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.

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.

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

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

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

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

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

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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.

If I were to tell you not to share would I be asking you to break the Golden Rule we learned as kids?  Hardly, but I am badly outnumbered by the likes of such "thought leaders" as Gartner, Accenture, IBM, AT Kearney and other entities that promote a shared services strategy.  I have to be wrong when the numbers are so great against me . . . really?

As positive a phrase as "shared services" sounds, it belies the negative side that no one wants you to know about.  The government management paradox that shared services wind up costing you more for less government services.  What?  They didn’t tell you?

Let’s take a look at what is missed:

1.  Did you have an optimal design in the first place?  Rarely, are government entities provisioning services in an optimal manner.  The rush to cut costs bypasses a bigger opportunity for improvement . . . the design and management of work.  Something the US government management doesn’t do well (but neither does the private sector – even though they claim to provide better service).   Most of the time all we do in sharing services is perpetuate a bad design and locking in waste.
2.  Did we really need that front and back office in the first place?  This goes hand-in-hand with #1.  When we combined back offices, did we need that back office in the first place?  Most of these I have found can be designed out and services provisioned less expensively.  Our thinking is the problem as we functionally separate the work and try to optimize each piece creating sub-optimization. 
3.  Did you understand demand?  A bad assumption is that all demand is demand we want from our constituents.  This is never the case.  Failure demand (demand caused by a failure to do something or do something right for a customer) can range from 25
   to 75% or more in government entities.  Sharing services without knowing this number is to lock-in and even increase costs.
4.   Did you know that costs are not in the scale, but in economies of flow?  A government management paradox is that costs are not reduced my scale, but by improving the flow.  A service provisioned well costs less tan one that isn’t.  To achieve this we must improve flow end-to-end from a customer perspective.  Understanding this can even have us achieve public sector innovation.
    

It is ridiculous to assume that combining things will lower costs in government, but a snappy tie or shoes and a well-known consulting firm, internet magazine or technology company can be mesmerizing.  Just remember that what you are seeing is slight of hand and will result in taxpayer and voter dissatisfaction.

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Learn more about improvement in government . . . the better way!  Got to www.thesystemsthinkingreview.com and make the taxpayer happy.

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.

• 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. 

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.

 

1. Assess the Need
2. Measure Total Cost of Ownership
3. Carefully Craft the Contract
4. Get Everyone on Board
5. Win Approval from the Top

These all appear logical enough which makes most of what I am about to say a management paradox.  Most of the argument is predicated on the cost cutting and efficiency mindset.  We (my Vanguard Partners and I) have long found that a focus on cutting costs always increases them.  To focus on costs is to miss the causes of costs.

1.  Assess the Need.  Nowhere in assessing the need does anyone talk about the functional separation of work and that optimizing each piece leads to sub-optimization.  Or that IT is a supporting service that supports the actual work and can not be viewed separate from the work.  Doing so leads the actual work to fail while IT "saves money." 

It would be difficult to say that the State of Pennsylvania didn’t save $316 million in IT, but they can’t show me that by sharing services that they didn’t increase the end-to-end costs by $500 million by provisioning services with a shared or outsourced service center.  These are the results found by my colleagues in the UK when assessing such moves.

If we are going to assess needs there should be a review of the services that are being provisioned.  In many cases we have already designed in waste with front and back offices.  This by itself begs the question of whether we even need IT, if a better work design can be found (and it usually can).  By studying customer demand and purpose (or called performing "check") government services can be designed more optimally, lessening the demand for IT.

In assessing needs there is another faulty assumption around economies of scale.  A management paradox is that costs are not in the scale, but in the flow (economies of flow).  If or when government management understands this we can get on with saving money . . . on a large scale!

2.  Measure Total Cost of Ownership.  Sounds reasonable until I read the article and realized they were talking about IT and not the end-to-end system.  The focus on costs again doesn’t account for the end-to-end service delivery (system).

The article discusses the IT costs like labor, overhead, benefits, office space, etc. but think about the cost of a contract, monitoring the contract, all things that are typically not done well by States.  Waste begets waste so government management will hire the inspectors/monitors/auditors too.  Good segway to . . .

3.  Carefully Craft the Contract.  Having SLAs is a huge waste in government (please read: SLA: Stupid Limiting Agreement) not only the crafting, but once crafted they are like chasing jell-o across the table.  You seem to have one nailed and something else always slips through your fingers.

Targets for times are always a bad idea . . . targets in general are a bad idea.  The example of answering calls in under 60 seconds at a 95% service level is an example of the ignorance perpetuated.  I outline why in my article Call Center AHT-Wrong Measure, Wrong Solution.  The prescribed measure of service level is settling and adding costs to IT.

A good measure of understanding is to track failure demand (demand caused by a failure to do something or do something right for a customer).  This runs between 40-90% in government and offers a huge opportunity to improve.  Outsourcing or sharing services without knowing this number is to lock in waste.

4.  Get Everyone OnBoard.  When workers know a bad deal and the disruption to their work they object.  Seeing that Outsourcing and Shared Services is done command and control style (top-down) is a huge failing of these projects.  Performing "check" means understanding the work that delivers the service (and that is not IT).

It was AP Sloan that separated the decision-making from the work in 1930s GM, government management must start putting decision-making back with the work.  This means they need to understand the work, not use a report, vendor or anecdotal liaison.  To fail at this is to increase costs and worsen service.

The whole benchmarking of processes is another gigantic waste.  Every state, federal agency, city or local government is a unique system.  To draw conclusions about processes through benchmarking is ridiculous and wasteful.  Each government entity has different demands, work design, structure, people, management, etc. and to benchmark is to lead to copying.  Everything you need to improve your system is contained within it.

5.  Win Approval from the Top.  I agree here, but not the way one might think.  The "top" must get knowledge by performing "check" on the organization, not by a command and control dictate using assumptions about the work.  The input for this article is all about keeping in line.  This approach is costly and damaging.

So, that is it.  A better way to approach outsourcing and shared services requires knowledge and thinking.  Before any shared services or IT outsourcing strategy takes place we need to understand current service performance.  This can be accomplished by studying customer demand (what customers want), capability (how well it is delivered), the value work (the service customers want efficiently), waste and its causes.  We can then improve service where it is currently delivered and then have a knowledge-based discussion on shared service or outsourcing opportunities.

To learn more click on shared services strategy or IT outsourcing strategy from my blog or go to 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.

 

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


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.
 

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.

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.

 

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.

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.
 

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.

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.

•  There has been a 30% increase in enrollment since 2005 for Welfare programs and an increase of staff of 36%. (Now that is modernization we can believe in.  Unfortunately, similar modernization projects in the UK have had the same results.  The focus to reduce costs always increases them.)
• Training was identified as the problem and a 10-week training program has been implemented, plus a testing program.  (One fact I have learned from working with my Vanguard partners in the UK is that government overspends on training, when training is not the biggest lever for improvement.  The design and management of work is our biggest lever for improvement, starting with understanding client demands and designing the system against demand allows for something worthy to be trained on.  Further, the High Frequency Value demands are the only ones to be trained on and probably cut training down to a couple weeks once the system is redesigned.)
• Doubled the data-gathering effort. (There was no conversation on what data was being gathered or why or for how long.  Many governments institutionalize waste this way.  Just because we have IT to collect data . . . we do.  I can only hope these are  measures related to client purpose and measures of failure demand.)
• Focus on the client experience, face-to-face contact and improve timeliness of determinations and pre-determinations.  (Sounds hopeful, but didn’t get much explanation or detail.)
• Move from a task-based system to a case management system.  (With great confidence, I can say that a case management system poorly designed can have more problems and costs than a task-based system, but does sound better.)
• Specialized team for the Elderly and those with Disabilities.  (Is this more scientific management theory and the functional specialization of work?  Does this require a different group of workers?  I don’t know why the client demands call for this, specialization can be very ineffective.)
• On-line applications, ability to check status by phone and paperless case files.  (All these items have the potential to add costs and not save them.  Checking status by phone is a type of failure demand and we are locking in the costs of a poor work design.)
• Working in teams, so if someone is gone they can have someone to follow-up on the case. (If the work design allows for a case to be done timely, why do we need follow-up, hand-offs and other waste?  Can’t workers decide for themselves how to handle vacations, illness, etc. with out a command and control dictate to establish teams?  Teams are best pulled and not pushed upon workers.)
• We had fraud of $1 million from 2002 – 2005 and have a two-tiered system to prevent it.  (What really is happening here is developing an inspection regime to hound workers.  These systems cost organizations and government many millions to save $1 million.  Guaranteed to lock-in waste.  Government management thinking and work design is at fault here.  We can’t prevent the next financial meltdown through more regulation either as the next one will be different than the last one.  But we can waste a lot of money trying.)
• 22-different contracts currently held by IBM will be turned over to Indiana with a performance matrix with the IT contracts going to the State CIO, operations to someone else, etc. (All I can hope for is that the end-to-end system works for the client, the functional separation of these contracts with performance matrix calls into question the ability to get economies of flow and whether these contracts are filled with targets and incentives that will further sub-optimize the system.)

I was privileged to hear Senator Vaneta Becker outline the problems in Vanderburgh county and how other Indiana folks had stepped up to fill the void at great cost both emotionally and financially (the unseen ones not in the State financials).  Two people in her district had died and as she said probably would have died anyway because of the illnesses, but they spent their last days worrying about eligibility and sending emails and faxes.

My Indiana-based company is not IBM, Accenture, Crowe, ACS, Xerox, EDS, etc. but we have a new way of thinking about the design and management of work that can help prevent the experience Senator Becker has had to endure the past 3 years.  Let’s hope that FSSA respects Representative Welch’s call to be open to new ideas and approaches.  I can only hope.

To learn more about our public sector work go to www.thesystemsthinkingreview.co.uk.

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. Have you personally gotten knowledge about the process that welfare recipients have to go through to get services?  Reason for ?:  Reports and reporting is not enough.  An executive must go to the work to understand the "what and why" of current performance.  This cannot be delegated to a contractor or employee of the State.  Plans not based on knowledge are just hopes, dreams and conjecture.
2. What are the High-Frequency Value Demands that applicants are giving to the State?  Reason for ?:  If the State understands the demands from applicants they can design a training program for state workers around the high-frequency demands.  This also will help prioritizing which demands need to run smoothly. 
3. What is the failure demand percentage of all contacts at the point of transaction?  Reason for ?:  Meeting the federal requirements is not enough.  An important metric for government is to determine how many contacts are failure (the failure to do something or do something right for an applicant).  My guess is that this number is between 60-90% of all demands from an applicant or a legislator, special interest group, guardian, etc. on behalf of the applicant. 
4.  What are the end-to-end measures derived from applicant purpose?  Reason for ?:  Spending time getting knowledge allows the State to understand what matters to applicants.  A timely response is most likely one of them, how long does it take today and how predictable is that measure.  There will be other important measures derived from what matters to applicants.  It is important to understand that costs are not from economies of scale, but economies of flow.
5. Is the State or the State’s vendors using targets and incentives with workers?  Reason for ?:  Targets become the defacto purpose as workers get focused on the target (usually with incentive) rather than serving the customer (applicant in this case).  This typically is a source for failure demand (described above), waste and sub-optimization.

If or when government management begins to understand that improving the design and management of work is the issue, we can move on to saving taxpayers money.  I am not talking about a little, but a lot.  Our thinking around the design and management of work must transcend politics and be the foundation to improving service and lowering costs.

Being good stewards of the State’s money means constantly uncovering better ways to think about the provisioning of services and even achieving public sector innovation.  Unfortunately, the prevailing thinking in US government and business is made up of command and control thinking.  We can do better than this.

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

For more on the public sector and systems thinking go to www.thesystemsthinkingreview.co.uk.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps service 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 caught John Ketzenberger on the Gerry Dick’s Indiana Business Review this past Sunday (10/18) talking about how to get more revenue for the State of Indiana.  I have long admired John’s writing in the Indianapolis Business Journal and The Indianapolis Star.  He has an Indiana Conservative bend to him and tries hard to be balanced in his reporting.

With his move to The Indiana Fiscal Policy Institute in September, I was a bit disappointed that the topic was how to tax more services and how we compared to other states in taxing these services.  I guess I see things differently, as I believe the burning question as how do we provision services more cost effectively so as not to have to raise taxes.

I always struggle with the word "revenue" to replace the word "taxes" when it comes to government.  This must be the new reality.  Remember when we had money and these things weren’t an issue?  Or even the time when we didn’t have to go to other countries to beg for jobs?  Those were the days . . . I digress.

I would much rather see the Indiana Fiscal Policy Institute help find ways to help provision services better.  The waste is costly whether privatized, outsourced or government run.  Other countries are finding ways to provision services less expensively with better thinking about the design and management of work. 

This may lead you (John) to find out why they are being so successful and bring new thinking to government through your research.  Entrenched government management may not be open to new ideas otherwise.  And in these times we could use some new ideas on greater effectiveness in government.

With this approach you won’t have to continually be creative in the new taxation arena, because it will require less (hmmmm) "revenue."  Public sector innovation and working on provisioning services better and with less tax dollars is certainly a more attractive option.

 
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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 our international government services www.thesystemsthinkingreview.co.uk[email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt. 
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