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12/25/2008
Fit for the Future – Part 6

Step 6: This means me

So did you change the way you think? If you carried out all of the exercises in Steps 2 to 5, you should at least have had a few doubts about things which managers have traditionally taken for granted. You may have gone further, you may be a committed systems thinker. If so, this article will simply echo things you have discovered for yourself. For the uninitiated, this article will represent an affront to traditional management practice, so please don’t spread it around, we don’t want to upset people.

The central argument in this series has been that to achieve a quantum leap in performance, we have to be prepared to change the way we think. The major disease of modern organizations is in their design and management, and through this series I have encouraged you to take a different and better view of the design and management of work. In summary, this is a systems view. I didn’t invent it, I learned it from the work of W. Edwards Deming, Shigeo Shingo, Taiichi Ohno and others. These are the people who led a transformation in Japanese manufacturing in the 1950s, their ideas are still not understood by most managers, yet when employed, they can have an enormous impact on performance.

“Where’s the proof?” I hear you ask.
Let me give you just one example: The number of man hours Toyota take to build a Lexus is LESS than the number of man hours a German luxury car maker takes in re-work at the end of the line – after the car is made!

How does Toyota achieve this? Do their people work harder? Is it because they are Japanese?
No, neither of these; their secret is in the methods they use to design and manage work. Work is designed and managed according to systems principles. I often say to my clients “It’s a good thing you don’t make cars! For it would take forty years to catch up with Toyota“. However, if you make nothing, if yours is a service organization, these ideas can be implemented and the benefits achieved in a very short time.

In this, the final article in the series, I shall summarize the distinction between traditional management thinking and systems thinking and discuss some truths that systems thinkers know, which go against the grain of what most managers take for granted. As space is limited I shall not give further examples; examples can be found in the previous articles in this series.

Figure 1: Traditional thinking versus systems thinking

Standards are a roadblock/hindrance to improvement

Just about every government official promotes the value of standards. If only they knew the damage that results. Standards appeal, they are grist to the political mill – ‘publish a standard then publish performance against it’ is the simple and simplistic political cry. Yet this very behavior undermines performance and worse, it engages people’s ingenuity against rather than with their systems.

Moreover, they encourage others not to over-achieve in fear of the standard increasing. We have seen all of these responses in our health services, police services and schools. They are not new phenomena, we have seen the same in our private sector organizations for years.

The minority of private sector organizations that have learned the error of these ways employ different and better measures – capability measures. Capability measures (see Step 3, Think capabilities) make it easier to connect ends with means and therefore make it easier to get the discussion on to method. It is better to know what is predictable about the performance of any process or system than whether and how often it performs to a standard. The capability or predictability of performance is governed by the nature and extent of variation. Capability data leads managers to look for and understand the causes of variation; by acting on them performance improves – always.

Managing with productivity measures gets you less productivity

The cost accountants have had too much sway over the way our managers manage. The logic, as with standards, is plausible – if everyone makes budget, the organization succeeds. But again the focus becomes ‘make budget’ by any means possible. The focus should be on understanding the relationship between means and ends, something only capability measures facilitate.

People do what you count, not necessarily what counts.  If you ‘count’ budget, standards, targets, activity and other ‘productivity’ measures. That’s what you’ll get, regardless of the impact on your system. If, on the other hand you ‘count’ achievement of purpose, you’ll get better at what you exist to do. Measures of purpose are always ‘outside-in’ measures, not ‘top-down’ measures.

If you have measures that relate to purpose in the hands of the people who do the work, they will feel able to experiment with method. You will gain a free brain with every worker – something traditionally designed and managed systems ignore. Motivation becomes intrinsic, people learn, people are excited about what they change and improve, simply because measurement has been integrated with work, not separated from it.

Incentives get you less (not more)

Managers believe incentives have value in driving behavior. They are wrong. This is not a matter of opinion. All the research evidence shows that incentives get you less work and, more importantly, they result in people attaching less value to their work. In schools, for example, children have been given pizza coupons as an incentive for reading books. When the tokens stop, so does the reading. What are the children learning? Not to value reading?

What accounts for poor quality selling in so many sectors?
Incentives. In the few organizations that have removed sales incentives they have

·        improved co-operation between salespeople,

·        decreased sales force turnover,

·        improved the quality of selling – hence improved customer satisfaction – and, above all,

·        they have improved revenue.

Systems thinking is a better way to make the work work

In this new millennium, we are witnessing a fundamental challenge to our beliefs about how to design and manage work. In my experience, this is not something that can be stirred by lectures and presentations, it is something you have to feel. As a common expression goes, “You have to be there”. If you have followed the exercises in this series you will have made a good start; you will have found for yourself the sub-optimization caused by traditional methods of designing and managing work. I have found it is only this type of ‘hands-on’ experience that gets managers interested in a better way.

If you really want to get fit, if you really care about productivity and profit, I recommend you take a systems view. It starts with you.

Articles were written by John Seddon (Managing Director) and Vanguard Consulting Ltd.  He is an occupational psychologist, author and consultant.  John describes his work as a combination of systems thinking – how the work works, with intervention theory – how to change it.  This article has been edited by the people of Bryce Harrison Inc. (USA).  The Bryce Harrison website is www.newsystemsthinking.com.