Monthly Archives: December 2009

Systems Thinking and Government, Systems Thinking Concepts

Indiana Welfare Eligibility Modernization, Costs and Cynicism

4 Comments

I ran across a couple of documents I had not seen about what was going on before the failed Indiana Welfare Eligibility Modernization was into full swing.  A couple of documents are very telling about the mindset of the administration.  The first is from FSSA called Eligibility Modernization: The Need for Change and the second is an article that appeared in reason.org called Steering Not Rowing.

The FSSA document cited six reasons on why the welfare eligibility system needed to be changed.  They were:

  1. Worst record of welfare reform in the country
  2. High error rates
  3. Slow processes that fall short of federal guidelines and provide poor customer service
  4. Inconvenient access
  5. Lack of consistency
  6. Lack of tracking capabilities and proper accounting programs

In the article Steering Not Rowing former FSSA Secretary E. Mitchell Roob outlined the problems in light of forthcoming solutions:

  • Lack of a central accounting system
  • A paper-based system
  • A general rule based on theory that if you can find someone in the private sector doing a service that mirrors what the government is doing, chances are the private company is doing at much higher quality and a much lower cost.
  • Efficiency leads to costs savings.

The State of Indiana (in general) has spent a lot of time putting in systems to track costs.  They spent millions implementing a Peoplesoft system to do just this.  The problem is they have spent so little time looking at the causes of costs.  Tracking costs does nothing to improve them.  In fact, spending money on ways to identify costs adds to costs and that is waste.

FSSA would be better off spending time finding the causes of costs associated with the design and management of work.  They are in the system (structure, work design, measures, technology, management thinking, etc.) and end-to-end flow from a customer perspective.  Something that typical government management can’t or won’t see.

The assumptions around technology, automation and “paper-less” systems is one I see killing government on a routine basis.  Technology companies are making lots of money and nothing is getting better.

The problem is the work design and not the need for more technology.  We perpetuate poor work designs by adding technology or automating them.  For government management it is to lock in the costs of a bad design.

Front office/back office and functional designs aren’t questioned they are automated.  For example, worker A passes documents to worker B  and the decision is made to automate the process.  Do we need the hand-off or the document?  This goes unquestioned and if you think about it IT companies don’t want to get rid of a poor design.  A poor design means lots of front office/back office and functional designs and the more of these we have the more revenue IT companies get to automate them or make them paperless.

The premise that efficiency leads to cost savings is unfounded.  Government management needs to learn to be effective.  A focus on costs and efficiency usually drives sub-optimization.  This means that we drive costs down in one area, but total costs are driven up.

The public sector would be wise to understand where costs come from in the first place, using the law of costs.   This is where government costs increase in proportion to the variety of demand.  The traditional design of government work is such that freedom must give way to efficiency . . . meaning the worker must be controlled.  The management paradox is that freedom by the worker is what gains efficiencies as the worker is best able to absorb the variety of demand that comes to government work.

The ability to absorb variety by the worker requires less technology as only people can abosrb variety effectively.  Something that technology companies don’t want governments to understand.

Public sector innovation is possible, but it requires a new line of thinking about the design and management of work.  The State of Indiana and FSSA continues to miss opportunity as they are blinded by oversight thinking,  an obsession with technology and cynical view of the role of the worker.

We help government entities innovate through our unique approach to the design and management of work.  We can help you “see” the waste and sub-optimization of your systems and work with you to change management thinking and redesign.  To learn more go to www.thesystemsthinkingreview.com or contact the North American office at info.newsystemsthinking.com or (317)849-8670.

Share This:
facebooktwitterlinkedin
Systems Thinking and Financial Industry, Systems Thinking Concepts

Goldman Sachs Bonus Plan: A (Very) Small Step in the Right Direction

1 Comment

The Wall Street Journal reported today in the article Goldman Blinks on Bonuses that Goldman Sachs is forgoing its executive bonuses.  It is a small (very small) step in the right direction for investment banks and other corporations under the scrutiny of the public.  Yet 31,000 other Goldman workers may still get bonuses and this deal is good for 2009.

The plan will award executives stock that can’t be sold for five years.  Taking $10 billion of bailout money and paying out bonuses at the same time is incredibly brazen.  AIG, Bank of America, etc. have the same problem.

The public and shareholders have grown weary of the weak arguments associated with bonuses.  Organizations whining about we can’t keep or find good people.  Are good people really only extrinsically motivated?  I mean can’t we find a “good” person for a measly half-million dollars that is more intrinsically motivated.

It would be naive to assume that incentive plans didn’t play a role in getting us into our current financial mess.  Excessive risk-taking is only part of the problem.  The sub-optimization, waste, cheating, manipulation, short-term thinking that incentives promote compromise US corporations ability to compete world-wide or compromise the trust of customers and other countries.

I am hopeful that we learn something coming out of this recession.  The same lessons that Dr. W. Edwards Deming tried to teach us . . . “Abolish incentive pay and pay based on performance.  Give everyone a chance to take pride in his work.”  He argued that 95% of the performance of any organization is attributable to the system in which they work, not the individual.  The individual can not be separated from the system.

After all, what is it going to take to understand Dr. Deming’s message . . . a huge recession?  Check, got that one covered.  Coming out of this mess, we will need a different leadership strategy to prevail.  Let’s start now.

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

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.  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

Share This:
facebooktwitterlinkedin
Systems Thinking and Contact Centers, Systems Thinking and Financial Industry, Systems Thinking Concepts

BofA, Jackie Ramos and Customer Purpose

Leave a comment

OK corporate America get ready for more of this as I suggested in my blog post The End of Buyer Beware.  Jackie Ramos, a former BofA employee is speaking out about the business practices of said bank (listen here).  I’ve listened to this video several times now and the mood of the nation favors her compassion over the “evil” business world.

Ms. Ramos was a customer advocate for BofA.  Her job was collections and she was told to do three things:

  1. Think of yourself as the customer,
  2. Do the right thing for the customer, and
  3. Do the right thing for the company.

She apparently did less of #3 and was fired for it.  Her crime was refunding fees and putting people that weren’t qualified for a “fix pay” (accommodating payment plan rather than 29.99% interest).

Jackie isn’t the first person to be fired for doing what she felt was right and certainly won’t be the last.

I am not here to debate the responsibility of debt (things like people should pay off their loans or who gave these people the loans in the first place) or even what corporations made bad decisions that started this financial mess.  And, I am sure there are many others including our lawmakers.  There is plenty of blame to go around.

My focus is on customer purpose.  Doing right by the customer always costs less.  Yet our organizations are built around business cost reductions and costs.  Few look to the causes of costs.

In the above BofA/Jackie Ramos scenario who is in a position to do what is right for the customer (in my world called who has knowledge).  Ms. Ramos outlines in detail some cases she had worked – a cancer patient and legally blind lady to name a couple.  These cases did not meet the criteria of getting relief based on policies (most likely) developed based on costs and not knowledge of the work.

What is the purpose of not working with a customer to help them.  The job of any collections department devoid of helping customers finding ways to make payments is to miss an opportunity.  The result of bankruptcy most likely ends in no payments to the bank, never mind the fallout of an angry customer or disenchanted employee.

The belief that helping customers costs money is one founded in the zero-sum mentality that there is a trade-off between costs and good service.  This is a fallacy.  Many times executives don’t see the costs of poor service until they get into the work and see for themselves the damage of bad policies and other cost-control decisions.

My business is to help organizations design their systems against customer demand.  This approach is powerful as the purpose of the work is not to submit to a policy or specification, but to serve the customer in the context of their demand.

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

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.  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

Share This:
facebooktwitterlinkedin
Systems Thinking Concepts

The End of Buyer Beware

2 Comments


Things have changed a lot over the past few years, which may be the biggest understatement I can muster.  Technology, social media, and a plethora of other ways to communicate are quickly changing the dynamics of doing business or dealing with government.  The bottom line is that bad news travels quickly.

Poor service or shady business dealings have fewer places to hide.  A blog post, tweet or YouTube video later and you will receive the wrath of scores of people about the performance of your organization.  I am seeing this with regularity especially as the internet finds new ways to expose organizations.

This can be a dangerous thing or a good thing . . . a double-edge sword if you will.  A false claim can be brutal to an organization, but I have found justice more often on the internet than legal action.  However, if many people have had a bad experience woe to the organization that consistently gives bad service.  In this day and age it will not be tolerated.

The old adage “buyer beware” just doesn’t (or shouldn’t) have a place in the collective psyche of business and government.  The internet/social media communities that are arising will find you and the damage to your brand can be devastating.  Conversely, doing right by the customer can help to build your business.

I have long advocated that good service is less expensive then bad service.  It is not a zero-sum game resulting in a trade-off between costs and good service.  Good service always costs less.

Looking to your own organization and finding those mindsets, practices, policies, etc. that are void of improving customer service or (worse) damage the relationship is a worthy endeavor.  These items are things like targets, incentives, complexity, financials and other command and control thinking that gets in the way of provisioning good service.  They become the defacto purpose of the organization and people focus on them rather than the customer.

With a new decade coming it will be increasingly important for the public and private sectors in service to do right by the customer.  This will require a new leadership strategy for service executives and government management.  One that focuses an doing “what matters” to customers.  The surprising result is happier customers, less costs and the end of caveat emptor.

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

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.  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

Tuesday, December 8, 2009 by Tripp Babbitt

 

Share This:
facebooktwitterlinkedin
Systems Thinking and Government, Systems Thinking Concepts

Driving Change in Government: Get Knowledge or Go Home

Leave a comment

Seems like each time I read something coming from the Ash Institute from Harvard, I am left shaking my head in disbelief.  It has now advanced to the point where I just accept that they will say things that defy all reality.  They can spin a web faster then any spider I know.
In the latest travesty John O’Leary in Driving Change: Go Big or Go Home likens government to driving a bus where everyone has access to a brake.  Meaning anyone can kill any change program in government.  He uses this as an impetus to basically run over people to achieve change.
Get Knowledge!
With apologies to one of our fine educational institutions this is ridiculous.  What got us in the mess we are in today is our inability to seek knowledge before seeking change.  Government management can only make assumptions about one thing . . . that they need to get knowledge before introducing change.

The cost of not getting knowledge is to guarantee failure in any organizational change management program.  The result is higher costs, worse service and a poor culture.  The political spin of this has to be exposed as administrations point to those costs that go down and not to the ones that increase due to this flawed approach.

Any new administration at any level of government management would be well-served to start by performing “check.”  This means understanding the what and why of current performance.  Not to come in with pre-conceived notions, agendas, mandates, milestones, schedules and project plans.

Further, Mr. Leary promotes the favorite of the Ash Institute which is cost cutting.  Even worse he promotes it as a top-down exercise.  Both of these again are command and control moves that increase government spending . . . let me explain.

Costs are often seen from activity and productivity numbers that are leading government management to take a shared services strategy or outsourcing.  What the fail to see is that cost are in the flow not the scale of activity (economies of flow).  To focus on costs increases them and instead we need government to focus on the causes of costs that are in the flow.

With respect to top-down implementation of a political agenda, we would be much better served to design our government systems from the outside-in.  This requires understanding demand while getting knowledge in “check.”  When we don’t understand demand we stand to outsource failure demand (demand caused by a failure to do something or do something right for a customer) or share services that shouldn’t be shared.

I have found a better way (as opposed to top-down) is to get knowledge of the work and engaging government workers.  Rather than a small group by engaging employees we get far more ideas for innovation.  And larger changes are accepted because when we make decisions with the knowledge of the work we don’t alienate those that do the work.

Think about it . . . would you rather have a small group innovating or the assistance of thousands to help facilitate change?  When you don’t make decisions with the work we wind up with SNAFU and FUBAR types of results and activities.

Workers engaged and understanding purpose and customer measures should be allowed to experiment with method.  This experimentation can lead to new methods and innovation.  New administrations would be wise to tap into this valuable resource pool.

Indiana has had a massive failure in the Welfare Modernization project they just cancelled with IBM.  Let’s not spin this any other way than a disaster that cost taxpayers money by not doing the things I have outlined above.  More approaches like this and we will continue to have to sell the public’s assets to meet the fiscal responsibilities of the state.

Join us for a new and better way to improve government at systemsthinkingreview.comwww.the

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

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.  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

Share This:
facebooktwitterlinkedin
Systems Thinking Concepts

Systems Thinking – The Purpose of the Work

2 Comments

If someone asked you to clean the table, what would be your response?  This simple question is at the heart of understanding the design and management of the work.  Let me explain.

When asked to clean a table a natural response might be “what am I cleaning it for?” (unless of course you are my teenage son who would respond “why”).  This seems to be an appropriate question am I cleaning the table to:

  • Do work or homework
  • To eat on the table, or
  • To perform surgery

For each of the above I would require different types of cleaning.  With knowledge of purpose I can set about performing my job in appropriate manner.  I can pull what I need to perform the job as needed (cleaning equipment, cleaning liquid, clothes, etc.).  Understanding purpose gives me context to the job to do.

A command and control (or traditional) manager doesn’t think this way.  There are a variety of reasons.  Some disrespect the ability of the worker to think, but most want control over the work to make sure the work is done right.  So what do they do?

  • Set Targets.  Things like I want you to spend 45 – 60 minutes cleaning the operating table. 
  • Standardize the Work.  A step-by-step process of what to do and how to do it.
  • Inspection.  This to make sure targets are met and the performance is “up to standards.”

All these things add to costs.  Targets don’t guarantee that the right things will be done.  Standardized steps with no deviation from method through inspection does not allow for better methods to be learned or even guarantee the purpose is understood by the worker.  Further, the work is really quite boring when I don’t understand purpose, can’t work with method and am dictated to by managers and inspectors.

For most service organizations and government management this (targets, procedures, and inspection) is the design and management of work that is followed.  As Frederick Herzberg said, “If you want people to do a good job, give them a good job to do.”

These aren’t the only barriers as we have scientific management theory (functional separation of work into specialties), incentives, front/back office design, top-down management, decisions separated from the work, cost focus and many others to overcome.  But the purpose of work and how we play it out should give one pause.  We can do better, there is a better way.

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

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.  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

Share This:
facebooktwitterlinkedin
Systems Thinking Concepts

"Thinking Envy" – For Those Who Like to Standardize

Leave a comment

Thinking Envy
New articles on standardization are popping up everywhere.  Most suffer from what I call “Thinking Envy” – a phrase to describe the bewildered that don’t understand why standardization can do such damage. So, with apologies to some of my “Down Under” friends that seem mystified by the concept, let me continue.

The issue with standardization is that it cannot absorb the variety offered by customers in the service industry.  (Qualifier: Manufacturing is not my domain, so the Lean manufacturing folks won’t go crazy on me . . . I am talking about service)  People running around looking for ways to standardize work fail to understand customer demand in service.  Unlike manufacturing the variety in service is greater.

When variety cannot be absorbed, the customer experiences failure demand (demand caused by a failure to do something or do something right for a customer).  In my post, Disney: Another Disturbing IVR Experience I describe my inability to decipher the standardized IVR menu.  My having to call back adds to the time and frustration of dealing with Disney (failure demand).

It doesn’t end with Disney . . . scripts are written in call centers, software is developed with best practice, 5S and standard work are applied to service . . . and I can’t even replace fries with celery.  Service worsens and costs increases . . . the loss is unknown and unknowable , but technology companies claim self-service and other “savings” from the application. 

The funny thing about self-service is that the same companies then claim the need for CRM because they just don’t know their customers anymore . . . oh boy!  Must be nice to be a technology company, they can sell both ends of the spectrum and usually do. 

The use of procedures and standards are to control behavior of the front-line.  They add costs as inspection and monitoring accompany the standardization effort.  We wind up doing work to the “right” standards, but this is not the same as doing the right thing.  The result is more resources and less thinking.

Add standardization with targets and we wind up with total dysfunction.  Yet, this is the way of the world . . . but it doesn’t have to be . . . you have a choice.

So those that suffer from “thinking envy” you can be cured.  If we understand customer purpose and design against demand we are well on our way to reducing costs, improving service and managing better.  This is a good systems thinking approach done with the worker and the work and I might add a better leadership strategy as an improved culture is the result.

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

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.  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

Share This:
facebooktwitterlinkedin