Innovation without Technology

Thursday, October 1, 2009 by Tripp Babbitt


Let me take you back to a simpler time when people helped people.  I’m not talking about Little House on the Prairie times, but probably late-70s and early 80s where computers began to dominate the scene.  Since this time our fascination and zombie-like attitude toward information technology (IT) has continued . . . at great cost.

A combination of media, business and government  with unbridled exuberance has done nothing to . . . well, keep things in perspective.  When improvement is needed we turn to technology.  Innovation leadership can not be achieved without IT, correct?  Wrong, and not just wrong but costly wrong.

In our collective psyche we have managed to place IT on such a pedestal it has become a dominate industry, more so than the industries to which they serve.  But in a management paradox, IT has failed to deliver in many cases.  And I am not just talking about missed schedules and cost over-runs.

The problem is that in our rush to go paperless (never happened) and automate (not always a good idea), we lost track of the ability to design and manage work optimally.  The current thinking of outsourcing, shared services, business analytics, Business Process Management, IVRs would never have been possible without Information Technology.  But one question never seems to get asked, "Since IT can, should it?"

I have to say a resounding NO is in order.  In fact, I would submit to you that larger gains in innovation can be achieved through better thinking around the design and management of work and pulling IT into the work as needed is more in order.  Then maybe, just maybe we can learn that cost reduction and business improvement can come from better thinking and not IT.

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.




 

Target Obsession Disorder (TOD)

Friday, September 25, 2009 by Tripp Babbitt

Worse than the outbreak of H1N1, Target  Obsession Disorder (TOD) has been around a lot longer.  There really is no cure for this disease, save one . . . stop doing it.  The sad part is most don’t recognize TOD as a disease.

Where did it begin.  In a public company probably the boardroom.  In a private company or public sector it began with the budget, filtering down the numbers by function (sales, operations, etc) and then monitoring the numbers in executive or functional meetings with performance against plan.  Riches for those that make the numbers or unwanted attention (or worse) to those that don’t.

So, managers and workers alike are given targets and the discussion at most companies surrounds "making their numbers."  "Hey, Tony . . . what’s it gonna take this year to make the numbers?"  Tony (in response) "cheat, well not cheating we will just manipulate the numbers. You know, early revenue recognition, shift some costs around, RIF . . . we’ll hit those numbers." 

All this ingenuity to hit a target can be repurposed to understanding the work as it is delivered from and to the customer.  Finding better ways to make the work work reaps enormous gains for service companies not preoccupied with targets.

For service organizations wallowing in the mediocrity of Target Obsession Disorder and the control it brings.  There is a cure that will result in business improvement and business cost reduction.  It is to realize greater control and cost reduction can be achieved through flow than targets, function or activity.

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.

The Great Customer Barrier – The Interactive Voice Response System (IVR)

Wednesday, September 23, 2009 by Tripp Babbitt

Frustrated CustomerI have posted many times on this subject, yet as companies find ways to "save money" they turn to technology that increase costs, makes customers shake their heads and take actions that make companies more unprofitable and less competitive.  Really, enough with the snake-oil and one of the worse technologies ever invented . . . the IVR.

But everybody has one (whining).  Sorry, time to fess up, pay the piper and get real.  Customers hated them when they first came out and hate them today.

A better customer management process does not have to include the IVR system.  I know everyone has one, but really.  You don’t need one and it does not save you money.  It is nothing more than a poor sorting process in the best cases and chases away customers in the worst cases.

Contact center executives continue to believe  that that separating the calls to specialists is a good idea so that customers get the right answers, but getting to that specialist is a journey through hell for the customer. IVRs (as with all technology) has to standardize things in the menu options.  What is not realized is that customers may have a variety of problems and I have to talk to several different specialists as a customer.  This is wasteful for both customer and service organization.

I have a better solution.  Service organizations should study customer demand and purpose from the customer perspective.  Derive customer measures from this purpose and redesign the system to accommodate variety of demand offered by customers.  While you are doing this at least offer the customer an option to talk to a human.  Humans a better able to absorb variety offered in service.

Redesigning against customer demand will help achieve corporate cost reduction and business improvement.  The management paradox here is that as service improves, costs will fall.  Happy customers are less expensive to take care of and when you do take care of them they will come back for more.

Leave me a comment. . . What’s 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.

 

Give’em a Better Job to Do

Tuesday, September 8, 2009 by Tripp Babbitt

Cooperation and Coordination?OK, Labor Day and I’m looking for a picture of istock.com that depicts the cooperation between workers and management . . . none found.  Maybe I shouldn’t be surprised by the absence of such a picture.  The management and the work have been separated for far too long . . . one of the reasons we have too many chiefs and not enough indians.  You can either be counted as a manager that does something (command, control, edicts, policies, rules, etc.) to someone or be the someone and most people don’t like to be the someone.  Because the someone gets coaching, appraisals, targets, carrots, sticks and when things really get bad blamed or reduced.  If that isn’t enough, management gives the someone tools and technology that make the work harder.  By the way, I am not talking about your company . . . I’m talking about the other company.  Like Congress, it’s not MY representative it’s the other ones.

The problem with this in service is the culture and bad culture is expensive to maintain.  Think about if you aren’t having to inspect and monitor everything because of incentives, policies, compliance, etc., you have to inspect and monitor because of distrust.  Inspection and monitoring is expensive and adds to costs.  Firing is expensive because we have to hire another worker and train them and who knows the next someone may be worse than the someone you just had.

My modest proposal is to give the worker a better job to do.  When workers understand the purpose of the work is to serve customers and not targets and incentives, new measures emerge and these measures are relevant to the customer.  A far cry from the traditional measures given to them top-down with targets and incentives.  New measures and understanding of purpose give way to liberating method where the work becomes more interesting (as opposed to the prescribed method of telling what to do) and innovation follows.  This method leads to business improvement and corporate cost reductions (structure costs less to support) accompanied by improved culture.  Then maybe . . . just maybe we can find a picture of management and worker happily together at istock.com.

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.

Economies of Flow Defined for Service

Tuesday, September 8, 2009 by Tripp Babbitt

Have you ever called customer service and wondered why it took so long to get an answer?  Most people blame the representative that they are talking to at the other end of the line.  "Stupid people, they just don’t train them very well" or "This company must hire the dumbest people" is usually the conclusion.

Tripp BabbittWhat if I were to tell you . . . it is not the representative’s fault?  Indulge me for a moment.

Some time ago, I came across the term "economies of flow" when reading John Seddon’s Freedom from Command and Control.  He was describing the important work of Taiichi Ohno in manufacturing.  For those not familiar, Taiichi Ohno is one that uncovered some counter-intuitive truths at Toyota. 

In order to compete in the automotive industry, Mr. Ohno had a problem.  He didn’t have the same number of press machines that the Americans had . . .  in fact, he had only one machine.  This wasn’t the only problem Mr. Ohno had, the other problem was the variety of demand in styles and options in automobiles.  In those days, to handle the variety, Ohno was faced with change-overs to different styles and options of about 10 days. 

Out of necessity (one machine), he worked to reduce waste in the changeover process reducing the time to 10 minutes.  A counter-intuitive moment occurred . . . smaller batch sizes actually reduced costs, because problems were caught earlier with smaller batches and less inventory was required.  He had reduced the time between the order and completion of the product.

In service, John Seddon discovered that variety was even greater.  He realized that the ability to handle variety was key to improving service and reducing costs.  Further, what he discovered was that "people are good at handling variety and computers are not."  This meant that in service the need for fewer computer applications and systems (in a management paradox) leads to more control and ability to absorb variety with people – reducing costs AND improving service.

I know what you are thinking . . . NO WAY! Everyone is investing in technology to reduce costs and improve service.  BPM, IVR and a host of other existing and emerging technologies are being sold as the panacea or cure-all for the next service problem. What we have found is that computer systems (for the most part) prevent the absorption in the variety of demand.  Partly because of the things that precede IT applications like best practices, scripts, written procedures, etc. that wind up entrapping the service worker and not allowing them to handle the variety offered.

Does this mean the end of IT?  No, it doesn’t mean the end of IT.  IT needs to be movedEntrapping Technology back to the supporting role it once had, up until IT vendors started selling solutions with out understanding the problem . . . and the problem is variety of demand.  The work and the people who understand the work need to "pull" technology as needed to enable the work that needs to be done.  Something all service organizations need to improve to achieve corporate cost reductions that last.

What we have is an important business cost reduction method that if leveraged will bring about a change in thinking that can start an organization down a path to reducing expenses and improving service by the ability to absorb variety.

Where does my organization start?  How can I quantify the inability to absorb variety? When a service organization (private or public sector) can not absorb variety the fallout includes (but not limited to) failure demand.  Failure demand comes from the failure to do something or do something right for a customer.  Things like missing an appointment, chasing progress on an order, etc.  I have found this number ranges between 25% and 75% of all contacts from a customer for service organizations.  This is an exercise that will bring service organizations to the doorstep of business improvement.

Does your service have failure demand?  Let me know what you find.

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.
 


Call Centers: Where Outside-In Performance Improvement Begins

Tuesday, September 1, 2009 by Tripp Babbitt
One often hears that quality begins in the boardroom.  This implies that (1) the boardroom and the people in it actually understand the work being done between the customer and their organization and (2) that the boardroom actually understands how to run the organization as a system.  Those are two items that would be a stretch for any service organization, but are needed to achieve business improvement.

So, here is a suggestion.  Those looking for a better leadership strategy may want to consider designing against customer demand.  An approach that requires the organization to look and understand current performance from the outside-in and not top-down.  This would require executive and front-line worker understanding current performance by performing a "check" of the system.  What are the types of demand received? Are these demands of value (things customers want to give and get from your organization)? Or are they failure demands (demand caused by a failure to do something or do something correctly)?  We can refer to this as getting knowledge about the organization and more specifically customer demand.  My company has found that you will find somewhere between 25 – 75% failure demand in service organizations.  Most organizations can not tell me this number and yet project plans, technology buys, organizational changes, etc. are done without knowledge. 

This leads us to Willy Sutton (the original Slick Willy) the depression era bank robber when asked "Why do you rob banks?"  His response, "because that is where the money is"  . . . and no this is not an advertisement for Activity-Based Costing.  An organization needs to go to where the knowledge can be gained . . . no, not a report or an anecdotal witness to activities . . . but where the customers are.  Where are they?  At the transaction points of your business, for service organizations that is (but not limited to) the call center.  Customers calling in every day with their demands, some value and some failure. 

Getting knowledge leads to an understanding of purpose and better measures that constitute the customer perspective and not the department or function perspective.  Customers don’t care that the other department was responsible for their problem, they see things differently than the function-by-function separation of work that we have built into our service systems.  We have become functional specialists by design and unable to serve the end-to-end demands of customers. 

Better designs for customer demands almost become self-evident once we gain knowledge about the nature of demand.  This allows a better customer management process to be achieved.  Because designing the organization from knowledge of customer demand helps us make the right choices regarding what will create value for the customer with regards to technology, policies, work design, structure, procedures, etc.  Otherwise, it is just a shot in the dark hoping to hit something.

Call centers can aid in this process by getting knowledge about customers by understanding the type and frequency of demand and whether it is – value or failure.  It’s taking leadership in understanding customer demand by performing "check" (or getting knowledge).  This is a value add to customers, executives and your organization.

Performing a Brain Enema on US Service Organizations

Wednesday, August 26, 2009 by Tripp Babbitt

The appeal for a change of thinking in the design and management of work in US service organizations is one requiring a certain . . . attention.  So, as opposed to a change of thinking, a brain enema may seem more appropriate.  A complete flushing, not of gray matter, but of the flawed beliefs that inhabit the gray matter regarding business improvement.

What is at issue?  Quite a lot for service organizations, these items are well-documented on my website.  The command and control approach which is diametrically different than systems approach I promote (see command and control vs. systems thinking).  But the problems run deeper for me, as a "reformed" Lean Six Sigma Master Black Belt I have seen more waste and sub-optimization than I care to post.  When you see that Lean and Six Sigma are very limiting compared to the magnitude of change that you get from a management brain enema.  I have seen black belt projects that save anywhere from $25,000 to $300,000, but with systems thinking the magnitude is far greater and systemic.  This is especially applicable to service and improvements come quickly.

What needs to be flushed?  One management paradigm to be expelled is the notion that work is activity and activity is cost.  The preoccupation with 3 questions:

How much work is there to do?
How many people will it take to do the work?
How long will it take people to do the work?

These questions lead to focus on the wrong things like targets, procedures, scripts technology, standardization and many other cost increasing, service decreasing actions.

Economies of flow has caught the attention of many readers.  Here is where we flush out the three questions (above) and look at our systems from the perspective of the customer outside-in and dump measures of activity to those associated with customer purpose.  The result is better service, increased capacity, reduced costs and improved culture.  Yes, even culture is improved as purpose is understood and better measures from the work a service company can allow the worker to engage their gray matter to improve method and even to innovate.  Sure beats the prescribed, command and control method that only audits compliance based on subjective criteria.

Flushing out the brain can lead to improved performance for your service company, but only if you replace it with better thinking.

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.


The Curious Case of John Seddon

Thursday, August 6, 2009 by Tripp Babbitt

In my life, I have had the pleasure of meeting some very famous people.  I went to Hanover College with Woody Harrelson.  I met many Indy 500 race car drivers like A.J. Foyt, Al Unser, Sr., Mark Donahue, Swede Savage, and Tom Sneva.  When I went to the ’93 Ryder Cup, I remember during a practice round striking up a conversation with the late Payne Stewart.

But the most memorable people I have had the pleasure of talking to are W. Edwards Deming and John Seddon.  I can safely say there are more differences than similarities between these two.  Dr. Deming had long forgotten probably more than I will ever know and he was not so dynamic in his delivery, but his message was undeniable.  More importantly, he pretty much said during his 4-day seminar that everything I had learned in my MBA program was well . . . wrong.  John Seddon on the other hand very spicy.  Likes to mix it up, calls them as he sees them and very dynamic . . . a stone that gathers no moss.

Long before I first met John Seddon, I read his book Freedom from Command and Control.  An excellent book, but John was not a statistician like Deming.  In a matter of fact, he is an occupational psychologist by education.  I was skeptical as any psychologist I had met in the US was usually associated with organizational development . . . and to quote Jerry Seinfeld "not that there is anything wrong with that."  Just my previous experience was that he probably would be having clients give group hugs and kick balloons to develop teamwork.  The book itself laid to rest quickly those thoughts.  So, like anyone curious enough to learn more, I flew to the UK and met him.

The first thing you learn is that John rarely beats around the bush.  He is hard-hitting and brutally honest.  More importantly, he is in unwavering in his message that to improve service thinking has to change for business improvement to be effective and sustainable.  This was the fourth leg of the System of Profound Knowledge that Deming didn’t have much of a background in.  John Seddon had spent time understanding Deming (and Taiichi Ohno), not from a book, but from practical research on why change management programs failed.  His application of Deming and Ohno had advanced the thinking.  Something that TQM, Six Sigma, Lean or Lean Six Sigma in the US has failed to do.  The problem was tools were preventing learning.  And management thinking has failed to advance as process improvement made things better for a while leading to unsustained business improvement.

The Deming User’s group I had been President of in Indianapolis ultimately shut the doors.  I am afraid that as great a man as Deming was he was never able to get the thinking to "stick."  The thinking was replaced by tools or arguments over what Deming said that really did little for us to advance the thinking.  Let’s give John Seddon of the UK some credit for doing what other great minds have failed to do . . . advance the thinking.

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

 


The Wall Street Journal’s Story on Starbucks and “Lean”

Tuesday, August 4, 2009 by Tripp Babbitt

Okay, I am glad that Starbucks is recovering and they have found efficiency in "lean."  But such articles (The Wall Street Journal’s article, "Latest Starbucks Buzzword: ‘Lean’ Japanese Techniques") should come with a warning label as people need to understand that copying Starbucks will be a huge mistake.  Lean manufacturing tools and the pursuit of the customer experience do not always go together.  Lean tools tackle the customer experience as an efficiency problem and some times it is and some times it isn’t.  Think about it . . . does every service organization want their customers flying in and out of their business as fast as possible?  I don’t think so.

Working with a bank in North Dakota I found that large groups of customers like to come in and stand around, eat cookies, have a cup of coffee, some conversation.  Could you imagine someone rushing them out the door in this setting?  The point is your service organization may need something different than Starbucks.  A Service company shouldn’t start to go nuts on "lean", "six sigma" or "lean six sigma" tools . . . like I know will happen anyway. 

"Lean" manufacturing tools really don’t transfer very well to service industry anyway (see: Lean Manufacturing is Not for Service Organizations).  The variety of demand gets in the way.  Although Starbucks is almost a "pseudo-manufacturing line" they will miss opportunities if they just have the "lean team" do the work for them.  They would be better off understanding the customer demand and purpose and allowing the front-line to figure out ways to absorb the variety of demand.  Business improvement need to be unique to each organization and their customers, demands, structure, management thinking, work design, technology, etc. it is what makes you different.  Copying will only lead to trouble.

So before every service organization runs around with stop watches and spaghetti maps, can we stop and think first before implementing "lean" manufacturing tools in service?

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.
 


A Fundamental Thinking Problem

Friday, July 31, 2009 by Tripp Babbitt
I have been a part of many "discussions" this week.  Most of them around my posts that challenge conventional wisdom on things such as best practices, targets and incentives.  I usually find that people conclude that organizations just aren’t using it (technology, measures, rewards, etc.) right or people are to blame (stupid people).  When I suggest it may have to do something with the way we think about the design and management of work . . .  the response is some variation of "no, that isn’t it."

But that is it!
We are putting all of our resources into the wrong things. Like:
  • inspection and monitoring believing they make quality services
  • the belief that economies of scale will reduce costs
  • the belief incentives will motivate people
  • leaders need visions
  • managers need targets
  • technology to drive change

Businesses and government have become dysfunctional based on flawed thinking.  A better way to think about the design of work . . . we reference as systems thinking.  By taking people to the work and getting knowledge we can show them new ways to improve and it exposes problems to the way they currently think.  It is that shift in thinking, but egos and position get in the way.  The (typical) US mindset inhibits us from admitting mistakes in our thinking and moving on.  One is left to ask,"How could I have been so wrong about the design and management of work?"  It is to admit failure from some people’s mindset.

The Better way, you may never have heard of
The ability to discard thoughts of failure in favor of learning is a fine line.  Can we not learn or was that only for when we were in college?  The management paradox of new thinking may be the decider.


The above table offers a change to the fundamental thinking we have all been taught as the best way.  Our only hope is to continue to improve the way we think about the design and management of work.  There will always be a better way to do something.

The wonderful thing that happens as we change thinking is that we are given the ability to improve exponentially.  The improvements are large and will give any organization employing it an unprecedented competitive advantage in improving service, cutting costs, improving culture and innovation opportunities.

Looking for strategic change management that gives you wholesale business improvement requires a change to the fundamental thinking about work and how irt is managed.

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.

 

Big Companies are Really . . . Shhhhhh . . . Small Governments

Tuesday, July 28, 2009 by Tripp Babbitt
I have worked with many different Fortune 500 companies in my career and the one item that they all seem to love is bureaucracy.  They have become small governments and some of them actual exceed the GDP of some countries.  So, why does it come as a surprise that they desire the same bureaucratic ways as government.  The sad part is many small companies lose the advantage they have over these behemoths by trying to become more like them.  The endless copying, project plans, cost/benefit analysis, targets, appraisals, inspection, monitoring, milestones, deliverables, technology, scripts, procedures, etc. become more entrapping than enabling to the small systems.  Yet, time after time I see companies trying to emulate the best practices of the big companies.  All the while in the pursuit of saving money these companies just keep adding expenses that offer little and usually no hope of a profitable return.

When you look at the reasons big companies operate the way they do, you will find flawed thinking around their actions.  They include:
  • Scientific Management Theory – The functional separation of work by department and unit with individual and group financial and performance targets.  All leading to sub-optimization and worse performance and lower morale.
  • Separating the decision making from the work – Big companies make decisions without knowledge about the work they manage, instead relying on reports and anecdotal evidence.
  • Technology – Because they never actually understand or see the work in big companies executives and managers require more and more technology to "control" the work and their pursuit of knowledge only winds up giving them information . . . not knowledge (let’s not confuse the two).
  • Productivity – Big companies are all about activity, they see activity as something to measure and keep track of when in reality it only adds waste.  Workers in big companies running around with procedures to write, project plans, PowerPoints, check lists, etc. to make sure the work is controlled, inspected and monitored.  While the people on the front-line doing the real work are left with "checking their brains at the door."
This isn’t an exhaustive list, but you get the idea.  So why do companies that are small and mid-sized follow these companies blindly. . . "We want to be big (and stupid) like the big companies."  I have talked about economies of scale being trumped by economies of flow which levels the playing field for organizations of all sizes.  But a new leadership strategy for companies of all sizes is required.  Business improvement doesn’t require most (if not all) the non-sense that big companies (aka small government) purport be required as most of it
is just waste.

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.

Throwing Technology at the Problem

Tuesday, July 21, 2009 by Tripp Babbitt
You see it every day in the newspaper somewhere.  A failed public sector innovation project that attempted to use technology as the tool to achieve efficiency.  Not that the private sector doesn’t have the same problem it just doesn’t make the newspaper as often.  But when things go awry in the public sector . . . everyone knows.

The problem starts with the call by stakeholders (newspapers, executives, legislators, etc.) to:
  • Automate a manual system
  • Replace "old" technology or an antiquated system
  • Reduce costs
I have never found these to be good places to start in the public or private sector.  The technology companies are all too willing to accommodate the request with either custom or pre-packaged "solutions" that will make things all better.  They usually don’t and in most cases make things worse.  With great waste the consumers of these solutions are left to the contract they negotiated for satisfaction.  Sometimes I  have even seen technology companies give away technology to satisfy a dissatisfied customer . . . just what a company needs is more of a mess as a "solution."

Yet, public and private sector companies still keep coming back to buy more.  Hoping against hope that the holy grail of technology will save them yet.  The constant product stream from technology companies helps facilitate this false hope with always a new generation of products that surely will be better than the last disaster.

Technology to me is a supporting function, but some how . . . some way it has become the focus of improving organizations.  This doesn’t mean that technology is devoid of value, but it is certainly not a place to begin business improvement. 

The better place to begin is to understand customer demand and purpose, accumulating measures related to customer purpose and redesigning service to absorb the variety of demand that service offers.  Once we understand the work, then we can talk about pulling technology to enable the system to perform better.  Sometimes manual is OK and a better way than expensive and entrapping technology.  I rarely see this deployed for several reasons:
  1. Technology becomes the solution and everything has to "fit";
  2. Standard work/process/procedure and best practice make coding easier, but does not allow for the absorption of the variety of demand received;
  3. Viewing customer demand from the inside-out rather than outside-in;
  4. Schedules and due dates are achieved to satisfy completion requirements; and
  5. Public and private sector organizations just don’t think this way.
I don’t know what the future holds, but I am hopeful that organizations quit throwing technology at the problem.  They haven’t been able to spend as much on technology during this recession (some worse off than others).  Most are or should be looking for better thinking around how technology is deployed.

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.

Failure Demand Elimination: Systems Thinking at Work

Tuesday, July 7, 2009 by Tripp Babbitt
In Freedom from Command and Control, John Seddon (of Vanguard Consulting, my UK partners) outlined two types of demand that can occur at the point of transaction.  Value demand and failure demand.  They are distinguished by the nature of customer demand and simply are those demands we want (value) and demands we don’t want (failure).  So what exactly is failure demand? John Seddon wrote that "failure demand is demand caused by a failure to do something or do something right for the customer."  If you miss or show up late for an appointment, the follow-up with one or more calls, poor service, forms or websites poorly designed or other activities that could be prevented we have failure demand. 

Failure demand is often overlooked because command and control thinking has most service organizations focusing on productivity which relates to how fast we can process something.  We take the phone call or other encounter as something to do an activity if you will and not necessarily something that can be prevented.  Failure demand changes this thinking, so I encourage organizations to know this percentage with the numerator being the number of failure demand contacts and the denominator being the total number of contacts. 

Probably the best place to conduct this exercise is with the call center where metrics are easily gathered, just don’t use your existing call data or your number will be tainted.  You must work with the front-line and listen to the calls with them to discern failure demand.

Here is what I can tell you about what you may find.  Our consultants have found that failure demand runs between 25 – 75% in private industry and in the public sector it can be as high as 90%.  So, any number you get in that range is typical, but it presents a tremendous opportunity to improve.

There is more to improving your organization with systems thinking than just knowing the failure demand percentage.  However, this will arm you with a new metric to help size up the possibilities for business improvement. 

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.

Call Centers and Systems Thinking

Tuesday, July 7, 2009 by Tripp Babbitt

The first thing any call center has to overcome is the functional separation of work.  Scientific management theory if you will. Frederick Taylor started all this.  Separate the work into functions and maximize each function.  The problem is it worked for a long time and now that there is better thinking organizations have trouble shifting to the new thinking.  Call centers were not exempt from this thinking.  They became a function.  The call center has its own set of measures and processes to navigate.

As a systems thinking consulting company, we see no reason that the call center should be any less a part of the system in which they belong.  The call center can provide vital customer information and when used appropriately can be the place of innovation and creativity.  Instead they are viewed as a function that has to be optimized with AHT (Average Handle Time) and other measures of productivity.  These are no more than handcuffs to the organization as a whole.  Targets become blinders to the ability to improve service.

The call center contains information that is readily malleable enough to become knowledge when we view organizations as systems.  A lot of customer demand, especially failure demand (problems, chase calls, missed appointments, etc.) enters the call center.  This is information to make business improvement.  Instead we find organizations looking for ways to reduce talk time rather than possibly increase it to make sure we get an understanding of customer demands and ultimately optimize the system.

New measures and new thinking would not only raise the stature of call centers as part of the system, but can provide tremendous opportunity to an organization that recognizes the possibilities when we look at our organizations as systems rather than functions.

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.

Zappos’ Achilles Heel

Wednesday, July 1, 2009 by Tripp Babbitt
First of all, let’s not look at the cup as half empty for Zappos, because I believe it is two-thirds full.  At the Economist Marketing Forum held in San Francisco this year Tony Hsieh (pronounced Shay) and two CMO’s from Del Monte and Frito Lay discussed the role of marketing in their organizations amongst other things (watch: Ties That Must Bind: Why CEOs Rely on CMOs More Than Ever).  The poor guys in the traditional roles of CMOs (by function) had to listen to Tony say that they really didn’t have a marketing function at Zappos.  They reinvested into customer service and the better service was the marketing for Zappos.  I thought the others would spontaneously combust.

So yes, there is much to like about Zappos.  Let me highlight a few other comments Tony Hsieh made that got my attention:
  • Our culture (of customer service) is our brand
  • Investment of surprise upgrades to customers
  • Repeat customers from word-of-mouth (pull, not push)
  • Investment in culture is not an immediate benefit like cutting costs, long-term thinking is necessary
  • The use of the telephone as a branding device
  • Allowing new hires to weed themselves out by offering significant money ($2,000) if they quit
  • A lot of emphasis in getting the right people in the organization
  • Leadership development and training
So why the heading about the "Achilles Heel"?  What could possibly better than this.  I got concerned when Tony started to talk about:
  • Low Performers (and how they weeded out "Jack Welch" style the low 8%).  I don’t know the nature of the 8% and it could be they hired the wrong people before they "improved" the hiring process.  But it brings up questions about having already invested in training and Tony said they were profitable when they did it and didn’t have to do fire the 8%.  Who says that if they dip back into the pool of people available that they will find better employees than the ones they just let go and now they have to be trained.  This "renewal" process is expensive.
  • Call Monitoring.  Call monitoring has a useful purpose if the agent is new or if the monitoring is for improvement efforts.  Regulatory compliance is waste, but required and doesn’t always require monitoring that’s just they way people interpret it.  Otherwise, call monitoring used as inspection comes too late and is costly.  if the other elements like culture, hiring the right people, management thinking, etc. are correct do I really need to inspect?
  • Performance Appraisal.  I was disappointed to hear that performance appraisal was being used.  My fear is that the worker is being managed command and control style. If I understand purpose "to serve the customer" what possible good can come from an appraisal of performance.  It distracts the worker from "serving the customer" to "serving my supervisor or manager" or could over time . . . this is a type of waste.
  • Financial Goals.  If this means targets for profits  that lead to scorecards, MBO or the like trouble is not far away.  The targets (financial or performance) will ultimately become the defacto purpose of the organization and customer service will become secondary to the target.
  • Failure Demand.  How many phone calls are they getting that are follow-ups, wrong shipments, wrong billing, problems with the product, etc?  This is failure demand and even if you have nice people and good service if failure demand runs high customers will eventually erode their advantage and go elsewhere.  So, what percentage of calls are failure demand?
  • Do they understand variation?  Do they understand when a worker is statistically different from other workers?  Do they understand how to use data for prediction?  Do they understand the difference between "special" and "common" causes of variation that will help them continually improve their organization.
  • How will they achieve continual or continuous improvement?  "By what method" will they improve.  Will command and control or will systems thinking prevail in their business improvement efforts?
I know he didn’t talk about the last three, but these are things that will play themselves out over time.  There is much for Zappos to be proud of in its inception-to-date achievements and I can only hope that continue to maintain that innovation leadership that they have on their side now.

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.

Outsourcing Call Centers

Sunday, June 28, 2009 by Tripp Babbitt
There are many reasons I don’t like the idea of calls centers being outsourced, so let’s outline the reasons why.
  1. Branding.  Customers see your organization through who they come in contact with and organizations reducing costs fail to realize that can have a big effect.  Dell is probably the best recent example, the outsourcing has cost their brand dearly.  As a former Dell customer I was always frustrated with dealing with customer service.
  2. Outsourcing Waste.  Probably my largest objection and originally pointed out to me by my Vanguard partners (UK).  Call centers have a large percentage of failure demand 25% to 75% of all calls.  These are calls that are problems, call backs from incomplete answers, follow-ups, missed appointments, etc.  If we eliminated this type of demand we would have fewer calls and happier customers.  Companies need to eliminate this failure demand before outsourcing call centers.  Otherwise we lock in the cost of the waste.
  3. Costs are not in transactions, they are in the flow.  Most people see transaction costs go down with outsourcing . . . true.  What they fail to see is not only the failure demand they are outsourcing are costly, but that the customer sees service end-to-end and not by function.  Too often already bad flow (end-to-end or systemic flow) is outsourced increasing the number of transactions at great cost.  You see cost savings are not gained through economies of scale, but through economies of flow.
  4. Failure to see that SLAs, inspection and monitoring are costs that rise in outsourcing.  Outsourcing contracts become full of SLAs that have little or no relation to the customer experience, as vendors seek measures that they can "control."  These metrics are never representative of the end-to-end metrics customers seek.  SLAs are by function not the end-to-end as they become too difficult for the outsourcing vendor.  Someone can very well be hitting the SLA for their outsourced call center while overall costs increase and customer service deteriorates.  Inspection and monitoring increases as the service deteriorates and costs continue to escalate.
     
  5. Even non-core competencies are part of your system.  An argument I hear often is that call centers are not part of the companies core competency.  Other than the branding argument, being a specialist in a function can be a big disaster.  We live the belief that optimizing a piece optimizes the whole . . . it does not.  It is how all the components of the system work together is where cost savings come from.  The optimization of one piece usually leads to sub-optimization of other parts of the system.  Example, I can reduce handle time by not getting all the information needed to transact business causing chaos in the rest of the system with errors and more calls.
  6. Loss of innovation and feedback loops.  Innovation leadership comes from the ability to leverage all parts of the system to optimize the whole.  The front-line worker (call center) has the best ears to hear opportunities to improve service and/or product.  Tied down with SLAs, scripts, monitoring, etc. inhibits the front-line as their purpose becomes to meet the target and not the customer needs.  Feedback that helps optimize the system are usually targeted to optimize the function and systemic feedback is lost.
I urge any organization that is considering outsourcing to look first at their own system and understand the what and why of current performance before outsourcing.  If you have already outsourced or you are an outsourcing vendor I urge you to find ways to work together to optimize the system.  This will require new thinking in your outsourcing strategy for call centers.  We often find in working with call center management ways to optimize the system before outsourcing through business improvement . . . and for outsourcing vendors there are better ways to partner.  There is much at stake because if the outsourcer dies the outsourcing company stands to die with it.

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.

Call Center Management: Two Ways of Thinking

Tuesday, June 23, 2009 by Tripp Babbitt

There are a couple of different ways of thinking with regards to call center management . . . command and control thinking and systems thinking.  Both types of thinking require us to plan for resources using call volumes and duration.  The similarities pretty much end there.

The command and control thinker uses these same data (call volumes and duration) to improve productivity.  Such measures as (average handle time), cost/contact, customer satisfaction, agent utilization and of course you must have a balanced scorecard (a pretty version of MBO).  Command and control thinkers also focus on the individual with coaching, performance appraisals, inspections, monitoring, targets and incentives . . . and the worker only is worried about not getting paid attention to by his manager/supervisor.  All of these things are waste and with all the time organizations spend putting into it, I wonder what could really be done to improve things.

Systems thinking focuses on the customer and more importantly the customer purpose and measures from their perspective.  They understand that the focus is the system, not the individual.  That performance of an organization is 95% determined by the system they work end and only 5% is attributable to the individual.  They also understand that call center management’s job is to manage this system and leave decision-making about the work with the work instead of some report.  They understand that failure demand (unwanted calls, problems, follow-ups, missed appointments, etc.) make up between 25% and 75% of all calls in a call center.  They understand that the call center is part of a broader system and not a part to be outsourced to reduce transaction costs or share services to cut costs without first studying customer demand and eliminating waste BEFORE such ventures.  They understand that targets and incentives become the defacto purpose of the worker and the real purpose is tied to serving the customer.

The two types of thinking are almost opposites.  Command and control fails to deliver sustainable results, while systems thinking can provide business improvement that organizations only thought were possible for manufacturing companies in Japan.  Are you ready to change thinking?


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" or sign up for his newsletter 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.

Call Center KPIs, Metrics and Measures

Monday, June 22, 2009 by Tripp Babbitt
I have been reading about call center KPIs, metrics and measures for several weeks now and I still walk away shaking my head.  Most service organizations are working on the wrong measure and worse working on the wrong problem.  Some of the metrics may be useful to know how to resource, but none hit the real problem in making things better.  For the command and control thinker these metrics are a dream as they can analyze themselves into oblivion . . . and usually do.

We have all types of metrics. Like:
  • Cost/Contact
  • Cost/Minute of Handle Time
  • Call Quality
  • Agent Occupancy
  • Training Hours
  • Absenteeism
  • Average Speed of Answer (ASA)
  • Call Abandonment Rate
  • IVR Completion Rate
  • Average Hold Time
  • % answered within 30 seconds
  • Average Handle Time
  • Talk Time
  • After Call Work Time
Most of this measurement tracking is a waste of time and resources.  The customer could care less about these metrics and the only one that matters to them is did you solve their issue.  I am always amazed that call centers spend so much time tracking data (and mostly unimportant data at that) and so little time improving the system they work in.  The response is usually, "but we can only be responsible for our call center, not sales or operations that is not our job" or "we can only do our part and hope that everyone else is doing theirs."  This is the stuff of poor customer service everyone "doing their job" while the customer suffers the end-to-end system.  Command and control thinkers love to collect data, inspect phone calls, and figure costs . . . but no one looks at what the customer demands.  The result is a sub-optimized system that provides no business improvement, higher costs, and a sweat shop culture.  WOW! sign me up . . . I want to work in that environment (sarcasm).

There is a better way.  The systems thinking organization understand that the only metric that matters are those important to the customer (defined from purpose).  Sure the first call resolution (FCR) is useful when applied with knowledge, but the metrics that really matter to the customer are end-to-end from the customer perspective and may cross several functions in their current state.  Very few service organizations understand this.  They pay attention to each function building structures of front office, middle office and back office and then constantly redesigning them into shared services or outsourcing.  All of this activity is done with the aim of saving money and all of these activities typically increase costs . . . a management paradox I have discussed in other blogs.  All the sub-optimization increases costs and waste.

Most call centers still are not tracking one metric that does matter to customers . . . failure demand.  The unwanted demand into the call center that represents 25% – 75% of all calls into any one call center.  Failure demand are calls that are problems, follow-ups and other annoying calls that customers have to make to get served.  Failure demand drives up costs and drives out customers.  I am grateful to John Seddon (my Vanguard partner) for pointing this out to me.  Eliminating failure demand increases capacity, reduces costs and makes customers happy.

By understand the relationship between Purpose, Measures and Method.  A systems thinking organization soon learns that the purpose is to serve the customer, we can then derive metrics important to the customer and allow changes to method to accomplish the measures.  No targets here, just continually improvement of service.  Let your competition get buried in the cost of command and control thinking with their benchmarking, KPIs, and metrics/measures that don’t matter.  A systems thinking organization understands this is just waste and sub-optimization and allows them to work on customer problems with a simple change in thinking.

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.



Peter Pan’s Shadow

Friday, June 19, 2009 by Tripp Babbitt
People who know me understand how much I love everything Disney.  Disney World andMe and Minnie! Disney movies always take me back to a simpler fantasy world away from the realities of business and life.  I couldn’t wait until my kids were old enough to watch Disney movies mostly so I could watch them with them and relive the fantasy world I so enjoyed as a child.  And to see my children wide-eyed at their first sight of the Magic Kingdom and Mickey.  It is a great experience as an adult even though the highlight for my children now-a-days is who gets to push the elevator button first.

One of my favorite movies is Peter Pan.  The symbolism of Peter and his shadow is the movement from a fantasy world to the world of reality.  Since the great victory the US had in WWII, we have been fortunate as a nation . . . living a fantasy if you will.  With Europe decimated, the world turned to our country for most of its goods and services.  A productivity mindset set the stage for the next 25 years to meet the world’s demand.

W. Edwards Deming rejected in the US went to Japan to start the next generation of thinking moving a country from one of command and control thinking (productivity mindset) to systems thinking (quality and improvement mindset).  The start of the Japanese Industrial Miracle had begun.  By the 70s the US was in a crisis, the auto manufacturers were under attack.  Deming returned from Japan with a new message and new thinking that was watered down into tools . . . if we could just copy what the Japanese did we would be back on top.  The Japanese understanding the change was systemic invited the Americans to their plants to see what they had done and the Americans left with tools.  Later, another group of Americans went to Japan to see what Taiichi Ohno had done in the development of the Toyota Production System (TPS) and called it "lean."  The lean toolkit would follow and again the need for a change of thinking was missed.  Three opportunities to change thinking and three opportunities missed, if this were baseball we would be "out."

Business improvement has turned into classes of certifications and tools for lean, six sigma and lean six sigma that does little to change thinking.  The command and control, productivity mindset still prevails today.  I am afraid that even the current crisis will not awaken the US and the deterioration of our ability to compete continues to diminish.  I see it in my networking meetings where people once in manufacturing are now selling homes or work in service industry now.  If we don’t change our thinking, what is left after service?

For the curious, my blogs, management articles and website outline different thinking that must occur to compete internationally.  We are left with a choice we can continue to live in the fantasy world of the command and control, productivity mindset or begin the process of reattaching our shadow (like Peter Pan) and live in a world of reality.

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.



Semmelweiss Syndrome: A Barrier to Business Improvement

Tuesday, June 2, 2009 by Tripp Babbitt
Assuming most readers of this blog have some familiarity with systems thinking from my previous 100+ blogs may be a stretch, but the question came up a few times last week as to what is preventing companies from achieving business improvement by adoption of new thinking? 

Let’s start with one Ignaz Philipp Semmelweis a mid-1800s physician that worked in a Vienna hospital where almost 1 in 3 women would die after childbirth of "childbed fever."  The reasons for the deaths were things such as "wounded modesty", "guilt and fear complexes", "cosmic influences" and "sudden changes in weather and temperature."  Dr. Semmelweiss wouldn’t buy any of it and set out for a cure.  Through a freak occurrence a physician friend died after accidentally cutting himself dissecting a corpse.  the symptoms were strangely similar to that of childbed fever.  With no knowledge of infection at the time, Dr. Semmelweiss was able to conclude that physicians were commingling infection one patient to another through the physicians themselves.  His discovery was nothing short of brilliant, he found that by having physicians and other care givers wash their hands the death rate spiraled down to almost zero.  But Semmelweiss ran into a problem (even with data) he was labeled a "nut case" because of his insistence on hand-washing.  The physicians of the day just couldn’t accept that they had been killing their patients because of their lack of hand washing.  Political pressure dumped the hand washing, the death rate went back up and Semmelweiss went crazy.  Having a better way and knowing that changing thinking is hard for people to believe . . . if it was that easy they would have discovered it by now. Thus, the "Semmelweiss Syndrome" that I am coining right here in this blog.

Individuals and organizations have invested heavily into training for Six Sigma, Lean, TQM, ISO and other organization change management programs.  I can’t say they haven’t improved things, but as a "reformed" Lean Six Sigma Master Black Belt I can only say that we are doing the wrong thing righter.  Until we begin to address the fundamental thinking problem of command and control thinking, we stand little chance of sustainability or large leaps in improvement.

The organizations that deliver the training are also a barrier, they are doing quite well thank you.  The last thing they want to hear is that their training is outdated and there are better ways to achieve improvement.

I don’t know what the future holds, I am hopeful that I don’t wind up like Semmelweiss.  Despondent (and (somewhat mad) he wound up cutting his hand and thrusting it into a corpse, within three weeks he had died of the same disease he had tried so hard to defeat.

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.