Bryce Harrison

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

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

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

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

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

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

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

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

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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.


 

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

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

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

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

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

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

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

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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.


 

Seems like each time I read something coming from the Ash Institute from Harvard, I am left shaking my head in disbelief.  It has now advanced to the point where I just accept that they will say things that defy all reality.  They can spin a web faster then any spider I know. 
In the latest travesty John O’Leary in Driving Change: Go Big or Go Home likens government to driving a bus where everyone has access to a brake.  Meaning anyone can kill any change program in government.  He uses this as an impetus to basically run over people to achieve change.

With apologies to one of our fine educational institutions this is ridiculous.  What got us in the mess we are in today is our inability to seek knowledge before seeking change.  Government management can only make assumptions about one thing . . . that they need to get knowledge before introducing change.

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

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

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

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

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

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

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

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

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

Join us for a new and better way to improve government at www.thesystemsthinkingreview.com

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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.

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

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

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

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

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

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

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

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

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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.
 

The point of transaction is that spot where your customers derive value from service organizations and government.  Simple enough, but that person that they come in contact with is typically not the owner, CEO or executive.  In fact it isn’t usually the manager or supervisor . . . it is the front-line worker.

All those in supporting or management roles are typically the ones making life "easier" for the front-line through technology, scripts, rules, procedures, targets, best practices, coaching and other nonsensical "help."  After all, the work has to be managed as do the people along with it.  The management paradox is that all these things lead to an entrapping and dismal work environment.  Worse, this makes costs increase and service poor.

While targets become the defacto purpose (over serving the customer).  Best practices, rules, scripts and procedures only allow the front-line to check their brains at the door.  Coaching and technology is thrust upon them by people that know little about the work that is being executed . . . after all these are the smarter people. 

A front-line worker has a choice either serve the master that pays them or serve the customer that pays the master.  Choose one. 

So where does your front-line focus?  A better leadership strategy should begin with finding out.

 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.

As I was working with a client last week, I reflected on the role of a manager in a systems thinking environment.  If we are to improve the design and management of work . . . the way we manage must change.  This should be seen as an opportunity to a more efficient and compassionate leadership strategy.

Taking an outside-in approach we squarely place ourselves in alignment with the customer.  There is no need to manage the financials as this will take care of itself when the customer is the center of our thoughts.  Taking our minds away from cost control to focus on the causes of costs.

Organizational change management with all the restructuring that leads to new programs and no improvement, gives way to focus management attention on the work.  A far cry from the report-driven and anecdotal method embraced by today’s command and control style of management.  Silos become non-existent as doing what is right for the customer delivers value rather than turf battles.

Measurement derived from customer purpose replaces the functional targets set from the quarterly dividend, financial forecast or budget.  Managers are instead looking at how capable they are at meeting customer demand and the measures that matter to customers. 

Meetings related to making sure the customer or supplier are adhering to contracts written, instead look at a systemic review of "what matters" to customers and create a cooperative environment.  Working together with suppliers and other managers to act on the system to improve flow rather than manage people and budgets.

Managers and workers learning together how to (first) understand current performance and learn what matters to customers.  We move from a reactive environment to an adaptive one.  Change is emergent as workers and managers try new methods to improve the work and innovation through better design.  Rewarded with the desire to learn more and continue the cycle.

Our need to redesign the way manager’s manage should be at the top of our 2010 to-do list.  Is your service organization or government ready for real change?

 

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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.

 

• They entrap the customer or sometimes the vendor.  Don’t we hate it when we sign a contract and the product or service just wasn’t as good as advertised?  I do and cell phone contracts are one of my least favorite.  It should be a crime to give that level of service and lock me in for two years.  But let’s not end there, we also have the government/private sector contracts that are even worse.  The longer the term of the contract, the more entrapping as circumstances are likely to change.
• They contain SLAs.  Writing an SLA (service level agreement) is like chasing jello across the table.  It looks like you got one nailed and it slips through your fingers.  Usually SLAs are very inflexible and both sides are looking for an advantage instead of what works for the customer.  This is usually not the government in public sector contracts especially as they try to modernize entering the unknown and instead get a lesson that taxpayers pay for.
• The time wasted in developing, negotiating and monitoring.  In private industry contract negotiations may take days, weeks or months depending on the size.  Government entities are notorious for lengthy times to put in force a contract.  Bids, BAFOs, negotiating games, etc. sometimes cost more than the contract itself.  These negotiations rarely involve people that are familiar with the work that will be effected assuring that waste will be locked in.  Further, contracts have to be monitored for compliance to the contract that adds additional costs.

A Better Way

I cannot dispute the need for contracts.  However, doing what is right in the eyes of the customer always costs less.  Our attitude should be one of doing what is right for the customer not a contractual one.  Those that pursue an advantage (vendor or customer) rather than pursuing a win-win contract stand to lose eventually (if not now).

The need for an understanding of what good service looks like and/or that the design and management of the work is our biggest opportunity for improvement should be foremost in the development and enforcement of any contract.  It is a better systems thinking way.

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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.

I was in Canada last week working with two auto dealerships, one in Yorkton, SK and the other in Winnipeg.  These are not just any auto dealerships.  They are run by an innovative and forward-thinking owner named Terry Ortynsky.

Mr. Ortynsky has been working on systems thinking for a little over a year.  His tinkering with the concept during that time has led him to fully commit.  He sees systems thinking as a way to build a better auto dealership.

The Ortynsky dealerships had long fashioned their work to be customer-friendly like so many other dealers.  The difference being the action he has taken to live this principle.  Mr. Ortynsky doesn’t pay his salespeople by commission, they are paid by salary so that when sales are made they are in the best interest of the customer.

His commitment and belief that doing things in the best interest of the customer in sales and service led him to systems thinking.  He understands that by focusing the design and management of work to serve the customer will decrease costs, improve service and achieve a culture that people want to work in. 

Despite pressure from the manufacturers to submit to targets and other dysfunctional behavior, the Ortynsky automotive groups are focused on creating a better customer experience.  They are in the process of improving the customer experience by understanding the "what and why" of current performance and "what matters" to their customers.  This will lead to a system of continual redesign as employees are engaged at all levels to find new ways to serve customers.

A better leadership strategy (especially innovation leadership) can now be found in a car dealership.  Mr. Ortynsky and his folks are on a mission to serve the people of Canada though better service and thinking . . . for sure.

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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.
 

1. High error rates
2. Low job placement rates
3. Two dozen employees convicted of fraud
4. Federal Sanctions

All true as I witnessed them during my tenure as CIO at FSSA.  The problem is the context and many may be duped by these anecdotal comments.  The FSSA Secretary (Anne Murphy) reported $1 million losses due to fraud from 2005-2008.  Indiana will be spending (most likely) anywhere from 2 – 25 times that per year to prevent it.

As with most with political agendas the Indiana Welfare Eligibility Reform was doomed from the beginning.  FSSA entered to change the system without knowledge of the "what and why" of current performance.  They had a reform agenda and disrespected the state workers, recipients (now called clients), and the taxpayer.

Mr. Goldsmith outlines the usual poster child for reform . . . antiquated technology and a paper-based system.  Neither of these assumptions should lead us to  believe that more technology or less paper will actually improve things.  In fact, in a government management paradox more technology led to increased costs and the locking-in of a poor design of the work.

Further, Mr. Goldsmith talks about the risks associated with innovation as if this should be something to embrace.  When spending $1.3 billion of taxpayer money to take a risk on innovation, it should be done on a small scale to see if the concept works.  To do otherwise, is to be arrogant . . . not bold.

He makes a mistake in stating as fact that outsourcing employees made things better.  No data to support this statement, which seems to play to those gullible enough to believe such statements.

The usual blame about unforeseen circumstances and federal regulations attempts to pacify the reader that things just couldn’t be done any better in this attempt and avoid actually holding anyone accountable or responsible for this bold attempt.  To this I say "hogwash" (it is Indiana after all). 

Indiana FSSA could have (and should have) understood that the biggest opportunity for change is the design and management of the work.  With knowledge gained through understanding they would have been able to design a system and trial it on a small scale, but the rush to "be bold" was their downfall.

It is a John Seddon says "ignorant people shouldn’t be in government management."

Please join us for a better way to manage in government at www.thesystemsthinkingreview.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.

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 Vanguard 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.

 

• You have to be curious (required).  If you are doing well (either real or perceived) you won’t be interested in getting better.  Unless of course you understand that things can change at any moment because of an economic downturn, new competitor or just a never satisfied feeling.  The first step is always the hardest, but for a change in thinking about the design and management of work the rewards are huge.
• Read the Books (suggested). Freedom from Command and Control or Systems Thinking in the Public Sector.  Both are excellent reads full of paradigm busting, counter-intuitive truths and management paradoxes.  They will challenge your thinking.
• Read the Fit for the Future series six parts in all.  This would be the abbreviated version of the thinking for someone trying to get a feel for systems thinking.
• Read the Blog (suggested).  The Bryce Harrison blog can be found here.  It is full of short reads on a better way and challenges assumptions ranging from shared services to standardization.
• Free Download – Understanding Your Organization as a System (suggested).  Almost 200 pages of background information on systems thinking.  The document is a workbook to help with the thinking.  Your email address is required and you have an option to sign-up for the newsletter (or not).  We do send updates to those that download on systems thinking articles and significant events.
• Sign-Up for Our Newsletter (suggested).  This monthly publication can be signed up for at www.newsystemsthinking.com and let’s you know what is happening in the systems thinking world.
• Check Out the Systems Thinking Review (suggested).  This is primarily for the public sector, but you can learn alot here.
• Find us at Twitter, LinkedIn or Facebook (optional).
• Email us at [email protected] (optional).

• Get Knowledge.  You will face resigning leaders and others that will leave with the political overhaul.  Most of what they learned will be lost.  Before any political agendas come roaring in, the new administration must get knowledge of the systems they wish to change.  This needs to be done by the leaders and not abdicated to a vendor, underling or anyone else (as most of these folks have their own agendas).  So, before the first plan, milestone, schedule, etc please begin by understanding the "what and why" of current performance (please see: performing "check").
• Understand that to Manage Costs is to Increase Them.  New Jersey is in a poor fiscal state and Virginia is better than most other states, but let’s face it this is hard times for state government.  The immediate reaction is to focus on cutting costs.  The government management paradox is that this always increases costs.  Governments work on what seems obvious missing the causes of costs. (Please see: Managing Costs Increases Them)
• Don’t Start with the Bad Assumptions.  There are several I see in government here are three:

1. Bad Assumption #1:  Technology is the Answer.  After a decade of working with large technology vendors, I can tell you this is not true.  In most cases, technology locks in the waste and sub-optimization of a poorly designed system.  The will tell you about other government successes, best practices, benchmarks, government analytics and more, but fail to deliver the value governments so desperately need to reduce costs and improve service.  Their aim is to improve their own bottom-line . . . not yours.  (Please see: Throwing Technology at the Problem)
2. Bad Assumption #2:  Shared Services Strategy.  Sharing services is NOT a no-brainer.  Government management must understand that sharing services without knowledge leads to higher costs and worse service.  (Please see: Dos and Don’ts of a Shared Service Strategy and The Case Against Shared Services)
3.   Bad Assumption #3:  Outsourcing/Privatization.  I’ve been a CIO in state government, it is unrealistic that we wouldn’t have outsourcing and/or privatization.  The problem is that in many cases we are outsourcing our failure demand from constituents (demand caused by a failure to do something or do something right for a customer).  This locks in waste, we need to improve the system by redesigning the management and work.  I have found this reduces technology spend, improves service and costs less on a large scale.  (Please see: Outsourcing: Why it’s a Bad Idea and Better Tips for Government IT Outsourcing and Shared Services)

• Understand that Your Greatest Lever for Improvement is the Design and Management of Work.  Understanding that a different line of thinking about how to manage and improvement through better work design is a huge leap in reducing costs as it addresses the fundamental thinking problem around the causes of costs.  Government management should take time to browse "Systems Thinking in the Public Sector" and the website for government systems thinking at www.thesystemsthinkingreview.com. 

My hope for both of these new governments is that through better thinking you can serve constituents better and be good stewards of their money.  Government management requires a different look at some age old problems . . . doing more with less.

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

Need help with transitioning government, reducing costs or improving service.  Call us at (317)849-8670.

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 debate at sixsigmaIQ.com was one that has been boiling for awhile.  However, I believe it is an important one.  I sense this will be the first of many as systems thinking begins to penetrate the minds of people in the improvement arena.

With a background that dates back to the  W. Edwards Deming movement and the Deming User Groups I am sensitive to how people hijacked Dr. Deming’s thinking into something that could be packaged and sold.  Dr. Deming did not reference a label for his thinking and did not promote TQM.

Instead, Dr. Deming gave us 14 Points and 7 Deadly Diseases and later his System of Profound Knowledge (Appreciation for a System, Theory of Variation, Theory of Knowledge and Psychology).  These were guiding principles for those wanting to increase market and market share, improve service and decrease costs through better thinking.  They were (and still are) management paradoxes and counter-intuitive truths that challenged the very fiber of US manufacturing, service and government.

Industrial tourists of all types have visited and written about what the Japanese and later Taiichi Ohno (Toyota) did and came away with new secrets to improvement.  It started as Just-in-Time manufacturing, Quality Circles, etc. and later 5S, Standard Work, A3 and other tools.  The US organizations always looking for a short-cut were hungry for what these folks learned as they became less competitive on an international scale.

The Japanese on the other hand were only too happy to invite the tourists into their plants because they understood it was the thinking not the copying that gave them the advantage.  But copying seems to be a staple in US business . . . because it is a short-cut.  The problem is that it doesn’t work or doesn’t work for long.

Whether Lean = Tools to me is an individual assessment of everyone that applies "lean."  If you find yourself starting with 5S, Kaizen events and such you may want to consider the long-term impact of such actions.  Just as not changing the mindset of managers and executives will reverse all the work that is done . . . no matter how well-intentioned.

The bottom-line is if the thinking doesn’t change the system doesn’t change.  This cannot be pushed away from a executive, manager or the front-line worker they all must play to improve the system.  The reward is dramatic improvement.

I partnered with John Seddon because he has advanced the thinking, something we haven’t done very well in the US.  His knowledge of applying systems thinking to service industry and government is something we all can learn from in the US.  And it all begins with being curious about what he and his Vanguard firm has learned.

I have learned about the problems with tools, standardization, shared services, outsourcing, scientific management theory, and separating the decision-making from the work.  I have also learned that manufacturing is different from service and that copying is not a good idea.  Some I have learned from Deming, some Ohno and some Seddon.

There are many other things I have learned and much more to be learned.  But we need to start with changing our thinking. 

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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.

 

A June article at  PublicCIO via GovTech.com (Shared Services Roadblocks and Rewards Examined at Harvard Summit) outlined a Kennedy School Leadership Summit on Shared Services.  Folks from all over the world coming to America’s top business school . . . to learn the wrong thing to do. 

The faculty chair (Jerry Mechling) of the Leadership for a Networked World program was there to explain what shared services is, how it can benefit government and the problems with implementation.  According to Mechling "the current economic crisis is a window of opportunity for government agencies to move to a shared services environment."  Mechling cites greater efficiency, but of course can NOT cite greater effectiveness.

The usual shared services strategy talk of sharing back office functions is noted.  No one ever asks whether we need the back office or talk of understanding demand.  Just that we can have improved delivery and boost local economies.  Improved delivery in our experience rarely (or never) happens.  And "moving out of Manhattan to someplace where it becomes an economic development tool" means robbing Peter to pay Paul.

As with most shared services strategy the focus is on cost-savings and improved efficiency.  I have written many articles on why focusing on costs always increases them.  These shared service projects wind up having to hire more people as service declines and agencies have to get the work done.

David Wilson (Accenture) topped of the madness by making the statement "Believe it or not, there are some governments where the corporate culture does not focus on cost-cutting and efficiencies."  Mr. Wilson, all I can say is you need to understand the management paradox that to focus on costs always increases them, but to focus on value will decrease costs and improve service.  Government management don’t be duped . . . there is a better way.

Relevant articles:
Shared Services

Service Paradox: Managing Costs Increases Them

Also, see: www.thesystemsthinkingreview.com


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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.
 

When I first read Freedom from Command and Control (by John Seddon) I hit one of those moments that give one pause.  It’s like a kick to the head . . . a jolt.  Some react differently than me when confronted with a counter intuitive truth or a management paradox and immediately reject it.  Not me . . . I have gone to such depth in learning and improving service organizations that you can feel it when you have heard something significant that will change your course.

Here it is . . . standardization is the enemy of service organizations. 

Sounds harmless enough, but it changes everything.  The way you think about tools-based improvement programs, documentation, scripts, information technology, and much more.   It all changes.

Lean manufacturing tells you to standardize as I have seen so many lean tool-based programs advocate.  Folks running around for the one best way or doing 5S . . . all non-sense.

I have consulted with Fortune 500 technology companies standardizing processes so business analysts could write requirements, system engineers and programmers code and schedules can be met.  But the problem was the back and forth between the technology company and the customer.  The customer rarely got what would work on the front-line and the technology company would blame the dumb or rigid user.

Contact centers with IVR systems that require a standard message.  Or the script for the customer service representative (CSR) that has to be complied to when the customer calls.  For the most part . . . all waste.

Why?

Standardization does not allow for the absorption of the variety of demand offered by service customers. 

The waste is in costs and customer service.  If a customer can’t understand the tree of options offered an IVR they are forced to call back to "get it right."  Or if the script a CSR is forced to comply with doesn’t fit a customer demand . . . the customer has to call back or try to negotiate a response with the CSR.  Additional handling of a customer either loses them or they are forced to call again (failure demand).

Variety of demand is best absorbed by humans and NOT technology.  To introduce technology in places where humans are needed is to increase costs for buying the technology and increasing the costs to serve a customer.  Technology change management tends to miss this as they gather requirements without knowledge and a rush to meet deadlines.

Call center and government management miss it because the prevailing thinking is that standardization is always good because they can control things.  The truth is that they are making themselves less competitive with increased costs and worse service.

I have learned many other counter-intuitive truths and management paradoxes working with systems thinking, but this opened my eyes.  I hope it does for you too.

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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.

 

1. A Focus on Costs Increases Costs.  The flawed belief that economies of scale reduce costs prevails in government management thinking.  We have found that costs are in the flow (economies of flow).  There is a dire need to end the fallacy that reducing costs as an objective works, governments need to find the causes of costs and they are in the flow.
2. Standardization Can Make Things Worse.  A difference between manufacturing and service is variety of demand.  Standardization can (and usually does) lead to the inability to absorb variety of customer demand.  This leads to increased costs and worse service in the form of failure demand (demand caused by a failure to do something or do something right for a customer) which increases when services can’t absorb variety.
3. Technology can lock in Waste.  Too many modernizations get kicked-off with faulty assumptions that technology and automation will improve things.  There are some things that technology is good at and some things that humans are good at . . . and in service humans are better able to absorb variety.  Further, standardization locked-in by technology is to institutionalize waste in government. 
4. Perform "Check."  Before making changes of any type government management must get knowledge about the service they want to change.  This means understanding the "what and why" of current performance.  No plans, schedules, milestones, projects, cost-benefit analysis, etc. can precede getting knowledge.
5. A Big Lever for Improvement in Government is the Design of the Work.    The reality is that the design of the work to be done is flawed and needs to be redesigned against customer demand eliminating hand-offs, redundancy and other wastes. 
6.  Sharing Services and Outsourcing without Knowledge is to Invite Trouble.  In desperate attempts to cut costs quickly these two methods are deployed as "no-brainers."  Without knowledge gained from "check" these methods are typically disasters.  They ignore the causes of costs and focus on visible costs. 
    

There are many more of these management paradoxes and counter-intuitive truths that have been learned that should be communicated.  Many before us like W. Edwards Deming, Taiichi Ohno and others laid the foundation for learning.  This is not best practice or tools as these stagnate learning, but theories of management that have universal application. 

Please join us in making government better through better thinking at www.thesystemsthinkingreview.co.uk where you can learn more about advances in improving thinking and method.

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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.
 

During my lifetime I have witnessed two attempts at Activity-based Costing (ABC).  For those unfamiliar this is  an approach that flowcharts processes (activity) and then totals the costs of these activities.  Seems a reasonable approach to anyone trying to manage costs and productivity.

The method deployed is to interview workers involved with the process and find out how long each activity takes and what percentage of their time is attributable to each activity.  Each worker is allocated indirect costs (overhead) for things like lease expenses, information technology, human resources, etc.  The result is an activity cost.

The flaw of ABC is to assume that being active is being productive.  As managers like the idea that workers being active 100% of the time is to be efficient.  Such thinking brings the human robot to mind.

My personal experience has been attempts by accounting organizations coming in and doing organization-wide ABC.  The problem was at the end of the ABC exercise, I summed up the activity costs multiplied times the volume of actual activity and the costs did not come close to the organization’s total costs.  This was problematic, but by no means the end.

ABC treating all activity as work to be done ignores failure demand (demand from customers caused by failure to do something or do something right for a customer), duplication, errors, etc.  This is to manage costs instead of the causes of costs.

Where costs are high to deliver service, organizations still need to understand customer demand and the reasons for waste before making changes to the organization  Or they run the risk of making things worse.  To set targets for a piece or function of the process ignores the understanding of the end-to-end system and purpose.  

If a function or process is deemed too expensive it stands to be paid attention to by looking for cheaper outsourcing or shared services opportunities.  These also lead to increased costs as it disregards the end-to-end costs and waste that are not seen in the activity as already illustrated above.

My Vanguard partners in the UK found that the inventor of ABC Thomas Johnson changed his mind about the benefits of the technique after spending time at the Toyota plant in Georgetown.  He came to his senses regarding the foolishness of managing through costs.  My hope is that the US government and other private sector businesses will come to the same conclusion.  Millions are being wasted by conducting and taking action on the ABC approach.

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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]temsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

• Client Choice of access into the system
• Face-to-face contact in county offices
• Case management in county offices
• Paperless case files
• Fraud prevention
• Consistent determination of benefits

1. What is the purpose?  What is the purpose of the service from the welfare recipient’s perspective.
2. What are the type and frequencies of demand?  This requires decision-makers to go to the work where the agency transactions occur.  Here they can understand: why they call, what they want, what would create value for them, what matters to them?  They must understand the major types of value and failure demand and their predictability.  To design for the unpredictable is costly.  You stand to entrap the workers delivering the service with technology if this is not understood (raising costs).  Understanding demand will also shorten the training cycle for workers as you train for only predictable (high frequency) demands.
3. How well does the system respond to demand?  You will discover the measures that matter are end-to-end from the customer perspective and NOT the ones currently used.
4. Study the flow.  Demand will tell you what to flow and measures related to purpose will tell you what the priorities are to flow activities.
5. Understand the systems conditions.  All the waste and sub-optimization is man-made.  The result of poor work design, structure, contracts, roles, technology, measures, etc.  Failure to remove the system conditions will lead to improvements that are unsustainable.
6. Management thinking.  Understanding the "what and why" of current performance draws the decision-makers in as this means that they must change too.  The actions they take can create more or less waste depending on their degree of knowledge.

Warnings:
Legislation can lead to entrapping the system worse than technology and should be avoided.  Systems change over time and to undo legislation is virtually impossible.  Variety of demand can not be absorbed by either technology or legislation.

Going back to the old way or planning without knowledge (as outlined here) can lead to missed opportunities or additional waste.

I am hopeful that other government agencies trying to improve their services will see the value in the approach.  This thinking transcends all partisan approaches.

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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.




 

• Drive cost and effort out of line and support services, including IT services
• Add value to line and support services
• Line staff will have better information or tools to do their job
• Leverage existing agency resources, data and processes avoid duplication
• Reduce Risk
• Reduce time to market
• Reduce time for problem resolution

• Standardization is possible
• Resources are underutilized
• Economies of scale are possible
• If an agency has data, a facility, an application or a process that other agencies need or currently duplicate. It could be a candidate for a shared service.

1. Economies of scale – This is mentioned as a primary reason for sharing services.  The concept of economies of scale go unchallenged despite evidence that there are better methods and thinking.  Costs are not reduced by scale, they are reduced by flow (economies of flow).  Economies of scale leads with the belief that by lowering transaction costs we lower total costs.  The management paradox is that costs are in the flow, end-to-end from a customer perspective (flow) and to focus on transactions creates sub-optimization and waste (counter to its intent).
2. Standardization –  One major problem in this directive is the focus to standardize.  Something good for manufacturing, but not for service.  Service offers variety of demand unmatched by manufacturing.  Standardization does not allow for the absorption of variety offered by service.  And when service variety can not be absorbed, costs go up and service is worse.
3. Front Office – Back Office Design – Accepted as "best practice" (a fallacy on its own) the front/back office design is staple to areas to share services.  The problem isn’t that they are too small (economies of scale), but that the design itself needs to be called into question.  The functional separation of work (derived from Frederick Taylor and scientific management theory) front/back office design sends the work to specialists through IT to get worked.  Many times I have found that this design is unwarranted and only a front office is needed, something that a shared service strategy misses.
4. Information Technology – Most shared service concepts are introduced by IT.  As IT is needed to move things from front to back office.  IT needs standardization to code software as variety of demand is so great in service to code for the great variety of customer demand is an expensive proposition.  I have found that IT only locks in the waste and manifests itself in failure demand (demand caused by the failure to do something or do something right for a customer).  Government management would see an increase of failure demand as a result in sharing services with a cost focus.  In US government, I have found failure demand to run 40 – 90% of all demand.  Other costs in flow disruption are commonly found.

I have found a better way, before sharing services we need to start by understanding current performance.  More specifically, the "what and why" of current performance.  This begins with studying customer demand, understanding how well the service is currently being delivered, and identifying wastes and its causes. Next, is to improve the service where it is delivered while teaching managers about service re-design to avoid assumptions around shared services. 

The final step is then to decide whether sharing services or IT makes sense.  We can pull the concepts in . . . rather pushing them through directives from the Governor.  Acceptance is immediate as change is emergent as decisions are made with the work.  Costs fall as service and flow improve and failure demand is eliminated.

We are in desperate need of better thinking to have the public sector provision services cost effectively.  I can only hope that Governor Gregoire will see and rethink her shared services strategy directive.

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Anyone wanting to learn more about shared services and a better way can contact me at (317)849-8670 or at [email protected].  I have papers, books and other information to help in a better way to think about shared services or to make the work work.

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.