purpose of teachers once put into place. The purpose shouldn’t be test scores, trying to get the “smart” kids in their respective classrooms, shmoozing with administrators, etc., it should be to find better methods to teach to the different ways children learn. This has to happen in the classroom with experimentation with new methods of teaching.

Objection: Administrators will use merit pay to reward their friends.

Ms. Neal remarks that this is a risk in every profession and objective measures should be used.

The result is predictable. Indiana will spend millions to make sure the performance system is objective and target teachers who do evil things like teach to the test. We will invent a whole new HR bureaucracy in government to put an objective system in place, monitor it, and inspect teachers to make sure they aren’t cheating. A few years ago, EDS spent millions trying to do this and scrapped it, as performance assessment is subjective.

Objection: All teachers are underpaid, so it would be smarter to pay all teachers more.

Ms. Neal argues that pay is a little better in the US as other developed countries.

OK, so if education is on equal footing with pay, then why is performance in education worse? Because the two do not tie together, so merit pay won’t help. The opportunity to improve education is to improve the methods of teaching and the system itself.

Objection: There is no connection between merit pay and student achievement.

Ms. Neal notes that there are good arguments on both sides. The RAND/Vanderbilt University study cites no notable increase in test scores through performance bonuses. She instead cites some obscure study by an economist.

Her point is that increased pay through a merit system is not to boost student achievement, but to attract better teachers through changing the professional environment.

The truth is that if we want to change the professional environment we can start by getting rid of the Indiana Department of Education and the US Department of Education who spend our tax dollars on many failed ways to make education better. We would have more money to pay teachers and attract the best and more money for teachers to experiment with new methods to educate students. That is what would make the education attractive is knowing that the classroom is where value is created, not some bureaucracy with expensive programs.

Ms. Neal will be providing us with future stories on how to copy other countries education systems. This is the same tact provided in the 1970s by manufacturing and we still haven’t caught up. Copying and best practices has led to nothing but mediocrity and uncompetitiveness in the US.

Our hope is to realize that education is in the classroom with better teaching methods and a better education system starts in the classroom. Let’s put our money and hope there and not in new schemes to add to Indiana’s debt.

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Tripp Babbitt is a columnist (Quality Digest, PSNews and IQPC), speaker, and consultant to private and public service industry.

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Systems Thinking Concepts

Lean for Services? . . . Not!

November 9, 2010 Tripp Babbitt 7 Comments

I read the lean stuff with amazement. A recent article on sixsigmaIQ is titled, How to lose friends and alienate staff – a lean sponsor’s guide. This “lean engagement” highlights many of the problems with lean in services.

As most lean efforts go, the focus is on getting “top-down” management support. I have long noted that to improve the system that management has to change too. There is nothing in the lean management engagement that addresses the hierarchy problem that must be tended to improve services. The top-down, command and control, functional separated hierarchy is a huge barrier to improvement.

The lean folks have no human change methodologies in their tool boxes.

The next problem is where they start . . . with the work, inside-out as a process to improve – “The team began work as per the pre-defined schedule, going through the typical due-diligence of comprising value stream walk, detailed process dissection, takt time calculation, etc.” In services, this is wholly the wrong place to begin as systems thinking advocates understanding your organization as a system from the outside-in. In fact, until we understand the system purpose and demands by studying the system, we risk a flawed design of services that creates more waste and sub-optimization.

Further, the use of takt time in service is not applicable. The concept originated in manufacturing where services have a different problem. The tools approach is a form of copying from manufacturing, but service has different problems.

Tools like the seven wastes that came from manufacturing are applied to service settings. If we are looking for the seven wastes and not looking for waste in general we stand to miss a lot in service. I compare it to taking inventory sheet-to-shelf rather than shelf-to-sheet . . . if you are only looking for on what is on the sheet you may miss what is on the shelf.

Services have different problems than manufacturing:

Greater variety in demands from customers
Nothing is stored like products and raw materials
Service happens between the front-line and the customer
The front-line and the customer are involved in service delivery

With more manufacturing people moving into service we have a forced fit of manufacturing thinking and tools represented by Lean and Six Sigma in to service. The problems are different and so should your approach be different.

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Tripp Babbitt is a columnist (Quality Digest, PSNews and IQPC), speaker, and consultant to private and public service industry.

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Systems Thinking and Healthcare, Uncategorized

Why Nurses Should Reject Lean in Hospitals

November 8, 2010 Tripp Babbitt 41 Comments

The recent debate on lean in health care, and specifically hospitals is heating up. Two Quality Digest Articles Why Lean? Why Now? and a follow-up story by the publisher of Quality Digest Lean Health Care and Quality.

I did a bit of research on the subject and it appears the a couple of months back the Minnesota Nurses Association has been very vocal in their distaste for Lean and standardization. I am right there with them.

Time features lean transformation at Seattle Children’s, debate ensues is very telling. The promotion of standardization is at issue.

“The two pillars of lean are continuous improvement and respect for people. However, there are aspects of lean that can ring alarm bells among employees who do not yet have a wholistic appreciation for lean. The first is standardized work. In lean, first you standardize, then you improve. Improving a non-standard process is like remodeling a house built on quicksand. It won’t do you much good in the long run.”

Lean continues to promote its application to service industry and hospitals. They believe (as in manufacturing) that standardized work is the place to begin improvement. This completely ignores the variety of demand that service and in particular hospitals get.

The Minnesota Nurse’s Union (or any other union) has right to voice there displeasure as this is a bad place to begin. The comment in the above article from Mark Graban of LEI (Lean Enterprise Institute) says nurses are “interested in talking about the hospital CEO’s paychecks than Lean.” Another comment says nurses are only interested in patient rations. My feeling is that nurses are over-worked by poorly designed systems that management has put in place using flawed thinking.

If we continue to standardize work in hospitals without accounting for the variety nurses and hospitals get from patients we will make things worse for patients, nurses, doctors and the bottom-line.

The system needs to be redesigned around the work by management, nurses, doctors and others working together to improve the system. This all begins by management changing their thinking around the design and management of work. Once management understands by seeing the damage of their thinking in a normative way can real changes impact the work.

Unfortunately, too few administrators spend time in the work. A checklist to be sure management shows up every once in awhile is hardly a solution. Decisions need to be made with the work with an understanding of it. The problem here is not the nurses, it is the management thinking.

Respect for people in service is not having someone stand over you with a stop watch like a machine or compliance to standard work that can’t cope with variety nurses get from patients.

Nurses should stand firm against any improvement initiative that doesn’t address the thinking problems of management.

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Tripp Babbitt is a columnist (Quality Digest, PSNews and IQPC), speaker, and consultant to private and public service industry.

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Systems Thinking and Government

Why Planning to Cut Costs is a Bad Move for Government

November 8, 2010 Tripp Babbitt Leave a comment

Topic of conversation for every government entity after the election has been on how to cut costs. The Wall Street Journal constantly prints articles about cutting spending and debt in government . . . this is not a partisan issue. Legislation will do little to reduce costs and counter-intuitively can increase them.

We have been brain-washed into believing that setting targets for reduction in business and government is a smart thing to do. It is not, it becomes the defacto purpose of government. But there are more than just the visible costs that we see involved in running a government and when we ignore this fact we get lots of unintended consequences in increased costs. The damage is debilitating.

The move to “plan on how to cut costs” is such a move. The plans will be built with millions of taxpayer dollars because we know a plan is the answer . . . it is logical. The problem is we lack knowledge of the actual work that is being done in some of these agencies. Without knowledge, the step of making a plan is fruitless. We need to get knowledge and act on the system that is either creating waste or provides value to recipients.

We can learn what the purpose of the system is intended to be and provision that service without all the attempts to legislate change by setting targets. What each of these agencies do is of great importance to understand. Some have little or no demand, yet continue to be funded year after year. This provides no value to taxpayers or constituents.

The advice is simple let’s quit developing tons of wasted effort without knowledge. We can’t afford to keep doing the wrong thing in legislation or government management.

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The 95 Method for “getting knowledge” that has transformed UK and other European governments. We are testing the 95 Method’s 3-day program for getting knowledge here in the US. Here you can learn the scope for improvement for government services. To learn more click this link – 95 Method Test program.

Tripp Babbitt is a columnist (Quality Digest, PSNews and IQPC), speaker, and consultant to private and public service industry.

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Systems Thinking and Government

The Morning After – More of the Same, or Real Improvement this Time?

November 3, 2010 Tripp Babbitt Leave a comment

2008 and the chant was “change we can believe in.” Two years later and the Republicans have swept the house. In two more years, they all may be swept out Republicans, Democrats and any one who holds office. Voters are demanding improvement and the rhetoric continues with no improvement.

I have long become an independent as neither party can get beyond the rhetoric. One party in power and can’t deliver and the next takes over. They all say the right things, but can’t deliver.

The problem . . . we lack method to improve. Politicians, to be honest, think so big picture that they can’t execute. They lack knowledge of the systems they are trying to change, yet continue to legislate without knowledge and make things worse . . . much worse.

The issue is not government or privatization, it is provisioning services in an effective way. The question should be . . .

BY WHAT METHOD?

We have a slew of new Republican and Democratic Governors in office that can make a real difference. But they must first get knowledge about the systems they are about to change. Political zealots with pre-conceived agendas need to be kept from bureaucratic posts.

In my home state of Indiana we are still paying a heavy penalty for a privatization of the welfare eligibility program that went to IBM and later canceled for lack of performance. Now both the State and IBM are suing each other. Waste leads to waste.

A method to improve government is to perform “check” on the system. This will help you understand the “what and why” of current performance. To change a system without knowledge is to invite more expense and constituent trouble.

A bad system that delivers poor service and then gets funding reduced creates huge problems. Because we get less for the money.

Improving government services means that we need to change the design and management of work. To do this we have to understand the problems our existing systems (structure, work design, thinking, technology, etc.) have. New government management needs to be in the work with the workers to achieve this.

Until we have elected officials advocating approaches that provision services economically, we are faced with higher debt and less for our tax dollars. This is not dependent on whether the government or private entity provisions the service . . . it is dependent on method.

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Tripp Babbitt is a columnist (Quality Digest, PSNews and IQPC), speaker, and consultant to private and public service industry.

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Tripp Babbitt’s Blog

Monthly Archives: November 2010

The Pledge

The Case Against Merit Pay for Teachers

Rivlin-Domenici Plan – The Problem is the Approach

Honoring Lean Principles Alone Won’t Replace Methods for Changing Thinking

Advancing the Thinking in Service – Standardization, Variation and Variety

Expect Worse Performance and More Bureaucracy with Merit Pay in Education

Lean for Services? . . . Not!

Why Nurses Should Reject Lean in Hospitals

Why Planning to Cut Costs is a Bad Move for Government

The Morning After – More of the Same, or Real Improvement this Time?

The 95 Method