Embarking on Fatal Maiden Voyage”>95 Method for service organizations. Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.
Software Scope Creep
Tag Archives: bank management consulting
The Coming Mutiny in Operations
Call it a mutiny, a revolt or maybe even anarchy. But the suppression of operations has gone on for too long. Operations has been pushed around by HR, finance, information technology, marketing, sales and of course . . . management. But nobody puts baby in a corner.
The result of years of abuse by supporting areas has led to increased costs and a lot less sanity. Operations has been budgeted, branded, automated, contracted, down-sized, outsourced, shared, tarred, feathered and quartered. Yet it is still the only area that can create value in the eyes of a customer.
In my bank management consulting I have seen 100s of thousands of dollars spent on technology and support to get rid of two tellers. In government I have seen billion dollar contracts to modernize and automate that have turned to lawsuits against a Fortune 500 technology because of lack of performance. Nothing invested in operations in a complete disrespect of the people in favor of false hope.
How is it the core work of an organization has been relegated to the back of the bus? As a customer, unless technology enhances my experience or makes the job easier for the person I deal with, otherwise, spare me the agony.
With this coming mutiny by operations, the organization will be the recipient of a large bounty. More purposeful, more focused on what matters without all the foolishness attached to the supporting functions answer to creating value.
The US has not become more competitive on the world scale by following the siren song of those that should support, but instead act like prima donnas competing for scarce resources. They have allowed the pie to shrink and the investment to evaporate. Management has spent ungodly sums on a pig in a poke.
Beware the Ides of March are upon us, Caesars prepare.
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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 columist (Quality Digest and IQPC), speaker, and consultant to private and public service industry.
Share This: Technology with a Human Touch
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Autonomation was originally written about by Taiichi Ohno where he discussed “automation with a human touch.” This is a far different than the “let’s automate something because we have the technology to do it” approach.
Unfortunately, while doing bank management consulting I observe poorly designed systems where technology has been layered on top of the system. This leads to entrapping technology that locks in the waste of the design of the work.
Most of these designs were based on the functional separation of work and a mentality that includes eliminating people to reduce costs. My observation has been that many banks reduced two tellers, but increased their technology spend by $200,000 annually. The design of the work was at issue, not the teller or the technology.
More than one bank talked about how they had been able to centralize their operations into a back office in another location through the power of technology. But none were able to show me that this move had actually made things less expensive through this thinking. Pride (of technology) was more important than practicality.
We don’t have fewer tellers or back office functions in banking because of this thinking. Had banks taken Ohno’s advice to “automate with a human touch” technology may have a different and better role in banking or the service industry in general. Instead, old assumptions about what makes a bank efficient are perpetuated.
Technology has its place in our world and can make our work easier and more productive, but we are in dire need of understanding that technology is to support people and not replace them. This thinking will lead to better use of technology and workers.
Leave me a comment. . . share your opinion! Click on comments below.
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 columist (Quality Digest and IQPC), speaker, and consultant to private and public service industry.
Since IT Can, Should It?
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My good friend David Joyce brought up an old post on IT with the title of this post. David has a blog he started in April, 2009 titled Lean and Kanban and really has become a journey of applying systems thinking to software development and support. Now, if I can just get David to change the name of his blog.
In my original post Innovation without Technology where I posed the question “If IT can, should it?” I called out those that use technology as a panacea for all the ills of service business . . . which is most people. Calls for “Let’s automate the process” and “Our processes are too paper-based or too manual” ring through many service companies. These assumptions are costly.
While doing bank management consulting I started to discover how badly IT was broken. In small and mid-sized banks, there is a reliance on outside help for software development. But these vendors were ill-equipped to help these banks. Software vendors had ready made packages full of best practices, IVRs and other entrapping technology to achieve economies of scale.
The economy of scale proposition was attractive as they got software cheap or so they thought. As with many other posts I have written, reducing costs always increases them. Small and mid-sized banks cannot compete on scale, they must compete on flow (economies of flow).
The flow is the ticket to overcome the scale advantage of big banks. Just ask the Japanese how they were able to compete with and beat the US with few resources and a huge disadvantage in scale. The answer, of course, is flow.
IT companies can gain a considerable advantage using systems thinking as David Joyce discovered. Banks, governments and many other service organizations would gain greatly from software vendors that could grasp these concepts. The problem is the thinking and system design that gets in the way.
My experience with software vendors in banking and government is not impressive. The financials and structure get in the way. Financial targets breed schedules and project plans and the game becomes hitting the targets and timelines . . . and managing the scope through contracts and change orders. These things are all waste and when working with a software vendor beware the snake oil.
Before IT hits you for another expensive proposal – STOP! The design of the work needs to be looked at first. What is the work without technology? What is the customer purpose? Designing a system against customer purpose will save on your IT spend.
If you are looking to save on your IT spend, it will take a different approach than what software vendors are pushing.
Leave me a comment. . . share your opinion! Click on comments below.
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.
Share This: Wisdom or Superstitious Learning – Which is It?
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Many times when visiting a service organization, I run into what is called “wisdom.” Sometimes I find it is real wisdom and a lot of the time I find it is superstitious learning. CEOs, executives, managers and workers alike believe they have found wisdom from their past experiences. W. Edwards Deming would say “experience by itself (without the aid of theory) teaches nothing.”
Knowledge has two opposites, ignorance and error. If I can observe things from every angle, the restriction to one perspective at a time will not mean necessary ignorance. But if perception were restricted to a single angle, that relativity would mean ignorance. Ignorance of whatever sort increases the likelihood of error. – C.I. Lewis (Mind and the World Order)
Too many service organizations have become of a single perspective. A perspective of banks is to closely control employees while the really bad decisions are made by managers approving loans (sound familiar?). What these organizations need to improve is more perspectives.
Most organizations are run in command and control manner which is where we see decisions made top-down. I have found that the outside-in perspective is better when decisions are made. As no theory is wrong some are more useful tan others. It doesn’t mean top-down is wrong, but I have found it is not as useful as outside-in.
The experiences we have guide our wisdom, but many times we wind up with a single perspective that is superstitious learning (a form of ignorance). Superstitious learning is shown in the form of business assumptions. These assumptions we hear everyday and sound like this:
It’s a manual or paper process and automation will make it better.
Sharing services and outsourcing will reduce costs.
One best way to do something (best practice).
Incentives and targets are needed to improve performance.
Functional separation of work into sales, marketing, operations, front/back office, etc. is an assumed good design.
Lean manufacturing tools are good for service.
Standardization makes service better.
Organizations need plans, budgets, milestones to achieve business improvement.
All of the above come from a single perspective and this is no means an exhaustive list.
When top-down decisions are made we lose the perspective of the worker and customer. We need all to improve the design and the management of the work. The single-minded approach associated with superstitious learning is so sanctimonious it is dumb.
Executives and managers that have all this wisdom they have accumulated need to sort out their perspectives to see if it is from one (superstitious learning) or many perspectives (wisdom). Otherwise, experience by itself teaches nothing.
Leave me a comment. . . share your opinion! Click on comments below.
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.
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The New Way to Brand
After working with a banking software company, I understood that marketing was about building a brand. The problem was the service was awful. Piles of change requests and poor execution to customer demands.
This software company had it all wrong. They spent large amounts of money on marketing to build brand and reputation but were losing the battle on the front-line every day to customers. What mattered to many of the banks was decent service.
At the time I was working on the customer service calls about the software. Although they had 100s of change requests and broken code only about 50 got regular complaints from different banks. While I was working to get the software fixed the focus became to develop the brand.
The management paradox was that they wouldn’t need to brand if the service was good. The service could be the brand and build the reputation by word-of-mouth rather than false perceptions through slick marketing and semi-annual boondoogles to appease frustrated banks.
In recent years this formula holds true: when you take care of customers you build a reputation and then the brand will follow. This, of course, is exactly counter-intuitive to the way things are done today. Most companies brand, build reputation and then work on improving the transactions or service.
If the service is there customers will reference you to other customers. If it is not you may still get customers, but it will cost you a lot more. The constant need to replace or pacify customers will be a drag on the financials. Taking a different approach to branding will bring you more revenue for less money.
Leave me a comment. . . share your opinion! Click on comments below.
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/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.
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Forms of “Copying” that Lose You Money
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I mean seriously, what organization or government wouldn’t want to copy what another is having success with in the marketplace. It is the right thing to do and after all . . . everybody does it. This has to be right approach.
The problem is, it is not the right approach. Yet we are inundated with those that advocate and perpetuate things like tools, benchmarking and best practices. All are forms of copying and can get your organization to lose grown quickly.
Systems thinking begins with understanding that no two systems are alike. The translation is that all organizations are different. Think about it, different people, different customer demands, different processes, different technology and the list goes on.
So why is it that consultants, technology companies and others always want to copy? Usually because they weren’t the ones that came up with the method, but anyone can copy. This approach doesn’t teach people in organizations how to develop new methods and what I find with tools is no one seems to be discovering new ones.
And so it goes with systems thinking, we teach that all organizations are different. Three good questions to ask before copying: Who invented the tool? What problem were they trying to solve? Do I have that problem? In service industry this is constantly abused by lean practitioners as they apply lean manufacturing tools to service (never a good idea to blindly apply).
As for best practices, the issue is that this is usually applied by software development firms that want to sell the standard software package. There is no “one best way” and this approach totally discounts that there is always a better way. I start to hear things like “everyone uses an IVR” (Interactive Voice Response) for their call center and you should have one too.
No, you shouldn’t and other blog posts will tell you why. It is to assume that this will make things better and we know that assumptions are bad to make. This is true especially when dealing with systems as complex as service organizations.
Organizations spend a pretty penny benchmarking against each other to compare, what a waste of resources. It is difficult enough to compare (and expensive), but in comparing to a different organization in the same industry we ignore the fact that all organizations are different. So save your money and invest in your own organization. The truth is every organization has what it needs within it to improve.
Another reason for not copying is that you will never catch up. Manufacturers for years have been trying to “catch-up” to Japanese Manufacturers. The problem with this approach is that you never catch-up, unless of course you are Toyota that has left the door wide open. The Toyota problem is copying the US investment community and has left Toyota with the same short-term thinking that has infected the US for so long.
For me, it is the thinkng that develops good ideas to improve systems. To improve performance we have to change our systems (and no this is not just processes), we have to change our thinking about the design and management of work. No copying in the form of tools and best practices, but the mindset to create the improvement.
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/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.
Banking – 5 Ways to Make Your Operations Profitable
The banking industry has been through nothing short of hard times lately. Many banks are in varying degrees of distress or will be. So, what can banks do to help their cause.
Having worked with banks for almost 10 years performing bank management consulting, I see many opportunities to improve service and reduce costs. Here are some ideas that may help.
(1)
Functional Design.
Every bank I have ever been has designed the work Frederick Taylor style (scientific management theory) separating the duties into specialties. This has created the well-known front office and back office environment. Many times this design has been locked in by technology that inhibits the flow of service and creates waste.
(2) Separating the Decision Making from the Work.
Banks are built on command and control thinking with the workers working and the managers managing this presents a missed opportunity. Most bankers in management have “done the work of a teller” at one point in their career. But things change and with out a thorough understanding of the work as it is done today, wrong or poor decisions are made. Banking management needs to be on a constant vigil to understand the work and not abdicate decision-making to reports, vendors or anecdotal evidence.
(3) Understanding Customer Purpose and Demand.
When I visited a bank, most executives and managers thought it was bizarre that I would want to start at the front-line. The points of transaction for customers is where improving banking systems begins. Understanding the what and why of current performance naturally leads us to where the customer touches the bank. Contact centers, tellers, and loan officers offer a good opportunity to easily understand how well a bank is performing in the eyes of the customers. Understanding “what matters” to customers and the types of demands presented can be a profound education.
(4) Technology and Automation.
When you combine making decisions about the work without knowledge, poor work design and technology you get huge amounts of waste in banking. The use of technology and automation is over-prescribed in banks at great cost. Technology folks and IT vendors running around looking for ways to use technology without questioning the design or understanding the demand.
(5) Best practices, Copying, and Standardization.
All of these lead to increase costs and worse service. The inability for standardization to absorb variety leads to failure demand demand caused by a failure to do something or do something right for a customer). When workers find the need to standardize they can pull it in, forced standardization is never a good idea. Copying and best practices (a form of copying) lead to much waste as all banks are different by culture, management, work design, structure, customers, etc. to copy is to miss opportunity for innovation and new methods.
Any bank looking to improve service and reduce costs should find plenty of ideas with each and all of these.
Some sample results are:
|
Measure |
Before |
After |
|
Bank servicing |
Failure Demand – 60% First Call Resolution – 30% |
Failure Demand – 10% FCR – 92% |
|
CD |
Retention – 20% |
Retention – 42% |
|
Mortgages |
Conversion – 21% |
Conversion – 95% (and the 5% were ones the bank didn’t want) |
|
Card Servicing |
Failure Demand – 54% FCR – 24% |
Failure Demand – 18% FCR – 86% |
These results are from a bank management consulting engagement that resulted in a 20% reduction in expenses in one year. You may be getting these results, if not, you may want to learn more about the 95 Method.
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.
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Want an Incredible Customer Experience? Don’t Copy Zappos, Apple or Disney
Zappos, Apple and Disney . . . some names often mentioned for the great customer experience offered. I am not here to debate whether they are or not. The issue is YOUR service organization should NOT copy any company, process, technology, best practice or anything from another company any time. That means never.
Salespeople will tell you about the standard option or what is hot. Technology salespeople are wizards at this and will say things like “it is best practice” and “everybody uses it this way in the industry.”
You see the problem is what works for another company won’t necessarily work for your organization. Systems thinking tells us that each organization is unique by structure, culture, management thinking, work design, etc. and copying another organization without understanding the differences is to create waste and sub-optimization.
While doing bank management consulting I saw banks copying other banks all the time. The front office, middle office and back office design was copied over and over again. The design in most cases was faulty and they had to have the added expense of buying technology to move things from front to back office making their technology costs sky rocket and their service get worse.
A company that has success, usually has success because of its unique abilities. Copying another organization just makes you a “wannabe.” It is not very original to tell your customers we are just like Zappos, Apple or Disney. In the words of Genie (from Aladdin) . . . “Be yourself.”
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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.
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Why "Best Practice" Suffocates Thinking and Innovation
Talk about overused phrases in business . . . the phrase “best practice” is at the top of my list. Annoyed by a word that can immediately shut down the brain. While doing bank management consulting the Fortune 500 company I contracted with threw this word out consistently in discussions with customers. “This is best practice to process applications this way” or “You really don’t want something different this is best practice”, and often I would stand in disbelief as the banking customer or prospect actually believed it. Rarely was there any evidence to support the “best practice”, but even if there was, what purpose would it serve?
One thing drilled into my head through W. Edwards Deming, Taiichi Ohno and application is that organizations should never blindly copy. The minute I heard that a bank was copying another bank I knew trouble would be found in time. All systems/companies are as unique as each individual. They have different structures, work design, management thinking, workers, skills, constraints, customers, demands, etc. And copying a process or idea from another company does not guarantee success and my experience is that either it flops or new ideas and thinking is stifled.
So What’s the Big Deal?
Simple, “best practice”, copying and standard work and the like don’t allow the absorption of the variety of demand offered by service. I love the Olympia Restaurant skit from Saturday Night Live (click here to watch). This to me is what I see in service organizations. They have built systems with “best practices” that don’t allow the customer to pull value. It’s much simpler to code software, have standard work and scripts as the bean counters will say, “we saved money!” Customer demands have variety and they say, “I’ll go somewhere else to get my demands satisfied.”
Taiichi Ohno built Toyota to handle variety of demand and in service the variety of demand is even greater. Ohno understood that costs were not in “economies of scale” (another best practice), but that in a management paradox, costs were in demand and flow (economies of flow). He understood that focus on flow reduced costs, focus on costs and costs will rise. Further, by taking a systems thinking approach I have found that things like “best practices” inhibit flow.
Taking approaches such as “best practice” allow people to quit thinking and start doing. But the approach Deming and Ohno pursued was that there was always a better way . . . so why stop thinking? Each unique system has everything you need to know to make it better. There is no reason to seek a best practice, copying or benchmarking.
Our approach is to begin by getting knowledge in your system, but starting with “check.” Check allows an organization to understand the “what and why” of current performance or get knowledge about their own unique system. It is a better way.
Leave me a comment. . . I can take it! 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.
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